Magalhaes v. Shulkin

Filing 26

ORDER AFFIRMING AGENCY ACTION. Signed on 5/20/19 by District Judge Greg Kays. (Law clerk)

IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF MISSOURI
WESTERN DIVISION
ALVARO MAGALHAES, M.D.,
Plaintiff,
v.
HONORABLE ROBERT WILKIE,
Secretary of the Department of
Veterans Affairs,
Defendant.

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No. 4:17-CV-00351-DGK

ORDER AFFIRMING AGENCY ACTION
This action arises from Plaintiff Alvaro Magalhaes, M.D.’s termination from the Kansas
City Department of Veterans Affairs Medical Center (“VAMC”). Plaintiff alleges the agency’s
decision to terminate his employment and revoke his clinical privileges is unsupported by
substantial evidence, arbitrary and capricious, and obtained without the procedures required by
law or regulation. Because the factual determinations are supported by substantial evidence, and
his termination is rationally connected to those facts, the decision is AFFIRMED.
Facts
The U.S. Department of Veteran Affairs (“VA”) is an executive department led by
Secretary Robert Wilkie (“Defendant”). The VA, through the Veterans Health Administration,
operates a national healthcare system that includes the VAMC. From 2010 to 2016, VAMC
employed Plaintiff as a full-time neuroradiologist appointed under 38 U.S.C. § 7401(1).
On March 3, 2016, the VAMC Emergency Room Director informed the Service Chief of
the VAMC Radiology Service (“Chief of Radiology”) that Plaintiff had failed to diagnose a
subarachnoid hemorrhage in two computed tomography (“CT”) scans regarding the same patient.

The Chief of Radiology believed this failure was a significant error and took her concerns to the
VAMC’s Chief of Staff.
Because of the significance of the misreading, the Chief of Staff submitted a
recommendation for the suspension of Plaintiff’s clinical privileges to the VAMC Professional
Standards Board (“PSB”) and the Executive Committee of the Medical Staff (“ECMS”). On
March 4, 2016, both the PSB and the ECMS decided to summarily suspend Plaintiff’s clinical
privileges. When Plaintiff returned from a previously scheduled leave of absence on March 14,
the Chief of Staff and the Chief of Radiology alerted Plaintiff his clinical privileges had been
suspended and he was under review.
An internal neuroradiologist at VAMC, Jordan Sessions, M.D., conducted a review of sixty
of Plaintiff’s cases. Most were randomly selected, but a few were cases in which the Chief of
Radiology had been informed of concerns with Plaintiff’s work by other providers. Of the sixty
cases, Dr. Sessions identified sixteen as being major misses. Those sixteen cases were then sent
to Daniel Martin, M.D., an external neuroradiologist at a different VA hospital, for review.
Dr. Martin came to the same conclusion as Dr. Sessions in thirteen out of the sixteen cases.
Plaintiff filed a written response to the sixteen cases, and on April 12, 2016, the Chief of
Radiology presented the results of the sixteen cases, as well as Plaintiff’s response, to the PSB.
Immediately after the PSB meeting, the ECMS held a special session where Plaintiff presented on
each of the sixteen cases. Both the PSB and ECMS recommended revocation of privileges and
removal based on their review and Plaintiff’s comments on the sixteen cases.
A few days later, the Chief of Staff determined that seven of the cases should not have been
considered by the PSB and ECMS because they were not randomly selected and had previously
been discussed with Plaintiff. The Chief of Staff then presented the nine remaining cases to the

