ADVERSE POSSESSION

Why do title insurance affidavits always contain a representation that no one is in possession of the property without permission (i.e., adversely possessing)? The answer is that the deed is void if someone is on the property without permission.

Moreover, as this case shows, the person who is adversely possessing the property does not need to satisfy the adverse possession time requirements -- 7 years under color of title recorded for at least 30 years or 20 years without color of title. Under the champerty statute, one year is long enough.

As the deed is void, the seller must file an action to remove the trespasser and then execute a new deed (assuming that the buyer still wants the property).

In this case, the buyer was trying to get something for nothing, and we all know that "you can't always get what you want."

See Charles E. Foust, Jr. v. Larry E. Metcalf, et al.

BEWARE OF GARNISHMENTS

A garnishment is a method of collecting a judgment. Typically, when we think of garnishments, we think of “wage” garnishments. But, garnishments can also be used by a judgment creditor to seize any funds owed by a party (the garnishee) to the judgment debtor. To encourage prompt and accurate response, the law allowing garnishments includes a penalty. If the person receiving the garnishment fails to respond, the person is liable for the full amount of the judgment.

Because of the unfairness to the garnishee, the law includes many provisions intended to protect the garnishee. In Little v. American National Property & Casualty Company, w2009-01798-COA-R3-CV (Sept. 22, 2010), the Tennessee Court of Appeals discussed those procedures. Ultimately, the Court held that the garnishee was not liable for the debt because it had not been properly served.

The facts showed that the garnishment was served on the garnishee – a Missouri insurance corporation – at the office in Tennessee of an independent agent. It was accepted by a “front-desk” person.

THE MORAL OF THIS STORY: Make sure that the “front-desk” people know that they are not authorized to accept any legal document.

FINALLY, A CASE THAT HOLDS THAT ARBITRATION IS NOT ALLOWED

Arbitration has its advocates, but I am not one of them. The judicial system in Tennessee provides most litigants with a fair and speedy disposition. Moreover, the judicial system provides a system for appeal and reconsideration. Arbitration does not. Often, even the best judges make mistakes of law or even in findings of fact. The arbitration process does not allow for that “further review.”

In Tennessee, the courts almost uniformly compel arbitration any time that the agreement provides for arbitration. In Tuetken v. Tuetken, W2008-00274-SC-R11-CV (Sept. 22, 2010), the Tennessee Supreme Court issued an opinion that gives a small victory to non-arbitration enthusiasts. In Tuetken, the court held that the parties could not agree, and the courts could not enforce, an agreement in a divorce proceeding to submit parenting issues to binding arbitration.

But the Court went further. The Court held that the parties in an arbitration proceeding cannot agree to change or modify the review procedures of the Tennessee Uniform Arbitration Act. So, even if the parties want the court to have the ability to provide “further review,” the court cannot exercise that authority. But, that is not all. The Court said that because the agreement to arbitrate was based upon the parties’ intent to give the court this expanded review authority, the agreement to arbitrate was invalid.

THE MORAL OF THIS STORY: If the other side insists on arbitration, insist that the agreement be tied to modifying the scope of appeal to the court to include a “do over.” Either the arbitration provision will be invalid or you may actually obtain a fair review.

YOU MUST ARBITRATE – EVEN IF THE ISSUE IS PURELY LEGAL

Tennessee courts mandate arbitration if the contract between the parties requires arbitration. In some cases, this mandate seems absurd. For instance, in Thomas v. Pediatrix Medical Group of Tennessee, P.C. E-2009-01836-COA-R3-CV (Tenn. Ct. App. Sept. 14, 2010), the issue was the validity of a non-competition provision in an employment agreement between a physician and his employer. After execution of the employment agreement, the Tennessee Supreme Court issued its decision in Murfreesboro Medical Clinic, P.A. v. Udom, 166 S.W.3d 674 (Tenn. 2005) holding that except as authorized by statute, physician non-competition agreements are void.

Physicians sue in court. The practice says the contract requires arbitration, so the practice demands arbitration. The physicians say arbitration is unnecessary because the issue is purely a legal issue. The court of appeals says, even if the case involves solely “legal” questions, because the contract requires arbitration, the dispute will be settled by arbitration. In fact, the court added “a panel of experienced, certified arbitrators will be able to rely on the well established laws of statutory construction” and properly decide the case.

