Last year, Oregon lawmakers passed one of the toughest corporate medicine laws in the nation, and a recent court case put this law to the test. SB 951 limits corporate influence in medical decisions and was at the center of a courtroom battle between ApolloMD, PeaceHealth and local physicians in Eugene. The issue came up when PeaceHealth announced it would not renew its contract with Eugene Emergency Physicians and would instead contract with Georgia-based ApolloMD. The case took a turn when it was announced that a tentative agreement between EEP and PeaceHealth was made.
Ashli Blow is an environment and public health correspondent for Lookout Eugene-Springfield. She joins us to share more on the agreement and what this court battle says about Oregon’s corporate medicine law.
Note: The following transcript was transcribed digitally and validated for accuracy, readability and formatting by an OPB volunteer.
Dave Miller: This is Think Out Loud on OPB. I’m Dave Miller. Last year, Oregon lawmakers passed one of the toughest corporate medicine laws in the nation. Senate Bill 951 was intended to ensure that medical decisions are based on patient health, not corporate profit. It went into effect at the beginning of this year.
A recent court case put the law to its first real test. The issue came up when PeaceHealth announced it would not renew its contract with Eugene Emergency Physicians [EEP] for emergency care in some of its hospitals in Lane County. Instead, the hospital system said it would contract with a Georgia-based company called ApolloMD. Eugene Emergency Physicians sued, saying the arrangement went against the new state law.
There were four days of dramatic hearings and then this week, a surprise. PeaceHealth backtracked and announced that they had once again come to an agreement with their longstanding partners, EEP. So what happened and what does all this mean statewide for the future of Oregon’s new law?
Ashli Blow joins us to answer these questions. She followed the legal battle as an environment and public health correspondent for Lookout Eugene-Springfield, and she joins us now. It’s great to have you on the show.
Ashli Blow: Thank you so much. Excited to be here.
Miller: I want to start with some important background. Can you remind us how emergency services worked at PeaceHealth’s hospitals in Lane County for more than 30 years?
Blow: Yeah, PeaceHealth has three emergency departments in Lane County. One is in Springfield at a hospital called RiverBend. The others are in Cottage Grove, and we have one in Florence. There used to be an emergency department in Eugene as well, but PeaceHealth closed that down in 2023. That hospital had been around for decades and that’s where EEP initially was contracted to staff its emergency departments. It still does so at RiverBend and Cottage Grove.
Miller: So what did the hospital decide earlier this year?
Blow: The administrators at PeaceHealth went through a request-for-proposals process last year because EEP’s contract was up for renewal. It was set to expire, so they decided to do this process to look at what other companies had to offer. And they announced in February that they were going to be going with a new staffing company named ApolloMD. They’re out of Georgia. And this meant that the contract with EEP was not going to be renewed.
They told physicians that they could work under ApolloMD. But the story quickly developed where these doctors started to share that they didn’t feel safe in their practice already at PeaceHealth. [They] worried what was going to happen when more control was given to a corporate structure and they didn’t have as much autonomy within a private practice to make democratic decisions.
Miller: I should note for folks who missed this, that two months ago or so, we talked to Margaret Pattison, the medical director of the emergency department at PeaceHealth Riverbend in Springfield and a member of EEP.
So why did this local group, Eugene Emergency Physicians, sue?
Blow: There’s many spinning plates, if you will, to this story. But the case really centers around Oregon’s new corporate medicine law. And I’d like to note that this law is so new that we’re still calling it a Senate bill. We can go to our schoolhouse rock lessons, [laughter] and once a bill is signed into law, which it was by Tina Kotek, it is law.
However, throughout the case, it’s been referred to as Senate Bill 951. And that was really the core of what EEP was suing over. They said that the setup that ApolloMD was bringing to Lane County was this business structure that this new law was designed to prevent. So they asked the federal judge … Originally, it was actually filed in the circuit court since it’s a state case, but because this involved companies out of state, it went to federal court. And they asked the judge to issue a preliminary injunction which would have blocked the transition, at least temporarily, until the judge could rule on whether that setup was legal under this law.
Miller: Can you just give us the basics of the state law that went into effect at the beginning of the year?
Blow: Oregon has a very strong corporate medicine law and it’s been in effect for decades. And over that time, of course, the business of medicine and health care has changed. There was a loophole specifically where groups would kind of disguise themselves as “physician-owned.” They do this by putting one or two physicians up, saying they own the practice, but really behind the scenes, there were administrators and business folks who were really pulling the strings and making decisions that had really huge impacts on patient care and access.
So this law actually was inspired in part from a health care fallout already happening in Eugene. A few years ago, Oregon Medical Group was bought out by Optum, which is part of United Health. And thousands of people lost their primary care doctors in that acquisition. Part of that, this law, was attempting to close a loophole that really kept care in the hands of doctors.
Miller: So this brings us to the case that you followed for days. A lot of issues were brought up that everybody, it seems, were acknowledging this isn’t exactly about the case, but this is important background I want you to know. And it seems like the judge, a couple times, said, listen, folks, let’s focus on the narrow question that is in front of me. So what was that question?
