Lawsuit Pits Independent Cardiologist Against a Large San Angelo Hospital

SAN ANGELO, TX — A lawsuit filed in Tom Green County begs the questions, can a doctor sustain an independent practice in San Angelo and is there really competition in health care here?

Two very large hospitals control much of the region’s health care services because they filter many of their new clients through their respective emergency room operations. This is especially true for cardiac patients.

San Angelo’s last standing, truly independent cardiologist wants to remain that way, and is spending his own money to defend against what he says are anti-competitive trade practices by one of the large medical centers in San Angelo.

Dr. Miltiadis “Milton” Leon, M.D., founder, head doctor, and owner-operator of Cardiology Associates of West Texas alleges that San Angelo Community Medical Center (SACMC) and its subsidiary Community Medical Associates (CMA) are engaged in anti-competitive trade practices designed to put him out of business, or to force him to join a physicians’ group in defeat.

Dr. Leon is Greek-born and completed his medical degree in Greece, Magna Cum Laude. In the U.S., he completed a cardiovascular disease fellowship at the University of Texas Medical School in Houston. Then he certified his skills as an interventional cardiologist at Massachusetts General Hospital, which is affiliated with Harvard Medical School. He holds a Ph. D. in physiology. From 2008 until 2012, Dr. Leon served as SACMC’s Chief of Medicine and was formerly a cardiologist with West Texas Medical Associates.

Dr. Leon explained that operating as an independent cardiologist offers him more flexibility to serve his patients better and for less cost to them. On a tour of his office on Executive Dr., Dr. Leon pointed to equipment, like a sonogram for performing echocardiograms (called an “echo”), brand new. “I can offer an echocardiogram test for $204 to self-pay patients. If you get one at Community, it will cost you much more, because it is connected to a hospital. This is the same machine and it provides the same outcome,” Dr. Leon explained.

We called and checked prices. SACMC’s retail price for an echo is $2,859. If the patient pays up-front, SACMC offers a 40 percent discount, for a total cost of $1,715.40. That doesn’t include the cost to have a professional read the test, which can cost around $350 more. The billing clerk at SACMC suggested using a service called MDSave.com, where by using a credit card, a patient can purchase an echo, all-inclusive with the read, for a flat rate of $591. MDSave.com pre-negotiates cash prices with health care providers in Texas, Florida, Tennessee, and Oklahoma for their customers.

Even still, Dr. Leon’s quoted price is about one-third CMA’s heavily discounted price available using MDSave.com.

Earning reimbursements from health insurance companies is more difficult today because of the Affordable Care Act, or Obamacare, and the general mess health care finance has become. To cope, large corporations owning hospitals, like SACMC, are vertically integrating hospital services like emergency room care with doctors’ groups. Dr. James D. Reschovsky, Ph. D. and Dr. Eugene Rich, M.D. explained how hospitals are acquiring physician groups so they can control the availability of care in a 2015 article in the American Medical Association’s JAMA Internal Medicine Journal (“Hospital Acquisition of Physician Groups: On the Road to Value-Based or Higher-Priced Care”, Dec. 2015).

This control allows the hospitals to negotiate better reimbursement rates from insurance companies, the article states. In San Angelo, Shannon Medical Center controls the doctors at Shannon Clinic while SACMC is affiliated with CMA and controls the physicians there.

Some insurance plans force you to choose Shannon or Community, and not use both. For example, SACMC accepts the Blue Cross/Blue Shield of Texas HMO plans, while Shannon requires the BCBS PPO plan and does not accept the HMO. Both plans are almost identical in cost to the consumer. What insurance is accepted depends, in part, on how well the hospital group is positioned to negotiate reimbursement rates with health insurance companies.

How these hospitals are aligning with physician groups matters to consumers because ultimately, it boils down to out-of-pocket expenses paid by the consumer. Most insurance plans have a two-step coverage formula. A patient spends enough to meet his or her deductible first, then the patient will be charged a co-pay, which is a percentage, until the second step, the maximum out-of-pocket expenses are met. Less expensive treatment can generally save even the insured patient money. Competition in health care is one way to induce lower costs.

Yet Obamacare, Reschovsky et. al. argued, is forcing the vertical integration of physician groups into close affiliation with major medical centers. While Medicare is experimenting with alternative payment models based upon outcomes, a hospital’s control of physicians and medical specialists allows that hospital to “hedge” their revenue streams and maintain profitability.

In other words, vertical integration of hospitals with almost all available physicians is creating large monopolies that control access to health care, and ultimately, its price, absent government price controls.

Dr. Leon’s independent practice is closely aligned with SACMC. He has privileges at the hospital, operates in the hospital’s cardiology lab, and is an on-call interventional cardiologist for the SACMC emergency room. Yet, whatever treatment he can provide his patient in his office means SACMC isn’t getting its cut.

This is not true of cardiologists assigned to CMA, the physicians’ group aligned with SACMC. And, since CMA is certified by SACMC, it charges higher rates than Dr. Leon does, as noted in the example of the cost of an echo test mentioned above.

With a shortage of cardiologists in San Angelo, the arrangement Dr. Leon had with SACMC was working for both parties up and until, Dr. Leon alleges, CMA invested in creating its own cardiology practice, hiring Dr. Michael S. Blanc, M.D., as its medical director for cardiology and, Leon said, part owner of SACMC.

