THE STATE OF SOUTH CAROLINA
In the Supreme Court
APPEAL FROM BEAUFORT COUNTY
Court of Common Pleas
Curtis L. Coltrane, Special Circuit Court Judge
Opinion Number 4026 (S.C. Ct. App. filed September 26, 2005)
Phyllis J. Wogan, Individually and as Personal Representative
of the Estate of James John Wogan…………………………………Appellant/Petitioner,v.
Kenneth C. Kunze, M.D.; Hilton Head Gastroenterology, P.A.;
Thomas P. Rzeczycki, M.D.; Hilton Head General and
Laparoscopic Surgery, P.A.; Gary W. Thomas, M.D.;
and Gary W. Thomas, M.D., P.A……………………………….…………...Respondents.
_______________
APPELLANT/PETITIONER’S INITIAL BRIEF
______________
Samuel
S. Svalina
Jennifer
I. Campbell
PO Drawer 1207
Beaufort, SC 29901
(843)
524-0333
Attorney
for the Petitioner
Timothy M. Wogan
PO Box 22124
Hilton
Head, SC 29925
(843)
815-6921
Attorney
for Petitioner
March 5, 2007
TABLE OF CONTENTS
Table of Authorities……………………………………………………… 3
State of Issues on Appeal………………………………………………… 5
Statement of the Case……………………………………………………. 6
Facts……………………………………………………………………… 6
Arguments
1. EVEN IF THERE IS NO IMPLIED RIGHT OF ACTION
UNDER THE MEDICARE ACT THE RESPONDENT
HAD A DUTY TO PRACTICE WITHIN THE
STANDARD OF CARE, WHICH, ACCORDING TO UNCONTRADICTED EXPERT MEDICAL
TESTIMONY, REQUIRED ADHERANCE TO MEDICARE REGULATIONS……………………………………………… 14
2. EVEN IF THERE IS NO IMPLIED RIGHT OF ACTION
UNDER THE MEDICARE ACT, THE MEDICARE
REGULATIONS CAN BE USED TO SET THE
STANDARD OF CARE IN STATE LAW CAUSES OF ACTION………………………………………………………… 17
3. BECAUSE CONGRESS, IN ENACTING THE MEDICARE
ACT, DID NOT INTEND TO PRECLUDE MEDICARE
BENEFICIARIES FROM PURSUING COMMON LAW
REMEDIES, THERE IS NO FEDERAL PREEMPTION IN THIS CASE………………………………………………… 25
4. BECAUSE THIS IS NOT A CASE AGAINST THE
UNITED STATES, THE SECRETARY OF HEALTH
AND HUMAN SERVICES, OR THEIR OFFICERS OR
EMPLOYEES THERE IS NO REQUIREMENT TO EXHUAST ADMINISTRATIVE REMEDIES……………………… 26
Conclusion…………………………………………………………………………………………………………………… 27
TABLE OF AUTHORITIES
CASES
Amgen, Inc. v. Scully, 234 F.Supp. 2d 9, 18 (D.D.C. 2002)………………… 21
Albrecht v. Baltimore & Ohio R.R. Co., 808 F.2d 329 (4th Cir 1987)……… 17,18
Brogdon v. Nat’l Healthcare Corp., 103 F. Supp.2d 1322 (N.D. Ga. 2002)… 25,26,27
Caldwell v. K-Mart Corp., 306 S.C. 27, 31-32, 410
S.E.2d 21, 24
(Ct. App. 1991)……………………………………………………………… 16
Chapman v. Citizens and So. Nat’l Bank of S.C., 302
S.C. 469,
395 S.E.2d 446 (Ct. App. 1990)…………………………………………… 24
Clifford v. S. Ry. Co., 87 S.C. 324, 69 S.E. 513 (1910)…………………… 19,22
Elledge v. Richland/Lexington School Dist. Five, 352
S.C. 179, 186,
573 S.E.2d 789, 793 (2002)………………………………………………… 18
Hodge v. Shea, 252 S.C. 601, 168 S.E.2d 82, 85 (1969)…………………… 23
Hofbauer v. Northwestern Nat’l Bank of Rochester, 700
F.2d 1197
8th Cir. 1983)……………………………………………………………….. 17,25
In American Fire and Cas. Co. v. Johnson, 332 S.C.
307,
504 S.E.2d 356 (Ct. App. 1998)…………………………………………… 23
In the Matter of White, __ S.E.2d __ (November 20th,
2006, South
Carolina Supreme Court……………………………………………….. 15,16,17,19,25
Kuznik v. Bees Ferry Assoc., 342 S.C. 579, 538 S.E.2d 15
(Ct. App. 2000)………………………………………………………… 23,24
McCormick v. England, 328 S.C. 627, 639,
494 S.E.2d 431, 437 (Ct. App. 1997)………………………………….. 23
Meinhard v. Salmon, 249 N.Y. 458, 164 N.E. 545 (1928)…………… 24
Pedraza v. Shell Oil Co., 942 F.2d 48 (1st Cir 1991)………………… 18
Peterson v. Nat’l R.R. Passenger Corp., 306 S.C. 27,
31-32., 410
S.E.2d 21, 24 (Ct. App. 1991)……………………………………………… 15,16,25
Rayfield v. S.C. Dept. of Corrections, 297 S.C. 95,
374
S.E.2d 910, 914 (Ct. App. 1988)…………………………………………… 20,21,22
Steeves v. U.S., 294 F. Supp. 446, 455 (D.S.C. 1968)……………………… 17,19
Steinke v. S.C. Dept. of Labor, Licensing and Reg.,
336 S.C. 373, 387-89,
520 S.E.2d 142, 149-50 (1999)……………………………………………… 19
Tidwell v. Columbia Ry., Gas and Elec. Co., 109 S.E.