The problem – what if the “panel of experienced, certified arbitrators” are wrong on the legal issues. Unfortunately, the Tennessee Uniform Arbitration Act and the Federal Arbitration Act allow only limited appeal of an arbitration decision. Judges often err on legal issues – and the court of appeals or supreme court exists to correct those errors.

THE MORAL OF THIS STORY – Do not sign an agreement that contains an arbitration provision unless you agree that legal issues may be decided by a court.

MOM SAID DO NOT RESUSCITATE – BUT I HAVE HER HEALTHCARE POWER OF ATTORNEY

Patient instructs doctor to “Do Not Resuscitate.” Patient crashes in front of the family members. A nurse’s assistant begins CPR. Another nurse comes into the room to help and notices the DNR notation in the chart. CPR stops. The son says “Save Mom.” I have a healthcare power of attorney, as Mom’s attorney in fact I am directing you to continue CPR. The nurses stop CPR -- Mom dies. Son sues.

Common sense says that the nurses should have continued performing CPR if they possessed actual knowledge that son in fact held a durable healthcare power of attorney for Mom. A wrongful life case is always easier to defend than a wrongful death case. But they did not, and Mom died.

In Tennessee, the Court of Appeals says that this is really a “medical malpractice” lawsuit. So, the family possesses the same obligations of expert proof and other hurdles that apply to every other medical malpractice lawsuit. Because the family failed to present expert proof on the issue of causation – would Mom have lived if CPR had been performed -- the court dismissed the case.

The unanswered question -- can the holder of a healthcare power of attorney overrule the patient’s own wishes. Although the court of appeals did not address that issue, it appears that the answer is No.

THE MORAL OF THIS STORY: If you give someone a healthcare power of attorney, make sure that the person understands what you want. It will save a lot of trauma for everyone.

Wheelock v. Doers, E2009-01968-COA-R3-CV (Tenn. Ct. App. Sept. 14, 2010)

NOT TAUGHT IN LAW SCHOOL

Foreign Judgments must be domesticated in Chancery Court or Circuit Court -- not General Sessions Court.

See Studsvik Logistics, LLC v. Royal Furniture Company.

CONTRACTUAL WAIVER OF RIGHT TO JURY

A big issue, and to my knowledge, the only case to address this one.

See Gregory Poole v. Union Planters Bank, N.A.

CORPORATE NAMES

On April 9, 2010, the Governor signed a bill that allows corporations and limited liability companies to use names that are indistinguishable from the name used by another entity. To do so, all entities using the same name must consent and must agree to use the same registered agent.

See House Bill No. 3815.

IF YOU SIGN A LEASE AS GUARANTOR, YOU MIGHT BE AN IDIOT

Or, you might get lucky if the lease fails to contain any language that sets out the obligations or duties of the guarantor.

Moreover,

a. if the landlord named in the lease does not exist

b. the lease names you as the lessee in the heading but the signature lines are for your company (and you sign as president)

c. you don't own the company when you sign the lease (and everyone knows it)

d. you sign the "Guarantor" line as "Larry N. Lunan, President"

You might win the lottery and be able to win and convice the court of appeals that there is no binding agreement because of the lack of a "meeting of the minds."

This defense is one that ordinarily is a loser. Hopefully the landlord did not have an attorney draft the lease.

See Joy Lamberson McNaughten, et al. v. Larry Lunan, et al.

A PARTNERSHIP IS NOT A PARTNERSHIP UNLESS THERE ARE 2 PARTNERS

In this case, the plaintiff knew she was dealing with Whiteco Limited Partnership and Orangeco Limited Partnership. And, if she checked the secretary of state's office, she would have discovered Certificates of Limited Partnership filed with that office. When she sued the "partnership" to enforce a contract, she discovered to her dismay that the "partnership" had only one (1) partner and alas, that "partner" was dead. So, lawsuit against other "partners" dies for lack of a partnership.

The moral of this story, as noted by the Court, is always insist on seeing a copy of the written partnership agreement.

