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Murray v. Community Health Systems Professional Corp.

Court of Appeals of Georgia, Second Division

March 5, 2018


          MILLER, P. J., DOYLE, P. J., and REESE, J.

          Miller, Presiding Judge.

         Dr. Mary Murray was fired from her position as an OB/GYN with Augusta Physicians Services ("APS") after she complained that the CEO of both Trinity Hospital and APS, Jason Studley, ordered her to make patient referrals to Trinity Hospital that she believed violated the federal self-referral law known as the Stark Act. She sued Studley, APS, and Community Health Systems Professional Services Corporation ("CHSPSC"), [1] the company that provided management services to APS. In her complaint, Murray alleged that Studley retaliated against her, in violation of the Georgia False Medicaid Claims Act, OCGA § 49-4-168.4; that he was an agent of APS and CHSPSC; and that following her termination he made defamatory statements to two other physicians, Dr. Joseph and Dr. Davis.[2] The trial court granted summary judgment to all defendants on all claims, and this appeal followed.

         After a thorough review of the record, we conclude that Murray failed to establish a prima facie case of retaliation, and therefore, we affirm the grant of summary judgment to all defendants on this claim. With respect to the defamation claims, we conclude that the statements Studley made to Dr. Joseph were privileged, and we affirm the grant of summary judgment to all defendants on this claim. However, the statements Studley made to Dr. Davis were not privileged as a matter of law. Therefore, we vacate the trial court's award of summary judgment to Studley on this claim and remand the case for further proceedings. As to defendants APS and CHSPSC, there is no evidence that Studley was "expressly directed or authorized" to make the statements to Dr. Davis, as is required to establish vicarious liability, and the trial court properly determined they were entitled to summary judgment on this defamation claim as well.

Summary judgment is proper when there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. OCGA § 9-11-56(c). A de novo standard of review applies to an appeal from a grant of summary judgment, and we view the evidence, and all reasonable conclusions and inferences drawn from it, in the light most favorable to the nonmovant.

(Citation omitted.) Caldon v. Bd. of Regents of the Univ. System of Ga., 311 Ga.App. 155 (715 S.E.2d 487) (2011).

         So viewed, the evidence shows that Studley is the CEO of both Trinity Hospital and APS, two entities owned by the same umbrella corporation. APS employs various doctors in designated practice groups, including OB/GYN. CHSPSC is a physician management company that provides consulting services such as business strategy, capital planning, and acquisitions to Studley in his capacity as CEO of APS. CHSPSC was never Studley's or Murray's employer.

         In 2011, Dr. Murray was recruited to Trinity Hospital, and she and another physician, Dr. Christie, formed an OB/GYN practice under APS. Murray's initial contract was renewed at the end of the first year, and, as Murray admits, the contract also provided that she could be terminated without cause. These employment contracts were approved by CHSPSC management and listed APS as Murray's employer.

         Although Murray was employed by APS, and APS was affiliated with Trinity Hospital, she sometimes referred patients to other area hospitals, a practice referred to as "splitting." These other referrals negatively impacted Trinity Hospital's revenue, and Studley occasionally inquired as to why Murray made them. Given that one of the hospital's goals was to minimize losses resulting from referrals elsewhere, Studley created a plan to help Murray increase her productivity at Trinity Hospital and minimize splitting.

         On or about July 13, 2013, Studley held a meeting with Murray, APS CFO Elmer Polite, and APS administrative manager Deann Brooks. During this meeting, Studley instructed Murray to refer all of her patients to Trinity Hospital for all surgical procedures and essentially prohibited her from treating patients at any hospital other than Trinity. Murray informed Studley that this was "not really what [she] signed up for, " but she discussed placing a sign in the office to inform patients that she would only be providing services at Trinity Hospital.

