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Neade v. Portes (237 Ill.Dec. 788) 1999
Appellate Court of Illinois, Second District
…Plaintiff's amended complaint alleged the following. Anthony Neade was approximately 37 years old in 1990 when he began to show the classic symptoms of coronary artery blockage, including chest pain radiating into his arm and shortness of breath. As a result, Neade was hospitalized from August 10 to 13, 1990. In addition to his physical symptoms, Neade had a family history of heart disease, was overweight, suffered from hypertension, smoked, and had a high cholesterol count. While in the hospital, Neade underwent various tests, including a thallium stress test. Dr. Thomas Engel (a defendant below but not a party to this appeal) interpreted the result as normal and discharged Neade with a diagnosis of hiatal hernia and/or esophagitis. Count III of plaintiff's amended complaint, which is not at issue in this appeal, alleged that Dr. Engel misinterpreted the thallium stress test and EKG data results. However, even if the test results were properly interpreted, plaintiff alleged that Dr. Portes knew that 20% of normal or negative thallium stress test results are false negatives.
Following his discharge from the hospital, Neade continued to experience chest pain and, therefore, saw Dr. Portes on August 17, August 28, and September 24, 1990. Dr. Portes did not examine Neade during these visits but, relying on the thallium stress test and EKG data, assured Neade that his chest pain was not cardiac related.
In October 1990, Neade again went to Primary Care complaining of stabbing chest pain. Dr. Portes asked his associate, Dr. George Huang, to examine Neade. Primary Care employed Dr. Huang part time, and he had no hospital privileges. After examining Neade, Dr. Huang recommended that he undergo an angiogram, a test that is more specific for coronary artery disease than the thallium stress test. Because Dr. Portes was Neade's primary care physician, however, Dr. Portes had to authorize any hospitalization or additional tests. Without examining Neade, Dr. Portes told Dr. Huang that the pain was not cardiac related and refused to authorize Neade's hospitalization for an angiogram.
In June 1991, Neade again returned to Primary Care, complaining of chest pain radiating up the right side of his neck and sweating when the pain was great. At Dr. Portes's request, Dr. Seymour Schlager, another part-time employee of Primary Care, saw Neade. Dr. Schlager also recommended hospitalization for an angiogram, but Dr. Portes again refused to authorize hospitalization. Without examining Neade and relying on the thallium stress test, Dr. Portes advised Dr. Schlager that Neade's chest pain was not cardiac related….
Count I of plaintiff's amended complaint alleged that Dr. Portes's reliance on the thallium stress test and the EKG and his failure to authorize an angiogram constituted medical negligence. Further, as a proximate result of defendants' medical negligence, Neade suffered a massive myocardial infarction caused by coronary artery blockage on September 16, 1991. Neade died nine days later.
The allegations that were stricken from count I of plaintiff's amended complaint alleged that Dr. Portes, as president of Primary Care, negotiated and entered into contracts with various entities, including Chicago HMO. That contract provided a capitation fee for subscribers of Chicago HMO who utilized defendants' services, as well as a "Medical Incentive Fund," which was to be used for various purposes, including certain tests and referrals to medical specialists. The contract further provided that any monies left in the Medical Incentive Fund at the end of the 12-month contract period would be split 60-40 between defendants and Chicago HMO. Neade's health care insurance was through Chicago HMO. Therefore, if Neade received an angiogram and a referral to a specialist, those fees would be paid from the Medical Incentive Fund administered by defendants.
Count II of plaintiff's amended complaint alleged that a fiduciary relationship existed between Dr. Portes and Neade pursuant to which Dr. Portes had a duty to act in good faith and in the best interest of Neade. Plaintiff alleged that Dr. Portes breached his fiduciary duty by refusing to authorize further testing of Neade, refusing to allow specialists to examine Neade, failing to disclose to Neade defendants' financial relationship with Chicago HMO, including the Medical Incentive Fund, and entering into a contract with Chicago HMO which put defendants' financial well-being in direct conflict with Neade's physical well-being. Plaintiff claimed that as a proximate result of defendants' breach of fiduciary duty, Neade suffered a massive myocardial infarction and died.
