Combo with Healthcare Law Midterm Chapters 7

express corporate authority
power specifically delegated by statute
implied corporate authority
the right to perform any and all acts necessary to exercise a corporation’s expressly conferred authority and to accomplish the purpose(s) for which it was created.
Ultra Vires Acts
a governing body can be held liable for acting beyond its scope of authority, which is either expressed or implied in law.
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ultimate responsibility for the functioning of a healthcare corporation rests with governing body. Ideally governing body includes representation from both community and organization’s medical staff.
Sarbanes-Oxley Act of 2002
encourages self-regulation and the need to promote due diligence; selecting a leader with morals, and core values; examining incentives; constantly monitoring the organization’s culture; establishing strong standards of conduct and a code of ethics that encourages employees to report unethical or fraudulent behavior without fear of retribution. p. 148
Respondeat superior (let the master respond)
legal doctrine holding employers liable, in certain cases, for the wrongful acts of their agents (employees). AKA vicarious liability.
Respondeat superior (for liability to be imputed to the employer)
1. Master-servant relationship must exist between the employer and the employee.
2. The wrongful act of the employee must have occurred within the scope of his or her employment.
Independent Contractor
relationship is established when the principal has no right of control over the manner in which the agent’s work is to be performed. Responsible for his/her own negligent acts.
Corporate Officer/Director
is not personally liable for the torts of corporate employees
Corporate Negligence
doctrine under which the hospital is liable if it fails to uphold the proper standard of care owed the patient, which is to ensure the patient’s safety and well-being while at the hospital. This theory of liability creates a non-delegable duty which the hospital owes directly to a patient. Therefore, an injured party does not have to rely on and establish the negligence of a third party.
Hospitals owe some nondelegable duties strictly to just patients
Duty to:
-use reasonable care in the maintenance of safe facilities and equipment
-Select and retain competent physicians
-Oversee all persons who practice medicine w/in their walls
-Formulate, adopt, and enforce rules and policies to ensure quality care.
Corporate Negligence Doctrine
Hospitals have a duty to provide an adequately trained medical and nursing staff. Hospital is responsible, in conjunction w/ its medical staff, for establishing policies and procedures for monitoring the quality of medicine practiced w/in the hospital.
Darling v. Charleston Community Memorial Hospital
Benchmark case in the healthcare field that had a major impact on the liability of healthcare organizations.
Joint Commission
Standards for hospital accreditation
Governing Body Responsibilities
exercise due care and diligence in supervising and managing and organization. Can be liable if the level of patient care becomes inadequate b/c of their failure to supervise properly the management of the organization. CEO selection, comply w/ law, comply w/ standards of accrediting bodies, provide timely treatment, avoid conflicts of interest, provide adequate staff,.
Responsible for day-to-day operations of the organization, overall management of the organization., supervision of the administrative staff and managers who assist in the daily operations, derives authority from owner or governing body, implement and interpret policies
Conflicts of Interest
Involves those situations in which a person has opportunity to promote self-interests that could have a detrimental effect on an organization w/ which he or she has a special relationship.
Rescue or remove the patient first
An alarm should be sounded second
Contain the fire third
Extinguish the fire last
Does not give rise to any tax obligation if the receiver of such benefit is exempt from taxation under any of several subsections of Section 501 (c) of the Internal Revenue Code provided that exempt activities are the organization’s main source of income and expense.
Drive purpose of organization
The desire to develop alternative sources of revenue and/or to streamline management of multi-institutional systems. Any discussion of corporate reorganization undertaken by hospital must involve the medical staff. Development of a business involving equity participation must be considered in the light of the state/federal securities laws and other laws.
Duty to Prevent Falls
Maintaining a safe environment, as well as providing ongoing staff and patient education, can reduce the frequency of falls. Parking lot safety, hospital lobby safety, stretcher safety, slippery floors etc.
Certificate of Need
Generally hospitals may not add additional programs or services and may not expend monies for the acquisition of capital in excess of specified threshold limits w/o first obtaining approval from appropriate state regulatory agencies.
Safe-Harbor Regulations
Describe how healthcare providers should structure financial arrangements in order to be exempt from prosecution by the Department of Justice and the FTC. Cover 1.) Investment interests 2.) Space rentals 3.) equipment rentals 4.) Personal services and mandatory contracts 5.) Sales of practice 6.) Referral services 7.) Warranties 8.) Discounts 9.) Employees 10.) Group purchasing organizations 11.)Waivers
Elements of negligence
1. Duty to care 2. Breach of duty 3. Injury 4. Causation
Privileging and Credentialing Process
Purpose of the appointment process is to evaluate the competency of the applicant to determine whether he or she is qualified for appointment to the medical staff
Establish non-discrimination policy. Provide information regarding residence, office location, medical school, internship, residency, license to practice medicine, board certification, fellowship, malpractice coverage, etc.
