Health Law Pointers - Volume III, No. 1

What is CMS?

   CMS, Centers for Medicare and Medicaid Services, is the new name for the Health Care Financing Administration.  The Department of Health and Human Services (HHS) Secretary Tommy G. Thompson disclosed the agency’s name change this month in conjunction with his pledge to reform the way the agency deals with health care providers and the America public. The new CMS will make customer service its number one priority.  For the official HHS press release, go to http://www.hhs.gov/news/press/2001pres/20010614a.html.

   Mr. Thompson promises “sweeping reforms [that] will strengthen [the] programs and enable … dedicated employees to better serve Medicare and Medicaid beneficiaries as well as health care providers.”  To meet these goals, CMS will consist of three branches: (1) The Center for Medicare Management designed to manage the traditional fee-for-service Medicare program; (2) The Center for Beneficiary Choices, which will manage the Medicare + Choice program and provide educational tools to beneficiaries that will assist them in making sound health care decisions; and (3) The Center for Medicaid and State Operations, which will focus its efforts on state administered programs.

Local HMO Held Responsible for its Physician-Employee's Negligence

The New York Appellate Division, Fourth Department in Rochester affirmed that Health Care Plan, Inc. (“HCP”) is vicariously liable for the negligence of its physician-employees. Unlike other local HMOs, HCP for many years hired the physicians who served as its provider panel and operated as a “staff model” HMO. The court denied HCP’s claim that the HMO is not liable for the negligent acts of a physician-employee because Public Health Law Section 4410 states that HMOs are not engaged in the practice of medicine. The Fourth Department concluded that Article 44 of the Public Health Law does not bar vicarious liability claims under the longstanding common law principle of “respondeat superior”, which holds employers responsible for the negligent acts of their employees. As the Court states, “[Under the doctrine of respondeat superior,] liability is the rule, immunity the exception” (citing Bing v. Thunig, 2 NY2d 656, 666). To review the full text of the court’s decision, see Wisholek v. Douglas.

New Rules Apply to Practitioners Performing IMEs

   The New York State Legislature recently adopted new laws that will permit the State’s Workers’ Compensation Board (the “Board”) to more stringently regulate the provision of independent medical exams (IMEs).  The laws were enacted to eliminate a “perceived” unfairness in favor of the insurance carriers over the claimants (injured and sick workers).

   The new laws:

            (1)        Require that all practitioners (defined as physicians, podiatrists, chiropractors, or psychologists) must obtain authorization from the Board before performing IMEs.

            (2)        Bar practitioners from performing IMEs if they have a conflict of interest with the claimant: ie. - if he or she has seen the claimant as a patient or if the practitioner and the claimant’s treating physician are members of the same preferred provider organization or managed care organization.

            (3)        Establish standards for the scheduling, location and setting for IMEs, the formatting and delivery of IME reports and the claimants’ rights during and after IMEs.

   To apply for Board authorization to perform IMEs, practitioners must complete an application with the Board and the local medical society.  For more information contact the health law specialists at Hurwitz & Fine, P.C. or your local medical society.

Vacation Policies

   This is the time of year when everyone is thinking about his or her vacation plans. Without a clear and concise written policy to address vacation rights and procedures, many employers may find their offices understaffed at critical times or that they expend too much time addressing vacation requests. Additionally, the employer may be granting time off in an inconsistent manner, which can lead to trouble under the New York Labor Law. Besides setting forth guidelines for accruing and using vacation time, a written vacation policy should address whether an employee who leaves the practice will receive compensation for earned, but unused vacation time. If you do not have a written policy or the policy in place does not address this issue, you may inadvertently violate the State Labor Law by failing to pay a former employee his or her vacation pay.  Such violations, if pursued by the Department of Labor, are prosecuted as criminal misdemeanors, which subject employers to both monetary fines and the possibility of imprisonment for up to one year.