See Sherry Tanner v. Whiteco, L.P. and Orangeco, L.P

CHOICE OF LAW FOR ARBITRATION IN CONTRACTS

I hate arbitration and strongly recommend to all of my clients that they refuse to arbitrate. Having said that, that may not be an option. This case emphasizes the difference between choosing the Federal Arbitration Act and the Tennessee Uniform Arbitration Act.

See Franke Elliott, et al. v. ICON In the Gulch, LLC

DON'T EVER IGNORE A MOTION FOR DEFAULT JUDGMENT

I hope this is a lesson, you never learn. In this case, Discover sued the widow to recover her deceased husband's credit card balance. Actually, there is some case law that supports the widow having liability for that debt (but that is another story). The widow filed a counter-claim under the Consumer Protection Act and the Fair Debt Collections Practices Act. The record indicates that Discover's attorney requested and received an extension in which to file an answer. For reasons unknown, he did not file an answer within that time. Moreover, he did not file an answer in response to communications from wife's attorney or when the motion for default judgment was filed. Worse, he failed to attend the hearing on the default judgment.

Result: Default Judgment for Wife and award of damages of $375,000, a call to the malpractice carrier and termination of the attorney. On appeal, the court of appeals affirmed the award of default judgment but reversed the damages award stating that the court applied the wrong standard.

Moral of the Story: File an answer.

See Discover Card v. Joy A. Morgan

PUBLIC EMPLOYEES AND POLITICAL OFFICE - A Tennessee Primer

For whatever reason, an extraordinary number of city and county employees want to run for elected office. Other than the pain and agony of attending endless meetings and the joy of listening to neighbors complaining about high taxes and no services, elective office generally provides little reward. In Tennessee, the law prohibits some local employees from running for elective office – they may be the lucky ones!

Here is a primer on some of the hurdles public employees face when running for political office:

· The federal Hatch Act (5 U.S.C. § 1501) prohibits an employee whose position or duties are financed by federal funds from running for office unless the election is “nonpartisan.”

· The “Little Hatch” Act (Tenn. Code Ann. § 2-19-201) limits the political activities of state employees – it does not apply to local government employees.

· Article II, Section 26 of the Tennessee Constitution prohibits a person from "holding more than one lucrative office at the same time." But, the term "office" is limited to "state office." Local offices (e.g., county school board member, city council member, and city school board member) are not state offices so a county commissioner may also be a city council member or a state representative.

· Tennessee Code Annotated section 7-51-1501 overrules any city ordinance or county resolution that prohibits or limits employees from running for state or local office.

· City or metropolitan government employees cannot run for election to the local governing body.

· School board members cannot be employed by the same school system (Tenn. Code Ann. § 49-2-203).

· County commissioners cannot also serve on the county school board (Tenn. Code Ann. § 49-2-202(a)).

· A public officer cannot hold two “incompatible offices” at the same time. (Tenn. Op. Atty. Gen. No. 08-107). A city manager cannot also be a city commissioner.

· A public officer cannot be directly interested in a contract he or she has the duty to vote for, let out, or supervise. This prohibition includes any contract with the official personally or with any business in which the official is the sole proprietor, a partner, or the person having the controlling interest. (Tenn. Code Ann. § 12-4-101(a)(1)).

There are other prohibitions under the law, however, these are the highlights.

HEY, THAT’S MY PROPERTY!

You buy a piece of property. The seller gives you a deed. All is good with the world. Forty years later, you are in court. And, the court says, “you don’t own this property anymore.” Why? You did not do enough to protect your investment, and someone else owns your property. Welcome to the world of adverse possession.

Adverse possession is a legal concept. It allows one person to literally take another person’s land. The only requirements are that the thief take possession of the property:

(a) Openly
(b) Hostilely
(c) Exclusively
(d) Continuously for a period of time

In Tennessee, it is not necessary the thief to erect a fence. It may be enough if the thief just uses the property. In one case, the thief placed a house trailer, built a storage shed, installed a culvert and driveway, mowed the area and kept horses on the property. The court said that was enough.

The owner’s problem – he had not been on the property in years. And, when he discovered the squatters, he did nothing to stop it.

The period of time required ranges from seven (7) years to thirty (30) years depending on the facts and circumstances.

THE MORAL OF THIS STORY: If someone is using your land without your permission, don’t ignore it – you may discover that it is not your land any more.