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PSB and ECMS, and upon review of those cases, the PSB and ECMS again determined that
removal and revocation of privileges was warranted.
On July 5, 2016, the Chief of Staff proposed Plaintiff’s privileges be revoked and he be
removed from employment. His penalty was based on a single charge: failure to demonstrate
appropriate radiologist skills, which encompassed nine specifications (or cases) supporting his
removal. In August 2016, the Medical Center Director, Kathleen Fogarty, sustained the charge
and all related cases. She also upheld the penalty of removal of privileges.
Plaintiff subsequently requested a hearing before the Disciplinary Appeals Board
(“DAB”). The DAB, which consisted of two radiologists and a medical doctor selected by the
Deputy Under Secretary for Health Operations and Management, held a two-day hearing in
February 2017.
At the hearing, the DAB heard testimony from Dr. Martin, the Chief of Radiology, the
Chief of Staff, the Medical Center Director, and Plaintiff. The DAB also had before it the
administrative record, which included, among other things, the findings of Dr. Sessions and
Dr. Martin, Plaintiff’s written responses to the charge, a summary of Plaintiff’s oral response to
the charge, letters to Plaintiff regarding his removal and revocation, agency procedures, and
articles concerning the medical significance of Plaintiff’s misreadings.
Following the hearing, the DAB unanimously sustained seven of the nine cases and found
the charge—failure to demonstrate appropriate radiologist skills—to be sustained by a
preponderance of the evidence. The seven cases sustained included missed diagnoses of a
subarachnoid hemorrhage, a disc extrusion, a neck tumor, two benign brain tumors, bilateral pars

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defects with grade 1-2 spondylolisthesis,1 and brain metastases, that is, cancer spread to the brain
from another primary cancer site. The DAB did not sustain the other two cases because it found
one to be an understandable miss and the other a careless dictation error. In its decision, the DAB
also noted that Plaintiff had resigned from his last job at a different VA after he was placed on one
hundred percent clinical practice review; he was placed on this review following reports of
erroneous neuroradiology interpretations. It also found that Plaintiff failed to take responsibility
for many of the misreadings and to appreciate the potential for patient harm. Thus, the DAB
sustained Dr. Magalhaes’ removal.
The Principal Deputy Under Secretary affirmed the DAB’s decision. Plaintiff then filed
this complaint, seeking judicial review of the agency’s decision to terminate his employment.
Standard of Review
Under 38 U.S.C. § 7462(f)(2), a reviewing court should only set aside the DAB’s decision
when a finding or conclusion is found to be: “(A) arbitrary, capricious, an abuse of discretion, or
otherwise not in accordance with law; (B) obtained without procedures required by law, rule, or
regulation having been followed; or (C) unsupported by substantial evidence.” “This standard
‘mirrors the standards for judicial review of other administrative actions, and analogous
administrative law precedents are applicable.’” Pocha v. McDonald, No. CV 15-475 (DWF/FLN),
2016 WL 916417, at *4 (D. Minn. Mar. 10, 2016) (quoting Abaqueta v. United States, 255 F. Supp.
2d 1020, 1024 (D. Ariz. 2003)).

“Spondylolisthesis is a condition in which a bone (vertebra) in the lower part of the spine slips out of the proper
position onto the bone below it.” Constant v. Astrue, No. 11-0455-CV-W-REL-SSA, 2012 WL 2684971, at *6
(W.D. Mo. July 6, 2012).
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Discussion2
I.

The DAB’s decision is supported by substantial evidence.
Plaintiff contends the DAB’s decision is unsupported by substantial evidence because the

DAB “essentially ignores the testimony of the Plaintiff, and, instead violated its own rulings by
relying, in whole or part, on alleged evidence emanating from Dr. Sessions.” Pl. Br. at 7. He also
argues the DAB’s decision is erroneous because no patient suffered an adverse outcome and
because the DAB failed to consider Plaintiff’s entire body of work in making its decision. Pl. Br.
at 8. These arguments are unavailing.
“Substantial evidence is less than a preponderance, but enough that a reasonable mind
might accept it as adequate to support a decision.” Haley v. Massanari, 258 F.3d 742, 747 (8th
Cir. 2001). “[T]he possibility of drawing two inconsistent conclusions from the evidence does not
prevent an administrative agency’s finding from being supported by substantial evidence.”
Consolo v. Fed. Mar. Comm’n, 383 U.S. 607, 620 (1966).
Plaintiff first contends the DAB improperly discredited his testimony. After reviewing the
record, the Court finds that the DAB properly gave little weight to Plaintiff’s testimony. As the
DAB noted, Plaintiff was “evasive at times,” “seemed to skirt around the issues in which the
mistakes were made,” and “blame[d] others or place[d] responsibility for missing his diagnoses on
others or systems.” R. at 14. The DAB also recognized that when Plaintiff admitted to an error,
he “minimized the events” and refused to recognize “the impact of his delayed or missed
diagnoses” and “potential adverse consequences” for patients. Id. Because these findings are
supported by Plaintiff’s oral and written responses, the DAB did not err by giving little weight to

