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Wang v. Ochsner Medical Center-Kenner, L.L.C.

United States District Court, E.D. Louisiana

December 7, 2017

YI-ZARN WANG, M.D.
v.
OCHSNER MEDICAL CENTER -KENNER, L.L.C., ET AL.

         SECTION "F"

          ORDER AND REASONS

          MARTIN L. C. ELDMAN UNITED STATES DISTRICT JUDGE

         Before the Court are two motions: (1) a motion to dismiss by defendants Ochsner Medical Center - Kenner, L.L.C., Ochsner Clinic Foundation, Ochsner Clinic L.L.C., and Ochsner Health System; and (2) a motion to dismiss by Dr. J. Philip Boudreaux. For the reasons that follow, the motions are GRANTED.

         Background

         This civil Racketeer Influenced and Corrupt Organizations Act and state law litigation arises from allegations by Dr. Yi-Zarn Wang that Ochsner Medical Center-Kenner, L.L.C. and its affiliates, and fellow doctor, Dr. J. Phillip Boudreaux, schemed to defraud him by steering neuroendocrine cancer patients from Dr. Wang to Dr. Boudreaux, by trumping up false accusations that Dr. Wang violated hospital policy, and ultimately by suspending Dr. Wang and terminating his privileges at the hospital based on the trumped up accusations and in violation of hospital bylaws.[1]

         After initially obtaining a dental degree in his native Republic of China, Dr. Yi-Zarn Wang moved to the United States, where he finished post-graduate school and enrolled in the School of Medicine at The Oregon Health Sciences University. After obtaining his MD degree, Dr. Wang participated in the Barnes Hospital/Washington University Surgical Residency Program in St. Louis, Missouri, a world class surgical oncology discipline under numerous renowned surgeons.

         In 1994, Dr. Wang joined the faculty at Louisiana State University Health Sciences Center in New Orleans. Before Hurricane Katrina, he served as Chief of General Surgery and Director of Surgical Education; he also ran surgical cancer care for indigent patients in Louisiana. After Katrina, he relocated and joined the group at Ochsner Medical Center-Kenner, L.L.C. to serve neuroendocrine patients. He partnered with J. Phillip Boudreaux, another surgeon who specialized in neuroendocrine cancer treatment.

         For many years, Ochsner promoted Dr. Wang's skills and specialized abilities for patients requiring neuroendocrine cancer surgery. A pioneer in the field, Dr. Wang had developed complicated approaches to surgery and other treatment options for neuroendocrine cancer. For example, Dr. Wang was the first surgeon in the world to intrude lymphatic mapping technique to define surgical resection margin of midgut neuroendocrine tumors to eliminate recurrence and to preserve ilocecal valve in selective patients to reduce post-operative diarrhea. Dr. Wang was the first surgeon to pioneer intra-operative chemotherapy; through this treatment, Dr. Wang targeted midgut neuroendocrine tumor (NET) patients who are often diagnosed at an advanced stage with extensive mesenteric lymph node and liver metastasis. In these cases, even with surgery, small specks of cancerous tissues can still remain. Dr. Wang's treatment targets the potential tumor residuals in mesenteric lymph node dissection beds using a safe and local application of chemotherapy agent 5-fluorouracil (5-FU). The 5-FU is delivered via intraoperative application of 5-FU saturated gel foam strips secured into the mesenteric defect following the extensive lymphadenectomy.[2] Dr. Wang then mastered the radio-guided surgery for neuroendocrine tumor cytoreductive procedures including a minimally invasive approach to address the lymph nodes metastasis in the neck and upper mediastinum. Dr. Wang also developed techniques to safely dissect and remove tumors encasing major blood vessels to the liver and intestine and became well known for taking on “unresectable” patients from different states and countries.

         Dr. Wang became the preeminent NET surgeon at Ochsner Kenner and was the most sought out NET surgeon for academic speaking engagements, professional organizations, and NET patients. This notoriety prompted recruitment efforts by multiple hospitals starting in 2010. It is alleged that Dr. Wang's potential move and loyalty became a concern to Dr. Boudreaux and the hospital. Because they feared losing Dr. Wang, it is alleged, Dr. Boudreaux and Ochsner Kenner sought to minimize Dr. Wang's practice by steering Dr. Wang's patients to Dr. Boudreaux's practice.