Other moral, if you own land and cannot find the time to visit it every seven years, you need to sell the land.

For more on adverse possession, see Roy G. Butler v. David a Still, No. M2009-01729-COA-R3-CV (Aug. 24, 2010).

PRE-AUTHORIZATION DOES NOT MEAN COVERAGE

It is a common story. The doctor tells the patient that surgery is needed. The doctor’s office contacts the insurance company, and the insurance company issues a “pre-authorization” letter. The surgery goes well and the patient recovers until the bills arrive with the notation -- NO COVERAGE UNDER POLICY.

A pre-authorization letter is just that – a determination by the insurance company that the procedure is “medically necessary.” It is not a determination that the insurance policy provides coverage for the procedure. That determination is usually not made until after the bills are submitted.

The insured can request a pre-determination of coverage. That should be done in situations in which the insurance policy includes riders. Riders are amendments to the insurance company’s form policy that limit or exclude coverage.

In Wellmont Health System v. John Quinton Qualls, No. E2009-00918-COA-R3-CV (Aug. 20, 2010), the patient discovered the importance of riders and exclusions to coverage. In that case, the insurance policy possessed two exclusions: one for pre-existing conditions and another specifically for diverticulitis. The patient had surgery for diverticulitis. The insurance company denied coverage after the surgery.

The patient argued that the insurance company issued a pre-authorization letter and that constituted a change to the policy. The court said no – the letter just confirmed that the surgery was “medically necessary.”

The patient then argued that he was confused about the exclusions. The “pre-existing condition” exclusion ended after 12 months. He had diverticulitis when the policy commenced; therefore, it was a pre-existing condition. He did not have the surgery until after the 12 month period ended. Therefore, the exclusion did not apply. Correct, the court said. If the insurance policy had only one exclusion -- the pre-existing condition exclusion, the insurance company would be paying the claim. But, the policy possessed two exclusions. The specific exclusion for diverticulitis lacked an expiration date. Consequently, that exclusion applied at the time of the surgery and the insurance company properly denied coverage.

THE MORAL OF THIS STORY: The words in red in the insurance policy really do have meaning. If you have any questions regarding coverage – ask the insurance company. If you are about to spend a lot of money for surgery, ask the insurance company if it is covered by the policy. And, make sure that the answer is in writing.

PEER REVIEW PRIVILEGE ONLY APPLIES WHEN “PEER REVIEW” OCCURS: Not when other business is discussed

On May 24, 2010, the Tennessee Supreme Court issued two important cases interpreting Tennessee’s Peer Review Statute. In Lee Medical, Inc. v. Beecher, No. No. M2008-02496-SC-S09-CV (May 24, 2010), and in Powell v. Community Health Systems, Inc., E2008-00535-SC-R11-CV (May 24, 2010), the Court clarified the scope and the application of the Peer Review Statute and the privilege in a significant manner.

In Lee Medical, the Court focused on the application of the “peer review statute and privilege” to a hospital’s internal business committees. The court found that those committees could be “peer review committees,” however the privilege only applied when the committees were engaged in “documents and discussions were protected only when the proceeding involved a physician’s professional conduct, competence, or ability to practice medicine. When the committees were discussing other issues, in this case whether to outsource vascular access services, the “peer review privilege did not apply.

Specifically, the court held that the privilege applies only to peer review proceedings conducted by a “peer review committee” and only when that proceeding involve a physician’s professional conduct, competence, or ability to practice medicine. Thus, the privilege only applies when a “peer review committee is performing a peer review function.

With respect to records, the Court stated that the privilege covers only records possessed by entities that qualify as “peer review committees” under Tenn. Code Ann. § 63-6-219(c). The privilege does not apply to records kept by a hospital in the regular course of its business unrelated to a peer review proceeding. And, the privilege does not apply mere because the peer review committee used those records in the course of a peer review proceeding. The records may be sought and obtained from the “Original Source.”

The court further clarified the definition of “peer review committee.” The court noted that the statutory definition of “peer review committee” is “any committee . . . of any licensed health care institution . . . the function of which, or one (1) of the functions of which, is to evaluate and improve the quality of health care rendered by providers of health care service[s].” This definition is meaningless as “It is difficult to imagine any committee created by a hospital whose functions do not include evaluating and improving the quality of care provided to patients at the hospital.”