34,
95 S.E. 109 (1918)…………………………………………………………… 16
STATUTES
42 U.S.C.A. §§ 1395i-3(h)(5), 1396r(h)(8)………………………………….. 25
OTHER AUTHORITIES
Restatement (Second) of Torts § 285 (1965)………………………………… 19
STATEMENT OF ISSUES ON APPEAL
1. DID THE COURT OF APPEALS ERR IN RULING THAT A
PHYSICIAN OWES NO DUTY TO FILE MEDICARE CLAIMS
FOR HIS/HER MEDICARE PATIENT, UNLESS AN IMPLIED
RIGHT OF ACTION EXISTS UNDER THE MEDICARE ACT……… 142. DID THE COURT OF APPEALS ERR IN HOLDING THAT A
VIOLATION OF MEDICARE REGULATIONS CANNOT BE
USED AS EVIDENCE OF NEGLIGENCE and/or BREACH
OF FIDCUAIRY DUTY IN STATE COMMON LAW ACTIONS…… 173. THERE IS NO FEDERAL PREEMPTION IN THE CASE AT BAR… 25
4. IF THIS COURT WERE TO FIND THAT THERE ARE VIABLE
STATE LAW CLAIMS FOR NEGLIGENCE AND BREACH
OF FIDUCIARY DUTY AVAILABLE TO THE PETITIONER,
THE PETITIONER IS NOT BARRED FROM BRINGING THOSE
ACTIONS UNDER THE EXHAUSTION OF ADMINISTRATIVE
REMEDIES DOCTRINE……………………………………………… 26
FACTS and STATEMENT OF THE CASE
The Decedent was a Sixty Nine (69) year old cancer patient being treated with radiation to his abdomen and pelvis. Shortly after the radiation therapy started, the Decedent developed debilitating, high output, high frequency diarrhea. Over a short period of time, the Decedent was hospitalized three times for malnutrition and dehydration. During all three hospitalizations, the Respondent, Kunze, treated the Decedent and billed Medicare for his services. During the last hospitalization the Respondent, Kunze, ordered that the Decedent undergo the surgical performance of a colostomy to stop the diarrhea. The Decedent underwent the surgery; however, it failed to cure the Decedent’s debilitating diarrhea. Upon discharge from the hospital, the Decedent had a normally functioning colostomy but continued to suffer debilitating diarrhea from his rectum. The Decedent’s treating physicians and the hospital all submitted claims to Medicare for these hospitalizations and all claims were paid by Medicare. A cause of action for negligence based on the allegation that this surgery was unnecessary is still pending in the lower court and is not subject to this appeal.
The facts relevant to the issues on appeal are based on the following events:
During an April 12, 2001, post operative office visit, the Respondent, Kunze, informed the Decedent and the Petitioner that he would place the Decedent on the medication Sandostatin LAR, which was a long acting form of the medication requiring a once-a-month injection. The Respondent, Kunze, informed the Decedent and the Petitioner that this form of the medication was covered by Medicare for his condition; that he would preorder the medication through his office; and that he would submit a claim to Medicare, through his office, each month for the injections. (R. p. 169, ¶ 14)
Shortly after this office visit, the Decedent and the Petitioner received a phone call from the Respondent, Kunze’s, office informing them they did not want to wait to be reimbursed by Medicare and, therefore, that he would not preorder the medication nor would he submit claims to Medicare. (R. p. 199-200, R. p. 207) The Decedent and the Petitioner were told that their only option was to purchase the medication at the local pharmacy, after a prescription was phoned in by the Respondent, and administer the medication injections at home. (R. p. 171, ¶ 19). Appellant contends that the Respondent, Kunze, knew that he was required to submit claims to Medicare if the medication was given in his office and therefore tried to convince the Plaintiff and the Decedent to administer the medication at home. (R. p. 201).Each injection cost Two Thousand ($2,000.00) Dollars. (R. p. 174). Additionally, both the manufacturer of the medication and the FDA require the injections to be given under the direct supervision of a physician. (R. p. 202, L15-L19, “Patient responsibility is zero.”)
For the next few weeks the Decedent and the Plaintiff continued to request that the Defendant, Kunze, give the medication in his office and submit Medicare claims. The Respondent continued to prescribe the medication and phone it into a local pharmacy but was adamant that he would not submit claims to Medicare. Although the Decedent and the Petitioner made numerous phone calls and even sent letters to the Respondent, he refused to respond. (R. p. 173 et seq.). At the same time, the Respondent’s office staff continued to inform the Plaintiff that they had no information regarding Medicare claims and that the Respondent needed to make all decisions regarding claim submissions.