“As a general rule, [the court] will not consider arguments raised for the first time in a reply brief.” Barham v.
Reliance Standard Life Ins. Co., 441 F.3d 581, 584 (8th Cir. 2006). Thus, to the extent the Plaintiff raises new
arguments in his reply brief, the Court does not address them.
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his testimony. See Abaqueta, 255 F. Supp. 2d at 1026 (noting the court gives great deference to
the findings of fact of a DAB because it had the opportunity to observe the witnesses’ demeanor).
Plaintiff also argues the DAB erroneously mentioned that Dr. Sessions’ review of two
cases was consistent with the findings of Dr. Martin. He claims these findings are inadmissible
hearsay. But relevant and material hearsay may be relied upon in the administrative context. See
Richardson v. Perales, 402 U.S. 389, 407-08 (1971) (finding there is no “blanket rejection of
administrative reliance on hearsay irrespective of reliability and probative value”); Beck v.
Shinseki, No. CV-113-126, 2015 WL 1202196, at *24 (S.D. Ga. Mar. 16, 2015) (finding “no
authority” for terminated VA nurse’s “position that hearsay is forbidden in § 7462 proceedings”).
Here, Dr. Sessions’ imaging forms were part of the administrative record, and his findings were
relevant and material because they address whether Plaintiff’s misreadings were understandable
mistakes or significant failures.
Moreover, the DAB did not rely on Dr. Sessions’ findings as substantial evidence to
support its decision in the two cases. Rather, the DAB relied on Dr. Martin’s findings and
testimony, as well as Plaintiff’s testimony, the medical charts, and the testimony of the other
VAMC staff.

Thus, the DAB’s notation that Dr. Sessions’ findings were consistent with

Dr. Martin’s on two occasions is not error. The DAB’s decision is supported by substantial
evidence even without Dr. Sessions’ findings.
Next, Plaintiff asserts the DAB’s decision is not supported by substantial evidence because
the sixty cases selected for review and the seven cases determined to be unacceptable mistakes
constitute a small percentage of his work. Plaintiff provides no support for his argument that the
DAB is required to balance Plaintiff’s correct interpretations with his missed ones. Nor could he.
To so find would insulate doctors from termination after making significant mistakes, not just

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understandable ones. It is not error for the DAB to sustain Plaintiff’s removal based on seven
significant misreadings, any one of which could have led to an adverse outcome for a patient.
To that point, Plaintiff argues the DAB erroneously speculated that Plaintiff’s misreadings
could have led to tragic outcomes even though no patient was harmed. But the DAB heard expert
testimony that the misreadings could have led to poor outcomes for patients, and the radiologists
on the DAB agreed based on the medical records. See Beck, 2015 WL 1202196, at *9, 14 n.40
(finding it was proper for DAB to rely on “its clinical expertise and “professional nursing
experience and judgment” in reviewing care provided by a VA nurse).

Thus, the DAB’s

conclusion that poor outcomes could have resulted from the misreadings was not speculation.
The DAB based its findings on Plaintiff’s testimony, as well as the credible testimony of
Dr. Martin, the Chief of Radiology, the Chief of Staff, and the Medical Center Director that these
seven mistakes were significant and could have resulted in adverse outcomes for patients.
Moreover, the DAB itself, which included two radiologists, reviewed the medical records before
outlining thorough evidence to support its findings. Thus, the record contains “evidence that a
reasonable mind would accept as adequate to support” the DAB’s finding that Plaintiff failed to
demonstrate the acceptable standard of radiologist skills. Haley, 258 F.3d at 747.
II.