         To accomplish this, starting as early as 2010, Dr. Boudreaux worked with Ochsner Kenner employee, Pam Ryan, who controlled intake communications with patients, [3] to divert NET patients away from Dr. Wang to Dr. Boudreaux. It is alleged that Ms. Ryan would mislead patients from seeing Dr. Wang, direct those patients instead to Dr. Boudreaux, and that she would “penalize” or sabotage those who insisted on seeing Dr. Wang. Nurse Ryan's patient-steering conduct was motivated by “an inappropriate relationship.” According to the allegations of the complaint, Dr. Boudreaux increased his own annual earnings through this scheme, earning approximately $100, 000 more each year from 2010 to 2016.

         Dr. Wang says he discovered the scheme in 2015 and lists about a dozen instances where Ms. Ryan or, on one occasion an unidentified staff member, misled patients by advising the patients that Dr. Wang was unavailable or not accepting new patients, even though Dr. Wang was actually available and accepting new patients. Dr. Wang also alleges that the patient steering scheme was confirmed by two online patient reviews. Through this patient information, Dr. Wang says it became clear to him that a scheme to defraud him of money or property by false representations was calculated to deceive him (through non-disclosure) as well as his patients (through misleading statements and concealing material facts).

         Dr. Wang says he reported to LSU the misleading statements made to his patients and the potential of an inappropriate relationship fueling the patient diversion. LSU told Dr. Wang that he needed to address those issues with Ochsner Kenner and request a new nurse. On October 10, 2015, Dr. Wang met with Ochsner CEO Stephen Robinson to report his concerns. Dr. Wang showed Mr. Robinson emails and communications from his patients regarding Ms. Ryan's patient steering conduct.

         In light of this report, it is alleged, Mr. Robinson, Dr. Boudreaux, and others combined to retaliate against Dr. Wang. Dr. Wang alleges that Dr. Boudreaux knew that if Dr. Wang was forced out, Dr. Boudreaux could then be the leading surgeon in Kenner and would inherit Dr. Wang's patients without the need to steer the patients. Ochsner Kenner, it is alleged, was heavily invested in the neuroendocrinology department and worried about Dr. Wang's loyalty to the hospital; the hospital did not want to suffer the financial loss it would experience if it lost Dr. Wang's patients.

         The solution, it is alleged, was to ruin Dr. Wang's reputation and keep his patients at Ochsner. Ochsner Kenner and Dr. Boudreaux had to come up with a plan to tarnish Dr. Wang's reputation. Acting on this plan, in early December 2015, Ochsner Kenner and Dr. Boudreaux targeted Dr. Wang's use of Non-Operative Treatment of Appendicitis (NOTA) to trump up a charge that Dr. Wang violated Ochsner Kenner policy. NOTA has received national prominence as accepted treatment for appendicitis; the practice is both scientifically accepted in the medical community and also often practiced at Ochsner Kenner by many physicians.

         Dr. Wang preferred NOTA for treating appendicitis. Despite the substantial literature supporting NOTA, on December 18, 2015, the Medical Staff Vice-President at Ochsner Kenner, Najy Masri, wrote to Dr. Wang admonishing him for offering NOTA as an option to his patients. Dr. Masri demanded that Dr. Wang immediately discontinue NOTA for his Ochsner Kenner patients. Dr. Masri also noted that the medical leadership council would refer this matter to the Medical Executive Committee for further review in January.

         Dr. Wang responded by detailing the national medical community's acceptance of NOTA; he also requested a meeting to discuss the developments and the trend toward adopting NOTA. On February 4, 2016, the Ochsner Kenner Medical Executive Committee (OK-MEC or the Committee) wrote to Dr. Wang requesting that he provide literature supporting NOTA. Dr. Wang did so; he provided the Committee with evidence of clinical acceptance of the treatment, including five randomized clinical trials, seven meta-analyses, and 60 papers.