Additionally, during this time period, not only was Dr. Kunze’s office telling the Decedent and the Appellant that Dr. Kunze made all the decisions on whether a claim is filed or not, the Respondent’s staff, including, Ms. Burr, attempted to shift the responsibility for the actual prescription of this medication and the submission of the claims away from the Respondent, Kunze, toward Gary W. Thomas, M.D., the Decedent’s oncologist. Specifically, the Defendant, Kunze’s, nurse, Gerri Burr, informed the Plaintiff that the Decedent’s condition was likely caused by the chemotherapy, which had been administered earlier by Dr. Thomas, and that, if it was caused by the chemotherapy, that Dr. Thomas’ office would be responsible for prescribing the medication, pre-ordering it through his office and waiting for Medicare reimbursement from Medicare, not Dr. Kunze. (R. p. 199, L12 – p. 200, L22).
This attempt to shift the responsibility for claim submission to Dr. Thomas is clear in Ms. Burr’s December 2002, deposition testimony, when she was questioned regarding a May 22, 2001, telephone message evidencing a conversation between the Plaintiff to the office of Gary W. Thomas, M.D. (R. p. 207). The testimony of Ms. Burr also evidences the fact that Dr. Thomas’ office sensed the desperation of the Appellant in trying to get one of her husband’s physicians to submit a claim to Medicare the cost of this expensive medication. Ms. Burr testified, as follows:
Q: I am going to go ahead and show you this. What does this look like?
A: Well, it’s from oncology and hematology so it has to be from Dr. Thomas’office.
Q: And what does it say?
A: “Phyllis called. She just had a long talk with Geri at Dr. Kunze’s office. They suggested that they call us to see if we can give the Sandostatin LAR…Gastro does not want to buy…every month.”
Q: I hate to interrupt, if you could speak up so she [the court reported] can get it down.
A. This says, “Phyllis called. She just had a long talk with Geri at Dr. Kunze’s office. They suggested that they call us to see if we can give the Sandostatin LAR and bill Medicare for it. Gastro does not want to buy the Sandostatin every month and then wait to get reimbursed for this. “Phyllis is desperate.”
Q: Is it possible that you sent her over to Dr. Thomas and suggested that Dr. Thomas submit the claim?
A: Did I send her over there? I don’t know. In our conversation I am certain that we talked about if it was chemo-induced that it would be covered, and I think we both discussed – Phyllis and I both discussed the fact that if it was chemo-induced that it would be covered by – by Medicare and that Dr. Thomas would be the responsible person to give it. Q: Did you think it was chemo-induced?
A: Did I?
Q: Yes ma’am.
A: Yes.
(R. p. 199, L12 – p. 200, L22).
It was this May 22, 2001, communication between Ms. Burr and the Petitioner which initially caused the Petitioner to believe that the Decedent’s condition may have been induced by chemotherapy. This communication between Ms. Burr and the Petitioner evidences the beginning of a battle between Dr. Thomas and Dr. Kunze and their offices over who would be responsible for the prescription and pre-ordering of this medication and the submission of Medicare claims. This battle lasted the last eight (8) months of the Decedent’s life.
Sometime in June, 2001, the Respondent, Kunze, agreed to administer the medication under his supervision and in his office but continued to require the Decedent and the Petitioner to purchase the monthly dose from the pharmacy and return it to his office where he would administer the injection. Between June 2001 and October 2001, the Respondent continued to refuse to file Medicare claims despite the constant pleas for assistance from the Decedent and the Petitioner and each month the Decedent and the Appellant had to purchase the medication. (R. pp. 181, 183, 188 and 207).
Between May 2001 and October 2001, the date of the Decedent’s death, the Petitioner and the Decedent were shuffled back and forth between the Respondent, Kunze’s, office and the Defendant, Thomas’, office. In the midst of their battle with each other, Dr. Thomas and Dr. Kunze were each claiming that the other was responsible for the submission of the claims with neither willing to submit claims. The Defendant, Thomas, continued to maintain his position that the Decedent’s condition was not chemotherapy related and, therefore, he was not responsible to submit claims, and the Respondent, Kunze, continued to maintain a position that unless the Decedent’s condition was chemotherapy related, a claim could not be submitted. Dr. Thomas’ position dependent on causation; however, the testimony clearly shows that Dr. Kunze is wrong.
Astonishingly, during this period of time, although the Defendant, Kunze, refused to submit claims for the cost of the medication, he did, each month, submit claims for his service in providing the injection in his office. (R. p. 180, ¶ 59-61, p. 202, L7-p. 203, L19). Even after the Respondent, Kunze, was informed by Medicare that the Decedent was not responsible for a portion of the charge for these injections (i.e. $11.76), the Respondent attempted to collect on that amount and, in January 2003, notified the Appellant, now a widow, that he would place a lien on her personal and real property unless the $11.76 was paid. (R. p. 202-205). It was not until shortly after the deposition of Ms. Burr, in December 2002, that the threats to place a lien on the Appellant’s property for this $11.76 ceased.
Without Medicare coverage or supplemental insurance coverage, the medication cost the Decedent approximately Two Thousand ($2,000.00) per month. The Decedent had a Supplemental Medigap Insurance policy and as a veteran of the United States Military, was eligible for VA benefits; however, a Medicare claim filing and determination was required before benefits would be payable under either of these sources. There was never any reimbursement for these injections from May 2001 through August 2001 for a total of over Eight Thousand ($8,000.00) Dollars.
On October 1, 2002, the Petitioner filed her Summons and Complaint in Beaufort County Court of Common Pleas alleging causes of action for (1) state law professional negligence and (2) state law breach of fiduciary duty against the Respondents, Kenneth C. Kunze, M.D. and Hilton Head Gastroenterology, P.A. (hereinafter collectively referred to as “Gastroenterology”). [1] Contrary to what the Respondent has claimed in the lower courts, the Appellant has not brought a claim for an implied right of action under the Medicare Act.
