Physician-owned hospitals are hoping to benefit from a ruling in Pensacola, Fla., that struck down the Patient Protection and Affordable Care Act last week.
Ruling buoys hopes
Physician-owned hospital seeks summary judgment
The 20-bed Texas Spine & Joint Hospital in Tyler, Texas, and trade group Physician Hospitals of American filed a lawsuit in June asking a judge in the Eastern District of Texas to invalidate the section of the law that prohibits new physician-owned hospitals from becoming certified for Medicare after March 2010 and places more restrictions on referrals involving physician-owned hospitals.
Critics say the Medicare certification limitation effectively halted new construction at hospitals around the country, including Texas Spine, which was in the midst of a $35 million expansion to double its bed count and add three operating rooms when the law was passed.
On Jan. 31, U.S. District Judge Roger Vinson of Pensacola ruled that the entire healthcare reform law was unconstitutional because one of its provisions—a requirement that most U.S. citizens buy health insurance—was illegal and not severable from the entire act.
The next day, the attorney for Texas Spine and the PHA filed a motion asking the judge in east Texas to grant summary judgment based on the Florida ruling. “In light of Judge Vinson's opinion, Secretary (Kathleen) Sebelius is incapable, as an executive branch official, of enforcing section 6001,” attorney Scott Oostdyk wrote in a motion for supplemental authority.
U.S. District Judge Michael Schneider announced Nov. 24 that he was canceling a trial in the case and would rule in favor of HHS on all five of its legal points, including that the law did not constitute a “taking” under the law and that the law did not deny physician-owned hospitals rights to due process or equal protection. However, the final memorandum opinion has not yet been released.
Physician-owned hospitals' “ability to compete effectively against lumbering hospital systems made them a political target,” says a filing from Texas Spine.
Attorneys for HHS countered that “numerous governmental and independent academic studies” have found that physician ownership leads to higher utilization and more cost while undermining the finances of community hospitals that provide “uncompensated care and other less profitable services.”
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