In Powell v. Community Health Systems, Inc., the Court clarified which records are protected by the “peer review” privilege.” As noted in Lee Medical, records received or made in the ordinary course of a hospital's business apart from the operation of a peer review committee are not protected by the peer review privilege in Tenn. Code Ann. section 63-6-219. In Powell, the plaintiff wanted a report prepared at the request of the Peer Review Committee. With respect to those documents, the Court held that the privilege applied. Specifically, the Court held that documents prepared by or at the request of a peer review committee exercising its peer review function and documents prepared by third parties as part of the work of a peer review committee performing its peer review function are privileged.

Finally, the Court addressed the question of whether the “peer review” privilege could be waived. The Court noted that the statute does not possess a “waiver” provision. As the privilege is intended to protect the “peer review process,” and not any specific individual, the Court held that it could not be “waived” by any person, including the hospital.

These two decisions are extremely important as they clarify the application of the Peer Review Process. By the same token, they emphasize the absolute “privilege” afforded to “peer review committees” when performing “peer review.” Although in Lee Medical, the hospitals possessed a valid argument regarding that their business committees performed some duties associated with “quality,” those duties involving business issues clearly did not invoke type of protection provided by the “peer review” statute.

The moral of this story – the Peer Review privilege is absolute, but it does not apply to every committee in a hospital.

Kimberly Powell v. Community Health Systems, Inc.

YOU MIGHT GET LUCKY, BUT IT IS NOT CHEAP

Hire a lawyer to read the lease before you sign it.

In Tennessee, the rule of law is that a fool with a pen acts at his own folly. Or, if you sign it, too bad. And, if it is a “guaranty” you are liable even though you did not personally get the money, the goods or the services.

Sometimes, even a fool is lucky. A “guaranty” must contain certain terms to be binding. For instance, the guaranty must set out the obligations or duties of the guarantor.

As lawyers, we love it when non-lawyers write their own contracts. And, as one recent case shows, non-lawyers usually do not save money. We love it when:

a. the landlord named in the lease does not exist

b. the lease names you as the lessee in the heading but the signature lines are for your company (and you sign as president)

c. you don't own the company when you sign the lease (and everyone knows it)

d. you sign the "Guarantor" line as "Larry N. Lunan, President"

You might win the lottery and be able to win and convice the court of appeals that there is no binding agreement because of the lack of a "meeting of the minds.”

The Moral of this Story is: You get what you paid for – in this case about $20,000 in legal fees and a losing case. Save some pain – Hire a lawyer.

McNaughton v. Lunan, M2008-00806-COA-R3-CV (Tenn. Ct. App. May 14, 2010)

ARBITRATION IS A FOUR LETTER WORD - Tennessee v. USA

In Tennessee, arbitration is a four-letter word. Why? Because in a lawsuit, you have the right to appeal a bad decision to the court of appeals. Even the best judge has a bad day. But, arbitration provisions are a fact of life and are a regular part of any form contract. Some contracts specify the Federal Arbitration Act, and some specify the Tennessee Uniform Arbitration Act. Does it really matter?

Well, Duh. They are different and which act governs can have major consequences. One important difference is the “well he lied to me before I signed the contract” defense. This defense is better known as fraud in the inducement. Under the Tennessee Uniform Arbitration Act, this issue must be decided by a judge and jury. Under the federal act, no such luck.

Also, do not ever assume that if you specify that Tennessee law applies, that this includes the Tennessee Uniform Arbitration Act. Why, because Tennessee law may mandate application of the Federal Arbitration Act unless the Tennessee Uniform Arbitration Act is specified.

The Moral of This Story – if you must arbitrate, Tennessee is probably better than USA.

Elliott v. Icon in the Gulch, LLC, No. M2009-01554-COA-R3-CV (Tenn. Ct. App. May 19, 2010)

WHY WOULD YOU WAIVE THE RIGHT TO A JURY?

In Tennessee, you have a constitutional right to a trial by jury of any civil question – unless, of course, you waive that right. How do you waive that right – by being stupid. Or, by failing to read the document before you sign it.

