Posts Categorized: Health Law Case Brief

Health Law Case Brief: Amarin Pharma, Inc. v. FDA

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By Elta Mariani

In Amarin Pharma, Inc. v. FDA (“Amarin”), the United States District Court for the Southern District of New York (the “Court”) ruled that truthful, non-misleading promotion of a drug approved by the U.S. Food and Drug Administration (“FDA”) for non-FDA approved (“off-label”) use is protected under the First Amendment of the Constitution. As long as this speech remains truthful and non-misleading, it cannot be “chilled” with threats including that of a misbranding action under the Federal Food, Drug and Cosmetic Act (“FDCA”). The Court reached this decision by interpreting predecessor case United States v. Caronia, 703 F.3d 149 (2d Cir. 2012) broadly and engaged in re-writing of Amarin Pharma, Inc. (“Amarin”) proposed statements to ensure they were truthful and non-misleading. While Amarin’s request for preliminary relief from criminal action under the FDCA was granted, its claim for preliminary relief from civil action under the False Claims Act was deemed not yet ripe.

This case was brought by biopharmaceutical company Amarin Pharma, Inc. (“Amarin”) and multiple physicians for preliminary relief on First Amendment, and alternatively due process, grounds[1]. Amarin’s drug Vascepa is FDA-approved for the treatment of patients with very high blood triglyceride levels (“severe hypertriglyceridemia”). Comprised of the omega-3 fatty acid “pure eicosapentaenoic acid,” Vasepa is considered safe for use by such patients. The issue in this case arose when Amarin sought to make truthful statements to doctors regarding an off-label use of Vascepa, but feared FDA prosecution on FDCA misbranding charges.

FDA regulation of pharmaceuticals dates back to 1938, when Congress first enacted the FDCA. In 1962, Congress amended the FDCA to required manufacturers to demonstrate that their products are safe and effective for their intended use prior to distribution, and gave approval power to the FDA (which established pre-clinical and clinical trial requirements towards this end). On its face, the FDCA prohibits misbranding (punishable by fines and imprisonment), not off-label promotion of drugs, but the FDA has interpreted the FDCA prohibition on misbranding to include off-label promotion. Recent FDA actions show an increased interest in bringing mislabeling charges under this interpretation of the FDCA, and the result has been large settlements (e.g., the 2012 GlaxoSmithKline guilty plea in the District of Massachusetts involving a $1 billion fine).

Amarin was the culmination of Amarin’s efforts to approve and market Vascepa for an additional, off-label use for patients on statin therapy with high (as opposed to very high) triglyceride blood levels. On July 6, 2009, it entered into a written, special protocol assessment (“SPA”) agreement with the FDA. Such an agreement guarantees FDA approval if certain size and design parameters are met. In this study, Vascepa also had to sufficiently reduce triglyceride levels for patients with high triglyceride blood levels on statin therapy. The resulting ANCHOR study met these parameters and benchmarks for effectiveness.

SPA guidance indicates that the FDA will only break an SPA agreement if “a substantial scientific issue essential to determining the safety or effectiveness of the drug has been identified after testing has begun.”[2] The FDA claimed this condition was met and rescinded the SPA agreement for this secondary use of Vascepa, pointing to various other studies with different drugs that indicated an unclear link between lowering triglyceride levels and reduced cardiovascular risk.

After appealing the decision through three FDA review levels and receiving guidance from the FDA indicating that it would pursue mislabeling charges if Amarin tried to promote the off-label use tested in the ANCHOR study, Amarin filed an action for relief on May 7, 2015. The two main ways Amarin desired to promote the off-label use were 1) distribution of ANCHOR results, and 2) additional reports supporting the correlation between lowering triglyceride levels and reduced cardiovascular risk. After much back-and-forth, the two sides were unable agree on language satisfactory to both.

The Court analyzed the communications between the parties and determined that Amarin met the requirements for preliminary relief because 1) it is likely to succeed on the merits, 2) it is likely to suffer irreparable harm absent preliminary relief, 3) the balance of equities tips in its favor, and 4) preliminary relief is in the public interest. First, reading predecessor case Caronia[3] broadly and beyond its specific facts, the Court deemed Amarin likely to succeed on the merits because its statements are truthful and non-misleading promotion of off-label use. Any language the Court believed not truthful or misleading, it redrafted. The Court next determined that the FDA’s misbranding action threat was enough of a specific present objective harm or threat to establish a claim for irreparable harm. The Court addressed the last two elements together, and determined that the public interest favored granting Amarin relief because of the importance of preserving First Amendment rights. The FDA’s concerns that relief would undermine the drug approval process and endanger the public health were dismissed as having no basis.

In Amarin, the FDA offered three counterarguments that were all rejected by the Court in turn. The first FDA argument, that protecting truthful speech to promote off-label drug use was an attack on Congress’s new drug approval framework, was dismissed as contrary to contemporary First Amendment interpretation. The second FDA contention, that only certain types of truthful and non-misleading manufacturer statements about off-label use deserved protection, was met with the observation that Caronia did not limit its holding to certain types of speech. Finally, the third FDA argument, that Caronia did not preclude it from using statements as evidence to prove intent or motive in a criminal misbranding action, was deemed irrelevant in this situation, where the act itself is legal and the speech is true.

In response to the FDA’s concerns, the Court noted three limitations on commercial speech promoting off-label drug use. False or misleading speech is not protected, false or misleading conduct is not protected, and finally, the subjective nature of “false or misleading” plus the developing nature of science and medicine will likely guarantee pharmaceutical consultation with the FDA regarding statements promoting off-label use. The Court also determined that going forward, Amarin carries the burden of ensuring that new studies and data do not change the (as now modified) truthful and non-misleading nature of its statements.

Amarin is noteworthy because its ruling, consistent with Caronia, provides momentum to the Caronia court’s pro-pharmaceutical company ruling involving the First Amendment. As both rulings come from district courts, they do not have tremendous precedential weight, but they could represent a new court trend nationwide in such cases. The arguments used by both parties, the tests and standards used in the Court’s analysis, and the Court’s comfort with stepping in and literally rewriting statements intended to be shared with physicians are in some ways unprecedented, and potentially prophetic.

Additionally, Amarin’s claim for preliminary relief from civil action under the False Claims Act was deemed not yet ripe. This leaves open another avenue for FDA action that has yet to be addressed and is worth watching. If Amarin could face civil penalties, its “win” in Amarin (protection from criminal action for misbranding) would be bittersweet.

Finally, this case like any other must be read in the greater national regulatory and political context. As drug prices have increased, pushing pharmaceutical companies into the spotlight for seemingly opportunist behavior in their acquisitions and other business practices, government scrutiny, from not only the FDA but also Congress, has increased. Rulings like Amarin and Caronia do not seem to support recent government attempts to reign in pharmaceuticals, and the Amarin court’s dicta about extant limitations on pharmaceutical company statements may not be sufficient. Demands of non-price sensitive consumers for the latest and best medicine could encourage profit-focused pharmaceutical company behavior despite these limitations. Thus, court rulings protecting pharmaceutical company speech and relying on such limitations may actually undermine government regulatory efforts. With the unsure fate of the Affordable Care Act and the delay of its special taxes on pharmaceutical companies, this in-flux area of law continues to be prescient and watch-worthy.

