Input on medical lawsuits sought

Virginia’s high court is asked to rule on immunity for doctors

BY BILL MCKELWAY
TIMES-DISPATCH STAFF WRITER
http://www.timesdispatch.com

The state Supreme Court is being asked to decide whether hundreds of doctors are immune from negligence suits in the care they provide at Virginia’s three teaching hospitals.

At issue is the largely abandoned, decades-old protection of charitable immunity, remnants of which are being used by tax-exempt foundations and the doctors they employ to plead immunity from malpractice suits. Lower courts across the state have issued opposite opinions on the defense.

In a rare effort to settle the conflict before trial, lawyers representing physicians employed by the University of Virginia Health Services Foundation and lawyers for two former patients — one who died in the hospital and another who was permanently injured — have asked the state’s highest court to intervene.

The court is expected to decide whether to hear the case this spring.

The two cases before the high court have far-reaching implications for medical care and malpractice issues at the state’s three teaching hospitals, where more than 1,100 physicians are employed by legally separate but service-related, tax-exempt organizations.

The charitable-immunity defense has been used successfully by doctors at Eastern Virginia Medical School in Norfolk and with mixed results at the University of Virginia Health System. Doctors affiliated with the Virginia Commonwealth University Health System in Richmond have not used the defense.

If the hospital-related foundations and doctors are determined to have charitable immunity under Virginia law, injured patients may be barred from bringing malpractice suits against the founda- tions and their individual doctors.

Without immunity, doctors and state hospitals could have a harder time absorbing the rising costs of indigent care and the steeply rising costs of malpractice insurance.

But in papers filed this week, plaintiff lawyers in two Charlottesville negligence cases claim that high salaries and bonuses paid to doctors and limited losses suffered from nonpaying patients destroy the notion that the U.Va. foundation operates as a charitable organization.

“The public should be offended that well-paid physicians treating mainly paying and insured patients are claiming entitlement to charitable immunity because they make a nominal contribution to the poor,” argue Matthew B. Murray and Gerald Walsh, lawyers for a Waynesboro family.

Murray and Walsh represent 5-year-old Hunter Morris, who was permanently injured when physicians at the hospital failed to respond to his deteriorating condition before birth, according to the family’s lawsuit.

A second case before the court involves the death of an Albemarle County girl, Cara Leigh Searcy, 4, who died six years ago at the University of Virginia Health Center during a kidney operation.

Both cases are in limbo, awaiting the Supreme Court decision on the immunity issue. A circuit court decision last year denied defense pleas of charitable immunity in both cases.

In appealing the ruling to the Supreme Court, lawyers representing the health-services foundation and defendant doctors said that physician compensation is “simply a necessary requirement” for the University of Virginia foundation “to accomplish its admittedly charitable objectives of education, research and clinical care without regard for ability to pay.”

The foundation’s charitable purposes include working in concert with the University of Virginia Health Center “to assist and conduct programs of public charity to benefit patients who might not otherwise receive or be able to afford medical attention,” according to arguments filed by the foundation.

But the plaintiffs’ lawyers in the two cases defeated the charitable-immunity defense in circuit court, arguing that the U.Va. foundation is an aggressive, bill-collecting entity that generates about $200 million a year in gross revenues.

They argue that the foundation’s losses from indigent care, after hospital and state reimbursements, totaled $1.5 million in 2005.

“There is no indication that [the foundation] used any of its revenue stream to further any charitable purpose,” their court filings argue.

The dispute has sharpened since a Supreme Court decision in 2005 involving a Norfolk YMCA. The court set up criteria for determining what constitutes a charitable organization and charitable immunity.

Judges in eastern Virginia have used the YMCA-case template to grant charitable immunity from malpractice suits to doctors employed by the physician foundation tied to Eastern Virginia Medical School.

More recently, judges in Charlottesville have issued rulings on five charitable-immunity cases involving the U.Va. foundation; in four of the cases, using the same criteria set up in the YMCA cases, the court found that charitable immunity does not apply.

In the fifth Charlottesville case, a judge ruled that charitable immunity does apply to the foundation, regardless of whether a patient paid.

The dispute over charitable-immunity cases has developed at a time when most other states have largely dropped the protection, which helped sustain charity at the beginning of the 20th century.

The U.Va. foundation has argued to the Supreme Court that under Virginia law, its billing, payment and collecting services, as well as its educational mission, don’t negate its charitable character or claim of immunity. All those functions serve to enhance the foundation’s ability to serve all patients, it says.

Lawyers for injured patients see the nature of the foundation as profit- and bonus-oriented.

Alluding to the specialty-oriented bonus system within the U.Va. foundation that rewards doctors for the revenues they generate, those lawyers argue that “brain surgeons do not altruistically share with the pediatricians . . . Physicians working for [the foundation] eat what they kill.”
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