Rather, Petitioner’s state law professional negligence cause of action contained numerous specific allegations of negligence acts by the Respondent, including (1) recommendation and performance of a March 21, 2001, unnecessary surgery and the care leading up to that recommendation; (2) refusing to submit Medicare claims for Medicare covered injections provided to the Decedent, a Medicare beneficiary; and (3) refusing to answer the repeated written and verbal pleas of the Decedent for assistance or help in the submission of Medicare claims for the Medicare covered injections. (R. pp. 32, ¶ 89(k); p. 33, ¶ 89(n) and 89(o)).
On February 9, 2004, the Respondent, Kunze, filed a Motion for Summary Judgment seeking dismissal “upon the claims raised by Plaintiff regarding … Breach of Fiduciary Duty and negligence arising out of the failure of Dr. Kunze and Hilton Head Gastroenterology to submit a claim to Medicare on behalf of the Plaintiff’s decedent, James John Wogan.” (R. p. 57, ¶ 1). The Respondent, Kunze, claimed that the Petitioner was attempting to assert a private right of action under the Medicare Act. Petitioner argued that the she brought state law causes of action which merely referenced violation of a federal regulation as evidence of negligence by the Respondent.
On June 28, 2004, the Honorable Curtis L. Coltrane, sitting as Special Circuit Court Judge, heard oral arguments on the Motion. During oral argument, the Respondent, Kunze, argued that the Petitioner was attempting to assert a private right of action under the Medicare Act where one did not exist. By order dated July 5, 2004, the Court dismissed (1) “Plaintiffs’ claim for negligence based on the failure of these Defendants to file a Medicare claim;” and (2) Petitioner’s Fourth Cause of Action for breach of fiduciary duty. (R. p. 9, ¶ No. 2). The Lower Court ruled that there is no implied right of action under the Medicare Act. Implicit in this ruling is the lower court’s finding the Petitioner’s complaint was attempting to assert a cause of action under the Medicare Act.
On July 16, 2004, the Petitioner filed a Motion to Alter or Amend, pursuant to Rule 59(e), SCRCP. (R. pp. 102-125) On August 6, 2004, the lower court denied Petitioner’s motion on its face without further oral argument. (R. p. 11).
On August 18, 2004, the Petitioner served the Notice of Appeal on the Respondents, Kunze and Thomas. The South Carolina Court of Appeals heard oral arguments on the matter on September 14, 2005. The Court of Appeals affirmed the judgment of the circuit court. (Phyllis J. Wogan, individually and as Personal Representative of the Estate of James John Wogan v. Kenneth C. Kunze, M.D., et al., Opinion Number 4026) (R. p. 386). The Petitioner filed a Petition for Rehearing on October 10, 2005. The South Carolina Court of Appeals denied the Petition for Rehearing on December 15, 2005. Petitioner filed a Petition for a Writ of Certiorari to review that decision of the South Carolina Court of Appeal.[2] The South Carolina Supreme Court granted Appellant’s Petition for a Writ of Certiorari on January 5, 2007.
It is undisputed that the Respondent is/was a Medicare Participating Provider and that the Decedent was a Medicare beneficiary. Additionally, Medicare’s Mandatory Claim Submission Regulation, states, “As a rule, providers are not required to submit claims for non-covered services. However, if the beneficiary or his/her representative believes a service may be covered or desires a formal Medicare determination for consideration by a supplemental insurance, the provider must submit a claim.” (R. p. 144, ¶ 18(a) and pp. 147-149). (emphasis added).
ARGUMENTS
I. Did the Court of Appeals err in ruling that a physician owes no duty to file Medicare claims for his/her Medicare patient, unless an implicit right of action exists under the Medicare Act?
A. Expert testimony as to the appropriate standard of care can be used to demonstrate the duty to file.
It does not matter whether a Medicare beneficiary has an implied right of action under the Medicare Act. It does not matter whether the Medicare regulations create liability based upon negligence per se.
The issue is not whether the Medicare regulations standing alone create a standard of care. Instead, the question is whether expert medical testimony that the standard of care is to follow Medicare regulations is competent testimony.
Petitioner has provided the Court with the uncontradicted expert opinion from the University of Virginia’s Chief of Gastroenterology and Hepatology, Dr. David Peura. R. P. 160). This expert, practicing in the same specialty as the Respondent, opined that the Respondent Dr. Kunze “departed from generally accepted medical standards of gastroenterological care and treatment” by failing to assist Mr. Wogan in filing for Medicare. (See R. page 163 ¶ 16 and R. page 164, ¶ 16(m); see also R. at p. 165, ¶ 18). Therefore, liability is not based upon violation of the Medicare Act, but upon violation of the standard of care of a reasonable physician. The standard of care imposed upon a reasonable physician is the requirement to submit the claim to Medicare. If the Respondent has failed to submit claims for his patient, it is a breach of the physician’s standard of care. This is relevant to demonstrate negligence, as it demonstrates the degree of care and skill (or lack thereof) which the Respondent Kunze used when dealing with his patient, as well as the harm caused.