Elta Mariani is a 3L student at Boston College Law. During law school, she has served as a president of the student-run Health Law Society, and worked at athenahealth, Tufts Medical Center, and the law firm of Donoghue, Barrett & Singal. She received her undergraduate degree from Cornell University.

[1] The Court did not address this alternative ground for relief.

[2] U.S. Food and Drug Admin., Guidance for Industry: Special Protocol Assessment (2002), at 10, http://www.fda.gov/

downloads/Drugs/…/ Guidances/ucm080571.pdf

[3] In Caronia, the Court of Appeals for the Second Circuit reversed a pharmaceutical salesman’s conviction for making truthful statements about off-label use of a drug to physicians. Determining that FDA had prosecuted the salesman for his speech alone, and applying the principle of constitutional avoidance, the court narrowly construed the FDCA provisions regarding illegal misbranding. Pharmaceutical marketing speech was determined protected expression under the First Amendment in the context of promoting off-label use when it passes the Central Hudson four-prong test for constitutionally protected commercial speech and promotes a lawful, off-label use of an FDA-approved drug.

Health Law Case Brief: Robert Roe, et al vs. Children’s Hospital Medical Center

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By Rachelle Rubinow, Esq.

In Robert Roe, et al vs. Children’s Hospital Medical Center,[i] the Supreme Judicial Court (SJC) ruled that a hospital employer does not owe a duty of care to the future patients of a former physician employee who had left its employ and was working for a different employer when that physician allegedly abused the plaintiffs.

In 1966, Children’s Hospital Medical Center (Children’s Hospital) hired Melvin Levine as a pediatric physician, a position he held until 1985, when he relocated to North Carolina and began working as a pediatrician at the University of North Carolina School of Medicine (UNC). In 2009, he surrendered his medical license amid allegations that he performed medically unnecessary genital examinations on several UNC patients. Two years later, eleven former UNC patients of Dr. Levine’s brought suit against Children’s Hospital in Superior Court. They alleged that Children’s Hospital failed to properly train, supervise, or discipline Levine during his employment at Children’s Hospital; knew or should have known that Levine was conducting inappropriate genital examinations of minors during that employment; and failed to report Levine’s conduct to various licensing authorities and UNC. The evidence used in support of the complaint included an allegation made by the mother of a former patient in 1967, as well as litigation brought in 1988, 2005, 2006, 2007, 2008, alleging similar conduct by Dr. Levine toward minor patients during his employment at Children’s Hospital.

Children’s Hospital moved to dismiss the plaintiffs’ complaint for failure to state a claim upon which relief could be granted. In response, the plaintiffs moved to amend, seeking to add an allegation that Children’s Hospital owed them a duty of care because it had a “special relationship” with Levine, and it knew or should have known that he posed a foreseeable risk of harm to future patients. In July 2012, the Superior Court granted Children’s Hospital’s motion to dismiss and denied the plaintiffs’ motion to amend. The plaintiffs appealed, and the SJC granted direct appellate review, with the only issue on appeal being whether Children’s Hospital owed a duty of reasonable care to the plaintiffs.

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Health Law Case Brief: Genereux et al. v. Raytheon Co.

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By Alysson M .Gray, Esq.

On June 10, 2014, the United States Court of Appeals for the First Circuit (First Circuit) affirmed a ruling of the United States District Court for the District Court of Massachusetts (District Court) granting a motion for summary judgment in favor of the defendant in Genereux et. al. v. Raytheon Co.[i] The decision in Genereux results in a narrowing of protections extended to individuals exposed to dangerous substances during their employment. Although past precedent in Massachusetts signals that those exposed to dangerous substances during the scope of their employment may be eligible for employer-funded medical monitoring, the Court in Genereux held that a plaintiff must show evidence of a subcellular or physiological change in order to secure compensation for treatment.

The defendant, Raytheon, is a company based out of Waltham, MA that specializes in defense and security technology.[ii] The plaintiffs alleged that the defendant endangered the health of its employees and their families by negligently exposing them to beryllium[iii], a hazardous substance used in the manufacturing process at the Waltham plant. The plaintiffs sought a court order compelling the defendant to establish a trust fund that would provide for medical monitoring of beryllium sensitization (BeS) for two groups. The first class consisted “…of all persons who worked at the Waltham plant for at least one month prior to December 31, 1996.”[iv] The other group consisted “…of all persons who lived with members of the first class and thus were subject to take-home beryllium exposure.”[v] Employees already diagnosed with Chronic Beryllium Disease (CBD) were excluded from both classes. (more…)

Health Law Case Brief: Walden Behavioral Care v. K.I.

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By: Stephanie Regan, Esq.

In Walden Behavioral Care v. K.I., the District Court, Appellate Division[1], held that the patient-psychotherapist privilege does not apply to civil commitment hearings.

Walden Behavioral Care (“Walden”), a private mental health facility, petitioned the District Court to commit and retain K.I., a patient at its facility.  During the hearing on the petition, K.I. moved to exclude any evidence based on his own statements to his treating physician, arguing that they constituted patient-psychotherapist communications, which are privileged pursuant to MGL c.233 §20B.  The District Court denied the motion, and allowed testimony from the attending psychiatrist, who testified that K.I. had repeatedly indicated that voices were telling him to kill himself and that he intended to do so.  The District Court subsequently committed K.I. to Walden based upon its finding that failure to retain K.I. at Walden would create a likelihood of serious harm and that there was no less restrictive alternative.

K.I. appealed to the District Court, Appellate Division, contending that the District Court erred in allowing privileged patient-psychotherapist communications to be used as the basis for his commitment because he had not been warned that his statements could be used in this manner and he had not otherwise waived the privilege.  As summarized below, the Appellate Division ultimately concluded that an individual may not assert the patient-psychotherapist privilege in order to prevent the introduction of patient-psychotherapist communications in a civil commitment proceeding pursuant to M.G.L. c.123, §§7,8.  K.I.’s commitment was consequently affirmed.

The Appellate Division began by examining both statutes.  The civil commitment statute, M.G.L. c.123 §§7,8 allows a facility to petition the District Court for commitment and retention of a patient for up to six (6) months if it determines that a “failure to hospitalize would create a likelihood of serious harm by reason of mental illness.”[2]  After hearing on the petition, the District Court may issue an order of commitment only upon a finding, beyond a reasonable doubt, that (1) the patient is mentally ill and (2) discharge of the patient would create a likelihood of serious harm.[3] Commitment is not authorized unless there is a showing of “imminent danger of harm.”[4]

That patient-psychotherapist privilege, M.G.L. c.233 §20B, is an evidentiary privilege which allows a patient to refuse to disclose, or prevent a witness from disclosing, “any communication, wherever made, between said patient and a psychotherapist relative to the diagnosis or treatment of the patient’s mental or emotional condition.”  There are several exceptions to this privilege.  Unless an exception applies, a patient may prevent disclosure of the communication in a court proceeding or in any proceeding preliminary to such court proceeding.