Medical Staff Bylaws
Should be approved by the medical executive committee & gov body, staff required to sign statement affirming that bylaws have been read and must be followed.
Physical and Mental Status
Must address issues regarding a doc’s physical and mental capacity before granting of med staff privileges.
Consent for Release of Info
Information from third parties should be obtained from applicant
Certificate of Insurance
Applicant should provide evidence of professional liability insurance. Policy should provide minimum levels of insurance coverage w/ limits determined by organization.
State Licensure
Grounds for revocation of license to practice includes: clear demonstration of lack of good moral character, deliberate falsification of patient’s med record, intentional fraudulent advertising, gross incompetence, sexual misconduct, substance abuse, performance of unnecessary medical procedures, billing for services not performed, disruptive behavior.
National Practitioner Data Bank
Created by Congress as a national repository of information w/ the primary purpose of facilitating a comprehensive review of physicians’ and other healthcare practitioners professional credentials.
Failure to thoroughly checked can lead to corporate liability for a physician’s negligent acts. Both written and oral should be obtained from previous organizations that applicant has been affiliated.
Interview Process
must receive all required documents beforehand, obtain answers to several questions
Delineation of Clinical Privileges
process by which medical staff determines precisely what procedures a physician is authorized to perform.
Governing Body Responsibility
Ultimate responsibility for the selection of organization’s professional staff and ensuring applicants are qualified to perform clinical privileges requested.
Appeal Process
Described in the med staff bylaws to cover issues such as the denial of professional staff privileges, grievances, and disciplinary actions.
Each physician’s credentials and departmental evaluations should be reviewed every 2 yrs.
Two Schools of Thought
Potential for liability affects the choice of treatment a physician will follow w/ his or her patient. Only applicable in medical malpractice cases in which there is more than one method of accepted treatment for patient’s disease or injury. Physician will not be liable for medical malpractice if he or she follows a course of treatment supported by reputable respected and reasonable medical experts.
Doctrine of Informed Consent
Independent from malpractice. Physician’s duty to disclose known dangers associated w/ a proposed course of treatment imposed by law.
Medical care was unreasonably discontinued, the discontinuance of medical care was against the patient’s will. Termination of the physician-patient relationship must have been brought about by a unilateral act of the physician, the physician failed to arrange for care by another physician, foresight indicated that discontinuance might result in physical harm to the patient, actual harm was suffered by patient.
Physician-patient relationship
Physician’s primary commitment must always be the patient’s best welfare and best interests
Master-servant relationship
Determines control
Standard of Practice
Failure to obtain an adequate family history and perform an adequate physical examination violates a standard of care owed to the patient.
Duty to Warn
There is a duty to exercise reasonable care to protect the forseeable victims and to warn them of any impending danger. Discharge of this duty also may include notifying the police or taking whatever steps are reasonably necessary under the circumstances.
Under Nebraska Law
Relationship between a psychotherapist and a patient gives rise to an affirmative duty to initiate whatever precautions are reasonably necessary to protect the potential victims of a patient.Duty develops when a therapist knows or should know that a patient’s dangerous propensities present an unreasonable risk of harm to others.
A special kind of agreement, either written or oral, that involves legally blinding obligations between two or more parties. Major purpose of a contract is to specify, limit, and define the agreements that are legally enforceable.
Types of Contract
Express Contract / Implied Contract / Voidable Contract / Executed Contract / Enforceable Contract / Unenforceable Contract
Express Contract
Parties to a contract have an oral or written agreement.
Implied Contract
one that is inferred by law. Based on the conduct of the parties such as a handshake or similar conduct.
Voidable Contract
One in which one party, but not the other, has the right to escape from its legal obligations under the contract.
Executed Contract
One in which all of the obligations of the parties have been performed fully
Enforceable Contract
one that is a valid, legally blinding agreement. If one party breaches it, the other will have an appropriate legal remedy
Unenforceable Contract
one in which, because of some defect, no legal remedy is available if breached by one of the parties to the contract
Breach of Contract
Violation of one or more of the terms of the contract. Basic elements that a plaintiff must establish in order to be successful in a breach of contract lawsuit include: 1) Valid contract was executed 2) Plaintiff performed as specified in the contract 3) Defendant failed to perform specified in the contract 4) Plaintiff suffered an economic loss as a result of the defendant’s breach of contract
Corporate Contract
Ability of a corporation to enter into a contract is limited by its powers as contained in or inferred from its articles of incorporation or conferred upon it by general corporation law.
comprises two or more persons who agree to carry on a business for profit and to share profits and losses in some proportions
The one who has the power to contract for and bind another person, who is known as the principal
Apparent or ostensible agent
One who a third person believes is acting on behalf of the principal.