The DAB decision is not arbitrary or capricious.
Plaintiff further complains the DAB’s decision was arbitrary and capricious because the

seven cases it sustained were a small percentage of Plaintiff’s body of work; professional standards
indicate a five percent error rate is normal; the conclusions were speculative; and the DAB
members inserted their own opinions into the case. Put simply, he claims “there is a clear absence
of a rational connection between the findings of fact of the DAB and the termination decision.”
Pl. Br. at 7. This argument is without merit.

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A decision is arbitrary and capricious if “the agency has relied on factors which
Congress has not intended it to consider, entirely failed to consider an important
aspect of the problem, offered an explanation for its decision that runs counter to
the evidence before the agency, or is so implausible that it could not be ascribed to
a difference in view or the product of agency expertise.”
McClung v. Paul, 788 F.3d. 822, 828 (8th Cir. 2015) (quoting Motor Vehicle Mfrs. Ass’n v. State
Farm Mut. Auto Ins. Co., 463 U.S. 29, 43 (1983)). Under this narrow standard, “a court is not to
substitute its judgment for that of the agency,” yet “the agency must examine the relevant data and
articulate a satisfactory explanation for its action including a ‘rational connection between the facts
found and the choice made.’” Motor Vehicle Mfrs. Ass’n, 463 U.S. at 43 (quoting Burlington Truck
Lines v. U.S., 371 U.S. 156, 168 (1962)). “If an agency’s determination is supportable on any
rational basis, [a court] must uphold it,” especially “when an agency is acting within its own sphere
of expertise.” Voyageurs Nat’l Park Ass’n v. Norton, 381 F.3d 759, 763 (8th Cir. 2004).
After a thorough review of the record, the Court concludes the DAB’s decision was not
arbitrary and capricious. While Plaintiff speculates the cases given to the DAB were not randomly
selected, he provides no support for his argument. In fact, this suspicion is belied by the fact that
the Chief of Staff removed seven of the sixteen cases after finding they were not randomly selected.
Further, Plaintiff does not explain how, even if the cases were not random, this would make the
DAB’s decision arbitrary and capricious. Regardless of how the cases got before the DAB, there
was substantial evidence before it that Plaintiff failed to exercise appropriate radiological skills.
Plaintiff also complains that the DAB improperly failed to consider that radiologists
average a five percent error rate. Although Dr. Martin did testify that radiologists will make some
mistakes, he also testified that some mistakes are more significant and that a radiologist’s
willingness to accept responsibility for his or her misreading is important in determining whether
the mistake is reasonable. So, while a five percent error rate may be normal, that does not mean

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all mistakes are treated equally. In fact, the DAB in this case determined that two of Plaintiff’s
mistakes were understandable misses but concluded the other seven cases were significant misses
that demonstrated a lack of competency. It was not error for the DAB to sustain Plaintiff’s removal
despite these seven misreadings being a small percentage of his work.
Finally, Plaintiff again argues the DAB’s findings that patients could have been harmed
was speculative and based on its own interpretation of the evidence. First, the Court declines to
find a patient must be harmed before termination is appropriate. And, as discussed, the DAB’s
conclusions that patients could have adverse outcomes from the misreadings is based on credible
testimony and the DAB’s own review of the medical evidence, which is not improper. Beck, 2015
WL 1202196, at *9, 14 n.40.
While a lesser sanction may have also been appropriate, the DAB’s decision is not “counter
to the evidence before the agency” or “so implausible that it could not be ascribed to a difference
in view or the product of agency expertise.” Nat’l Parks Conservation Ass’n v. McCarthy, 816
F.3d 989, 994 (8th Cir. 2016). The DAB found Plaintiff “made multiple serious diagnostic errors
that have the potential to affect a veteran’s evaluation, treatment and prognosis” and “demonstrated
no remorse and failed to self-acknowledge that his radiological skills were deficient and in need
of improvement.” R. at 14, 15. Thus, the DAB found Plaintiff’s continued employment would be
“likely to result in more clinically significant diagnostic radiological errors,” and therefore
sustained his termination. R. at 15. The DAB’s decision is not arbitrary or capricious.
III.