The Appellate Division addressed two exceptions to the patient-psychotherapist privilege that were potentially relevant to this case.  First, exception (b) provides that the privilege does not apply where, during a court-ordered examination, the patient is informed that his or her communications to a psychotherapist will not be privileged.[5]  This “warning” regarding the lack of privilege is also referred to as a “Lamb warning.”[6]

The Appellate Division relied on a plain reading of exception (b) in determining that it does not apply to civil commitment hearings, and thus no Lamb warning is required as a precondition to the admissibility of patient-psychotherapist communications at such proceedings.  Exception (b) expressly applies to communications made “in the course of a psychiatric examination ordered by the court.”[7]  This excludes communications that, as in this case, take place in the context of hospital treatment.  Further, the Appellate Division noted that the policy considerations behind the exception are not implicated in civil commitment hearings, as the exception is intended, “to permit a court to utilize expert psychiatric evidence by ordering an examination,”[8] which takes place “in anticipation of a future proceeding” in which the defendant’s mental state will be at issue.[9]  The purpose of communications presented during a civil commitment hearing, however, are to provide treatment to the patient and they are not in anticipation of any future proceeding.

The Appellate Division next looked at exception (a), which has been referred to as the “dangerous patient exception.”[10] This exception permits the disclosure of patient-psychotherapist communications for the purpose of hospitalization (or placing the patient under arrest or under the supervision of law enforcement) in cases where a psychotherapist encounters a patient who poses an imminent danger of harm.[11]  Where a communication is disclosed for the purpose of hospitalization, the privilege will apply after the patient is in such hospital.[12]

Upon reading exception (a) together with the civil commitment statute, the Appellate Division ultimately concluded that, given the purpose of exception (a), the patient-psychotherapist privilege does not apply to civil commitment proceedings under M.G.L. c.123 §§7, 8.  The Appellate Division observed that the disclosure of communications contemplated by exception (a) is consistent with the purpose of a civil commitment proceeding, which is to commit or retain a patient at a time when the patient presents an imminent danger of harm.  While acknowledging the significant consequences of civil commitment proceedings and the importance of procedural safeguards, the Appellate Division stressed its refusal to interpret the laws in a manner that produces an absurd result.  It noted that often, patient-psychotherapist communications are the only relevant, and indeed most critical, evidence available at a civil commitment hearing.  If the privilege could be asserted to preclude such evidence, it would result in the release of a potentially dangerous person, without appropriate treatment, into the community.  Such a statutory construction would defeat the purpose of the civil commitment proceeding.

Finally, this case includes a dissenting opinion that contends that Lamb warnings should not be limited to court ordered examinations.  Rather, the dissent contends that when a psychotherapist examination is initiated by the petitioner, for the purpose of determining whether to proceed to civil commitment, the patient should be administered Lamb warnings and there should be no disclosure of any patient-psychotherapist communications absent the patient’s knowing and voluntary of waiver of the privilege.

 

Stephanie Regan is a health care attorney in the Boston area.  She spent eight years as an Associate in the Health Care Department of Donoghue, Barrett & Singal, P.C., where she provided advice to health care clients on a wide range of health and business law matters.  She received her law degree with a Concentration in Health and Biomedical Law from Suffolk University Law School, where she was a founding staff member of the Journal of Health and Biomedical Law.  During law school, Ms. Regan interned in the Health Care Fraud Division of the United States Attorney’s Office.  Prior to law school, Ms. Regan worked as a Legislative Aide in the Massachusetts House of Representatives.  She received her undergraduate degree from Boston College.

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[1] Please note this case is currently pending in the Appeals Court.

[2] M.G.L. c.123 §7(a)

[3] M.G.L. c.123 §8(a)

[4] Acting Superintendent of Bournewood Hosp. v. Baker, 431 Mass. 101, 105, 725 N.E.2d 552 (2000) quoting Lessard v. Schmidt, 349 F. Supp. 1078, 1093 (E.D. Wis. 1972)

[5] M.G.L. c.233 §20B(b)

[6] See Commonwealth v. Mercado, 452 Mass. 662, 665 n. 5, 896 N.E.2d 1262 (2008), citing Commonwealth v. Lamb, 365 Mass. 265, 311 N.E.2d 47 (1974) (referencing right to Lamb warning in case of court-ordered examination)

[7] M.G.L. c.233 §20B(b)

[8] Commonwealth v. Lamb 364 Mass. 265, 269, 311 N.E.2d 47 (1974)

[9] Commonwealth v. Seabrooks, 433 Mass. 439, 450-451, 743 N.E.2d 831 (2001)

[10] See Commonwealth v. Brandwein, 435 Mass. 623, 628, 760 N.E.2d 724 (2002)

[11] M.G.L. c.233 §20B(a)

[12] Id.

Health Law Case Brief: Johnson v. Kindred Healthcare, Inc. and Licata v. GGNSC Malden Dexter LLC

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By: Sean Baird, Esq.

The Supreme Judicial Court of Massachusetts (the “SJC”) recently addressed a nursing home’s ability to compel a patient or the patient’s estate to arbitrate all disputes.[1] In both Johnson v. Kindred Healthcare, Inc. and Licata v. GGNSC Malden Dexter LLC, the SJC held that, based on the plain language, history, and context of the Massachusetts health care proxy statute, Mass. Gen. Laws. Ch. 201D, §§ 1-17, a health care agent may not enter into an arbitration agreement on behalf of the principal.[2]

 Johnson v. Kindred Healthcare, Inc.

On May 24, 2007, Dalton Johnson (“Dalton”) executed a health care proxy pursuant to Mass. Gen. Laws. Ch. 201D, §§ 1-17.[3] The health care proxy authorized Dalton’s wife, Barbara Johnson (“Barbara”), to act as Dalton’s health care agent.[4] Subsequently, on August 6, 2008, in her capacity as Dalton’s health care agent, Barbara signed an agreement with defendants (Kindred Healthcare, Inc., & others[5]) to submit any disputes for mediation or arbitration.[6]

In July of 2009, Dalton died after suffering burns he received while a resident of defendant’s nursing home.[7] Upon his death, administrators of Dalton’s estate filed a complaint in the Superior Court for negligence, seeking damages under the wrongful death statute as a result of Dalton’s care while he resided at defendant’s nursing home.[8] The Superior Court proceedings were stayed pending the conclusion of mediation and arbitration as required by the arbitration agreement.[9] At that time, plaintiffs sought leave to pursue an interlocutory appeal and the SJC transferred the case on its own motion.[10]

The SJC began by analyzing the plain language of the Massachusetts health care proxy statute.[11] The Court noted that the statute defines “[h]ealth care” as “any treatment, service or procedure to diagnose or treat the physical or mental condition of a patient.”[12] The SJC also noted that “health care decisions” are defined as “a decision which is made in accordance with the requirements of this chapter, is consistent with any limitations in the health care proxy, and is consistent with responsible medical practice.”[13] Accordingly the Court held that, “taken together, these definitions appear on their face to limit ‘health care decisions’ to those that directly involve the provision of responsible medical services procedures, or treatment of the principal’s physical or mental condition.”[14] The Court concluded that the statute does not include language to suggest that the health care agent has authority over any affairs beyond medical treatment decisions.[15]