Blow: That question was, is this new group that ApolloMD is creating, a new private practice, really owned by a physician and is it going to be managed by a physician, or is it really going to be ApolloMD? And he did not get clear answers to that. The CEO of ApolloMD, Dr. Yogin Patel, testified, and so did the owner of this new practice, Dr. Johne Philip Chapman. They responded under oath saying things like, “I don’t know,” in response to what seemed pretty basic questions as far as, “When did this new LLC practice start?” “When did you find out you were going to be the owner?” And they kept saying, “I don’t know,” or deferring to people who weren’t even in the room for answers.
The judge, verbatim, said that he was becoming frustrated and that these are basic questions that people should know. He went on to point to evidence in the case, which was documents from this procurement RFP (request-for-proposals) process, saying that this document shows that you do know how this structure is. He went on to describe the setup as a shell game and that it really did seem like Apollo was pulling the strings. But to be clear, he hasn’t ruled on that. I think like a lot of people in the community, [he] was trying to get an answer, and that was an answer none of us really heard.
Miller: You included a really striking quote from day three that you were referring to there. He says,“The plausible deniability is discouraging and disappointing. At the end of the day, we have to figure out what the statute means, but what you’re doing,” and he was saying this basically to the defendants, the head of ApolloMD and this new physicians group, “what you’re doing is not helping me understand the actual relationship any better than it being a shell game. So do better. I hope PeaceHealth actually provides some clarity,” he said. “If they don’t, they may be just as liable if I find there’s a violation of state law.”
Striking comments there. Then the next day, he said that the CEO of ApolloMD and the owner of the company’s new physicians group had lied under oath. So what did he say they had lied about?
Blow: That goes back to what was in the RFP, the application that these doctors submitted to the hospital. So this was basically a packet. It’s almost like a really big resume, saying this is what we can do, this is our experience, this is how we work together. And that document apparently did tie Chapman and Patel together, both working for ApolloMD, when they had said that they had worked for partners and affiliates, [although] it was still very unclear still how or who these affiliates or partners were.
So the fact that both doctors said, “I don’t know” or things to that nature, came across to the judges that they were being dishonest with the court. And he said on the last day it would have been better if they had simply told the truth. He went on to say they did this at risk of perjury and contempt of court. He said he’s not escalating that at this time, but that’s to be seen in the coming weeks.
Miller: So things are not going well for PeaceHealth and the company that it was trying to transition to to partner with. But after these days of hearings, there was really surprising news this week that PeaceHealth was basically just backtracking and renewing its contract, or signing a new extension of its longstanding contract, with the local ER docs group after all. How big a surprise was that?
Blow: It was a huge surprise. I was traveling to Portland for this case, because these court hearings essentially went into triple overtime. They were originally scheduled for two days; it went five days. So the judge had another case he had to take in Portland. So many of us made it up there to go listen. I was getting ready to go into court and I received a call from a PeaceHealth spokesperson, telling me that they were going to reverse course.
Going into this court case, I did not expect that to happen. I wasn’t even sure if a ruling was going to come out of this, especially in time before the transition. Why there was such urgency around this is that the transition for at least two of the hospitals was set to start at the end of June. So what had happened is there was an overnight agreement, essentially, that was made between EEP and the hospital. And this was information so new that there were attorneys in the court that still hadn’t read the agreement. This is sort of a preliminary agreement. It’s about four pages and details are going to be fleshed out in the coming weeks, But it essentially says that, yes, we’re going to go forward with a contract for another two or three years, and ApolloMD and this new practice that they were going to create will not be a part of it.
Miller: Are all the emergency docs who have been working for Eugene Emergency Physicians still around?
Blow: Yeah, a couple of them are not from what I have heard from the president of the group. This has been really hard on these people because they’re doctors, but at the end of the day, they’re also people. And these are people who are working very long shifts, learning how to talk to the media for the first time, learning how to organize rallies, learning about a new law. They are exhausted. And then you layer on top of it that you might have to look for a new job. So, there’s at least two people from my understanding that have since left and that’s something that they’re going to be trying to figure out how to fill in the next couple of months.
Miller: I want to zoom out and go back to the statewide ramifications of this. The federal judge was clear – well, pretty clear. [Laughter] He said that there was “ample evidence” that the operations of ApolloMD are “arguably” in violation of that law. So he was tipping his hand. It’s not exactly, it’s not a ruling, but is there going to be a ruling after these days of testimony that were dramatic and were seen as the first real legal test of this new law? Is anything going to be official coming out of this? Is there going to be case law codifying this legal skirmish?
Blow: Well, I will caveat that I’m a public health reporter, I’m not a justice reporter. So I do know that the judge is going to continue to retain jurisdiction of this case for the next couple of weeks until there is a fully signed deal between EEP and PeaceHealth. And if there isn’t for some chance, at that time, he’s going to make a decision on what that means for this case.
So we don’t know if there’s going to be an official ruling or a written opinion from this. But he said on the fifth day, what he has observed from the stand and told attorneys that he said are not musings or hypotheses, those are true from what he believes he has seen. So it seems like that is going to go into some kind of legal record and he feels a responsibility to tie this up in some way. What that’s going to be exactly, I’m not sure, but we will know in the next month.
Miller: Ashli, thanks very much.
Blow: Thank you so much.
Miller: Ashli Blow covers environment and public health for Lookout Eugene-Springfield.
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