         After this meeting, Murray discussed the instruction with Brooks, Dr. Christie, and her practice office manager, Susan Allen, stating that she did not think it was a good idea because patients would be upset. Murray also expressed concern to Brooks that such referrals would violate federal Stark law, which prohibits doctors from making referrals to entities in which they have a financial interest and submitting claims for such services for payment under Medicare or Medicaid, [3] given that the hospital and APS were both owned by the same corporation. See generally 42 USC § 1395nn (a), (g).

         In response to Murray's concern, Brooks stated she would talk to Studley. Within the next few days, Brooks told Murray to "just ignore" Studley's new rule, that Brooks thought Studley had been mad when he gave the instruction, and that Studley had "taken that back."

         In an e-mail dated July 20, 2013, Polite advised Studley that Trinity Hospital and APS needed to eliminate between 45 to 50 positions, leading Studley to impose a reduction in force. About 20 people, including Murray and one of her staff members, were terminated in the reduction. Studley estimated he saved about 30 other jobs by terminating Murray, although he could not identify which specific jobs were saved.

         Although Studley stated that Murray's termination was part of the reduction in force, he later gave conflicting explanations for Murray's termination, including that he terminated Murray because of (1) financial concerns after she repeatedly fell below performance expectations, (2) concerns about her overhead and expenses because she was not generating enough revenue to defray her contribution towards those costs, (3) complaints from patients that they experienced long wait times, (4) concerns that Murray treated her Medicaid patients differently from other patients, and (5) a contract dispute or failed contract negotiations. Studley told Murray that "the corporation" was forcing him to fire her, along with many other people. However, after Murray's termination, there was an advertisement for an OB/GYN position at Trinity Hospital.

         Following her termination, Murray was unable to join another practice in the Augusta area, and she requested a letter of recommendation from Studley to facilitate her job search elsewhere. Studley refused to provide a letter because Murray had not signed a release of information, per hospital policy. Dr. Allan Joseph, who was chair of the OB/GYN Department at Trinity Hospital, a member of the hospital medical executive committee, and a member of the hospital board, approached Studley to discuss writing a letter for Murray. During this meeting, Joseph asked Studley about Murray's termination. Studley told Joseph that he could not discuss all the reasons, but he had been concerned that Murray had treated patients covered by Medicaid less favorably. Studley also told Joseph that Murray had been on probation prior to her termination, and that Murray was aware of his concerns. Nevertheless, Studley agreed to allow Joseph to write Murray a letter of recommendation on hospital letterhead.

         Dr. Wendy Davis, a general surgeon who sometimes referred patients to Murray and was friendly with Murray socially, also spoke with Studley about Murray's termination. Davis initiated this conversation in the doctor's lounge, but no one else was present at the table. In this discussion, Studley allegedly mentioned that he had been concerned that Murray was treating her Medicaid patients less favorably. However, Studley denied making such a statement. The trial court granted summary judgment to all defendants on all claims, and this appeal followed.

         Before turning to the merits of Murray's claims on appeal, we briefly set out the federal statutory scheme known as the Stark Act. The Stark Act prohibits healthcare entities from submitting Medicare claims for payment based on patient referrals from physicians having a "financial relationship" with the entity. 42 USC § 1395nn. The Act also prohibits a healthcare entity from presenting or causing to be presented a Medicare claim for services furnished pursuant to a prohibited self-referral. 42 USC § 1395nn (a) (1) (B). Notably, there are various safe harbor provisions that permit certain self-referrals under specific conditions, including bona fide employment relationships. See 42 USC § 1395nn (b), (e) (2). However, even in the context of a bona fide relationship, the compensation arrangement between the physician and the health care entity must "not [be] determined in a manner that takes into account (directly or indirectly) the volume or value of any referrals by the referring physician." 42 USC § 1395nn (e) (2) (B) (ii). With this framework in mind, we turn to Murray's claims for retaliation and defamation.

         1. Retaliation

         Murray argues that she was terminated in retaliation for her complaint about conduct she believed to ...

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