In support of this conclusion, the Court pointed to the statute’s history and context to demonstrate that the Legislature intended to differentiate a health care proxy’s decision making power from that of a durable power of attorney, guardian, or conservator.[16] The SJC noted that a durable power of attorney, conservator, and guardian have statutorily enumerated powers beyond health care decisions, namely that these roles permit an individual to make decisions regarding the principal’s business, estate, finances, and legal relationships.[17]

Thus, based on the plain language and legislative history and context of Mass. Gen. Laws. Ch. 201D, §§ 1-17, the SJC held that a health care agent’s decision-making power is limited and does not include the ability to enter into binding arbitration and mediation agreements.[18]

 

Licata v. GGNSC Malden Dexter LLC

On August 19, 2008, Rita Licata (“Rita”) executed a health care proxy designating her son, Salvatore Licata, Jr. (“Salvatore”), as her health care agent.[19] On August 22, 2008, Rita was transferred from a medical center to a nursing facility operated by the defendant, GGNSC Malden Dexter LLC (“GGNSC”).[20] As part of her transfer to GGNSC’s nursing facility, Salvatore signed a number of documents on Rita’s behalf, including an arbitration agreement.[21]

One year later, on August 10, 2009, Rita died from personal injuries she received while a resident at GGNSC’s nursing facility.[22] Rita’s estate filed a complaint in Superior Court against GGNSC.[23] GGNSC moved to dismiss the complaint and to compel arbitration based on the agreement Salvatore signed as Rita’s health care agent.[24] The Superior Court concluded that Salvatore lacked authority to execute the arbitration agreement on Rita’s behalf and therefore denied GGNSC’s motion to dismiss.[25] GGNSC requested an interlocutory appeal and the SJC transferred the case on its own motion.[26]

On appeal, GGNSC argued that Salvatore was authorized to sign the arbitration agreement.[27] The Court disagreed and based on its reasoning in Johnson, held that a health care agent’s decision to enter into an arbitration agreement is not a health care decision as defined by Mass. Gen. Laws. Ch. 201D, §§ 1-17 and therefore found that the agreement was unenforceable.[28]

GGNSC also contended that Salvatore was authorized to sign the arbitration agreement as a “responsible party” under Mass. Gen. Laws ch. 201 D, §16.[29] The SJC indicated that it has permitted “responsible parties” to act on behalf of a patient in a medical emergency in certain instances but that there is no authority to suggest that a “responsible party” may bind an incompetent patient to an arbitration agreement.[30] Moreover, in light of the reasoning in Johnson, the SJC held that “[i]t would be unreasonable to recognize a wider scope of authority for a responsible party, not appointed by the principal, than exists for a health care agent, designated by the principal.”[31]

Additionally, GGNSC argued that Rita bestowed Salvatore with apparent authority to sign the arbitration agreement or later ratified the arbitration agreement.[32] The Court disagreed and pointed to facts developed by the Superior Court which indicate that there were no words or conduct by Rita to support such claims.[33] Likewise, the SJC noted that GGNSC did not provide any evidence that Rita even learned of the arbitration agreement. [34]

GGNSC also argued that the arbitration agreement bound Rita as a third-party beneficiary.[35] The Court, nevertheless, pointed to adopted language from the Restatement which provides that there can be no third-party beneficiary in the absence of a contract.[36] The SJC held that there was no contract because no one with signing authority signed the arbitration agreement.[37]

Finally, GGNSC contended that because Salvatore filed suit for breach of the admission agreement, he should be equitably stopped from denying the arbitration agreement.[38] Nonetheless, the Court concluded that Salvatore’s complaint sought enforcement of the contract to provide services, not the agreement to arbitrate.[39] For all of these reasons, the SJC affirmed the Superior Court’s finding and concluded that the arbitration agreement was unenforceable.[40]

In sum, it appears as though Massachusetts courts are unlikely to expand the authority of a health care agent to matters that are unrelated to health care decisions.[41]

 

Sean R. Baird is a member of Holland & Knight’s Healthcare and Life Sciences Team and of the Corporate Mergers and Acquisitions Group. He advises clients on a wide range of  healthcare regulatory matters, as well as on fraud, abuse and compliance matters, and on transactional matters.  During law school, Mr. Baird served as a legal intern for Judge O. Rogeriee Thompson, U.S. Court of Appeals for the First Circuit, and Judge James P. Donohue, U.S. District Court for Western Washington. Prior to law school, Mr. Baird worked as a public health professional at Harvard University, Johns Hopkins University, the United States Agency of International Development and various non-governmental organizations. He has extensive experience managing, designing, and evaluating large domestic and international public health programs.

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[1] See Johnson v. Kindred Healthcare, Inc., 2 N.E. 3d 849 (2014); Licata v. GGNSC Malden Dexter LLC., 2 N.E. 3d 840 (2014).

[2] See Johnson, 2 N.E. 3d at 851-59; Licata, 2 N.E. 3d at 842-49.

[3] See Johnson, 2 N.E. 3d at 851.

[4] See id.

[5] Kindred Nursing Centers East, LLC; Kindred Healthcare Operating, Inc.; Braintree Nursing, LLC d/b/a Braintree Manor Rehabilitation and Nursing Center (Braintree Nursing); Barbara Webster; and Robert E. Young.

[6] See Johnson, 2 N.E. 3d at 851.

[7] See id.

[8] See id.

[9] See id. at 851-852.

[10] See id.

[11] See id.

[12] See Mass. Gen. Laws. Ch. 201D, § 1.

[13] See id.

[14] See Johnson, 2 N.E. 3d at 853-54.

[15] See id.

[16] See id. at 854-56.

[17] See id.

[18] See id. at 851.

[19] See Licata, 2 N.E. 3d at 842-43.

[20] See id.

[21] See id.

[22] See id.

[23] See id.

[24] See id. at 843-44.

[25] See Licata, 2 N.E. 3d at 843-44.

[26] See id.

[27] See id. at 844-45.

[28] See id. at 844-45.

[29] See id. at 846.

[30] See id.

[31] See Licata, 2 N.E. 3d at 846.

[32] See id. at 846-48.

[33] See id.

[34] See Licata, 2 N.E. 3d at 846-48.

[35] See id. at 848.

[36] See id.

[37] See id.

[38] See id. at 848-49.

[39] See id.

[40] See Licata, 2 N.E. 3d at 842-49.

[41] See Johnson v. Kindred Healthcare, Inc., 2 N.E. 3d 849 (2014); Licata v. GGNSC Malden Dexter LLC., 2 N.E. 3d 840 (2014).

Health Law Case Brief: Bryant v. Jackson

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By: Andrew Egan, Esq.

