A suit filed Thursday in the U.S. District Court for the Eastern District of Texas in Tyler challenges provisions in the new health care reform law that place new restrictions on physician-owned hospitals.
"This is the only suit we are aware of by any physician-owned hospital or other group challenging this provision of the law," says Lindsey Birdsong, attorney for plaintiffs Physician Hospitals of America and Texas Spine and Joint Hospital.
The suit names as defendant Kathleen Sebelius, in her official capacity as secretary of the U.S. Department of Health and Human Services.
According to the complaint in Physician Hospitals of America, et al. v. Sebelius, PHA is a nonprofit organization formed to educate members of the physician-owned hospital industry about regulatory and legislative issues, and Texas Spine is a 20-bed physician-owned hospital that opened in Tyler in 2002.
The plaintiffs allege in their complaint that the Physician Hospital Law, §6001 of the Health Care and Education Reconciliation Act, prevents a new physician-owned hospital from receiving Medicare certification after this year if the physicians refer Medicare patients to the hospital. The patients further allege that the Physician Hospital Law restricts expansion of a physician-owned hospital unless the hospital meets "certain vague and contradictory qualifications that will allow an 'exception' to the law's general prohibition on growth."
Birdsong, a partner in Tyler's Birdsong & Armstrong, says there are conflicts in the law about when it is to be implemented. The owners of Texas Spine, who are planning to expand, could lose their Medicare certification and "not even have a hospital at all," if they do not act on the correct date, Birdsong says. As noted in the complaint, the plaintiffs allege violations of their due process and equal protection rights. They also allege the Physician Hospital Law is void because of vagueness and that enforcement of the law would result in an unconstitutional and uncompensated taking of their property in violation of the Fifth Amendment to the U.S. Constitution.
The plaintiffs are seeking a declaratory judgment that the Physician Hospital Law is an unconstitutional abridgement of the plaintiffs' constitutional rights and injunctive relief to prevent enforcement of the law.
Tracy Schmaler, spokeswoman for the U.S. Department of Justice, which represents Sebelius, writes in an e-mail, "The Department of Justice will vigorously defend the health-care reform statute in any litigation challenging it on constitutional or other grounds. We are confident that this statute is constitutional and that we will prevail."
This article first appeared on Texas Lawyer's Tex Parte blog.