Dr. Portes and Primary Care moved to strike from count I the allegations regarding the Medical Incentive Fund and to dismiss Count II entirely. Defendants argued that any financial motive was irrelevant to whether Dr. Portes violated the applicable standard of care in treating Neade. Defendants also argued that there was no cause of action against a physician for breach of fiduciary duty. The trial court granted defendants' motion as to both counts with prejudice.
Plaintiff then filed a motion to reconsider, attaching to the motion plaintiff's affidavit and excerpts of the deposition of Dr. Jay Schapira. Dr. Schapira testified that the applicable standard of care, as well as ethical considerations, required a doctor to divulge his financial interest in withholding care so that a patient could make an informed decision concerning the quality of care he is receiving and concerning the doctor's true motivation in treating him. Plaintiff's affidavit stated that had she known of Dr. Portes's financial interest in refusing to authorize additional treatment for decedent, she would have sought a second opinion. Plaintiff also filed a proposed "supplement" to the complaint incorporating these additional allegations. Defendants filed a motion, which the trial court denied, to strike the deposition excerpt and affidavit from plaintiff's motion to reconsider. However, after considering those materials, the court denied the motion to reconsider. Plaintiff timely appealed….
Defendants then claim that there is no case law to support plaintiff's argument that Dr. Portes had a fiduciary duty to disclose his contractual compensation relationship with Chicago HMO. Defendants are correct that there is no Illinois case law addressing this issue. In fact, in our review of other jurisdictions, we have found no cases that address the specific issue raised in this case. However, given the changing nature of health care in this country, courts most likely will be faced with increasing issues concerning managed care and its effect on the physician-patient relationship. Cost containment measures in the health care industry have come under increasing scrutiny in recent years. Traditionally, the entity responsible for paying for health care was separate from the person or organization that delivered the health care. Note, Financial Incentives to Limit Services: Should Physicians Be Required to Disclose These to Patients?, 83 Geo. L.J. 1821 (1995). More and more, however, the financing and the delivery of health care have been integrated, requiring physicians to be both a care giver and a cost manager. 83 Geo. L.J. at 1821. Under managed health care plans similar to the plan through which Neade was insured, a patient must choose a primary care physician who serves as a "gatekeeper," deciding whether the patient requires laboratory tests, inpatient hospitalization, or a referral to a specialist. Further, in risk/bonus arrangements like the Medical Incentive Fund here, the gatekeeper is paid a bonus for controlling referrals, which arguably creates an incentive for the gatekeeper to limit the use of high-end health services.
As one commentator has noted, most HMO enrollees do not know that their physicians have financial deterrents to providing more expensive health care to their patients. 83 Geo. L.J. at 1837. Thus, in order to make proper choices concerning health care, "the mechanisms that govern the restrictions on treatment need to be disclosed to the patient." In this case, plaintiff contends that the obligation to disclose financial incentive arrangement should be placed on the gatekeeper physician pursuant to his fiduciary duty and that a failure to do so constitutes a breach of fiduciary duty.
As noted, in reviewing case law from other jurisdictions, we have found no cases that have addressed whether a physician has a fiduciary duty to disclose the financial incentive arrangement he has with an HMO, although we have found federal case law holding, under analogous fact patterns, that a patient has a cause of action against his HMO for failing to disclose the financial incentive scheme that it has with its physicians. Herdrich v. Pegram (1998); Shea v. Esensten, (1997).
For example, in Shea, following hospitalization for severe chest pain while on an overseas business trip, the decedent made several visits to his family doctor complaining of symptoms of heart disease. Shea. The decedent complained of chest pains, shortness of breath, muscle tingling, and dizziness and discussed his extensive family history of heart disease. The decedent's physician said that a visit to a cardiologist was unnecessary. When his symptoms did not improve, the decedent said he would pay for the cardiologist himself, but his physician persuaded him that he was too young to have heart disease and that he did not have enough symptoms to justify an appointment with a cardiologist. A few months later, decedent died of heart failure.. The decedent's health insurance was through an HMO which, unknown to the decedent, had a financial incentive agreement with its doctors that was designed to minimize referrals by rewarding the physicians for not making referrals to specialists and by docking the physicians a portion of their fees if they made too many referrals. Decedent's widow claimed that if her husband had known about the financial incentive, he would have disregarded his physician's advice and would have consulted a cardiologist at his own expense.