On September 17, 2013, the Massachusetts Superior Court ruled on a motion for summary judgment in the case of Bryant v. Jackson,[i] finding that the defendant hospital: (1) could not be held responsible for the intentional release of a patient’s HIV status by its employee under the common law theory of vicarious liability; but (2) the hospital could be strictly liable for such disclosure under Massachusetts’s HIV Privacy Act.[ii]

Plaintiff Daphne Bryant, who is HIV-positive, received care from co-defendant Brigham and Women’s Hospital (BWH), where co-defendant Shona Jackson worked in the Patient Access Services Department.[iii] Bryant and Jackson were acquaintances. Bryant alleged that Jackson had improperly disclosed Bryant’s HIV status to a third party, who was a mutual acquaintance. A complaint from Bryant to BWH prompted an internal investigation by BWH, which revealed that Jackson had improperly accessed Bryant’s medical records, leading BWH to terminate Jackson. The evidence presented also showed that Jackson had undergone training regarding the privacy and security of medical information.

In her lawsuit, Bryant claimed that Jackson was negligent in disseminating her HIV status, and that BWH was vicariously liable for Jackson’s negligence. Bryant also claimed that Jackson’s supervisor Christie Collins and BWH were negligent in the training and supervision of Jackson. Finally, Bryant alleged that BWH violated M.G.L. c. 93A, Massachusetts’ consumer protection law, by virtue of violating the HIV Privacy Act. This case regards movements for summary judgment by Defendants BWH and Collins on all claims against them.

As a preliminary underpinning to their motions for summary judgment, the Defendants claimed that, although Jackson improperly accessed Bryant’s information, Bryant could not support the claim that Jackson disseminated Bryant’s information, and that Bryant therefore suffered no harms. The court denied the Defendants’ motion on this basis, finding the issue of dissemination to be in dispute.

The court granted summary judgment to Collins and BWH on the issue of negligent training and supervision of Jackson, finding that there was no evidence to support these claims.

BWH also moved for summary judgment with regard to the claim of vicarious liability by asserting that, even if Jackson had disseminated Bryant’s information, Jackson’s actions could not be imputed to BWH. In analyzing this question, the court focused on the employer-employee relationship, and the question of whether Jackson was acting within the scope of her employment when committing the alleged harmful disclosure. Acting within the scope of employment means the work was “of the kind she is employed to perform, occur[s] substantially within the authorized time and space limits, and [is] motivated, at least in part, by a purpose to serve the employer.”[iv] The court found that, although Jackson’s access of Bryant’s information was within the scope of her employment, the alleged disclosure was “simply gossip” in no way motivated by a purpose to serve BWH, and was therefore not within the scope of Jackson’s employment. The court granted summary judgment to the BWH on the claim of vicarious liability for Jackson’s negligence.

Finally, BWH moved for summary judgment with regard to the violation of M.G.L. c. 93A under the HIV Privacy Act by asserting that it had not made the alleged disclosure, but rather its employee (Jackson) had done so, and such disclosure was outside the scope of her employment. The court examined the statutory language, legislative history, and public policy behind the HIV Privacy Act and found that there were no exceptions to liability, not even for inadvertent or good-faith disclosures.[v] The court found that, as a “facility” under the definition of the HIV Privacy Act, BWH would be strictly liable for any violation of the HIV Privacy Act by an employee, such as Jackson. The court therefore denied BWH’s motion for summary judgment for violating the HIV Privacy Act, stating that, if a jury finds that Jackson did disclose Bryant’s HIV status, BWH will be strictly liable for that disclosure under the HIV Privacy Act, regardless of whether Jackson was acting within the scope of her employment.

Andrew R. Egan is an assistant general counsel with the Massachusetts Health Connector. He is a 2013 graduate of Boston University School of Law, where he served as an articles editor for the American Journal of Law and Medicine. He is a member of the Boston Bar Association’s Health Law Section, as well as the American Health Lawyer’s Association. During law school, he interned for the Massachusetts Commission Against Discrimination, the Boston Municipal Court, and the Massachusetts Health Connector.

———–

[i] Bryant v. Jackson, 31 Mass. L. Rptr. No. 19, 425 (Nov. 4, 2013).

[ii] See M.G.L. c. 111 § 70F. The HIV Privacy Act prohibits the disclosure by a hospital of the results of an HIV test, or the identity of the subject of an HIV test, to anyone other than the subject of such tests without the subject’s informed written consent. A violation of the HIV Privacy Act is regarded as a per se violation of M.G.L. c. 93A § 2, which prohibits unfair or deceptive acts or practices, and which gives a private right of action for anyone injured by violation of that law. See Bryant at 428.

[iii] Specifically, Jackson worked as an access facilitator.  “The position of access facilitator requires an employee to access patient information in order to perform her job function[, which] includes admitting patient’s administratively, assigning them to a unit in the hospital and assisting with appropriate billing.” Bryant at 425.

[iv] Id., citing Lev v. Beverly Enterprises-Massachusetts, 457 Mass. 234 (2010).

[v] The court cited Commonwealth v. Ortiz, 2001 WL 34129741, in which the Massachusetts Supreme Judicial Court stated, “The absence of any [exceptions to the prohibition on disclosure of HIV test results] in § 70F strongly suggests that the Legislature did not intend there to be any exceptions.” Id. at 428.

 

Health Law Case Brief: In the Matter of C.B.

Posted

By: Sarah E. Lowdon

On March 11, 2013, the Massachusetts Appellate Division of the District Court vacated the commitment of C.B. to Bridgewater State Hospital (“BSH”), holding that he was not a “patient” who could be committed pursuant to G.L. c. 123, § 7.[1]

Prior to February 2012, C.B. had been found incompetent to stand trial on charges pending against him in the West Roxbury Division of the Boston Municipal Court Department.  Since that time, C.B. had been committed to BSH, pursuant to G.L. c. 123, § 16(c).[2]  On February 29, 2012, BSH petitioned the Brockton District Court for recommitment of C.B. under § 16(c), as his commitment order was expiring.  In accordance with the law, the district court began by determining whether C.B. was still incompetent to stand trial.  Finding that he was not, the district court ordered that C.B. be returned to the West Roxbury Division for trial.

Immediately thereafter, C.B. was retained at BSH for transportation to the West Roxbury Division the following day.  While C.B. was awaiting transfer at BSH, the medical director petitioned for C.B.’s recommitment, this time under G.L. c. § 7(b).[3]  When C.B. was taken to the West Roxbury Division the next day his charges were ultimately dismissed and the district court addressed the § 7(b) petition.  C.B. moved to dismiss the petition, arguing that he was not a patient of BSH at the time of the petition.  Relying on the definition of “patient” in G.L. c. 123, § 1,[4] the court denied C.B.’s motion to dismiss and committed him to BSH for six months, pursuant to G.L. c. 123, § 8(b).[5]

Upon review, the Appellate Division considered the extraordinarily broad language of G.L. c. 123, § 1’s “patient” definition and noted that while C.B.—who, on February 29, had “a mental health professional-patient relationship” with “a number of mental health professionals,” including psychiatrists and licensed clinical social workers—could be considered a “patient,” so could almost “anyone who had ever been a patient at BSH.”[6] Accordingly, the court found room in the statute’s definition section to “interpret the statutorily defined terms in the context of a given case,”[7] and determined that even a frequent patient is not a patient between terms of commitment.  The court remarked that this is especially true when a patient’s commitment ends pursuant to a judicial determination that the patient is no longer incompetent to stand trial, and denies a § 16(b) recommitment petition for that reason.  Under this reading of the definition, C.B. could not be a recommitted as a current patient under §§ 7 and 8.[8]

Sarah E. Lowdon is a third-year at New England Law | Boston concentrating in healthcare law and is the Managing Business Editor of the New England Law Review.

