Restrictive Covenants, Lawsuits Against HMOs, Patient Counseling, Nurse Anesthetists
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A California appellate court has ruled that a medical group cannot enforce a restrictive covenant against a departing physician without compensating him for the goodwill value of his practice.
Radiologist Russell Wycoff had been a 20-year partner in the Hill Medical Group, based in Pasadena, CA, when he decided to open his own practice. As stipulated in his contract, Hill paid him $217,000 for his shares in the corporation, based on their current book value.
But then the group sued Wycoff, seeking a court injunction to block his new venture. The suit cited his contract's noncompete clause, which barred him from practicing near any of Hill's sites in greater Los Angeles for three years. (A 1996 amendment to the covenant had expanded the geographic restriction from 1/2 mile to 71/2 miles.)
The trial court denied Hill's request for an injunction, ruling the noncompete covenant invalid, unenforceable as a violation of state law and public policy on open competition, and a restraint of trade. Now Hill has also lost in appellate court, which said the noncompete clause "effectively excludes [Wycoff] from the practice of his profession, and is thus void."
The appeals court noted that state law would have allowed the covenant if Hill had paid Wycoff for the goodwill value of his practice. (In his case, that would have included the value of his relations with referring physicians.) Failing that, however, the group couldn't enforce the covenant.
Says Wycoff's lawyer, Charles Ivie: "You can't deny a person the right to engage in a business if you haven't paid him to give up that right."
It's one of the broadest legal challenges ever thrown at the health insurance industry: The Connecticut State Medical Society has filed a package of six lawsuits against six large insurance companies. The suits, filed on behalf of 7,000 doctors, claim that the health plans have systematically harmed patients by arbitrarily denying medically necessary treatment and using a variety of tacticsfrom downcoding to bundlingto avoid paying millions of dollars to physicians.
The defendants are Aetna US Healthcare, Anthem Blue Cross and Blue Shield, Cigna HealthCare, ConnectiCare, Oxford Health Plans, and PHS Health Plans. Together they manage the care of 1.5 million people in Connecticut.
The suits are intended to force the plans to change the way they treat doctors and patients, says Timothy B. Norbeck, executive director of the medical society. "These lawsuits take direct aim at health plan policies and practices that place critical medical care decisions in the hands of insurance company bureaucrats instead of physicians." The suits are the first of their kind; no earlier suit against HMOs has ever sought wholesale changes in the way insurers operate.
Keith Stover, a lobbyist for the Connecticut Association of Health Plans, attributes the suits more to the wishes of trial lawyers than to disputes over health care services. "Connecticut probably has the most advanced patient-protection statutes in the country," he contends. "These claims are at best hyperbolic, and at worst disingenuous."
Melvyn Weiss, an attorney for the medical society, calls the HMOs "ripe for legal challenge." Norbeck, reflecting the passion imbedded in the issue, says: "We have made good-faith efforts to resolve our many differences with insurers . . . but we have learned that if you must deal with wolves, you must act like a wolf."
While as many as 15 million Americans use illegal drugs, one-third of primary care physicians and psychiatrists don't routinely discuss the problem with patients, according to a survey in Archives of Internal Medicine.
Fifty-five percent of doctors routinely recommend formal chemical dependency treatment programs to drug-abusing patients, but 15 percent of the 1,082 survey respondents said they rarely intervene at all. Psychiatrists and ob/gyns are the most likely to screen for drug use, but ob/gyns are the least likely to intervene, the survey found. Physicians are more likely to refer patients to a 12-step program (the Alcoholics Anonymous model) than to a formal addiction treatment program.
Why the resistance to discussing drugs? The study authors suggest that doctors have little confidence in their ability to manage drug problems, are pessimistic about the benefits of treatment, are leery of a large time commitment, and believe that patients don't want to be asked about substance abuse. What's needed, the researchers conclude, are new strategies to address those concerns.
On his first day in office, President Bush used his executive power to postpone and review a controversial new rule that would have eliminated mandatory physician supervision of nurse anesthetists within the Medicare program.
The rule, vehemently opposed by the American Society of Anesthesiologists and the American Medical Association, had been part of several orders issued by the Clinton administration in its final days. Certified nurse anesthetists would still have been subject to state laws and hospital rules regarding physician supervision, but this oversight would no longer have been federally mandated.
"This action by the Clinton administration . . . is an affront to our most vulnerable patientssenior citizenswho look to our federal government to establish minimum standards for keeping patients safe," said ASA president Neil Swissman. The society will lobby to overturn the new rule permanently, he says. "Nurses are not doctors and should not be expected" to make split-second decisions that could jeopardize a patient's health.
Cigarette smokers are more likely to stop if their doctors suggest it to them, according to the Center for Studying Health System Change, a research group funded by The Robert Wood Johnson Foundation. It appears, however, that doctors don't dispense their counsel evenly among the races.
In 1998-1999, according to the Community Tracking Study Household Survey conducted by the Center for Studying Health System Change, 38 percent of white smokers and 34 percent of African-American smokers received such counselwhile only 25 percent of Hispanics did.
The pattern holds with mammography. In 1998-1999, 74 percent of both white and African-American women older than 50 had mammograms, while 71 percent of Hispanics did. With flu shots, Hispanics and African-Americans both trail. In those two years, 69 percent of whites aged 65 and older had annual shots, while just 56 percent of Hispanics and only 51 percent of African-Americans did.
Lack of health insurance, as well as language and cultural barriers, are among the reasons for the disparities. In 1998 and 1999, according to HSC, 81 percent of whites and 79 percent of blacks visited their physicians. Only 68 percent of Hispanics did.
Practice Beat. Medical Economics 2001;6:21.