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.
Friday, July 2, 2010
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)
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)
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).
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).
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.
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).
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.
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)
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
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
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