 

[1] In the Matter of C.B., 2013 Mass.App.Div. 42 (2013).

[2] Section 16 allows for a person who has been found to be incompetent to stand trial or not guilty by reason of mental illness, or mental defect, in a criminal proceeding to be hospitalized. G.L. c. 123, § 16.

[3] Section 7 allows for the BSH medical director to petition for the hospitalization of an existing patient “when it is determined that the failure to hospitalize in strict security would create a likelihood of serious harm by reason of mental illness.” G.L. c. 123, § 7(b).

[4] Section 1 defines “patient” for all of chapter 123 as “any person with whom a licensed mental health professional has established a mental health professional-patient relationship.” G.L. c. 123, § 1.

[5] Section 8 outlines the procedural and evidentiary requirements for commitment. G.L. c. 123, § 8(b).

[6] C.B., Mass.App.Div. 42, at *2.

[7] Id. Section 1 states: “The following words as used in this section [and in the remaining sections of G.L. c. 123] shall, unless the context otherwise requires, have the following meanings: . . .” G.L. c. 123, § 1.

[8] The court noted that instead the proper course would have been for the BSH medical director to file for commitment under G.L. c. 123, § 12 for emergency restraint and hospitalization, which would provide the “mental health professional-patient relationship” predicate to then file for recommitment under §§ 7 and 8. C.B., Mass.App.Div. 42, at *2.

Health Law Case Brief: HipSaver, Inc. v. Kiel

Posted

By: Maggie Schmid, Esq.

HipSaver, Inc. (hereinafter referred to as “HipSaver” or the “Company”), a designer and manufacturer of its own brand of hip protectors, sued Douglas P. Kiel, M.D., an associate professor at Harvard Medical School, for commercial disparagement arising from the publication of an article in the Journal of the American Medical Association (“JAMA”).

Dr. Kiel, the article’s lead author, also conducted the clinical trial upon which the article was based. Citing the results of the clinical trial, Dr. Kiel’s JAMA article stated that “the clinical trial failed to demonstrate a protective effect of a hip protector on hip fracture incidence in nursing home residents despite high adherence,”[1] and concluded that the clinical trial “‘confirm[s] the growing body of evidence that hip protectors are not effective in nursing home populations’”[2] (collectively referred to as the “challenged statements”).

After the publication of the challenged statements, HipSaver filed a complaint in Superior Court alleging that Dr. Kiel had adversely impacted HipSaver’s ability to conduct business with its primary customer base: long-term care facilities and the U.S. Veterans Administration.  Specifically, HipSaver contended that: (1) Dr. Kiel knew or had reason to know that the hip protector tested in the study differed in design and was of inferior quality to HipSaver’s products, (2) persons likely to read and write about Dr. Kiel’s JAMA article would be unaware of the distinction and would be convinced to falsely believe all hip protectors to be ineffective, and (3) Dr. Kiel published the article with malice and reckless indifference to the fact that his conduct would injure HipSaver.[3]  Moreover, HipSaver claimed that it had suffered and would continue to suffer severe economic damages as a direct and foreseeable consequence of the article’s publication.[4]

Though Dr. Kiel’s motion to dismiss was denied, the Superior Court granted Dr. Kiel’s motion for summary judgment on the basis that HipSaver “had no reasonable expectation of proving [all of] the essential elements of its claim.”[5]  Subsequently, the Supreme Judicial Court (the “SJC” or the “Court”) granted HipSaver’s application for direct appellate review.

The SJC acknowledged the “scarcity of appellate decisions in [Massachusetts] analyzing a cause of action for commercial disparagement”[6] – the Court had previously never considered “special damages” in the context of a commercial disparagement claim[7] – and drafted its opinion with the objective of creating a complete analytical framework for the tort.  The SJC adopted the test set forth in the Restatement (Second) of Torts (the “Restatement”), and thus, in order to prevail on a claim alleging commercial disparagement, a plaintiff must prove that a defendant: (1) published a false statement to a person other than the plaintiff; (2) “of and concerning” the plaintiff’s products or services; (3) with knowledge of the statement’s falsity or with reckless disregard of its truth or falsity; (4) where pecuniary harm to the plaintiff’s interests was intended or foreseeable; and (5) such publication resulted in special damages in the form of pecuniary loss.[8]

Applying a de novo standard of review, the SJC considered the facts of the case in light of each of the Restatement’s elements of the test for commercial disparagement.  First, the Court considered HipSaver’s contention that the clinical trial’s conclusions (and by extension, the challenged statements) were false because aspects of the clinical trial’s methodology were flawed.  The Court disagreed, stating that “any purported design defects in the clinical trial were acknowledged by Dr. Kiel in the article, and did not necessarily render the challenged statements false.”[9]

Second, the Court addressed whether the challenged statements were “of and concerning” HipSaver.  Citing ELM Med. Lab., Inc. v. RKO Gen., Inc.[10], the SJC reiterated the Massachusetts test for whether an alleged defamatory statement is “of and concerning” the plaintiff: the plaintiff must prove either that the defendant intended the words to refer to the plaintiff and that they were so understood, or that persons could reasonably interpret the defendant’s words to refer to the plaintiff and that the defendant was negligent in publishing them in such a way that they could be so understood.[11]  Though HipSaver’s products were not used in the clinical trial, and though the Company was not mentioned specifically in Dr. Kiel’s article, HipSaver argued that, as the second largest hip protector manufacturer in the United States, the article could be understood as referring to the Company.  Again, the Court disagreed, stating that the article’s discussion of the “inefficacy of ‘hip protectors’ in general . . . was insufficient to give rise to a conclusion that Dr. Kiel was specifically discussing HipSaver’s product.”[12]

Third, the Court debunked HipSaver’s claim that “Dr. Kiel published the challenged statements with knowledge that they were false, or with reckless disregard for their truth or falsity.”[13]  The theory underlying the Company’s claim was that “because Dr. Kiel purportedly ignored or concealed evidence suggesting that the design of the clinical trial was flawed, he therefore published the challenged statement with reckless disregard for their truth or falsity.”[14]  HipSaver’s argument failed to persuade the Court; in addition to referencing the significant amount of scientific oversight that attended the clinical trial and the subsequent JAMA article, the Court also stated that “[t]he challenged statements in the article reflected Dr. Kiel’s interpretation of the accurately reported data . . . .”[15] and the fact “[t]hat concerns may have been raised about the chosen design does not mean that Dr. Kiel entertained serious doubts about the truth of the challenged statements as they were a reflection of the achieved results.”[16]

In regard to the fourth element of the Restatement’s test for commercial disparagement, the Court acknowledged that, based on Dr. Kiel’s correspondence, HipSaver had a reasonable expectation of proving that Dr. Kiel recognized, or should have recognized, that publication of the article was likely to result in pecuniary harm to the Company.[17]