In the matter of White, __S.E.2d ____ (November 20th, 2006, South Carolina Supreme Court), this Court held that the relevant standards of care may be derived from numerous sources, including statutes and regulations. There was no requirement in White that the statutes at issue be safety statutes sufficient to impose liability under the doctrine of negligence per se:
“The fact finder may consider relevant standards of care from various sources in determining whether a defendant breached a duty owed to an injured person in a negligence case. The standard of care in a given case may be established and defined by the common law, statutes, the administrative regulations, industry standards, or a defendant’s own policies and guidelines.”
This Court in White discussed that Medicare Regulations may possibly be relevant, while noting that that issue was not yet right for review:
“Appellant cites Federal Medicaid or Medicare regulations in her complaint, and both Appellant and Babcock Center mentioned various statutes, regulations and program guidelines in their briefs. We express no opinion on particular standards of care which may be relevant and properly applied in this case. The identification of sources establishing the standard of care with regard to Appellant will be an issue for the parties and Court on remand of this case.”
In the case at bar, Petitioner is relying on expert testimony, not simply the Medicare guidelines alone.
In Peterson v. National Railroad Passenger Corporation, 365 S.C. 391, 397, 618 S.E.2d 903, 906 (2005), this Court held: “We agree that the standard of care is established by Federal law.” In the very next paragraph, Peterson reiterated that “ Federal regulations provide the standard of care ...” 365 S.C. at 397. Peterson then proceeded to hold that defendant was bound by its own more stringent standard of care which it had voluntarily adopted. Thus one can see that Peterson does two things: it first finds that the standard of care can be derived from a Federal regulation; next, it holds that regardless of pre-emption and other issues, one can alternatively base liability on the policy of a defendant. Peterson goes further than is necessary in the case at bar, because in the case at bar the Medicare regulations do not justify a lesser standard.
Similarly, in Caldwell v. K-Mart Corp., 306 S.C. 27, 31-32, 410 S.E.2d 21, 24 (Ct. App. 1991), policies of a defendant were held admissible to prove standard of care even though they were more stringent than required by statute. Caldwell was cited by White for the same proposition.
In the case of bar, the Respondent Kunze signed up for the Medicare program and thereby agreed to be bound by its regulations; Kunze’s subsequent violation of the regulations in his dealings with this Decedent demonstrate that he deviated from the standard of care which he voluntarily adopted when he agreed to participate in the Medicare program. Expert testimony has opined this to be a violation of the standard of care.
This Court has held that “relevant rules of a Defendant are admissible in evidence in a personal injury action regardless of whether rules were intended primarily for employee guidance, public safety, or both, because violation of such rules may constitute evidence of a breach of duty of care and the proximate cause of injury.” White, supra, citing Tidwell v. Columbia Railway, Gas and Electric Company, 109 S.C. 34, 95 S.E. 109 (1918).
When a physician signs on as a Medicare participant and agrees to honor the regulations of the program, this is no different from adopting a policy that mirrors those set out in the Medicare regulations. Therefore, the following additional quotation from White is relevant:
“[W]hen Defendant adopts internal policies or self-imposed rules and therefore violates those policies or rules, jury may consider such violations as evidence of negligence if they proximately caused a plaintiff’s damages.” White, citing Steeves, supra.
What is decisive is not what rights are created by violation of a Medicare regulation, but that expert testimony has demonstrated that such violation contravenes the standard of care.
II. Did the Court of Appeals err in ruling that a violation of Medicare regulations cannot be used as evidence of negligence and/or breach of fiduciary duty in state common law actions?
A. Can a standard of care be derived from Medicare regulations alone even absent negligence per se?
Federal case law in this area shows that federal regulations, even those without a private right of action, are often used to set the standard of care in state law causes of action. “Even though the [Plaintiff] cannot assert a private right of action arising under federal laws, the federal statutes may create a standard of conduct which, if broken, would give rise to an action for common-law negligence.” Hofbauer v. Northwestern Nat’l Bank of Rochester, 700 F.2d 1197 (8th Cir. 1983). Even though the Hofbauer court first determined that there was no private right of action under the National Flood Insurance Act, it nevertheless went on to state, “The NFIA does not itself create a federal cause of action, but we do not think it prohibits a state court from finding negligence when there has been a violation of the statute.” Id at 1201.
Additionally, although The Occupational Safety and Health Act (OSHA) does not provide for an explicit private right of action, most state and federal courts agree that at a minimum, evidence of an OSHA violation can be used to set the standard of care. The Fourth Circuit, in Albrecht v. Baltimore & Ohio Railroad Co., 808 F.2d 329 (4th Cir. 1987), has adopted the view that OSHA standards may be admitted as “some evidence” of applicable standards of care. In Albrecht, the district court read OSHA regulations to the jury and instructed the jury that the regulations could be considered by it as “one more piece of evidence on the issue of negligence.” Id. at 332. The trial court also instructed the jury that the regulations “were not conclusive or binding and that the application of the regulations to the facts of the case were solely for the jury to determine, as was the weight to be given to the regulations in determining the issue of negligence.” Id. at 332. The Fourth Circuit Court of Appeals found no reversible error in these instructions or the introduction of these regulations.
The First Circuit Court of Appeals, in Pedraza v. Shell Oil Co., 942 F.2d 48 (1st Cir. 1991), after remarking that OSHA creates no private right of action, cited Albrecht and held that OSHA regulations should be viewed as “prescribing standards of care relevant in common law negligence actions” and that in such actions, regulations promulgated under OSHA furnished evidence of the standard of care. Id. at 52.