That made Dr. Leon a competitor of CMA and the hospital, and Leon alleges Dr. Blanc used his position at SACMC to make it impossible for him to operate his practice.

The allegations surround the ER and how the “on call” cardiologists are scheduled. The ER is there to save lives, but in the medical profession, the ER is also a vast resource of new heart patients to be assigned to the cardiologist on call if the patient is new or doesn’t have one already assigned.

In his lawsuit, Dr. Leon alleges SACMC, CMA and Dr. Blanc’s cardiologists ended up later seeing Dr. Leon’s patients if one of them previously appeared in the emergency room when Leon was not on call. “The patient was wondering if I had abandoned or ‘fired’ them because they’d leave the ER with a referral to CMA instead of to my office,” Leon said.

Because of this, Dr. Leon was forced to be on-call 24 hours a day, seven days a week to provide services to his own patients. Soon, Dr. Blanc refused to cover for Dr. Leon at all, forcing Dr. Leon to hire a cardiologist to assist him. That would allow Dr. Leon time to run his business, attend professional or educational meetings, and take care of his personal life.

Because Dr. Blanc was head of cardiology, he had significant influence on certifying new cardiologists to have privileges at SACMC. Leon alleges that at least two cardiologists Leon hired to work with him were harassed and forced to endure peer review when there were no significant issues or reasons to do so. And, Leon notes, CMA physicians were not subjected to the same level of scrutiny.

Dr. Blanc, however, disagreed. In a letter to Dr. Leon in 2011, Blanc told Leon he and his associate cardiologists at CMA had “significant and growing concerns regarding [Leon’s associate cardiologist, Dr. J.Y’s] practice patterns and professional integrity.” Therefore, Blanc wrote, CMA cardiologists would no longer cover for Dr. Leon’s patients at SACMC.

Soon thereafter, Dr. J.Y. and Dr. Leon split, and Leon was on his own. At that time, Blanc and CMA agreed to cover Leon’s patients again.

A few months after Dr. Leon lost his associate, in September 2012, Dr. Blanc heard Dr. Leon was interviewing another cardiologist to help cover his patients. According to a letter from Blanc, he said he was “disappointed” that Leon had not presented his concerns to CMA first, and again refused to cover Leon’s patients thereafter.

Leon claims that the SACMC offered to have CMA cardiologists cover Leon’s patients for $1,000 per day. Dr. Leon was not offered a reciprocal arrangement if he covered CMA patients, the lawsuit alleges. Doctors providing coverage for the patients of other doctors is generally considered a professional courtesy and no money is exchanged.

The coverage issues continued, to the point, Dr. Leon alleges, Dr. Blanc would not accommodate a schedule change to allow Dr. Leon to attend a meeting in San Antonio that was required of Leon for his approval to become a U.S. citizen. In court documents, an email exchange shows that Dr. Leon had to hire his immigration attorney to beg SACMC for time off the on-call schedule for Leon to attend the required naturalization interview with U.S. immigration officials. Dr. Blanc seemingly reluctantly agreed after an intervention from SACMC’s chief of staff, but added that no other changes for the rest of the year would be allowed.

Through the years, four doctors who Dr. Leon employed or attempted to employ, the lawsuit alleges, were met with actions by Dr. Blanc that either ran them off or made it difficult for them to practice medicine at SACMC. The lawsuit alleges Blanc used his position as the head of cardiology to place Leon’s non-CMA cardiologists into an arduous peer review process.

The last cardiologist hired by Dr. Leon in 2013 was Dr. Gregson Oghafua. He left San Angelo disappointed after his proctorship to practice as an interventional cardiologist was terminated by SACMC despite showing good progress, Dr. Leon said. “There were no complications,” Leon claimed. Dr. Oghafua returned in 2017 as only a general invasive cardiologist, not an interventional cardiologist he desires to be, because the process for the second proctorship offered by SACMC was too arduous, Leon said.

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Above: Dr. Milton Leon and his associate Dr. Gregson Oghafua. (cardiowesttexas.com)

Leon’s lawsuit alleges restraint of trade; anti-competitive conduct; tortious interference with existing contracts with his non-CMA cardiologists; tortious interference with prospective relations such as patients; fraud; promissory estoppel; and unjust enrichment with anti-competitive conduct.

Chris Payne, an Austin-based attorney who wrote the original lawsuit in 2016, said the trial would boil down to an antitrust argument against Community Health Systems (CHS), SACMC, CMA, and Dr. Blanc. “If you look at the numbers, the economic impact to Dr. Leon’s business jumps off the page,” he said.

In a pre-trial Friday, the attorney for SACMC stated in court his side will need to hire an economist to defend the case. At the end of the pre-trial, both sides were released to begin the discovery phase. Dr. Leon’s lead attorney, Paul Craig Laird II of Irving, promised multiple depositions, much of it on video.

A jury trial is scheduled for September 2019.

The trial promises to shine a spotlight on whether independent doctors can operate in a post-Obamacare financial environment, and all of it will take place at the Tom Green County Courthouse.

The trial pits two powerhouse legal teams against one another. For the plaintiff, Dr. Leon, Paul Craig Laird II is a highly experienced antitrust lawyer based in Irving. For the SACMC’s defense, Bill Katz of Thompson and Knight in Dallas, was named the antitrust lawyer of the year in “The Best Lawyers in America” by Woodward/White Inc. in 2015.

Dr. Leon is asking for over $2 million in damages and attorneys’ fees.