         In March 2016, the OK-MEC Chair, Dr. Dasa, called Dr. Wang regarding a meeting that occurred on March 17, 2016. Dr. Dasa informed Dr. Wang that the committee would permit Dr. Wang to use antibiotic therapy for uncomplicated appendicitis on the condition that, if the patient failed to improve within 24 hours, Dr. Wang must cease antibiotic treatment and instead intervene with surgery. To confirm this conversation, the Committee wrote to Dr. Wang on April 26, 2016. Dr. Wang used NOTA for his patients, with their consent, for a 24-hour trial period. If the patient responded appropriately, the therapy continued.

         Sometime in April 2016, Dr. Wang was treating a patient with appendicitis; he disclosed to the patient the basic medical information required for informed consent. In front of students and residents, he discussed the treatment options, including the 24 hour rule. Dr. Wang noted this in the patient's chart. The patient responded to the IV antibiotic therapy within the 24-hour benchmark as demonstrated by an improving clinical exam, afebrile and reducing WBC. Dr. Wang offered the patient a surgical option the following morning even with her signs of improvement. She declined surgery, opting to continue antibiotic therapy. IV antibiotics were switched to PO on the second hospital day. The patient was observed in the hospital for an additional 24 hours to make sure she would do well on PO antibiotics. She did. She was discharged to home on PO antibiotics on the third day with instruction that 15% of patients might fail the antibiotic therapy or have recurrence; she was told to return if her condition worsened or recurred. This successful treatment followed the medical standard of care and also the Ochsner Kenner policy.

         On May 26, 2016, the Committee held a secret emergency meeting regarding Dr. Wang's use of NOTA. During the meeting, the Committee suspended Dr. Wang for five days. The grounds for the suspension were the Committee's allegation that Dr. Wang had violated the February 4, 2016 letter requiring that he discontinue NOTA at OMC-K. The Committee's decision directly contradicted its prior confirmation to Dr. Wang both on the phone and in writing that he could perform NOTA for 24 hours. Dr. Vinod Dasa drafted a letter on behalf of the Committee; the letter outlined the factually inaccurate and contradictory charges, which it is alleged Ochsner knew were false, unsupported, and misleading and made with the intent to injure Dr. Wang. Dr. Dasa also called Dr. Wang to inform him of the suspension.[4]

         Ochsner Kenner conditioned Dr. Wang's return from the five-day suspension on signing a performance review plan. To sign the review plan would effectively oblige Dr. Wang to waive appeal rights related to NOTA, admit that his performance needed improvement, admit that he acted in a derogatory manner, and admit to the suspension. Dr. Wang refused to sign the plan. When Dr. Wang returned to Ochsner Kenner after his five-day suspension, he was told that he no longer had privileges at the hospital because he failed to sign the plan; a plan Dr. Wang characterizes as pretextual.

         That the peer review process (culminating in Dr. Wang's five-day suspension and the revocation of his privileges) was a sham is allegedly demonstrated by Ochsner Kenner's various breaches of the bylaws. [1] Ochsner Kenner breached the bylaws by failing to adhere to the provisions regarding the investigation and suspension of Dr. Wang's privileges. The Committee only has authority to “recommend suspension of clinical privileges for a term” after the OK-MEC or other committee follows the investigative procedures outlined in the bylaws. [2] Section 7.3(A)(1) of the bylaws requires that the OK-MEC provide Dr. Wang notice of the investigation. Section 7.3(b)(4) requires that OK-MEC provide Dr. Wang with an “opportunity to meet with the investigating committee before it makes its report.” But Ochsner Kenner neither informed Dr. Wang of the investigation, nor did it allow Dr. Wang an opportunity to meet with the committee prior to its report. [3] Similarly, under Section 7.3(C)(3), after the OK-MEC makes a recommendation by a report identifying its findings and conclusions, the bylaws require the committee to refer the recommendation to the governing board of Ochsner Kenner. But this did not happen with Dr. Wang, who alleges that OK-MEC simply held a secret meeting and decided to suspend Dr. Wang's privileges while breaching the procedural protection of the bylaws. [4] Section 7.4(A)(1) limits summary suspensions to cases where OK-MEC finds that “failure to take such action may result in imminent danger to the health and/or safety of any individual or seriously impair the ability of hospital staff members to perform their duties.” But OK-MEC skipped the investigation stage yet made no finding of “imminent danger” in its May 27 letter in which OK-MEC implied that this was a “final finding of responsibility, ” in violation of the bylaws. [5] By attempting to skirt the hearing process and conditioning Dr. Wang's return on a waiver of rights to a hearing or appeal process, OK-MEC violated the bylaws. The May 27 letter essentially revoked Dr. Wang's privileges and violated the bylaws' requirements regarding notice for hearings.

