Holland & Hart Healthcare Law Blog

FDA Review to “Pre-Empt” State Pharmaceutical Litigation?

The United States Supreme Court will soon decide whether state tort actions against drug companies will be "pre-empted" by the FDA’s pre-market regulation of new drug products. The case, Wyeth v. Levine, arose out of a Vermont action by a musician, Diane Levine, who was injected with Wyeth’s anti-nausea drug, Phenergan during hospital treatment for migraine headaches. The drug was mistakenly injected into Ms. Levine’s artery resulting in the necessary amputation of her right arm. Many observers believe the Supreme Court will follow the logic of its recent decision in Riegel v. Medtronic, to pre-empt state law tort actions against drug companies where the drug has received FDA approval.

The FDA does not itself test new drugs, but rather relies on reported results of pre-market studies performed by the drug companies themselves. It may not surprise anybody to learn that these self-reports are not always complete and candid. Further, an overextended and underfunded FDA is not always on top of its game in investigating weaknesses in the studies presented to it.

AND THE HORSE YOU RODE IN ON!

Wilcox Memorial Hospital in Kauai, Hawaii announced last month that a relative of a patient arrived at Wilcox with a horse to cheer up a patient at the hospital.  The visitors reached the lobby where the front desk personnel had retired for the evening.  The relative and the horse called from the lobby to announce their arrival and intention to visit the patient. They boarded an elevator and proceeded to the 3rd floor where they were met with security.  Security seems to be a problem at Wilcox at a number of different levels.   Back in 2005, the hospital informed 120,000 past and current patients that their names, addresses, Social Security numbers and medical records had been placed on an USB  Flash Drive and was missing.

NEGLIGENT DISCHARGE?

The  Indiana Court of Appeals, in McSwane v. Bloomington Hospital and Healthcare System, Ind. App. ct.,No 53A04-075-cv-243 (March 12, 2008) reversed a summary judgment granted in favor of Bloomington Hospital in a claim, that the hospital negligently discharged Malia Vandenneede into the custody of her estranged husband, Monty Vandeneede, following her treatment for apparent martial abuse. The hospital treated Mrs. Vandeneede for laceration puncture wounds and arm and wrist pain
which Mrs. Vandneede herself related to falling off of a horse onto a pile of debris. The plaintiff in the case, Mrs. Ava McSwane, was Mrs. Vandeneede's mother,who advise a hospital nurse that Mr. Vandeneede had beaten his wife with a fireplace poker.

TAX COURT: NO CHARITABLE DEDUCTION FOR MEDICAL PRACTICE “GOOD WILL”

Medical Practice “good will” is one of those amorphous concepts like pornography that is difficult to define, but you know it when you see it.  Not infrequently “good will” is deemed the largest component in the appraised value of a medical practice.  In many medical practices the actual hard assets of the practices have little or no value.  Part of the value of intangible good will can be identified in the surrender of the right to compete and the potential for generating revenues and income in the future.  Compliance oriented appraisals of medical practices generally assess the value of future revenue multiples after deducting the expenses and salaries of replacement physicians (with substantially lower compensation levels for physicians without a seasoned practice.)

TEXAS COURT UPHOLDS HOSPITAL CEO NON-COMPETE

In Teel v. Hospital Partners of America, CA No. H-06-3991, a U.S. District Court for the Southern District of Texas – Houston Division, entered summary judgment in favor of the defendant finding as a matter of law that Mr. Teel, a former CEO of Twelve Oaks, an HPA hospital in Houston could not claim damages against HPA for its attempts an enforcing Mr. Teel’s covenant not to compete with HPA, because the covenants were enforceable under the law of the contract (North Carolina) and under the law of the jurisdiction (Texas). Mr. Teel’s contract restricted him from “owning, acquiring, developing or managing a competing hospital located within a 25-mile radius of an HPA facility or a facility that HPA was actively pursuing, for one year after his employment ended. If Mr. HPA terminated his employment without cause, Mr. Teel was to receive a severance package up to one year’s salary and benefits, if he signed an “effective release agreement in form and substance reasonably satisfactory” to HPA.

MONTANA COURT MUZZLES BARKING RADIOLOGIST

In St. James Healthcare v. Cole, Mont., No. DA 07-0084, 2/12/08. the Montana Supreme Court upheld an injunction that  St. James Healthcare obtained against its former exclusive contractor for radiologist services., Dr. Jesse A. Cole. Dr. Cole allegedly made harassing and threatening phone calls to a radiologist a Boston University Medical Center in Massachusetts who obtained the radiology contract after Dr. Cole was dispatched by St. James. Dr. Cole sent emails and phone calls to his replacement warning her of a “predatory situation” and that “bad things can happen to you.”  The Court concluded that an injunction that proscribed speech and conduct that was intended to embarrass, harass or threaten was not protected by the First Amendment to the Constitution and therefore the injunction and restraining order imposed on Dr. Cole was not an illegal prior restraint. Dr. Cole, is a fan of the Second Amendment to the Constitution as well. He maintains two 64 gun vaults, which seems to have generated some considerable concern about the potential of his going “postal.” Other radiologists testified in court about a concern s over threatening interactions with Dr. Cole in the past. Erratic behavior and large gun vaults do tend to focus the mind.