If you sign a contract that includes an arbitration provision, you waive your right to a jury. Once again, the fool with the pen strikes. What if the contract does not contain an arbitration provision – it just waives your right to a jury. Well, of course that is unenforceable. Everyone knows you have a right to a jury, right? Wrong!

The right to a jury can be waived by merely signing a document that says I waive my right to a jury. Does this really matter? Sometimes it does and sometimes it doesn’t. But, normally, it only matters when you are in a lawsuit and you want a jury.

The Moral of this Story is: You can always waive the jury later – what are you receiving for waiving it now?

Poole v. Union Planters Bank, N.A., No. 2009-01507-COA-R3-CV (Tenn. Ct. App. Apr. 8, 2010).

SO YOU HAVE A JUDGMENT, TRY TO COLLECT IT

In law school, they don’t tell you that the hardest part of any lawsuit is collecting the judgment. That task is more difficult if you have a judgment in another state and the defendant has assets in Tennessee. The first step is to “domesticate” the judgment in Tennessee. Actually, there is a statute that tells you what you need to do. The first step is to file a lawsuit in a court in Tennessee. Simple enough. The lawsuit alleges that you have a judgment entered by another state and it is a “final” judgment. Then, you wait a period of time – normally 30 days -- and file an order making the judgment a Tennessee judgment.

Because this process is set forth in the statute, it is always helpful to read the statute. If you do, you will discover that the lawsuit must be brought in either the “circuit or chancery” court. What this means is that you cannot sue in general sessions court. If you do, you are just wasting your time.

The moral of this story is: Read the statute – it is there for a reason.

Studsvik Logistics, LLC v. Royal Furniture Co., W2009-00925-COA-R3-CV (Tenn. Ct. App. Apr. 20, 2010).

I WOULD LIKE TO USE YOUR NAME, AND I CAN DO IT NOW LEGALLY

On April 9, 2010, Governor Bredesen signed a bill that allows corporations and limited liability companies to use names that are indistinguishable from the name used by another entity. This means that more than one company can use the name Acme Plumbing in Tennessee. To do so, all entities using the same name must consent and must agree to use the same registered agent.

This issue normally comes up when the two companies are affiliated. Sometimes, this comes up because the companies are in different parts of the state. The real issue is not the corporate law, but trademark law. Thus, the fact that you can do it legally, does not mean that you need to do it. Also, it is a real bummer when you are sued for someone else’s mistake. Then, you have to prove that you did not do it.

Moral of this story – just because it is legal doesn’t make it smart.

2010 Tenn. Pub. Ch. 703.

LYING IN COURT CAN HURT

Lying has become a national pastime. Even worse, people, including a former President, lie under oath in court proceedings every day. Every once in a while, a liar is caught. When that occurs, it really is fun. Jerry Robertson learned that lesson the hard way.

Jerry was the adopted son of Tillman Robertson. In Tennessee, adopted children are considered “heirs” just like natural children. Jerry was quite fortunate. In 1936, Henry C. Butler died and left a will. In that will, Mr. Butler left his land to Tillman Robertson for his lifetime. The will specified that upon Tillman’s death, Tillman’s heirs inherited the land. Tillman died in 1990. At the time of his death, Tillman had two children – his adopted son, Jerry, and his natural daughter, Clara. The property was worth, according to the Court, about $1.1 million.

After Daddy died, Jerry obtained a divorce and he filed bankruptcy. Both are judicial proceedings. Jerry, however, did not list his interest in the Property on the list of assets he was required to make in either case. Even worse, he filed “sworn” statements with the two courts that omitted this property.

In Tennessee, we take “sworn” statements very seriously. In fact, the courts take it so seriously, that the court held that Jerry Robertson was “judicially estopped” from asserting that he owned the property.

The moral of this story: Liars do get caught, and sometimes it is painful.

Robertson v. Hodges, No. E2009-01335-COA-R3-CV (Tenn. Ct. App. June 28, 2010).

CMS ISSUES DRAFT REGULATIONS MANDATING DISCLOSURE BY PHYSICIANS OF IMAGING SERVICE PROVIDERS

On June 25, 2010, CMS proposed regulations that immediately impact physicians who provide diagnostic imaging services to their patients. These regulations are required by the Healthcare Reform Act enacted on March 23, 2010. A copy of the proposed regulations is available at www.cms.gov. The effective date of the final regulations is January 1, 2011.

