One Doctor group litigation The lawsuit against Envision Healthcare will test California’s restrictions on corporate medical practice bans.

The team of physicians of the American Academy of Emergency Medicine believes that Envision’s emergency department contract with Placentia-Linda Hospital violated state law because it took too much decision-making power from doctors — something that state law tried to prevent — and changed it. Placed in Envision, owned by private equity firms Kravis, Kohlberg, and Roberts.

AAEM-PG’s chief medical officer, Dr. Robert McNamara, said that the lawsuit was designed to test Envision’s use of the so-called “frontier” professional association, which they claimed was an employing entity.

“We believe that Envision is responsible, and we will be able to prove that the professional association structure is just a scam that hinders the practice of medical law companies,” he said.

In a complaint filed in a California court on Monday, the organization of doctors stated that after Envision gained practice, it had “deeply and universally” controlled the medical practice of doctors, weakening their independence and violating the law. For example, the lawsuit states that Envision decides how many doctors to hire, which doctors to hire, their salaries and work schedules. The complaint alleges that it also controls advertisements for doctor vacancies, terms of employment, staffing levels and patient visits.

Envision said it would not comment on pending litigation. KKR Acquired the company for $9.9 billion in 2018.

In states with drug bans such as California, hospitals and other companies that have physician groups build them as a basis for compliance with the law. For example, Sutter Health owns Palo Alto Medical Foundation.

Richard Schaeffler, professor of health economics and public policy at the University of California, Berkeley, said: “It’s everywhere in the state; you can find it everywhere.”

Scheffler said that Envision is trying to do something similar, but it is a private equity company, not a non-profit medical system. He said that the former must make money for its investors, so the court will have to decide whether Envision’s workaround will push the restrictions too far.

“This may be a landmark case,” he said. “This is the first major resistance.”

Paul Giancola is a partner of Snell & Wilmer in Phoenix. He has been engaged in the corporate practice of pharmaceutical transactions. He believes that there should be no difference whether the corporate entity is a private equity or a non-profit organization, although there may be some differences in California law.

Giancola said such arrangements may be helpful because they allow doctors to focus on patient care rather than operational purposes such as reimbursement and benefits. However, if they interfere with patient care, such as asking them to see a certain number of patients within a certain time frame, that is a problem. Even so, these contracts are not different from the hospital’s practice guidelines, for example, this may indicate that all patients over 65 years of age with certain diseases receive CT scans.

“You always see this kind of tension. Whether you are employed by a hospital, a company, or a practice group, people have different models of practice. They try to make recommendations that people can follow. It makes sense,” Giancora said. .

AAEM-PG does not require monetary compensation. Instead, it asked the court to prevent Envision from continuing to practice in the state under its current structure, which allegedly included exclusive medical groups, restrictive covenants in doctor contracts, payment of consideration for acquisition of emergency room contracts, and staffing and billing. Contract control.

The complaint alleges that Envision provided consideration to the hospital in exchange for an exclusive emergency department contract. In this case, the complaint alleges that it provided anesthesia services and inpatient services to hospital owner Tenet Healthcare in hospitals across the country, but did not receive subsidies in exchange for Tenet to grant it an exclusive emergency department contract. Subsidies are allowances provided by hospitals to doctors in certain hospitals to encourage them to practice in hospitals. It is said that the principle of profitability was agreed. The company did not respond to a request for comment.

“The plaintiff was informed and believed that this rebate program was one of its standard methods for obtaining new contracts and maintaining existing contracts,” the complaint stated.

AAEM-PG used to have a contract with a physician company who previously practiced at Placentia-Linda Hospital, but when the hospital decided to cooperate with Envision, the contract was cancelled. McNamara said that this lawsuit is not about reinstatement in the hospital.

“We are not doing this to return to Placentia-Linda,” he said. “We are trying to get the court to enforce the patient protection measures inherent in California’s prohibition on corporate medical practice. It all depends on who controls the patient’s care.”

Tim Greaney, a visiting professor at the University of California Hastings School of Law, said the complaint exposed “widespread concerns” about how the company handled California law. He said this includes the question of whether Envision’s contract would prevent the doctor group from establishing contacts with multiple hospitals, which would restrict competition.

“For years, I have been wondering how these controlled professional companies can thrive and get away with it, I think, because I know it’s common,” Greeney said.