March 22, 2021

The United States Court of Appeals for the Second Circuit (“Federal Appellate Court”), in its decision dated January 26, 2021, held: “Razmzan was acting within the scope of his employment when he performed the delivery services. Razmzan was fulfilling his contractual duties to HRHCare—pursuant to a contract that HRHCare designed for its own benefit—and HRHCare benefited from his private billing by being able to retain an experienced OB/GYN and to secure inpatient treatment for its patients. App’x 66-67. He delivered Agyin’s twins “as a result of his employment contract with HRHCare,” Supp. App’x 11, the day after he treated her at one of HRHCare’s clinical locations. His private billing was anticipated by HRHCare in that contract; as the district court explained, HRHCare “agreed on an employment contract that would compensate him … indirectly for the inpatient services he rendered to the center’s patients.” App’x 66. In fact, Razmzan maintained a separate billing account specifically for inpatient services provided to HRHCare patients at a hospital.”

“Moreover, the district court noted that “this arrangement was designed to benefit HRH[Care] by shifting the risk of not having sufficient volume of inpatient services to support the fixed salary that HRH[Care] would have … had to pay to secure the doctor’s inpatient services for its patients.” App’x 67. Therefore, “[i]t was in HRHCare’s interest and benefit to assign Dr. Razmzan the rights to revenue for inpatient services rather than having to pay a fixed salary with the risk that it would either overpay or underpay Dr. Razmzan for inpatient services.” Id. Because Razmzan was acting in furtherance of the duties he owed HRHCare when he provided delivery services at the hospital and billed privately, and because he acted at least in part to benefit HRHCare, he acted within the scope of his employment under New York law.”

The Underlying Facts

After he was sued for medical malpractice in state court, Dr. Shahram Razmzan removed the case to federal court and moved to substitute the United States as the defendant in his place. Razmzan argued that the alleged malpractice occurred within the scope of his employment at a federally deemed community health center, entitling him to immunity and the substitution of the United States as the defendant under the Federally Supported Health Centers Assistance Act (“FSHCAA”), 42 U.S.C. § 233(g)-(n).

The U.S. District Court for the Southern District of New York (Karas, J.) disagreed in part. It concluded that some of the alleged malpractice occurred outside the scope of Razmzan’s employment because he had billed for some of his services privately, in contravention of the Federal Tort Claims Act Health Center Policy Manual (the “FTCA Manual”), and that he was therefore not covered by the FSHCAA implementing regulation, 42 C.F.R. § 6.6. The district court denied substitution of the United States as to that conduct and remanded the case in part to state court. Razmzan appealed.

The Federal Appellate Court reversed the district court’s order in part and remanded for further proceedings consistent with its opinion.

Source Razmzan v. United States, No. 19-227-cv.

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