In Elledge v. Richland/Lexington School District Five, 352 S.C. 179, 186, 573 S.E. 2d 789, 793 (2002), industry safety standards regarding playground equipment were found admissible to prove the standard of care even though such standards had not been adopted by the School District. The Court noted:
“This kind of evidence is not admitted because it has ‘the force of law,’ but rather as ‘illustrative evidence of safety practices or rules generally prevailing in the industry.’” 352 S.C. at 186.
The Court noted that such evidence is also admissible under Rules 401 and 402, SCRE. Elledge was cited in White for the above proposition.
In White, supra, this Court cited the Restatement (Second) of Torts §285 (1965) for the proposition that “standards of conduct of [a] reasonable man may be established by statute, regulation, court’s interpretation of statute or regulation ...”
The above case supports a finding that one basis to establish the standard of care is Medicare’s Mandatory Claim Submission Regulations. This regulation sets the standard of care requiring the Respondent, as a Medicare participating physician, to submit a Medicare claim for his patient, a Medicare beneficiary. He failed to do this, and this failure was a breach of the standard of care, as established by regulation and a breach of his duty.
The Respondent Kunze signed up for Medicare in order to reap its financial benefits. So his compliance with its requirements was mandatory. The expert testimony submitted in this case demonstrates that it is a jury issue as to the requirement of the participating physician to submit all Medicare beneficiary’s claims, as is in fact required by the Medicare regulations.
II. B. Violation of the Medicare Regulations constitutes negligence per se.
This Court in White cited numerous South Carolina cases for the proposition that statutes which establish a standard of care will give rise to the operation of the doctrine or negligence per se (see, e.g., Steinke v. S.C. Department of Labor, Licensing and Regulation, 336 S.C. 373, 387-89, 520 S.E.2d 142, 149-50 (1999); Clifford v. Southern Railway Company, 87 S.C. 324, 69 S.E. 513 (1910); Steeves v. U.S., 294 F. Supp 446, 455 (D.S.C. 1968). As discussed, this assignment of error is not based upon the doctrine of negligence per se.
Additionally, the Respondent’s violation of Medicare’s Mandatory Claim Submission Regulations could be viewed as negligence per se. In rejecting Petitioner’s negligence per se argument and hence the implication of a duty based on this reasoning, the South Carolina Court of Appeals ruled that “the Medicare Act was not created to protect from a harm but instead to create a voluntary insurance program to provide medical benefits in accordance with the provisions of this part for aged and disabled individuals...” Phyllis J. Wogan, individually and as Personal Representative of the Estate of James John Wogan v. Kenneth C. Kunze, M.D., et al, (App. P. 404). This is in error.
First, “in order to show that the Defendant owes ... a duty of care arising from a statute, the Plaintiff must show two things: (1) that the essential purpose of the statute is to protect from the kind of harm the Plaintiff has suffered; and (2) that he is a member of the claim of persons the statute is intended to protect. If the Plaintiff makes this showing, he has proven the first element of the claim of negligence: viz., that the Defendant owed him a duty of care. If he then shows the Defendant violated the statute, he has proven the second element of a negligence cause of action: viz., that the Defendant, by act or omission, failed to exercise due care. This constitutes proof of negligence per se.” Rayfield v. South Carolina Department of Corrections, 297 S.C. 95, 374 S.E.2d 910, 914 (Ct. App. 1988) (emphasis added).
Clearly, the Medicare Act was enacted to protect aged individuals from a harm - the harm and sickness due to lack of coverage of catastrophic medical expenses. “Congress described the Medicare program as ‘more adequate and feasible health insurance protection’ designed to ‘contribute toward making economic security in old age more realistic...” Amgen, Inc. v. Scully, 234 F. Supp.2d 9, 18 (D.D.C. 2002), citing S.Rep. No. 89-404, (1965) reprinted in 1965 U.S.C.C.A.N. 1943, 1964. This is further clarified in President Lyndon B. Johnson’s remarks with President Truman at the signing in Independence, Missouri of the Medicare Bill in 1965. President Johnson stated:
“No longer will older Americans be denied the healing miracle of modern medicine. No longer will illness crush and destroy the savings that they have so carefully put away over a lifetime so that they might enjoy dignity in their later years... And no longer will this Nation refuse the hand of justice to those who have given a lifetime of service and wisdom and labor to the progress of this progressive country.” (App. p. 75 and http://63.241.27.79/about/history/presidents/LBJ7_30_65.asp).
This is a clear statement of Medicare’s purpose and the policy behind it’s enactment.
Defendant participated in Medicare to reap its benefits, so his compliance with its requirements was mandatory.
It is not necessary to determine here whether the violation of the Medicare statute gives rise to an implied federal cause of action for damages. The question here is to whether or not it constitutes negligence per se for a state law action.
The standard for imposing negligence per se is set out in Rayfield v. South Carolina Department of Corrections, 297 S.C. 95, 374 S.E.2d 910:
“In order to show that the defendant owes him a duty of care arising from a statute, the plaintiff must show two things: (1) That the essential purpose of the statute is to protect from the kind of harm the plaintiff has suffered; and (2) that he is a member of the class of persons the statute is intended to protect... Negligence per se simply means the jury need not decide if the defendant acted as would a reasonable man in the circumstances. The statute fixes the standard of conduct required of the defendant, leaving the jury merely to decide whether defendant breached the statute.” 297 S.C. 95, 103-104.