Fifth and finally, the Court considered whether HipSaver had demonstrated that it sustained “special damages” as a result of Dr. Kiel’s publication of the challenged statements.[18]  To establish special damages in an action for commercial disparagement, “a plaintiff must show, where feasible, a specific loss of sales to identifiable customers.”[19]  The Restatement recognizes an exception to the general requirement that customers must be identifiable “where a false statement has been ‘widely disseminated’ and it would be impossible to identify particular customers . . . . ,”[20] and the SJC adopted the Restatement’s exception.  Nevertheless, the Court was not persuaded that the Company’s lost profits were a direct and immediate result of the article’s publication.[21]  The SJC noted that several other articles related to the inefficacy of hip protectors had been previously published, and highlighted the fact that HipSaver had not eliminated other possible causes for the Company’s pecuniary loss.[22]

Because HipSaver was unable to prove all the essential elements of the tort of commercial disparagement, the SJC affirmed the order of the Superior Court judge granting summary judgment to Dr. Kiel.[23]

 

Maggie Schmid, Esq. is an associate at Donoghue, Barrett, & Singal, P.C..  Prior to working for Donoghue, Barrett, & Singal, Ms. Schmid interned at Massachusetts Executive Office of Health and Human Services.  She also worked for the U.S. Department of Health and Human Services, Office of the General Counsel, Public Health Division during her third year of law school.  Ms. Schmid received her law degree from The Catholic University, Columbus School of Law in Washington, D.C., where she was a Note and Comment Editor on the Journal of Contemporary Health Law and Policy.  She received her undergraduate degree from Kenyon College.

[1] HipSaver, Inc. v. Kiel, 464 Mass. 517, 520 (2013).

[2] Id. at 518.

[3] Id. at 521.

[4] Id.

[5] Id. at 519.

[6] HipSaver, Inc. v. Kiel, 464 Mass. 517, 524 (2013).

[7] Id.at 535.

[8] Id. at 523-524 (citing Restatement (Second) of Torts, supra at § 651 (setting forth plaintiff’s burden of proof in action for injurious falsehood)).

[9] Id. at 524-525.

[10] 403 Mass. 779 (1989).

[11] HipSaver, 464 Mass. at 528 (citing ELM Med. Lab., Inc. v. RKO Gen., Inc., 403 Mass. 779, 785 (1989)).

[12] Id. at 529.

[13] Id. (citing Dulgarian v. Stone, 420 Mass. 843 (1995)).

[14] Id. at 532.

[15] Id. at 533.

[16] Id.

[17] Id. at 534-535.

[18] HipSaver, 464 Mass. at 535.

[19] Id. at 536 (citing Restatement (Second) of Torts § 633(2)(a) & Comment C).

[20] Id. at 537-538 (citing Restatement (Second) of Torts § 633(2)(b)).

[21] Id. at 540.

[22] Id. at 540-541.

[23] Id. at 541-542.

Health Law Case Brief: N.E. Physical Therapy Plus, Inc. v. Liberty Mutual Insurance Company

Posted

By: Tucker W. Wade

On September 10, 2013, the Supreme Judicial Court of Massachusetts (the “Court”) affirmed a trial court’s decision to exclude statistical evidence offered by Liberty Mutual Insurance Company (“defendant”) contesting the reasonableness of high cost services provided by New England Physical Therapy Plus, Inc. (“plaintiff”) to a passenger of defendant’s insured.[1]  Under Massachusetts G.L. c. 233, § 79B, an exception to the hearsay rule, defendant sought to introduce geographical billing statistics from a third-party database marketed by Ingenix to support its refusal to reimburse plaintiff for the total amount of the chiropractic bills submitted.[2]  In excluding the database, the judge noted the defendant did not meet its burden of persuading the court of the admissibility of the evidence required under the exception.[3]  Section 79B has been interpreted to allow the admission of exhibits ordinarily excluded if the moving party persuades the trial court the exhibit is, at a minimum a) issued to the public, b) published for members of the relevant profession, and c) used and relied upon by such individuals.[4]  Defendant claimed the trial judge abused his discretion in denying the admission of the database as it fulfilled these three elements.

The Court considered whether the trial judge had the discretion to deliberate upon the reliability of the data offered by the defendant under §79B.  Even if the data satisfied all of the requirements set forth under §79B, the Court assessed whether the subsequent barring of the data amounted to an abuse of judicial discretion.[5]

The Court began its analysis by applying the abuse of discretion standard of review.[6]  In applying the standard, the Court looked for a decision which was arbitrary or capricious, noting it would not set aside the trial judge’s decision “simply because [it] might have reached a different result.”[7]

First, the Court found that if the defendant’s interpretation of the statute were accurate, the trial court would have contravened the legislative intent underlying the statute.[8]  The Court noted the language of the statute provides the trial court with discretion to determine the admissibility of evidence.[9]  The Court held the plain language of the statute controlled.[10]

Next, relying on precedent, the Court held the traditional role of the judge precludes the defendant’s interpretation of §79B, as the judge is the final arbiter on the admissibility of proposed exhibits.[11]  In dicta, the Court noted despite the statute’s requirement that “the offered publication be commonly used and relied upon…to ensure a certain level of reliability,” the trial court was not barred from addressing its own concerns on the reliability of the publication.[12]  The trial court concluded the database, while meeting the elements in §79B, was comprised of unverified, voluntary submissions of raw data provided by select insurance companies.[13]  Furthermore, Ingenix applies proprietary value and conversion factors to the volunteered submissions making extrapolations which cannot be verified as “accurately correspond[ing] with the actual charges for medical procedures.”[14]  The Court found the defendant’s interpretation of the statute led to an “absurd” distortion of the judge’s role, effectively hindering the court’s ability to exclude unreliable or weak data due to its reliance, no matter how pervasive, in a given profession.[15]

In light of its findings, the Court held the trial judge did not abuse his discretion in barring the admission of the database.

Tucker W. Wade is a J.D. student at Boston College Law School.  He is a graduate of College of the Holy Cross in Worcester, Mass.  He served as a summer intern in the Massachusetts Attorney General’s Office where he worked on subprime mortgage securities and false claims litigation.  Tucker is a native of southern California.

[1] N.E. Physical Therapy Plus, Inc. v. Liberty Mut. Ins. Co., 466 Mass. 358, 359 (2013).

[2] Mass. G.L. c.233, § 79B.

[3] N.E. Physical Therapy Plus, Inc. at 364.

[4] See id.  Mass. G.L. c.233, § 79B states that “Statements of facts of general interest to persons engaged in an occupation contained in a list, register, periodical, book or other compilation, issued to the public, shall, in the discretion of the court, if the court finds that the compilation is published for the use of persons engaged in that occupation and commonly is used and relied upon by them, be admissible in civil cases as evidence of the truth of any fact so stated.”

[5] Id. at 359.

[6] Id. at 363 (citing Commonwealth v. Polk, 462 Mass. 23, 32 (2013)).