The district court dismissed plaintiff's claim alleging breach of the HMO's fiduciary duties under the Employee Retirement Income Security Act (ERISA) (29 U.S.C.A. § 1001 et seq. (West 1985)), finding that ERISA did not require an HMO to disclose its physician compensation arrangements. Shea The Eighth Circuit Court of Appeals reversed the dismissal, holding that the decedent's widow had stated a claim against the HMO for breach of its fiduciary duty to disclose all material facts affecting her husband's health care. Shea, 107 F.3d at 629. The court noted that "'the duty to disclose material information is the core of a fiduciary's responsibility.'" Shea quoting Eddy v. Colonial Life Insurance Co., (1990). In addition, the court held: "When an HMO's financial incentives discourage a treating doctor from providing essential health care referrals for conditions covered under the plan benefit structure, the incentives must be disclosed and the failure to do so is a breach of ERISA's fiduciary duties." Shea.
The court noted that a patient relies on his doctor's advice about treatment options and, thus, "must know whether the advice is influenced by selfserving financial considerations created by the health insurance provider." Shea.
Likewise, in Herdrich, the plaintiff alleged that her doctor discovered an inflamed mass in her abdomen but forced her to wait eight days before undergoing an ultrasound at a plan hospital 50 miles away. As a result of the delay, plaintiff's appendix ruptured, creating a life-threatening condition which required additional treatment In an effort to defray costs, the plaintiff was required to again drive 50 miles to the plan hospital to drain and cleanse the ruptured appendix. HerdrichThe plaintiff filed a complaint against her health care plan for, inter alia, breach of fiduciary duty, alleging that the defendants breached their fiduciary duty to the plan beneficiaries by depriving them of proper medical care through a financial incentive arrangement with plan physicians that minimized the use of diagnostic tests, of facilities not owned by defendants, and of emergency and nonemergency consultations and referrals to nonplan physicians. Herdrich. In reversing the district court's dismissal of plaintiff's claim for breach of fiduciary duty, the Seventh Circuit Court of Appeals held that "the language of plaintiff's complaint is sufficient in alleging that the defendants' incentive system depleted plan resources so as to benefit physicians who, coincidentally, administered the Plan, possibly to the detriment of their patients." Herdrich.
The foregoing cases, thus, recognize that patients should be informed of financial arrangements that may negatively impact their health care. In this case, as noted, we must determine whether the burden of disclosing such relationships can be placed on a physician pursuant to his fiduciary duty. While many jurisdictions, including our own, recognize that there is a fiduciary relationship between a physician and his patient, there is no consensus concerning whether a plaintiff can bring a cause of action against his physician for breach of fiduciary duty. For example, the Supreme Court of California has held that a physician has a fiduciary relationship with his patient and that a patient can state a cause of action for breach of a physician's fiduciary duty to disclose facts material to the patient's consent. Moore v. Regents of the University of California (1990). In Moore, the plaintiff, who suffered from hairy-cell leukemia, alleged that the defendants, by virtue of the physician-patient relationship, conducted research on his cells and planned to benefit financially by their exclusive access to plaintiff's cells without disclosing the extent of their research and economic interests. The court concluded that a physician must disclose personal interests, whether research or economic, unrelated to the patient's health that may affect the physician's professional judgment. Further, a physician's failure to disclose such interests may give rise to a cause of action for breach of fiduciary duty or for performing medical procedures without informed consent. Moore.