Independent Contractor
an individual who agrees to undertake work without being under the direct control or direction of another. Personally liable for their own negligent acts
Theory of Respondeat Superior
A physician is an independent contractor as long as the physician is not an employee of the organization, is not compensated, maintains a private practice, and is chosen directly by his or her patients.
An act or event that must happen or be performed by one party before the other party has any responsibility to perform under the contract.
The act of doing what is required by a contact. Each party to a contract is bound to perform the promises according to the stipulated terms contained in the contract.
Nonperformance Defenses
Defenses permitting a non-performance of a contract include fraud, mistakes, duress, illegal contract, impossibility, and statute of limitations
Occurs when one party intentionally misrepresents a material fact of term of the contract and intends that the other party rely on that misinterpretation
Mistake of Fact
incorrect belief regarding a fact. Both parties must have made that mistake. If only one is in error (and it is not known to the other), mistake of the fact is not a defense.
Mistake of Law
incorrect judgement of the legal consequences of known facts. If the parties to a suit make a mistake as to the law involved, they usually must accept their light without any remedy. Valid defense.
Unlawful threats or pressure to force an individual to act against his or her will. An act performed duress in not legally binding
Statute of Limitations
A party who does not, without a period known as the statute of limitations, take action to enforce contract rights by suing for damages caused by a breach of contract or taking other action can be barred from doing so.
Employee Handbook: A contract
1) Policy statement that clearly set forth a promise that the employee can construe to be an offer
2) Policy statement must be distributed to the employee, making him or her aware of the offer
3) After learning about the offer and policy statement, the employee must “begin” or “continue” to work
Employee Handbook: Not a Contract
Not a contract Because of a Disclaimer-although employee handbook may delineate specific disciplinary procedures, that fact does not, in and on itself, constitute an enforceable contract
Termination of Contract: Subordination- Trieger vs Montefiore Med Cty.-appellate court found that the trial court correctly determined that the memorandum was insubordinate and that it gave just cause for termination of the physicians employee contract.
Exclusive Contracts
An organization enters into this contract with physicians and medical groups for the purpose of providing a specific service to the organization. Generally occurs within the organization’s ancillary service departments (e.g. radiology, anesthesiology, pathology)
Sherman Antitrust Act
proscribes that every contract, combination in the form of trust or otherwise, or conspiracy in restraint of trade or commerce among the several states is declared to be illegal. Those who attempt to monopolize or combine or conspire with any other person or persons to monopolize any part of the trade or commerce can be deemed guilty of felony. Concern: reduced market competition, price fixing, actions that bar or limit new entrants to the field, preferred provider arrangements, and exclusive contracts.
Non Competitive Clause
clause in a contract in which the provider of a specific service, commonly understood to be physicians in private practice, agrees not to practice medicine-ie, compete-in the same geographic region-the size of which is defined by the contract
Burden of demonstrating the covenant’s validity is on the party seeking to enforce it.
First, the covenant must be reasonable in scope as to geography and time. Second, the covenant must be reasonably necessary to protect certain narrowly defined and well-recognized employer interest
Federal Trade Commission
Authorized to enforce Section 5 of the FTC Act, which prohibits unfair methods of competition and unfair or deceptive acts or practices. With the Department of Justice, the FTC also enforces the Clayton Act sections that prohibit discrimination, exclusive dealings and similar arrangements, certain corporate acquisitions of stock or assets, and interlocking directorates.
Restrain of Trade
Increasing number of alternative delivery systems and resultant to competition has created the potential for illegal activities to restrain trade. Emphasis on free enterprise and a competitive marketplace has resulted in careful scrutiny by the FTC, the federal agency responsible for monitoring the marketplace and enforcing federal antitrust laws.
Transfer Agreement
A written document that sets forth the terms and conditions under which a patient may be transferred to a facility that more appropriately the kind of care required by the patient.
Insurance Contract
The insurer has an obligation to indemnify the insured for losses caused by the specified events. In return, the insured must pay a fixed premium during the policy period. The interpretation of an insurance contract can give rise to legal action when the insurer refuses to indemnify the insured.
Elements of a Contract
1) offer communication-promise by one party to do something if the other party agrees to do something 2)consideration-each party to a contract must give up something of value in exhange for something of value 3) acceptance- a. Meeting of the minds:parties must understand and agree on the terms of the contract. b.Define and Complete:requires mutual assent to be found between the parties. Both parties agree to what has been proposed. c. Duration:Once the offeree (the person to whom the offer is made) has accepted the offer, any attempt to revoke the agreement is too late and invalid. d. Complete and Conforming: the acceptance must be a mirror image of the offer.

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