The Shadow Practice, Part 12: Patient safety net still in tatters three years after court ruling

Published on
September 29, 2010

Prior to 2007, a clinic like Anaheim Hills Surgery Center could have been penalized or even shut down by the state of California. One court ruling changed that, allowing shady clinics to operate without the scrutiny given hospitals, nursing homes and clinics.

That year, the California's Third District Court of Appeal made a ruling in a lawsuit brought by Dr. Daniel Capen from Oxnard against the state, claiming that the state had no authority to force him to go through the licensing process for his outpatient surgery center. The court ruled that Capen was right. As a result, the California Department of Public Health (CDPH) started notifying physician-owned surgery centers in April 2008 that they did not to have to be licensed by the state.

The opening of this regulatory loophole was great timing for the team at Anaheim Hills Surgery Center. After the court ruling and one month before the CDPH notices went out, Maria Garcia bled to death after her vaginal wall was cut open during a cosmetic procedure at Anaheim Hills Surgery Center, also known as Hills Surgical Institute. At the time of Garcia's death, the facility was technically unlicensed and unaccredited by any of the four agencies responsible for reviewing surgery centers.

The state had not licensed any facility to operate at that location since Wellcare Surgical Center closed in 2006, according to CDPH. (It's worth noting that Antidote on September 5 asked the California Department of Public Health for all records about any facility located at 145 S. Chaparral Court and was told, "CDPH's district offices maintain records for facilities for 4 years." Because Wellcare had closed on August 18, 2006, the statute of limitations, literally, had just passed.)

Because the surgery center is co-owned by cosmetic surgeon Dr. Mark Knight and licensed nurse anesthetist Gustavo Gutierrez, the surgery center now is considered off-limits for the CDPH.

"Even if a physician owns 1% of a surgery center, the state has no jurisdiction," CDPH spokesman Ralph Montano told Antidote. "We now see very few surgical centers because there are only a very small number that are not physician-owned in some way."

That leaves the healthcare-industry-funded Joint Commission as the only oversight organization to have audited the surgery center in the past two years, and the commission has done nothing but give it repeated gold stars.

My former colleague at the Los Angeles Times, Michael Hiltzik, has been writing some no-holds barred investigative stories about how this regulatory loophole has given clinics a free pass to harm patients without consequences. He pointed out in a recent story:

A bill sponsored by Sen. Gloria Negrete McLeod (D-Chino) may help. "We're trying to close those holes so no one can sneak through," she told me last week. A similar bill was vetoed last year by Gov. Arnold Schwarzenegger, who said its improvements to consumer protection were only "marginal." Negrete McLeod says her bill, SB 1150, would end another regulatory shortcoming identified by my reporting: the inconsistencies in the clinic accreditation process.

The Medical Board of California requires most physician-owned surgery centers to be accredited by one of four independent organizations, all of which have different oversight boards and corporate structures. The best known is the Joint Commission, because it has become, for better or worse, the Good Housekeeping seal of approval for hospitals. The other three are probably names that even most health reporters have rarely heard. Each of them allows patients to search their site for accredited institutions, but they don't provide information about surgery centers that have lost their accreditation or been denied accreditation.

Hiltzik found out that Almont Ambulatory Surgery Center, which later became Beverly Hills Surgery Center, had been accredited initially by the Accreditation Association for Ambulatory Health Care (AAAHC). But then that accreditation lapsed"for reasons the association won't disclose," Hiltzik wrote.

The clinic was accredited from a different body, the American Association for Accreditation of Ambulatory Surgery Facilities (AAAASF), but that organization revoked its accreditation a few months later in April 2009.

Undaunted, the clinic's owners applied for – but failed to win – accreditation with the Institute for Medical Quality (IMQ) in San Francisco. Because of the AAAASF decision, Medicare also revoked the surgery center's ability to receive federal funds in June 2009.

"For those of you keeping score at home, that's three out of four accreditation agencies," Hiltzik wrote.

Of course, with three different accrediting organizations shutting the door on the clinic and Medicare pulling its funding, the Joint Commission must have declined to accredit the surgery center, right?


In September 2009, the Joint Commission gave Beverly Hills Surgery Center, full accreditation. Hiltzik wrote in April:

Interestingly the JC, unlike IMQ and the AAAASF, doesn't examine a facility's prior accreditation history as part of its approval process.Incidentally, Top Surgeons was claiming on one of its websites as recently as April 6 that its facilities were still accredited by AAAHC, though that hadn't been true for some 13 months. They removed the claim April 7 -- the day after I asked them about it.

They also, apparently, changed the name of the clinic to New Life Surgery Center, which is how the clinic is listed now with the Joint Commission. This makes three different names for the clinic in less than five years. Sound familiar?

The boys at 145 S. Chaparral Court know this game well. And now, because of the Capen ruling, there are fewer referees making sure they play by the rules.

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Related Posts:

The Shadow Practice Part 1: Disciplined doctor found an exile community in immigrant health care

The Shadow Practice Part 2: New owners can't exorcise ghosts of clinic's past

The Shadow Practice Part 3: Immigrant clinic had deep roots in deception

The Shadow Practice Part 4: Doc begs patients for loans

The Shadow Practice Part 5: Drug pushers running this clinic were far from saints

The Shadow Practice Part 6: Doctors sell their souls, and their licenses, on the cheap

The Shadow Practice Part 7: Punishment for drug-dealing doctors more severe in Arizona

The Shadow Practice Part 8: How one California clinic became a magnet for bad medicine

The Shadow Practice, Part 9: Woman dies during cosmetic surgeries at unlicensed clinic

The Shadow Practice, Part 10: Coroner rules mistakes that killed patient a "therapeutic misadventure"

The Shadow Practice, Part 11: Joint Commission overlooks risky practices that led to patient death