PeaceHealth ER transition in court: What happened on Day 1

The first lawsuit involving Oregon’s new corporate medicine law came to U.S. District Court in Eugene Monday, April 27, as attorneys representing local doctors argued that an illegal business model is emerging at PeaceHealth in Lane County. Hospital attorneys argued the doctors’ case doesn’t have merit. 

Eugene Emergency Physicians is asking U.S. District Judge Mustafa Kasubhai to block a transition in the hospital’s three emergency departments in Lane County until PeaceHealth and incoming Georgia-based ApolloMD can prove they are in compliance with the law.

Nearly 50 people sat in the courtroom gallery, some in scrubs, others in their Oregon Nurses Association T-shirts, to listen during the first of at least two days of oral arguments and evidentiary hearings scheduled for this week. More time may be scheduled in the coming week if needed, the judge told attorneys.

The morning started with both sides giving opening statements, then the plaintiffs’ attorneys called eight witnesses — including doctors, a nurse and a parent — throughout the afternoon. The defendants will have the opportunity to do the same Tuesday. 

Although the case centers on state law, it is being heard in federal court at the request of PeaceHealth attorneys after the physicians’ group first filed in Lane County Circuit Court. 

Witnesses on the stand Monday largely reiterated what they stated in declarations filed by plaintiffs over the last two weeks since filings began in the case April 8. 

They spoke of “significant risks” that came with a rapid transition of care, but it remains unclear whether those risks fall within what Kasubhai can consider under Senate Bill 951.

“There are many lenses, which is this case, this relationship can and appropriately looked at, look through,” Kasubhai said. “There’s some community concern, interest. There’s the concern of business entities to be able to really engage in relationships with one another. All of that is certainly bearing and intense and weighty within our community.”

I have to apply the law in the Senate Bill 951.

U.S. District Judge Mustafa Kasubhai

Kasubhai continued, “All of this is to say, I want to simply express to all of you that I appreciate that there’s many different vectors at play here, and meaningful and valuable and necessary and important considerations, but I want all of you (attorneys) to focus on the legal question, because I’m not a policymaker, I’m not a legislator … I have to apply the law in the Senate Bill 951.”

Three themes dominated the day’s discussion: contracting issues, the motive behind the switch and exacerbating long wait times at PeaceHealth emergency departments. Here is how the arguments unfolded Monday.

Contracting and credentialing 

In his opening statement, attorney Todd Johnston, representing plaintiffs, outlined concerns about the relationship between ApolloMD and Lane Emergency Physicians. Johnston said that, according to a deposition, Chapman is the sole employee of Lane Emergency Physicians and has limited information about the transition.

Johnston told the judge: “Apollo is going to need to convince you that LEP (Lane Emergency Physicians) is real and it’s not just a proxy for Apollo. And conversely, PeaceHealth should explain to you straight-faced why it decided to replace 41 resident emergency physicians with one guy from Illinois (Chapman) who has no plans to live here or move here.”

Johnston continued that PeaceHealth still doesn’t have a contract with ApolloMD that clarifies rates, terms or commitments from new doctors, whether they are permanent or temporary traveling physicians.

“There’s no commitments on the amount of money. There is not even a draft agreement between PeaceHealth and anybody to provide medical services,” Johnston said. 

In response, attorney Misha Isaak, arguing on behalf of PeaceHealth, said that such a lack of contract between the hospital and ApolloMD shouldn’t be considered as evidence that the two entities are in violation of SB 951. 

PeaceHealth will present evidence that it is a responsible, conscientious steward of its Lane County hospitals.

attorney Misha Isaak

“Mr. Johnston told you that Dr. Chapman has no plans to live here … Does that prove a violation of SB 951? The only evidence that you will hear that indicates how decisions will be made is the testimony you will hear tomorrow and from Dr. Chapman and (ApolloMD CEO Dr. Yogin Patel),” Isaak said. “PeaceHealth will present evidence that it is a responsible, conscientious steward of its Lane County hospitals.” 

The plaintiffs’ complaint alleges the transition already violates SB 951 because ApolloMD has been recruiting, which they argue a management services organization cannot do under the law. Isaak said Lane Emergency Physicians has “entered” into nearly 50 contracts with new doctors.

Johnston then called Dr. Chris Poulsen to testify. Poulsen, who works through Eugene Emergency Physicians at PeaceHealth’s RiverBend emergency department in Springfield, said no new doctors have completed the hospital’s credentialing process. He chairs the credentialing committee at RiverBend and noted that credentialing differs from signing a contract or obtaining a state medical license.