         As a result of his suspension and the revocation of his privileges, Dr. Wang has not maintained privileges at any hospital except Physicians Medical Center in Houma. And, he lost his job at LSU. It is also alleged that Ochsner Kenner and Dr. Boudreaux have continued to misrepresent Dr. Wang's availability to patients in that Dr. Wang's patients are being referred to Dr. Boudreaux, implying that Dr. Wang is no longer practicing medicine, and failing to disclose Dr. Wang's contact information. Dr. Wang was also required to report the suspension to the Louisiana Board of Medical Examiners. As a result of what transpired at Ochsner Kenner, Dr. Wang's reputation has been damaged.

         On May 23, 2017, Dr. Wang sued Ochsner Medical Center-Kenner, L.L.C., Dr. J. Phillip Boudreaux, Ochsner Clinic Foundation, Ochsner Clinic, LLC, and Ochsner Health System in this Court, and on that same day he filed an amended complaint in which he alleges: (A) as to all defendants: violations of the Racketeer Influenced & Corrupt Organizations (RICO) Act, conspiracy to violate the RICO Act, [5] violations of the Louisiana Unfair Trade Practices and Consumer Protection Law (LUTPA); and (B) as to the Ochsner entities: breach of contract (for Dr. Wang's loss of privileges), negligent misrepresentation (for misrepresentations made during the peer review process), tortious interference with contract (for costing Dr. Wang his job at LSU), tortious interference with prospective relations (for deterring patients from Dr. Wang).[6] Dr. Wang alleges entitlement to actual damages (including lost wages, lost employee benefits, lost profits, and other direct financial damages); consequential damages (damage to Dr. Wang's economic welfare, mental anguish and physical suffering, harm to Dr. Wang's reputation, lost business reputation, and attorney's fees); statutory trebling and exemplary damages warranted by the defendants' alleged malicious, willful, and egregious conduct. In compliance with this Court's standing order, Dr. Wang filed a RICO Case Statement. Dr. Boudreaux and, separately, the Ochsner entities now seek to dismiss each of Dr. Wang's claims for failure to state a claim upon which relief may be granted.

         I.

         A.

         Rule 12(b)(6) of the Federal Rules of Civil Procedure allows a party to move for dismissal of a complaint for failure to state a claim upon which relief can be granted. Such a motion is rarely granted because it is viewed with disfavor. See Lowrey v. Tex. A & M Univ. Sys., 117 F.3d 242, 247 (5th Cir. 1997)(quoting Kaiser Aluminum & Chem. Sales, Inc. v. Avondale Shipyards, Inc., 677 F.2d 1045, 1050 (5th Cir. 1982)).

         Under Rule 8(a)(2) of the Federal Rules of Civil Procedure, a pleading must contain a "short and plain statement of the claim showing that the pleader is entitled to relief." Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009)(citing Fed.R.Civ.P. 8). "[T]he pleading standard Rule 8 announces does not require 'detailed factual allegations, ' but it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation." Id. at 678 (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)).

         In considering a Rule 12(b)(6) motion, the Court “accept[s] all well-pleaded facts as true and view[s] all facts in the light most favorable to the plaintiff.” See Thompson v. City of Waco, Texas, 764 F.3d 500, 502 (5th Cir. 2014) (citing Doe ex rel. Magee v. Covington Cnty. Sch. Dist. ex rel. Keys, 675 F.3d 849, 854 (5th Cir. 2012)(en banc)). But, in deciding whether dismissal is warranted, the Court will not accept as true legal conclusions. Id. at 502-03 (citing Iqbal, 556 U.S. at 678).