The DAB’s decision did not violate Plaintiff’s due process rights.
Plaintiff does not complain that the VA failed to provide him with any of the due process

rights afforded to Title 38 employees under 38 U.S.C. § 7462. Instead, he argues the DAB violated
his due process rights by referencing two of Dr. Sessions’ findings even though he did not have an

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opportunity to cross-examine Dr. Sessions.
There is no absolute right to cross-examine a witness in an administrative hearing. See
Kreso v. Shinseki, 67 F. Supp. 3d 1235, 1252 (D. Colo. 2014), aff’d sub nom. Kreso v. McDonald,
631 F. App’x 519 (10th Cir. 2015) (“a party in an administrative discharge hearing does not have
an absolute right to cross-examine witnesses”). And, here, the Court finds that Plaintiff received
due process notwithstanding his inability to cross-examine Dr. Sessions about his findings.
Dr. Sessions’ findings were part of the administrative record, and there is no factual dispute
that Dr. Sessions found all nine cases to be significant misreadings. See Richardson, 402 U.S. at
407-08 (finding relevant and material hearsay admissible). Indeed, Plaintiff did not complain
about the inclusion of these findings in the record. And, in fact, Plaintiff addressed Dr. Sessions’
findings both orally and in written responses, so he was not blindsided by Dr. Sessions findings at
the hearing or unable to respond to them.
Plaintiff also brought his concerns about Dr. Sessions’ findings to the DAB’s attention, and
it acknowledged that Dr. Sessions was not available to testify and that his findings would not be
given weight. While it did mention two of his findings in its decision, the DAB did so only to
acknowledge that Dr. Martin had reached the same conclusion. It did not solely rely on those
findings as substantial evidence to support its decision, as previously discussed.
Thus, there no evidence that cross examination of Dr. Sessions would have changed the
DAB’s decision. See Riano v. Shinseki, No. 11-CV-0939, 2015 WL 1311445, at *13 (E.D. Wis.
Mar. 24, 2015), aff’d sub nom. Riano v. McDonald, 833 F.3d 830 (7th Cir. 2016) (finding the
plaintiff received due process notwithstanding that he could not call and question the patients
whose statements were part of the record and resulted in the cases before the DAB). The DAB did
not violate Plaintiff’s due process rights.

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IV.

The DAB decision is in accordance with applicable law and regulation.
Finally, Plaintiff alleges the DAB’s decision does not comport with applicable law and

regulations because the selection process for the sixty cases reviewed by Dr. Sessions was not
random. Plaintiff believes that “[h]ad the PSB and ECMS consulted with Plaintiff on the method
of selection of the sixty cases, such irregular procedures would have been avoided and a more
representative case sample would have resulted and possibly resulted in a much different decision
as it concerns Plaintiff.” Pl. Br. at 10.
Plaintiff cites no legal authority or specific rule in the VA Handbook to support his claim.
In fact, Plaintiff’s argument is contradicted by the DAB’s explicit finding that the agency followed
the process outlined in the VA Handbook 1100.19. See Thomas Jefferson Univ. v. Shalala, 512
U.S. 504, 512 (1994) (“[w]e must give substantial deference to an agency’s interpretation of its
own regulations”).
In any event, the method of selecting the cases is of no importance so long as the evidence
presented before the DAB shows by a preponderance of the evidence that Plaintiff failed to
demonstrate appropriate radiologist skills. The evidence demonstrated that here.
Conclusion
The DAB made proper, factual determinations supported by substantial evidence and,
based on those determinations, recommended Plaintiff’s termination. Applying the deferential
standard of 38 U.S.C. § 7462, the DAB’s decision must be AFFIRMED.
IT IS SO ORDERED.
Date: May 20, 2019

/s/ Greg Kays
GREG KAYS, JUDGE
UNITED STATES DISTRICT COURT

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