The regulations, as proposed, require a physician or physician extender who orders a MRI, a CT scan or PET Scan, to provide the patient with a list of other suppliers of those services in the area and a statement that the patient may obtain the service from another supplier. The required disclosures include:

• A list of ten alternate suppliers of that service located within a 25 mile radius of the
doctor’s office.
• The address, telephone number and distance from the doctor’s office of each supplier.

The regulations require that disclosure be given to the patient at the time the test is ordered. In addition, the patient must sign an acknowledgement of receipt of that disclosure. This acknowledgment must be maintained in the patient’s medical record.

What if there are less than ten suppliers within a 25 mile radius of the office? Then, all suppliers of the service must be listed.

What if there are no other suppliers within a 25 mile radius of the office? According to CMS, the disclosure does not need to be made.

What if the physician or extender ordering the test does not have the equipment necessary to perform the test? The proposed rule only applies if the physician or physician extender ordering the test is able to perform the test.

Does this disclosure requirement apply to any tests other than MRI, CT Scan or PET Scans? At this time, no. CMS is considering whether additional diagnostic imaging tests should be added to the disclosure requirement.

Can the disclosure be in electronic form? CMS does not specify that the disclosure must be in written form. CMS is requiring the patient “to sign” an acknowledgment. Presumably, electronic signatures are permitted.

Is a hospital a supplier? The proposed regulations exclude hospitals and critical access hospitals from the definition of supplier. A freestanding outpatient imaging clinic owned by a hospital is a supplier.

Is the disclosure required in emergency situations? At this time, yes. CMS is accepting comments on that issue.

May the patient choose another supplier who is not on the list? Yes. CMS clearly states that the list of suppliers is non-exclusive.

DOCTOR BEWARE: IF YOU SUPERVISE AN INDEPENDENT PHYSICIANS ASSISTANT OR NURSE PRACTITIONER, YOU ARE LIABLE

It is a common story. A doctor wants to make some "easy" money. He agrees to supervise one or more physicians assistants. The PAs are not employed by his practice. Instead, the PAs own their own practice. The PAs pay the doctor for his time as their "supervising" physician. No problem, just review some files and periodically consult with the PA about an interesting case. The doctor does not even see the patients. In Tennessee, there is an added benefit - the doctor is liable for the PAs malpractice.

Today, physicians assistants and nurse practitioners are setting up their own healthcare practices independent of physicians. All the PA needs is a physician who is willing to "supervise" the practice. For the doctor, this is easy money. The doctor reviews charts and is paid for that review.

As a recent Tennessee Supreme Court case illustrates, the doctor also receives another gift - potential malpractice liability. According to the court, the PA is an "agent" of the supervising physician. Hence, the supervising physician is liable for the PA's malpractice. This liability exists even though the PA is not employed by the physician, and the physician never sees the patient.

There is some good news. The Court emphasized that a PA can only be held to the standard of care applicable to physicians assistants. A PA is not a physician and therefore, cannot be held to the standard of care applicable to doctors.

THE MORAL: As usual, easy money is not always that easy. And, because the PA is not an employee of the practice or of the physician, the doctor's malpractice policy may not cover this malpractice liability.

Melissa Michelle Cox v. M.A. Primary And Urgent Care Clinic et al., No. M2007-01840-SC-R11-CV (Tenn. June 21, 2010)

RELIGIOUS NON-PROFIT ORGANIZATIONS

When the church membership becomes divided on a topic, tempers flare and lawsuits are filed. The role of courts is limited by the ecclesiastical abstention doctrine. This doctrine states that the courts will not adjudicate "religious" issues.

Many church organizations, however, elect to become "non-profit" corporations. As a non-profit corporation, a church possesses a statutory obligation to provide certain documents to its members "upon written request."

For accounting records, the membership list and other corporate records, the law states that the member must make the request "in good faith and for a proper purpose." Pre-lawsuit discovery is not a proper purpose. And, according to this case, "determining your rights in the Church's building and funds" is not a proper purpose. Why, because the church property and other assets is owned by the corporation, and not its members.

The moral of this story is that church members should always act with a proper purpose.

Two Rivers Baptist Church v. Jerry Sutton