Finally Settled: Hospitals Settle Physician's Anti-Competition Lawsuit
By Joey Berlin Texas Medicine December 2019

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More than a decade after some ill-fated prescription-drug orders, Eduardo Miranda, MD’s lawsuit against two Laredo hospitals for allegedly defaming him and hurting his business is finally over, and he has privileges at one of the two facilities.

The oncologist confidentially settled a years-long lawsuit involving a pair of hospitals he alleged mischaracterized a past legal misfortune to terminate his privileges and eliminate his clinic from competing with the facilities.

Dr. Miranda had unknowingly ordered prescription drugs from Canada in violation of the law, but pleaded guilty to a misdemeanor. With the Texas Medical Association’s help, he ultimately resolved the issue with the federal Office of the Inspector General (OIG) to continue seeing patients insured in federal health care programs.

But his suit alleged that Laredo Medical Center and Laredo Specialty Hospital used those past troubles to engage in antitrust activity and defame him to “stifle competition” in the local market for oncology and hematology services from Dr. Miranda’s clinic, Oncology and Hematology of South Texas.

The American Medical Association (AMA), which through its Litigation Center also supported Dr. Miranda, said in a synopsis of the case that AMA “opposes the loss of medical staff privileges without due process,” calling the outcome of the case “favorable” for medicine.

Neither Laredo Medical Center nor Laredo Specialty Hospital returned phone calls from Texas Medicine seeking comment. They both denied any wrongdoing in court records.

Lost privileges        

According to court documents, beginning in 2007 Dr. Miranda ordered cancer medications from a drug supplier that he believed was located in the U.S., but was actually a Canadian company. The medications were identical to those available in America, but weren’t approved for U.S. distribution because some of the package inserts and labeling weren’t U.S. Food and Drug Administration-approved.

Dr. Miranda’s court filings say once he learned of the issue, he cooperated with authorities and acknowledged he’d violated the law. The fact he didn’t know the drugs were coming from Canada wasn’t an available defense for him, so he agreed in 2014 to plead guilty to a misdemeanor and repay the money that federal health care programs had paid him for the medication.

He was subsequently excluded from federal health care programs. But with TMA’s help, Dr. Miranda received a waiver from the OIG that allowed him to continue participating in federal programs in every Texas county where he had been practicing, based on the need for his services in those communities. TMA and AMA also later assisted Dr. Miranda with his ongoing lawsuit.

“We thought the restriction of him [from] treating Medicaid patients was way beyond what we thought was appropriate, especially since he was a sole provider at that time for those services,” TMA General Counsel Rocky Wilcox said. “That’s why TMA stepped in – to try to help him recover his ability to treat Medicare and Medicaid patients in his community.”

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Despite the waiver, the two local facilities stripped Dr. Miranda’s privileges. Noting that “[t]reating cancer patients is a very profitable business for hospitals,” Dr. Miranda’s court documents say Laredo Medical Center built its own cancer infusion center and, in 2015, sought to expand its oncology services. Dr. Miranda and Oncology & Hematology of South Texas were “formidable competition,” and the hospital took steps to eliminate that competition, according to his court filings. He alleges Laredo Medical Center, “at the direction of its ultimate corporate parent … began a campaign to undermine and discredit Dr. Miranda,” including termination of his medical staff privileges in August 2015.

The reason the hospital gave for that termination, according to Dr. Miranda’s filings, was his supposed exclusion from federal health care programs.

The facility “took this action even though it knew that Dr. Miranda was eligible to participate in federal healthcare programs in the Laredo area and that his services in connection with Laredo Medical Center were eligible” for payments under those programs, Dr. Miranda’s legal records state. Moreover, the suit said the hospital “ended Dr. Miranda’s medical staff privileges without providing him a hearing as directed” by both state law and the hospital bylaws.

“Not content to only remove Dr. Miranda from its medical staff, Laredo Medical Center began spreading lies about Dr. Miranda to other hospitals and doctors in Laredo,” the doctor’s court filings say, adding that the hospital’s representations “fell on welcoming ears” at Laredo Specialty Hospital, for which Laredo Medical Center serves as “the main source of patient referrals.”

Laredo Specialty Hospital terminated his staff privileges on Feb. 29, 2016, court filings say, “despite a prior conversation between Dr. Miranda and the Laredo Specialty Hospital chief executive office where this was discussed and Dr. Miranda was reassured that his prior legal issues would not be a problem and he was encouraged to submit his application for re-credentialing.”

The suit says Laredo Specialty Hospital reported its termination of Dr. Miranda’s privileges to the National Practitioner’s Data Bank and the Texas Medical Board (TMB), and falsely reported to TMB that Dr. Miranda had been the subject of an adverse peer review determination, according to court documents.

The suit also accused Laredo Specialty Hospital of spreading “the false information that Dr. Miranda has been convicted of a felony and is excluded from federal health care programs among the Laredo medical community.” It claimed the defamatory statements resulted in a decline in patient referrals to Dr. Miranda and his clinic, and sought to recover that lost income.

Both hospitals generally denied the claims in Dr. Miranda’s suit in 2016 court filings.                          

Settlements reached

In August 2016, just months after Dr. Miranda filed suit, Laredo Specialty Hospital notified him that it had reinstated his privileges.

Veronica Procasky, Dr. Miranda’s former general counsel, says the physician reached separate, confidential settlements with the hospitals in early 2019. Those settlements prohibit either side from discussing the settlement publicly, she says.

One thing Ms. Procasky could reveal was that Dr. Miranda today does not hold privileges at Laredo Medical Center. She says he can’t comment on the lawsuit. For him to fully overcome what started more than a decade ago would mean receiving a federal pardon or an expungement of his conviction, she says.

“He’s continually fighting for this little issue that happened in 2007 to early 2009 that has no relevance to [his] practice,” Ms. Procasky said.

She notes that laws for ordering drugs have changed significantly since then: The 2013 federal Drug Supply Chain Security Act introduced a central database where legitimate wholesale pharmacies must register.

“In previous times, physicians were left to their own devices, and it was much easier for fraudulent pharmacies to permeate the market without the providers knowing that this was very prevalent,” she said.

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 Correction: The original version of this story incorrectly described how Dr. Miranda ordered drugs from Canada. 

Tex Med. 2019;115(12):36-38
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January 08, 2020

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Joey Berlin

Associate Editor

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Joey Berlin is associate editor of Texas Medicine. His previous work includes stints as a reporter and editor for various newspapers and publishing companies, and he’s covered everything from hard news to sports to workers’ compensation. Joey grew up in the Kansas City area and attended the University of Kansas. He lives in Austin.

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