Federal Court Rules Physician Suit Against Surgery Center for Enforcing Safe Harbor One-Third Tests A Decision for State Court

The 7th Circuit Federal Appellate Court has ruled that a recent lawsuit brought forth by a physician-partner of an Illinois surgery center when the center attempted to revoke his partnership because he failed to perform one-third of his cases at the center did not involve federal issues and instead should be heard in state court. This case is particularly significant because it is one of the few written opinions that involves the buying out a surgeon for failure to comply with ASC safe harbors.

Hansel DeBartolo, MD, a surgeon at Surgicare of Joliet, a HealthSouth surgery center, brought forth the suit against HealthSouth and the center after Surgicare notified him that it was exercising a clause in his agreement that allowed it to buy out his shares in the center because he did not meet the one-third requirement.

Dr. DeBartolo brought forth the case in federal district court, which dismissed the suit. He then appealed to the federal Appellate Court.

The 7th Circuit Appellate Court ruled the that federal district court should not have heard the matter originally because it involved state law contract claims, as opposed to federal issues. The 7th Circuit Appellate Court overruled the lower court decision and remanded the case back to the lower federal court with instructions that the federal court did not have authority to even hear the matter.

The physician can now bring the suit as a state law contract claim in state court, as opposed to federal court.

Read the Appellate Court's complete ruling.