   Each New York employer is required by law to pay or provide its non-exempt employees “benefits and wage supplements” within thirty days after the benefits or payments are due. The term “benefits or wage supplements” includes vacation and separation pay. Thus, absent a written vacation policy, you must (i) grant paid vacation time off in a consistent manner, and (ii) pay an employee who leaves the practice, for whatever reason, any accrued, but unused vacation time. If, however, you have a properly drafted written policy, the departing employee may be expressly prohibited from receiving payment for accrued, but unused vacation time. This law does not apply to bona fide executive, administrative, or professional employees earning six hundred dollars or more per week.

             Plaintiff went to the emergency room at Buffalo General Hospital seeking treatment for an abscess on her buttocks.  Plaintiff was treated by defendant Gary Douglas, M.D., an on-call physician employed by defendant The Health Care Plan, Inc. (HCP), plaintiff’s health care provider and a qualified HMO.  After the abscess was drained plaintiff developed complications, including cellulitis.  She underwent two more surgeries performed by Dr. Douglas.  Some weeks later she suffered further complications and was treated by a colorectal surgeon who performed additional surgeries.  Plaintiff currently has a large scar on her buttocks where the abscess had been and has bowel incontinence caused by damage to her external sphincter.

            The jury returned a verdict finding that Dr. Douglas was negligent, that his negligence was a substantial factor in bringing about plaintiff’s injuries, and that he was acting within the scope of his employment and in furtherance of the business of HCP.  It further determined that HCP was negligent but that its negligence was not a substantial factor in bringing about plaintiff’s injuries.  The jury awarded plaintiff $230,000 for loss of earnings, pain and suffering, and emotional shock to the date of the verdict, and $3 million for future pain and  suffering, and it awarded her husband $25,000 on his derivative cause of action.

            We conclude that Supreme Court properly denied the pretrial motion of HCP to dismiss the complaint against it based on Public Health Law § 4410.  Public Health Law § 4410, enacted in 1976, provides in relevant part:

"(1) The provision of comprehensive health services directly or indirectly, by a health maintenance organization through its comprehensive health services plan shall not be considered the practice of the profession of medicine by such organization or plan.  However, each member, employee or agent of such organization or plan shall be fully and personally liable and accountable for any negligent or wrongful act or misconduct committed by him or any person under his direct supervision and control while rendering professional services on behalf of such organization or plan."

That section explicitly provides that an HMO is not engaged in the practice of medicine.  We are not required to determine

the effect of the statute on the direct liability of an HMO.  With respect to the issue before us, the effect of the statute on the vicarious liability of an HMO, we conclude that nothing in the statute expressly bars an HMO from being held vicariously liable for the acts of its employees. 

            Assuming, arguendo, that the statute could be considered ambiguous, we nevertheless conclude that it does not bar vicarious liability.  If "the intent of the lawmaking body is not clear," we must use traditional rules of statutory construction "to discover the true intention of the law" (McKinney’s Cons Laws of NY, Book 1, Statutes § 91).  One commentator concludes that even the direct liability of an HMO is not barred by the statute.  He writes, "A review of the session notes surrounding passage of this law reveals no discussion of limiting medical malpractice liability.  There was extensive discussion of how the health maintenance organizations were being formed, the application and certification processes, and the need for the organizations to demonstrate financial responsibility" (Trueman, As Managed Care Plans Increase, How Can Patients Hold HMOs Liable for Their Actions, 71-Feb NY St Bar J 6, 16).  The overall intent of the Legislature was to remove regulatory impediments to the formation of HMOs and to decrease the cost of services (Public Health Law § 4400 et seq., L 1976, ch 938).  The commentator further writes, "Given the ambiguity of the section, it appears logical to assume that if the Legislature intended to take the monumental step of totally eliminating the right of a harmed individual to sue for damages caused by negligence, there would have been some discussion of the matter" (Trueman, op. cit., at 16-17).

