Liability Concerns for Physicians, Providers, Hospital and Reproductive Clinics following the Alabama Supreme Court Ruling in LePage v. Center for Reproductive Medicine – the “Sanctity of Human Life” Opinion

Much has been written in social media about the recent decision by the Supreme Court of Alabama in LePage v. Center for Reproductive Medicine. While the decision has been viewed as controversial, and surely raises issues of reproductive rights which are contentious in the world today, very little of the discussion focuses on the facts or the actual legal holding of the case. Instead, most social discussion appears to be based upon the perceived impacts of the decision, with little conversation of the analysis or legal issues in the holding. This article does not seek to advance a political, religious, social, or moral persuasion of the validity or viability of the legal issues raised by the decision.  Instead, it illustrates why physicians and medical providers face a new legal landscape in light of the implications of the LePage ruling.

The decision was based upon a unique but potentially repeatable factual scenario.  Plaintiff’s filed suit alleging that the reproductive center, which was located within the same building as a local hospital, allegedly and negligently allowed a hospital patient to wander into the fertility clinic through an unsecured doorway.  The patient entered the cryogenic nursery and removed several embryos.  The subzero temperatures for embryo storage freeze-burned the patient’s hand causing the person to drop the embryos on the floor, killing them. 

Several groups of Plaintiffs brought multiple lawsuits asserting claims under the Wrongful Death of a Minor Act, pleading in the alternative common law claims for negligence, “wantonness” and asserting the entitlement to recover mental anguish and emotional distress.  The trial court granted motions to dismiss by the hospital and the clinic finding that the cryopreserved in vitro embryos do not “fit within the definition of a child” for purposes of permitting Plaintiffs to assert a wrongful-death claim.  The trial court also dismissed the negligence claims based upon Alabama’s prohibition on recovery of “compensation damages for loss of human life.”  This ruling focused on a theory, common under many state laws, that limits recovery for emotional injury only to plaintiffs who were in the zone of danger, sustained a physical injury, or were placed in immediate risk of physical harm.

The Alabama Court noted that the issues in these cases have “raised many difficult questions” including questions about the “ethical status” and legal status of “extrauterine children” under the 14^th Amendment to the United States Constitution.  But the Court declined to wade into those thorny issues, and instead presented what it deemed to be a “clear” review of the “relevant statutory text” of the Wrongful Death of a Minor Act (“WDA”) which had been enacted back in 1876.  The Court held that the WDA applies to “all unborn children, without limitation,” and reversed the trial court’s ruling dismissing the Plaintiffs’ complaint. 

The Court opined that the parties disagreed as to the legal implications but did not fundamentally disagree with several basic premises for the Court’s decision: that an unborn child was a “genetically unique human being” whose life begins at fertilization and ends at death; and that an unborn child usually qualifies as a “human being,” a “human life,” or a “person” utilizing words as used in ordinary conversation.  The Court noted that defendants argued that an unborn child ceases to qualify as a child or person if that child is not contained within a biological womb.  The Court also noted that while there had been a longstanding ethical norm against artificially gestating human embryos behind 14 days of development, but that norm was wavering and that research and recent technology had allowed human embryos to develop well past that point, to eventual viability and/or full term.  The ruling did not focus on the advance of technology in reproductive health nor juxtapose the current set of facts against the history of the law passed back in the late 1870’s. 

In reaching its ruling that the WDA applied to human embryos held in frozen storage, the Court advised that it had previously ruled in 2011 that an unborn child qualified as a minor child for purposes of the WDA.  The decision in this matter relies upon that prior precedent and what it describes as how the phrases “unborn children” are “widely recognized” as “living persons with rights and interests.” The Court then advises that its ruling recognizing the rights of frozen embryos as an unborn life which may not be wrongfully killed in violation of the Act as based upon its effort to give words their natural and common understanding and meaning.  The Supreme Court was sure to note that its own Alabama Constitution recognized the public policy of the state to ensure the protection of the rights of “the unborn child in all manners and measures lawful and appropriate,” under the “Sanctity of Unborn Life” section of the Constitution. 

The Court concluded its analysis by noting that it had previously ruled that the WDA allows an action to be brought for the wrongful death of “any” unborn child, and proceeded to address the extensive dissent by Justice Cook and why it felt the Court should not fashion an “exception” to what it viewed as established precedent under the WDA.  It would be inappropriate to avoid mentioning that the decision was not unanimous, numerous justices concurred in the result but not the reasoning of the majority, and Justice Cook wrote a 56-page dissent and rebuke to the majority 25-page opinion.  In any event, in concluding its decision, the majority noted that the Court found it significant that the parents themselves had contracted with the clinic under terms which allowed the destruction of the embryos which the Court found may be litigated on remand, under theories that the Plaintiffs were contractually barred or equitably prohibited from pursuing WDA claims based upon their signed contracts. 

