Morris Manning & Martin, LLP

Georgia Courts Issue Important Healthcare Decisions in 2020


Premier Health Care Investments, LLC v. UHS of Anchor, L.P., 849 S.E.2d 441 (Ga. 2020)

In Premier Health Care Investments, the Georgia Supreme Court considered the validity of a rule promulgated by the Department of Community Health (DCH) which requires an acute care hospital that is also offering Certificate of Need (CON) approved inpatient psychiatric services to obtain a CON prior to expanding or converting the number of beds devoted to psychiatric services. The Court held the rule invalid, determining it improperly expanded the scope of “new institutional health services” requiring a CON as set forth in O.C.G.A. § 31-6-40(a). The Court rejected the argument that a CON for inpatient psychiatric services is limited to its defined scope pursuant to O.C.G.A. § 31-6-41, i.e. to the number of inpatient psychiatric beds authorized by the CON.

Following the Georgia Supreme Court’s opinion, an acute care hospital that has a CON for inpatient psychiatric beds likely can offer inpatient psychiatric services up to its authorized number of acute care beds. The decision has other potential important ramifications, that include when an acute care hospital has CON authorization for certain defined service lines within its broader acute care hospital.

Bowden v. Med. Ctr., Inc., 309 Ga. 188 (2020)

In Bowden, the Georgia Supreme Court considered allegations in connection with the Georgia hospital lien statute, O.C.G.A. § 44-14-470 et seq. In this case, the plaintiffs alleged that when a hospital files a lien against causes of action that patients possess, the hospital cannot reasonably state its chargemaster rate as the value of its services. Rather, it must state some lesser amount because hospitals often offer discounted rates to governmental and commercial payors. On the basis of these allegations, the plaintiffs asserted claims sounding in fraud and sought to certify a class action.

However, the Georgia Supreme Court rejected plaintiff’s class certification and held that the plaintiffs’ claims failed as a matter of law. On class allegations, the Court determined that the plaintiffs’ putative class could not satisfy the “commonality” requirement because the common issue asserted by the plaintiffs – whether the chargemaster rate is reasonable – is too individualized. On the plaintiffs’ causes of action, the Court held that the plaintiff’s claims for fraud, negligent representation and civil RICO fail as a matter of law because the hospital committed no fraud. The Court held that the hospital lien statute requires that a hospital state in a lien the “amount claimed to be due,” which is the chargemaster rate. On these bases, the Georgia Supreme Court reversed several opinions issued by the Georgia Court of Appeals allowing similar plaintiffs to proceed past the pleadings stage on similar allegations.

Atlanta Women's Specialists, LLC v. Trabue, No. S19G1138, 2020 WL 6385866 (Ga. Nov. 2, 2020)

In Atlanta Women’s Specialists, the Georgia Supreme Court considered inter alia whether a defendant physician in a medical malpractice action could argue that the jury should apportion fault to the physician’s employer, who was also a named defendant, on the basis of fault of a non-defendant co-employee. The Georgia Supreme Court answered that the defendant physician can do so, but only if the defendant complies with the mandates of O.C.G.A. § 51-12-33(d), i.e. by filing a Notice of Non-Party at Fault, even though the co-employee’s employer is a named defendant. In Atlanta Women’s Specialists, because the defendant physician failed to file a Notice of Non-Party at Fault, the Court held the defendant physician could not argue for apportionment to his employer based on a co-employee’s alleged fault.

Jackson v. Raffensperger, 308 Ga. 736 (2020)

In Jackson, the Georgia Supreme Court considered the constitutionality of the Georgia Lactation Consultant Practice Act (the Act), which prohibits the practice of “lactation care and services” for compensation without a license from the Secretary of State. The trial court and Georgia Court of Appeals found a plaintiff could not state a claim challenging the Act on the grounds that the Georgia Constitution does not recognize a right to work in one's chosen profession, but the Georgia Supreme Court reversed their rulings. The Georgia Supreme Court held that the Georgia Constitution protects a right to work in one's chosen profession free from unreasonable government interference and it remanded the case to the trial court to reconsider whether the plaintiffs’ case presented viable claims. This decision could have broad ramifications for a number of categories of health care professionals who require licensure.

Cobb Hosp., Inc. v. Emory-Adventist, Inc., No. A20A1000, 2020 WL 6445071 (Ga. Ct. App. Nov. 3, 2020)

In Cobb Hosp., the Georgia Court of Appeals considered the applicability of the Georgia Hospital Acquisition Act (HAA) § 31-6-400 et seq. to acquisition of certain real property that had formerly been the site of Emory-Adventist Hospital. The HAA applies only to the sale of non-profit “hospitals,” and in an action brought by certain hospitals owned by the WellStar system, the Cobb County Superior Court concluded that the HAA did not apply to Emory Healthcare, Inc.’s acquisition of real property because Emory did not, in fact, acquire a non-profit “hospital.”

The Georgia Court of Appeals affirmed, holding that Emory acquired real property, not a “hospital” within the meaning of the HAA. Months before Emory’s acquisition, Emory-Adventist closed and ceased operating. It terminated its medical staff, Medicare and Medicaid provider numbers and commercial payor contracts, and closed its doors to patients. Accordingly, Emory acquired vacant land and buildings, not a “hospital.” Because such a transaction need not have undergone HAA review, the Court affirmed dismissal.

Doctors Hosp. of Augusta, LLC v. Georgia Dep't of Cmty. Health, 847 S.E.2d 614, 617 (Ga. Ct. App. 2020)

In Doctors Hosp., the Georgia Court of Appeals considered the grant of a CON to Georgia Regents Medical Center to build a new hospital in Columbia County. Doctors Hospital challenged the CON on a variety of bases, including the validity of certain exceptions to a numeric need methodology for obtaining a CON.

The Court of Appeals noted the proposed facility did not satisfy the numeric need methodology outlined in DCH Rule 111-2-2-.20(3)(b), but did satisfy the “county-financed exemption.” The county-financed exemption applies where the proposed facility would be the sole community provider and more than 20% of the capital cost of the new facility is financed by the county governing authority. Doctors Hospital challenged the validity of the county-financed exception, but the Court of Appeals found it was consistent with the plain language of the CON Act. The Court found that the Rule is consistent with the mandates of O.C.G.A. 31-6-21(b)(8) that the Department adopts regarding methodologies for various new institutional health services such as acute care beds. On this and other grounds, the Court of Appeals affirmed the grant of the CON. 

If you have any questions about this legal update, please contact a member of the MMM healthcare group.