         To survive dismissal, “‘a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.'” Gonzalez v. Kay, 577 F.3d 600, 603 (5th Cir. 2009)(quoting Iqbal, 556 U.S. at 678)(internal quotation marks omitted). “Factual allegations must be enough to raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true (even if doubtful in fact).” Twombly, 550 U.S. at 555 (citations and footnote omitted). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678 (“The plausibility standard is not akin to a ‘probability requirement, ' but it asks for more than a sheer possibility that a defendant has acted unlawfully.”). The Court's task “is to determine whether the plaintiff stated a legally cognizable claim that is plausible, not to evaluate the plaintiff's likelihood of success.” Thompson v. City of Waco, Texas, 764 F.3d 500, 503 (5th Cir. 2014)(citation omitted). This is a “context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Iqbal, 556 U.S. at 679. “Where a complaint pleads facts that are merely consistent with a defendant's liability, it stops short of the line between possibility and plausibility of entitlement to relief.” Id. at 678 (internal quotations omitted) (citing Twombly, 550 U.S. at 557). “[A] plaintiff's obligation to provide the ‘grounds' of his ‘entitle[ment] to relief'”, thus, “requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555 (alteration in original) (citation omitted).

         B.

         General notice pleading requirements are based on Rule 8. Rule 9(b) imposes a heightened pleading standard on pleadings alleging fraud:

(b) Fraud or Mistake; Conditions of Mind. In alleging fraud or mistake, a party must state with particularity the circumstances constituting the fraud or mistake. Malice, intent, knowledge, and other conditions of a person's mind may be alleged generally.

Fed. R. Civ. P. 9(b). A plaintiff must plead “the particulars of time, place, and contents of false representations, as well as the identity of the person making the misrepresentation and what he obtained thereby.” Benchmark Elecs. V. J.M. Huber Corp., 343 F.3d 719, 724 (5th Cir. 2003)(quoting Tel-Phonic Servs., Inc. v. TBS Int'l, Inc., 975 F.2d 1134, 1139 (5th Cir. 1992). “[A] plaintiff must state the factual basis for the fraudulent claim with particularity and cannot rely on speculation or conclusional allegations.” United States ex rel. Rafizadeh v. Continental Common, Inc., 553 F.3d 869, 873 (5th Cir. 2008). Indeed, the Fifth Circuit “interprets Rule 9(b) strictly, requiring the plaintiff to specify the statements contended to be fraudulent, identify the speaker, state when and where the statements were made, and explain why the statements were fraudulent.” Flaherty & Crumrine Preferred Income Fund, Inc. v. TXU Corp., 565 F.3d 200, 207 (5 Cir. 2009)(citation omitted). Simply put, to comply with Rule 9(b), plaintiffs must plead the “who, what, when, where, and how” of the alleged fraud. United States ex rel. Williams v. Bell Helicopter Textron Inc., 417 F.3d 450, 453 (5th Cir. 2005)(internal citation and quotation marks omitted). If a plaintiff alleges fraud by omission, “Rule 9(b) typically requires the claimant to plead the type of facts omitted, the place in which the omissions should have appeared, and the way in which the omitted facts made the misrepresentations misleading.” Carroll v. Fort James Corp., 470 F.3d 1171, 1174 (5th Cir. 2006).

         Rule 9(b)'s particularity requirement applies to RICO claims that rest on predicate acts of mail and wire fraud. See Williams v. WMX Technologies, Inc., 112 F.3d 175, 177 (5th Cir. 1997); Landry v. Air Line Pilots Ass'n Intern. AFL-CIO, 901 F.2d 404, 430 (5th Cir. 1990).

         II.

         The Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. § 1961-1968, prohibits certain conduct involving a “pattern of racketeering activity.” As an enforcement mechanism, 18 U.S.C. § 1964(c) provides a private right of action for treble damages to “[a]ny person injured in his business or property by reason of a violation of section 1962 of this chapter.” To pursue a private RICO claim, a plaintiff must show that he has been injured “by reason of” a violation of RICO's criminal prohibitions; a RICO plaintiff must “establish both but-for cause and proximate cause in order to show injury ‘by reason of' a RICO violation.” Torres v. S.G.E. Mgmt., L.L.C., 838 F.3d 629, 636 (5th Cir. 2016)(internal citations omitted). “When a court evaluates a RICO claim for proximate cause, the central question it must ask is whether the alleged violation led directly to the plaintiff's ...


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