Plaintiffs Will Appeal Dismissed Lawsuit Challenging Ban on Physician-Owned Hospitals

Plaintiffs will appeal a lawsuit against the ban on physician-owned hospitals, following a federal judge's decision to dismiss the case.


In an order filed on Nov. 24, U.S. District Court Judge Michael H. Schneider said he would dismiss the lawsuit but paved the way for an appeal, says Scott Oostdyk, a partner at McGuireWoods and attorney for the plaintiffs, Physician Hospitals of America and the Texas Spine & Joint Hospital.


The judge's order found the plaintiffs were within their rights to sue in federal court and "we will appeal," Mr. Oostdyk says. The judge is expected to issue his full opinion before Christmas or in January.


Mr. Oostdyk says a key part his case is a legal requirement that the federal government must explain decisions implemented retroactively. When enforcing a law retroactively, "the government has to issue a separate rationale examining why," he says.


The healthcare reform law banned existing hospitals from expanding on March 23, the day the law passed, and banned new hospitals from opening after Dec. 31. Mr. Oostdyk says immediate enforcement of the ban on expansions would be seen as retroactive.


Mr. Oostdyk says the ban harmed physician-owned hospitals already planning expansions. The Texas Spine and Joint Hospital, for example, lost $3 million in purchased property, meeting zoning requirements and paying for architectural work for an expansion. He adds that no other parts of the healthcare reform law were implemented on the day it passed.


Read more about the lawsuit challenging ban on physician-owned hospitals.

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