[7] Id. (citing Cruz v. Commonwealth, 461 Mass. 664, 670 (2012), quoting Bucchiere v. New England Tel. & Tel. Co., 396 Mass. 639, 641, 642 (1986)).

[8] Id. at 364 (quoting Mazzaro v. Paull, 372 Mass. 645, 653 (1977) (noting ultimate admissibility of exhibits under by §79B is entrusted to the trial judge)).

[9] See id.

[10] Id. at 364 (citing Commonwealth v. Jones, 417 Mass. 661, 664 (1994) (stating it is not the practice of the Court to tamper or deviate from the clear expression of legislative intent)).

[11] See id. at 364-65.

[12] Id. at 365.

[13] Id. at 361.

[14] Id. at 366.

[15] Id. at 364-65.

Health Law Case Brief: Alla Feygina v. Hallmark Health System, Inc., et al.

Posted

By: Kelly McGee, Esq.

 In Feygina v. Hallmark Health System, Inc., the Superior Court of Massachusetts granted the plantiff’s motion for summary judgment holding that a physician employee with a claim for unpaid wages was entitled to treble damages under the Massachusetts Wage Act, but not additional amounts for increased income tax liability or prejudgment interest.[1]  The Court ultimately determined that the liquidated damages mandated by the Wage Act are compensatory, not punitive, in nature, and that the treble damages ordered fully compensate the physician employee for all harm caused by the employer’s refusal to pay.[2]  In addition, the Court did not agree with the employer’s claim that it fell under the “hospital” exception to the Wage Act due to the employer’s affiliation with a hospital.[3]

Alla Feygina, M.D., was employed by Hallmark Health Medical Associates, Inc. (“HHMA”) and its predecessor from 1998 to December 31, 2010.  The parties entered into an employment agreement for the calendar year 2010 under which HHMA agreed to pay Dr. Feygina a base salary plus an incentive payment of 100% of excess revenue over expenses.[4]  HHMA paid Dr. Feygina the full amount of the base salary for 2010, but never paid the owed incentive compensation.  HHMA calculated the incentive compensation owed to Dr. Feygina and issued her a check for that amount minus deductions for taxes and other withholdings on September 23, 2011.[5]  HHMA indicated in language in the cover letter and on the check stub that the payment represented satisfaction of any and all incentive compensation HHMA owed Dr. Feygina.[6]

On September 28, 2011, Dr. Feygina’s attorney wrote to HHMA’s counsel seeking clarification as to whether HHMA intended to make the payment subject to the condition that she accept it as full and final payment.[7]  Dr. Feygina believed that the check did not represent the full amount owed her for incentive compensation in 2010, and HHMA later acknowledged receiving additional managed care payments for work performed by Dr. Feygina’s practice after sending the initial check.[8]  Dr. Feygina’s attorney made the same inquiry in subsequent letters on December 8, 2011 and September 10, 2012, but never received a response from HHMA.[9]

The Court stated that it was undisputed that HHMA had a contractual obligation to pay Dr. Feygina $255,755.82 in incentive compensation for 2010.[10]  HHMA asserted that it complied with part of its obligations by issuing a check in the amount of $167,399 to Dr. Feygina on September 23, 2011.  However, the Court held as a matter of law that “the tender of partial payment subject to the condition that it be accepted as a ‘full and final payment’…is not an effective tender.”[11]

Further, the incentive compensation owed to Dr. Feygina constituted “wages” under the Massachusetts Wage Act, and any damages paid to Dr. Feygina would be subject to the trebling provisions of the Wage Act.[12]  The parties agreed that Dr. Feygina would be paid according to the compensation plan in the employment agreement, which set forth both Dr. Feygina’s base salary and her incentive compensation.[13]  Thus both the base salary and the incentive compensation constituted “wages.”

HHMA contended that it should not be subject to the provisions of the Wage Act under the hospital exception, which states that the Act “shall not apply…to an employee of an incorporated hospital which provides treatment to patients free of charge, or which is conducted as a public charity….”[14]  The Court determined that although HHMA is affiliated with a hospital (Hallmark Health Systems, Inc.), HHMA is not an incorporated hospital and the exception does not apply.[15]

Finally, the Court held that while Dr. Feygina was entitled to treble damages as a matter of law, the treble damages in the Wage Act are compensatory in nature and “she is not entitled to recover any amount of consequential damages for increased federal income tax liability in addition to this amount.  That would give her an unfair windfall.”[16]  Although most statutes that give trial judges’ discretion to award double or treble damages are meant to be punitive in nature, the treble damages provided for in the Wage Act are intended to be compensatory.[17]  In 2008, the Massachusetts legislature amended § 150 of the Wage Act to specify that an award of mandatory treble damages will constitute “liquidated damages, for any lost wages and other benefits.”[18]  The Court determined that the addition of this phrase makes clear that the mandatory award of treble damages is compensatory, not punitive.  As the First Circuit held in Matamoros v. Starbucks Corp., the statutory liquidated damages are not punitive, but instead “constitute compensation for the retention of a workman’s pay which might result in damages too obscure and difficult of proof for estimate other than by liquidated damages.”[19] Although HHMA’s breach resulted in a higher federal income tax liability for Dr. Feygina, the Court determined that the treble damages awarded to Dr. Feygina sufficiently compensated her for all direct damages, and she is not entitled to additional damages for increased tax liability or prejudgment interest.[20]  The Court did state, however, that Dr. Feygina may be entitled attorneys’ fees under the Wage Act and scheduled a hearing on Dr. Feygina’s request for attorneys’ fees, unless the parties reached a settlement prior to the hearing date.[21]

Kelly McGee, Esq. is an attorney in the Providence office of Donoghue, Barrett & Singal, P.C.  She is licensed to practice in Massachusetts, Rhode Island, and the District of Columbia, and is a Board member of the Rhode Island Women’s Bar Association.  Ms. McGee received her law degree from Boston College Law School.  She served as President of the law school’s Health Law Society and as the law school representative for the Health Law Section Steering Committee of the Boston Bar Association.

[1] 31 Mass. L. Rptr. No. 12, 279, 284-285 (August 5, 2013).

[2] Id. at 284.

[3] Id. at 282.

[4] Id. at 280.

[5] Id.

[6] Id.

[7] Id.

[8] Id. at 281.

[9] Id. at 280-81.

[10] Id.

[11] Id. at 281.

[12] Mass. Gen. Laws ch. 149, § 148.

[13] 31 Mass. L. Rptr. No. 12, 279, 282 (August 5, 2013).

[14] Mass. Gen. Laws ch. 149, § 148.

[15] 31 Mass. L. Rptr. No. 12, 279, 282 (August 5, 2013).

[16] Id. at 282-83.

[17] Id. (citing to Wiedmann v. Bradford Group, Inc., 444 Mass. 698, 710 (2009) and Goodrow v. Lane Bryant, Inc., 432 Mass. 165, 178 (2000)).

[18] Id.; see also Mass. Gen. Laws ch. 148 § 150.

[19] 699 F.3d 129, 140 (1st Cir. 2012).

[20] 31 Mass. L. Rptr. No. 12, 279, 284 (August 5, 2013).

[21] Id. at 285.