“It’s problematic to imagine that there could possibly be enough physicians credentialed and privileged by July 1,” said Poulsen, referencing RiverBend staffing. “I can’t recall a time when there’s been more than one or two positions in a month that comes through. … It’s a process designed for extraordinary need, because it’s very concerning to push large numbers of people through that because the natural safety valve of the process is completely averted.”

Motive for the switch 

Poulsen also spoke about the difference between clinical decision-making and administrative oversight and how Jim McGovern, the chief hospital executive of PeaceHealth’s Oregon Network, blurred the lines between the two. 

McGovern, who was placed on leave as the allegations became public, and his behavior are not a facet of the case. Neither is the reason PeaceHealth chose to switch to a new company to staff its ER, though Kasubhai asked about the hospital’s motive. 

Before Poulsen’s statements, Isaak presented a slide to the court showing results of a scorecard compiled by a PeaceHealth committee of eight administrative leaders. Eugene Emergency Physicians ranked last.

“The only reason we are going to put on evidence tomorrow about the RFP (request for proposals) process is because one of the elements of the test before the court is to balance the equities. It does not go to the merits [under SB 951] one iota,” Isaak said. “It’s important to call it out for the court, and for the public frankly, what is at issue in this proceeding and what isn’t.”

Isaak said the RFP process was part of a “best practice” and reserved follow-up questions for Tuesday. 

With Poulsen on the stand, Kasubhai asked about how McGovern allegedly influenced care on the emergency department floor. Poulsen gave the following example: 

“The emergency department is very busy. Ambulances are bringing patients in. There aren’t enough beds for all the patients immediately in the emergency department. So patients are on gurneys to be cared for, and the pressure was to say that ‘the patients weren’t very sick, so they could go to the lobby and wait.'” Pressure coming from McGovern for us as the physicians.”

Poulsen continued: “It’s extremely dangerous to [send] patients that come in by ambulance and receive advanced life support, and are in pain and have potentially life-threatening illness and have them sent to the lobby without evaluation. The implication is, if it was a different group than us (EEP), and the physicians didn’t feel empowered to do the right thing, that it would be much harder to resist that, because you know that you would potentially have a repercussion of losing a job.”

“I think it is very likely that the long-standing commitment of Eugene Emergency Physicians to provide extremely excellent care to our community has been used against us because we have not willingly gone along with every single request of Dr. McGovern, specifically regarding patient flow and trying to change metrics in our permit.” 

Poulsen said he worried that, under ApolloMD, doctors could face increased pressure to meet corporate targets — concerns echoed by other health care professionals who testified that the transition could instead worsen wait times rather than improve them.

Wait times could worsen, witnesses say

Registered nurse Rose Fantozzi, firefighter Brett Deedon, cardiologist Dr. Matthew Trojan, and general surgeon Dr. Kalelyn Clark all said they do not expect the emergency department to improve with a new group of emergency physicians and warned that disruptions to existing working relationships could lead to longer delays.

We’ve had people pass out in the lobby.

Rose Fantozzi, RN

Clark pointed to similar staffing transitions in other departments that have been difficult and have been associated with increases in mortality and morbidity, she said.

Fantozzi attributed ongoing challenges more to limited resources than to physicians, describing difficulties moving admitted patients out of the emergency department while they wait for beds on other hospital floors. 

“They stay put in those rooms, and in the hallways, because they can’t go anywhere. We can’t change that. I’ve offered to clean the beds upstairs, but that didn’t work, and we just have to wait until the beds are open,” said Fantozzi, who went on to explain the effects to patients.

“People have seizures. We have people pull up in front with a cardiac arrest in the car. We’ve had people pass out in the lobby,” she said. “We’ve got hyperglycemia.” 

Hyperglycemia is a condition related to diabetes in which blood sugar levels are too high.

Emergency visits for diabetes are something Karen Stapleton, one of the plaintiffs in the case, said she knows well. She testified that her daughter was diagnosed with Type 1 diabetes, has been taken to the emergency department twice, and requires ongoing vigilance for future episodes.

“I’ll never forget the pediatrician telling me, you do not have time to go home first. This is an emergency,” said Stapleton, who relies on consistent access to emergency doctors.

Under cross-examination, Stapleton said she was not familiar with details of the transition, which have not been publicly disclosed, and so she, like other witnesses, could not speak to whether plans would satiate her concerns.

“It certainly doesn’t make me happy to know that some of the people that live in this community are going to have to leave this community because they’re not travel nurses, travel doctors,” Stapleton said.