Rayfield cited Clifford v. Southern Railway, 87 S.C. 324, 69 S.E. 513 (1910) for the proposition that in interpreting the purpose of the statute, liability is not limited to situations wherein injury occurred in a particular manner, so long as the injured party was within the class of persons intended to be protected by the statute. Rayfield noted that Clifford involved a situation wherein a horse was spooked while leading a buggy by the sudden appearance of a train which had not sounded its horn while approaching the crossing. Although there was not actually a collision between the horse and buggy and the train, the horse had sprung forward, causing the plaintiff to be thrown from it and injured. This Court rejected the defense by the railroad which contended that the signaling statute only applied if the injury was caused by a collision with the train.
II. C. Breach of Fiduciary Duty.
The decision of the Court of Appeals in the case at bar noted that South Carolina has recognized the doctor-patient relationship as a confidential relationship. However, the Court added that South Carolina has not found that negligence or malpractice will support a cause of action for breach of fiduciary duty.
However, the Amended Complaint clearly pleads breach of fiduciary duty as a separate cause of action from the malpractice count. Therefore, the question is whether the Respondent Kunze had a fiduciary duty to Decedent to file the Medicare claim, and if so, Appellant/Petitioner is entitled to damages for Respondent’s breach of that fiduciary duty. This question does not depend, as found by the Court of Appeals, on whether the Medicare statute creates an implied right of action. While that would create an alternative and additional ground for recovery, it is not a necessary ground. It is common for the same relief to be available through two different legal theories. Therefore, it was not logical for the Court of Appeals to rule that “to hold the Doctors liable for failure to file the Medicare claim would render meaningless our ruling that there is no private right of action arising under the Medicare Act.”
The expert witness has opined without contradiction that the Respondent had a duty to submit the Medicare claims. It does not matter whether a technical reading of the Medicare statute or regulations requires such submission, as long as this is the standard of care, and the doctor had a fiduciary relationship to the Petitioner.
As noted, the decision of the Court of Appeals in the case at bar did note that South Carolina has recognized the doctor-patient relationship as a confidential relationship, in both McCormick v. England, 328 S.C. 627, 639, 494 S.E.2d 431, 437 (Ct. App. 1997); and in Hodge v. Shea, 252 S.C. 601, 608, 168 S.E.2d 82, 85 (1969).
Additionally, in McCormick (upon which the Court of Appeals decision is based), the underlying rationale for the confidentiality finding was the existence of a fiduciary relationship between a doctor and a patient in South Carolina. The very first legal discussion under the heading “Breach of Physician’s Duty of Confidentiality as Independent Tort” in McCormick, was the following:
“Being a fiduciary relationship, mutual trust and confidence are essential.” 328 S.C. at 635.
A fiduciary duty not only creates a duty not to do certain things (such as reveal confidential information), it also creates certain affirmative duties that would not otherwise be present. This affirmative duty includes the duty of a fiduciary partner to disclose to his other partners that he had purchased land which was later purchased by a partnership. Corley v. Ott, 326 S.C. 89, 485 S.E.2d 97, Kuznik v. Bees Ferry Associates, 342 S.C. 579, 538 S.E.2d 15 (Ct. App. 2000). In American Fire and Casualty Company v. Johnson, 332 S.C. 307, 504 S.E.2d 356 (Ct. App. 1998) and in Chapman v. Citizens and Southern National Bank of South Carolina, 302 S.C. 469, 395 S.E.2d 446 (Ct. App. 1990), it was held that a fiduciary duty “requires the utmost degree of good faith in all transactions between the parties.” 332 S.C. at 311, 302 S.C. at 476.
It is clear that a fiduciary may not rely upon the fact that something is not forbidden or required by law (as argued by Respondent in the case at bar):
“Many forms of conduct permissible in a workaday world for those acting at arm’s length are forbidden to those bound by fiduciary ties. A trustee is held to something stricter than the morals of the market place. Not honestly alone, but the punctilio of an honor the most sensitive, is the standard of behavior. As to this there has developed a tradition that is unbending and inveterate. Uncompromising rigidity has been the attitude of courts of equity when petitioned to undermine the rule of undivided loyalty by the disintegrating erosion of particular exceptions. Only thus has the level of conduct for fiduciaries been kept at a level higher than that trodden by the crowd. It will not consciously be lowered by any judgment of this court.” Kuznik, supra, 342 S.C. at 597, citing Justice Cardozo in Meinhard v. Salmon, 249 N.Y. 458, 164 N.E. 545 (1928).
Therefore, it can be seen that it is irrelevant whether or not the Medicare Act creates an implied right of action or even whether it actually requires the physician to file claims; all that matters for this cause of action is whether the doctor is a fiduciary. If the doctor is a fiduciary, then the uncontradicted Affidavit of Dr. Peura that the Respondent Kunze had a fiduciary duty to assist Mr. Wogan in filing his Medicare claim, and that such was the standard of care of a gastroenterologist in this situation, is the prevailing state of facts. Since the Affidavit of Dr. Peura is uncontradicted, there is no substantial evidence upon which to base a contrary finding.
Additionally, even if a breach of fiduciary duty would not alone give rise to a medical malpractice claim, the Petitioner would still have a claim for at least the $8,000.00 in actual damages resulting from the failure to file the Medicare claim, as a separate cause of action.