In reaching its conclusion, the Moore court noted that "a reasonable patient would want to know whether a physician has an economic interest that might affect the physician's professional judgment." The court also noted that the desire to protect patients from a possible conflict of interest is reflected in legislative enactments prohibiting a physician from charging or referring a patient to an organization in which the physician has an interest without first disclosing that interest….In contrast, the court of appeals of Minnesota has held that a trial court properly dismissed the plaintiffs' claim for breach of fiduciary duty arising from their physician's failure to disclose a "kickback" scheme, whereby the distributor of Protropin, a synthetic growth hormone drug, made payments to the physician to induce him to refer patients for Protropin-related services and supplies. D.A.B. v. Brown (1997). The court held that the complaint sounded in malpractice and that the allegations concerning the kickback scheme presented a classic informed consent issue. D.A.B. The court concluded:
While we agree that a physician's advice about treatment options should be free from self-serving financial considerations, any cause of action based on that conduct necessarily flows from the therapeutic relationship. Any breach of fiduciary duty that may have occurred during the doctor's prescription of medication to his patients arose while the doctor was examining, diagnosing, treating, or caring for his patients. Thus, the complained-of acts constitute an integral part of the process of rendering medical treatment." D.A.B.
In so holding, the court acknowledged that it had recognized causes of action against attorneys for breach of fiduciary duty in addition to legal malpractice claims but declined to recognize a separate cause of action against physicians.
Similarly, the Colorado Court of Appeals has held that a trial court properly denied the plaintiffs' request to add a claim for breach of fiduciary duty to their complaint against their physician where the breach-of-fiduciary-duty claim would have been duplicative of their negligence claims. Spoor v. Serota (1992); see also Awai v. Kotin (1993) (claim for breach of fiduciary duty against psychologist properly dismissed where factual allegations supporting claim were same factual allegations that supported claim of negligence and, thus, were duplicative). Using similar reasoning, the New Mexico Court of Appeals held that a breach-of-fiduciary-duty claim, based upon allegations that a chiropractor and his corporation designed treatment programs to the detriment of patients in order to generate income, did not state a cause of action separate from the plaintiff's fraud claim, and, therefore, the plaintiff could not recover under both causes of action. Garcia v. Coffman (1997). Finally, the Supreme Court of Arizona has declined to find a breach of trust action arising from an undisclosed risk of surgery where the plaintiff had an adequate remedy through a medical malpractice action should any undisclosed risk occur. Hales v. Pittman (1978).
In those cases holding that a plaintiff could not state a claim for breach of fiduciary duty apart from a claim for medical negligence, the courts found that the breach-of-fiduciary-duty claims merely were duplicative of the medical negligence claims and, thus, would constitute a second recovery under one set of facts. In this case, defendants also claim that plaintiff's breach-of-fiduciary-duty count is in essence a medical negligence claim and thus is duplicative and should be stricken. While we are mindful that in many cases a cause of action for breach of fiduciary duty against a physician will be duplicative of a medical negligence claim, we also recognize, as did the court in Moore, that in some instances a plaintiff may be able to plead a cause of action for breach of fiduciary duty separate from medical negligence. We find support for our conclusion in legislative enactments, in the current opinions of the American Medical Association (AMA), and in cases holding that a plaintiff can plead separate causes of action against his attorney for legal negligence and for breach of fiduciary duty.
Illinois courts have recognized that a fiduciary relationship exists between a physician and his patient. Petrillo v. Syntex Laboratories, Inc (1986). In addition, our legislature, like the California legislature, has recognized a potential conflict of interest where a physician or health care worker refers a patient for health services to an entity in which he has an investment interest. Thus, the Health Care Worker Self-Referral Act (1996)) prohibits a health care worker from referring a patient for health services to an entity in which he is an investor and in which he does not provide direct services, unless the health care worker discloses his investment interest to the patient. Further, if the health care worker's financial interest is incompatible with the referred patient's interests, the health care worker is required to make alternative arrangements for the patient's care…. It follows, then, that there is a potential conflict of interest, which the physician should disclose, where, incompatibly with the patient's interest, he has a financial interest in minimizing referrals or tests.We find further support for requiring physicians to disclose any financial arrangements with insurers in Current Opinions of the Council on Ethical and Judicial Affairs of the American Medical Association (Current Opinions) (1996-1997 edition). Section 8.132 of Current Opinions provides:
Physicians must not deny their patients access to appropriate medical services based upon the promise of personal financial reward, or the avoidance of financial penalties. Because patients must have the necessary information to make informed decisions about their care, physicians have an obligation to assure the disclosure of medically appropriate treatment alternatives, regardless of cost.
