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VOL. 127 | NO. 12 | Thursday, January 19, 2012

Health Care Presents Unique Legal Issues

By Daniel K. Swanson

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Hospitals and their medical staffs work together to satisfy the needs of their patients. As a professional medical team, they strive to provide the best care. But what happens when a doctor leaves one hospital to practice in another – for greener pastures – especially when those pastures are just across the road?

On the business side of this team, the hospital has an interest in keeping its patients or it won’t be able to keep the lights on. Can the hospital, which provided the doctor with a place to treat his patients, prohibit the exiting practitioner from using patient lists and other information from the doctor’s former practice? Can the hospital claim it owns this data and that this data is protected as a “trade secret”? How will such claims affect patients’ rights to be informed and to choose?

A 1984 Delaware case (Dickinson Medical Group, P.A. v. Foote) answered these questions in an unexpected way. In this case, an oncologist left a group medical practice which then sought to keep the doctor from contacting former patients.

The court decision is a classic exercise of Solomon-like wisdom. The court ruled that the cancer doctor could be prevented from reaching out to patients whom the doctor had once treated since the laws of Delaware could enforce these kinds of restrictive covenants. Then the court ruled that the health care group had to send the oncologist’s former patients a letter, informing them that the doctor had moved and telling them where the doctor could be found – a strong public policy in favor of patient choice required such notification.

The lesson: Health care providers should be careful what they wish for. Patient lists may be trade secrets, but patients’ interests may trump these important intellectual property rights.

Health care providers and the people who work for them often have good ideas. Sometimes, those ideas also have commercial value. In these challenging times for HCPs, it is tempting to quickly roll out as a marketable product what has been developed and proven useful internally. Are there pitfalls for the unwary? In a word, you betcha!

In a recent federal court case (McKesson Technologies Inc. v. Epic Systems Corp.), a medical products distributor (McKesson) converted for commercial sale a system the distributor’s sister company had developed internally. The system allowed health care providers and their patients to communicate using personalized Web pages. The problem: A software company (Epic) had a competing patent on a similar package that allowed health care providers to associate a patient’s medical records to a personalized Web page. McKesson sued Epic claiming Epic’s product infringed McKesson’s intellectual property rights.

McKesson won at the trial court level but lost on appeal. The Federal Circuit Court of Appeals spent time talking about complicated issues we can’t consider given our limited space. It is sufficient to say that, had McKesson more carefully analyzed its claims before suing Epic, the outcome might have been different. Any HCP with intellectual property assets should consider an IP audit (a portfolio “review”), to try to ensure that the HCP’s high-value ideas and inventions are properly protected.

Daniel K. Swanson is a partner with the law firm of Wyatt, Tarrant & Combs LLP, whose legal practice encompasses business, health care and intellectual property law.

PROPERTY SALES 63 441 6,018
MORTGAGES 72 450 6,721
BANKRUPTCIES 0 1,045 4,093