The facts of this case are unique, and yet, this ruling has already had consequences nationwide.  Physicians and providers are concerned for the legal implications and their personal liability under the WDA in light of the ruling and its impact on care. 

Hospitals and hospital systems concerned for their liability, particularly the punitive damages allowed under the WDA, have announced the temporary suspension of their fertility clinic operations.  While the Court did not rule on the impact of patient waiver or consent forms, there could be rippling effects for physicians and medical providers while the Court on remand renders a ruling on those key issues. 

While New Jersey’s Supreme Court has not squarely addressed this issue, its rulings on similar topics may leave physicians, clinics and hospital providers wary.  New Jersey has not allowed parents of stillborn children to sue for wrongful death, however, the Court has allowed personal injury claims for the loss of an unborn child.  State lawmakers in New Jersey, Alabama and throughout the country, as well as federal legislators, may react to this ruling to provide statutory protections and/or amendments to their wrongful death laws.  Physicians, clinic operators and hospital-based clinics, without what they believe to be sufficient contractual or legal protection, could flee the industry, seek stronger contractual protections and waivers from patients, or lobby for legislative immunity from suit.  Given the expansive nature of the reproductive health industry and consumer demand for its providers, the industry may also enhance security surrounding facilities, clinics, and hospital systems to prevent against further outside security breaches giving rise to plaintiff’s wrongful death claims.  Physicians and providers may advocate in their practice, hospital, and medical systems for greater security protocols as a means to protect themselves from future liability.

The U.S. Attorney’s Office for the District of New Jersey reorganized its health care practice in 2010 and created a stand-alone Health Care and Government Fraud Unit to handle both criminal and civil investigations and prosecutions of health care fraud offenses. Since then, that office has recovered more than $1.36 billion in health care and government fraud settlements, judgments, fines, restitution and forfeiture under the False Claims Act, the Food, Drug and Cosmetic Act, and other statutes.  Many of its enforcement actions have involved diagnostic testing companies and their arrangements with physicians.

In two recent cases, the U.S. Attorney settled with cardiac monitoring companies.  One company agreed to pay more than $13.4 million for steering physician clients to order higher levels of service than medically necessary. In another case, the cardiac monitoring company had entered into “fee-for-service” or “direct-bill” agreements with certain hospital and physician clinic customers that allowed the customers to bill Medicare and retain the reimbursement, which exceeded the fee that the company charged them. These agreements resulted in a net profit to the customers who submitted claims to Medicare in accordance with the agreements, primarily for services that the company—and not the customers—performed. That company paid more than $1.35 million to settle the allegation that the remuneration under these agreements was to induce referrals from their customers for non-Medicare business.

In cases like these, there is always another shoe that drops, and that would be the physician’s shoe. This was the case with the Biodiagnostic Laboratory Services (BLS) matter which involved physicians accepting bribes and kickbacks in exchange for test referrals to BLS. In June 2016, BLS, which is no longer operational, pleaded guilty and was required to forfeit all of its assets.  Since then, the investigation has resulted in 45 guilty pleas – 31 of them from doctors – in connection with the bribery scheme. It is believed to be the largest number of medical professionals ever prosecuted in a bribery case. The investigation has to date recovered more than $12 million through forfeiture.

Similarly, in Texas, One Step Diagnostic agreed to pay $1.2 million in 2014, to settle allegations that it violated the Stark Statute and the False Claims Act by entering into sham consulting and medical director agreements with physicians who referred patients to One Step Diagnostic Centers. Thereafter, in 2016, at least four physicians entered into settlements to resolve anti-kickback allegations surrounding the same medical director agreements.

The message here is that diagnostic testing companies are always on the government’s radar screen, and that surveillance eventually includes the physicians who do business with them.  While diagnostic testing companies can bring valuable services to a physician practice, even legitimate arrangements can place the physician in jeopardy if the company, the services, or the agreement don’t meet applicable rules.  The physician must assess whether the company it plans to partner with is operating in accordance with laws regarding licensure, personnel, referrals and billing.  In New Jersey, rules governing diagnostic testing services performed in a physician’s office impose additional requirements on the practice. Physicians should consult with experienced legal counsel to vet any diagnostic testing arrangement under both federal and state law before signing a services or billing agreement or receiving any compensation from a consulting or medical director arrangement.

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