Physicians must assure disclosure of any financial inducements that may tend to limit the diagnostic and therapeutic alternatives that are offered to patients or that may tend to limit patients' overall access to care. Physicians may satisfy this obligation by assuring that the managed care plan makes adequate disclosure to patients enrolled in the plan." (Emphasis added.) Current Opinions, § 8.132 (1996-97).
Plaintiff's expert, Dr. Jay Schapira, testified at his deposition that Current Opinions addresses the fact that there could be a conflict of interest in a physician's motivation, and when that possibility exists, the physician must disclose it to the patient….
Our conclusion that a plaintiff may be able to plead a cause of action for breach of fiduciary duty separate from a claim for medical negligence finds further support in Illinois cases that have held that a plaintiff can allege claims for both legal malpractice and for breach of fiduciary duty against his attorney….Thus, where the allegations in a claim for breach of fiduciary duty are virtually identical to those set forth in a claim for legal negligence, it has been held that a cause of action for breach of fiduciary duty has not been properly pleaded and should be dismissed as duplicative. Calhoun . This result is similar to that reached by other jurisdictions that have held that a plaintiff could not state a claim for breach of fiduciary duty against his physician where that claim was duplicative of another claim in his cause of action.
Turning to the facts of this case, then, we must examine the specific allegations in plaintiff's medical negligence claim and her breach-of-fiduciary-duty claim to determine whether plaintiff has pleaded separate causes of action. Plaintiff's medical negligence claim against defendants alleged that defendants breached the standard of care in that they (1) failed to provide appropriate care and treatment for Neade after he demonstrated signs and symptoms of coronary artery blockage; (2) failed to properly monitor Neade's condition; (3) unreasonably continued to rely on the results of the thallium stress test and EKG despite Neade's continuing symptoms; (4) failed to personally review the thallium stress test and EKG; (5) failed to take into account Neade's personal factors in combination with his symptoms; (6) failed to make an adequate differential diagnosis; (7) failed to eliminate the differential diagnosis of hiatal hernia or esophagitis; and (8) failed to order or allow an angiogram after Drs. Huang and Schlager recommended the test. As a result of defendants' negligence, Neade suffered a massive myocardial infarction and subsequently died….
We find that the … allegations allege two separate and distinct causes of action. The claim for medical negligence is premised upon defendant Dr. Portes's allegedly improper reliance on the thallium stress test and EKG in deciding that further tests to rule out coronary artery blockage were not necessary, despite the recommendations of two other physicians. The breach-of-fiduciary-duty-claim is based upon defendant Dr. Portes's failure to disclose to Neade that he had a financial incentive to refrain from ordering any tests or referring Neade to a specialist to determine the cause of his symptoms. In an affidavit attached to plaintiff's motion to reconsider, plaintiff alleged that, had Dr. Portes disclosed his financial relationship with the HMO, she would have questioned him regarding his refusal to approve the recommended angiogram and would have recommended that her husband obtain a second opinion or consult another primary physician.
In so holding, we do not intend to open the floodgates of litigation, and we caution that not every claim for medical negligence will also set forth a claim for breach of fiduciary duty. In this case, however, we find that plaintiff's claim for breach of fiduciary duty is not duplicative of her medical negligence claim. It is conceivable that a trier of fact could find both that Dr. Portes was within the standard of care and therefore not negligent in relying on the thallium stress test and the EKG in deciding that an angiogram was not necessary and also that Dr. Portes did breach his fiduciary duty in not disclosing his financial incentive arrangement and, as a proximate result thereof, Neade did not obtain a second opinion, suffered a massive coronary infarction, and died….Return to contents