III. There is no federal pre-emption.
Congress [in enacting the Medicare Act], did not intend to preclude residents from pursuing common law remedies.” Brogdon v. National Healthcare Corp, 103 F.Supp.2d 1322 (N.D. Ga. 2002). Additionally, both the Medicare and Medicaid statutes specify that the remedies provided [under the Act] “shall not be construed as limiting such other remedies, including any remedy available to an individual at common law.” See 42 U.S.C.A. §§ 1395i-3(h)(5), 1396r(h)(8).
The Respondent has presented no authority to show that the Medicare Act preempts sate law. Generally, “a state court is free to look to the provisions of a federal statute for guidance in applying its longstanding common-law remedies unless Congress has prohibited the state from looking to the statute’s provisions as a standard in determining whether there has been a common-law breach of duty. Hofbauer v. Northwestern Nat’l Bank of Rochester, 700 F.2d 1197 (8 Cir. 1983).
This Court has also so held. In Peterson v. National Railroad Passenger Corp, 365 S.C. 391, 397, 618 S.E. 2d 903, 906 (2005), a defendant argued that more lenient federal safety regulations pre-empted more stringent internal policies of that defendant regarding the standard of care. However, this Court held that the pre-emption doctrine was irrelevant to the standard of care. This ruling was cited for the same proposition in Mater of White, supra.
IV. If this court were to find that there are viable state law claims for negligence and breach of fiduciary duty available to the Petitioner, as an alternative sustaining ground, is the Petitioner barred from bringing those actions under the exhaustion of administrative remedies doctrine?
When faced with clear and convincing evidence of a violation, Respondent argues, as an additional and sustaining ground, that the petitioner failed to exhaust her administrative remedies. First, because the Respondent refused to submit claims on behalf of the Decedent, there were no administrative remedies available to Decedent and Petitioner. Faced with the clear refusal of the Respondent to submit claims, Respondent then argues, “[t]he petitioner had the opportunity pursuant to the Medicare Act to file the claim herself and likewise, report any perceived misconduct of Dr. Kunze.” The Respondent can provide no authority for the proposition that the Petitioner could have filed her own claim; rather, he places the burden upon the Petitioner, stating, “the Petitioner has failed to cite any Medicare regulation that would have prohibited the Decedent or the Petitioner as his representative from filing his own claim.” (Respondent’s Return, p. 16).
Even if the Medicare Regulations allowed for the Petitioner to file his own claims for this medication, it could not have been done without the active assistance and participation of the Respondent. The testimony in the record is that the Respondent failed to address any of the pleas for assistance from the petitioner, including failing to respond to the Petitioner’s written requests for assistance.
Additionally, this exact issue was addressed in Brogdon v. National Healthcare Corporation, 103 F. Supp.2d 1322 (N.D. Ga. 2000). Just as the Respondent is now arguing, the Brogdon Defendants argued that the “Plaintiff must first present their claims under the Medicare Act through an administrative process before seeking judicial relief.” See Brogdon at 1328. Brogdon rejected this argument for the same reason that it must fail in this case - because it is not a case against the United States, the Secretary of Health and Human Services or their officers or employees.
In Brogdon, the Court emphasized the requirement of exhaustion under the Medicare administrative scheme is strictly limited, stating, “[T]he Court is not authorized to address claims against the United States, the Secretary of Health and Human Services, or their officers and employees, that arise under the Medicare Act until after the conclusion of an administrative review process.” In denying the Brogdon defendants’ motion to dismiss, the Court stated, “Plaintiffs do not assert claims against the United States, the Secretary of Health and Human Services, or their officers or employees. Furthermore, the Medicare Act contains no administrative review process that applies to Plaintiff’s claims. The Court therefore rejects this argument.” Id at 1328. Thus, the exhaustion of administrative remedies doctrine applies only to cases against the United States, the Secretary of Health and Human Services, or their officers or employees.
Finally, Respondent argues that Petitioner’s claims were properly dismissed because she would never be able to prove that the medication was covered by Medicare. As discussed above, it does not matter even if this were the case (which is denied), because the standard of care does not depend on the state of the law. The standard of care has been established in an uncontradicted affidavit of a Gastroenterologist.
CONCLUSION
For the reasons set forth above the Petitioner respectfully requests that the decision of the South Carolina Court of Appeals be reversed and that the Order of Summary Judgment issued by the trial court be overturned.
Respectfully submitted.
SVALINA LAW FIRM, P.A.
_______________________
Samuel S.
Svalina
Jennifer I. Campbell
PO Drawer 1207
Beaufort, South Carolina 29901
(843)
524-0333
Attorney for
the Appellant/Petitioner
LAW OFFICE OF TIMOTHY M. WOGAN, LLC
_________________________
Timothy M.
Wogan
PO Box 22124
Hilton Head, South Carolina 29925
(843)
815-6921
Attorney for
the Appellant/Petitioner
Beaufort, South Carolina
March 5, 2007
[1] The other causes of action alleged against the Defendants are either not subject to this Petition or are still pending.
[2] The Court of Appeals ruled that since the Respondents, Thomas and Thomas, P.A., did not prescribe the medication at issue they had no duty to submit a Medicare claim for the medication. The Petitioner does not appeal this ruling and, therefore, all issues on appeal are only as to the actions and/or inactions of the Respondents, Kunze and his partnership, Hilton Head Gastroenterology, P.A. (App. at 411-412).