            Vicarious liability of an employer for the acts of its employees is based on the principle of respondeat superior (see, 53 NY Jur 2d, Employment Relations, § 322, at 34).  "The doctrine of respondeat superior is grounded on firm principles of law and justice.  Liability is the rule, immunity the exception" (Bing v Thunig, 2 NY2d 656, 666).  Statutes that seek to abolish common-law rights must be strictly construed (see, McKinney’s, op. cit., § 301 [a]; see also, Oden v Chemung County Indus. Dev. Agency, 87 NY2d 81, 86), and the common law must be "no further changed than the clear import of the language used in a statute absolutely requires" (McKinney’s, op. cit., § 301 [b]).  Here, the statute does not explicitly preclude vicarious liability (see, Public Health Law § 4410; see also, Moore and Gaier, The Liability of Health Maintenance Organizations, NYLJ, July 1, 1997, at 1, col 1).  Therefore, we decline to hold that the statute precludes an HMO from being held vicariously liable for damages arising from the negligence of its employees.

            We reject defendants’ contention that the verdict is against the weight of the evidence.  A jury verdict should not be set aside as against the weight of the evidence unless a jury could not have reached the verdict on any fair interpretation of the evidence (see, Riggio v New Creation Fellowship of Buffalo, 249 AD2d 942; Nicastro v Park, 113 AD2d 129, 134).  Defendants presented expert medical testimony that conflicted with that presented by plaintiffs, and the jury was entitled to resolve any credibility issues against defendants.  We further reject defendants’ contention that the court should have refused to permit several witnesses to testify concerning the impact of the injuries of plaintiff on her life on the ground that such testimony was cumulative.  "Whether evidence should be excluded as cumulative is a matter that rests within the sound discretion of the trial court" (Rosabella v Fanelli, 225 AD2d 1007, 1008).  Additionally, we reject defendants’ contention that the court erred in refusing to admit in evidence the notes of HCP nurses.  The uncertified notes were hearsay and did not come within any exception set forth in CPLR 4518. 

            The court properly refused to discharge a sworn juror.  In order to discharge a sworn juror, the court must find that the juror is grossly unqualified and "be convinced that the juror’s knowledge will prevent that person from rendering an impartial verdict" (People v Anderson, 70 NY2d 729, 730).  The juror, who expressed concern because she received medical care at the same building where Dr. Douglas worked, stated unequivocally that she could be fair and impartial, and thus there was no basis to conclude that the juror was unable to render an impartial verdict.

            Defendants failed to preserve for our review their contention that the court erred in using a general verdict sheet (see, Schmidt v Buffalo Gen. Hosp., ___  AD2d ___ [decided Dec. 27, 2000]; see also, Williams v City of New York, 240 AD2d 734, 736).  Nor can it be said that the use of the general verdict sheet precluded review of the central issue of liability or that inclusion of an item of damages for emotional shock and distress constitutes a fundamental error warranting reversal in the absence of preservation (see generally, Breitung v Canzano, 238 AD2d 901, 902). 

            We conclude, however, that the award of $3 million for future pain and suffering is excessive (see, CPLR 5501 [c]; Inya v Ide Hyundai, 209 AD2d 1015; Prunty v YMCA of Lockport, 206 AD2d 911, 912).  Plaintiff suffers from bowel incontinence, which has severely impacted her daily life.  In our view, an award of $1.5 million for future pain and suffering is the maximum amount the jury could have found in this case as a matter of law (see, Hafner v County of Onondaga [appeal No. 2], ___ AD2d ___ [decided Dec. 27, 2000]; see, e.g., Kahl v Loffredo, 221 AD2d 679; Kwasny v Feinberg, 157 AD2d 396, 399-400; Schwartzberg v Kai-Shun Li, 141 AD2d 530).

            Accordingly, we conclude that the judgment should be modified by vacating the award of damages for future pain and suffering, and a new trial should be granted on damages for future pain and suffering only unless plaintiff, within 20 days of service of a copy of the order of this Court with notice of entry, stipulates to reduce the verdict for future pain and suffering to $1.5 million, in which event the judgment should be modified accordingly and as modified affirmed.  (Appeals from Judgment of Supreme Court, Erie County, Sedita, Jr., J. ‑ Negligence.)  PRESENT:  PIGOTT, JR., P. J., PINE, HAYES, KEHOE AND BURNS, JJ.  (Filed Mar. 21, 2001.)