©2011 neil b. caesar1 georgia association of medical equipment suppliers spring meeting 2011 take...

©2011 Neil B. Caesar 1

GEORGIA ASSOCIATION OF MEDICAL EQUIPMENT

SUPPLIERS SPRING MEETING 2011

Take It Back! Strategies for Reclaiming Equipment

Held by Customers

Macon, GeorgiaTuesday, April 26, 2011 at 10:45 AM

1200 Woodruff Road, A-3Greenville, SC 29607

www.healthlawcenter.com

Telephone 864-676-9075Facsimile 864-297-8725

[email protected]


Take It Back! Strategies for Reclaiming Equipment Held

by Customers

Neil B. Caesar, Esq.Health Law Center

Health Law CenterNeil B. Caesar Law Associates, PA

1200 Woodruff Road -- Building A-3Greenville, South Carolina 29607

Telephone: 864-676-9075Fax: 864-297-8725

E-Mail: [email protected]

www.healthlawcenter.com


About the Health Law Center

Established in 1994, the Health Law Center serves the legal and management advisory needs of healthcare companies nationally.

The Health Law Center is recognized as an innovative leader in health law services, and is proud to have achieved the highest rating ("AV") from Martindale-Hubbell.


About the Health Law CenterNeil Caesar, President of the Health Law Center, brings 30 years of extensive healthcare and business law background to the firm.

Mr. Caesar possesses an extensive healthcare and business law background, having served as Corporate Counsel to Foster Medical Corporation (now Apria Homecare), as Vice President of the Health Care Group, Inc., and as a member of premier law firms in Pennsylvania and North Carolina.


About the Health Law Center

Mr. Caesar is the Author and Editor-in-Chief of the five-volume Compliance Answer Book Series, and is an active speaker and author on ventures and acquisitions; compliance, reimbursement and fraud; physician and HME issues; and health law issues generally.

Mr. Caesar was the creator of the “Legal Forum,” “Diagnosis Health Law” and “Legal Insight from the Health Law Center” columns for Managed Care, Today’s Physician and New Perspectives magazines. His column, “Compliance University” appears monthly in HomeCare magazine.


Take It Back!

• Purpose: – Understand Rules and Processes to

Reclaim and Repossess Equipment in a Customer’s Possession …


Take It Back!

• Purpose: – When Customer is No Longer Entitled to Equipment•End of coverage period•Customer non-compliant with

conditions for coverage•No payments•Missed payments•Death


Take It Back!

• Topics to Address:– From where do a supplier’s rights

originate?– Laws governing reclamation and

repossession– Contract issues governing reclamation and

repossession– Customer defenses– Strategic and tactical considerations– Ethics


Take It Back!

• Goal:– Obtain tools for improving

reclamation/repossession results•Legal tools•Ethics tools•Practical tools


What Are My Rights, and How Did I Get Them?

• Supplier rights derive from two basic sources– Legal rights– Rights granted by contract



• Legal Rights:– Federal

•Consumer/Creditor relations–Fair Credit Reporting Act etc.–Regulated by Federal Trade

Commission

•Medicare statutes, regulations and policies

•Medicaid statutes, regulations and policies



• Legal Rights:– State Law

•Deceptive Trade Practices Laws–Consumer purchases and leases of

goods and services•Breach of the Peace•Deficiency judgments•Vandalism•Repossession•Patient abandonment



• Legal Rights:– Georgia:

•Adopted Uniform Deceptive Trade Practices Act

–Fair Business Practices Act of 1975•Also comprehensive “Lemon Law”

passed in 1990•Significant modifications to many

consumer protection laws in 1997•Enforced by Georgia Office of

Consumer Affairs



• Contract Rights:– With third party payer– With Medicare/Medicaid

•Participation is a contract•Competitive bidding is a contract•Medicare Advantage Plans



• Contract Rights:– With Customer

•Delivery Forms•HIPAA Forms•Advance Beneficiary Notices (ABNs)•Patient bill of rights and

responsibilities



• Let’s look at these rights more closely …



• Generally speaking, a creditor retains rights until final payment is received



• Trigger: “Default” by customer– Amount of payment– Timing of payment– Terms stated in contract– Includes copays and deductibles



• Default can trigger right to repossess (if purchased)– or remove (if leased)– If:

•Contractually allowed–Usually after some “cure”

opportunities•Clear notice•Specific procedures followed



• Repossession: Rights vary by state– Notice required– Permitted to trespass onto property?– Restricted by time of day?– Harassment?– May be limited to secured goods

•Example, Purchase Money Security Interest



• Repossession:– Usually includes option to keep in lieu of

debt•Or sell and apply toward debt

– Not applicable to DMEPOS?



• Deficiencies:– If value of reclaimed property less than

debt– Options:

•Sell and apply proceeds•Other rights granted by patient

–Liquidated damages–Tied to wear and tear–Tied to age of goods



• In some states, can’t sue for deficiency– Georgia: May sue



• Suppose equipment vandalized by customer?– Or excessive wear and tear

• Criminal?– Usually state remedy

• If purchased, usual rule is Buyer may do what he wants



• Buy-back by customer allowed?– Right to redeem– Timeframe?– Includes costs– May be covered by “cure” provisions in

contract



• “Breach of the Peace”?– Threats of physical force– Removal without permission– Consequences:

•Penalty compensation•Loss of right to collect



• Georgia:– Allowed if debtor stops making payment or

otherwise violates sales contract on secured goods• Purchase money security interest or otherwise

– If debtor has paid less than 60% of secured debt, creditor may keep equipment to satisfy debt (after notice)• If 60% or more, creditor must seek sale and

allocation of proceeds• unless debtor renounces this right after default



• Georgia:– Debtor has right to redeem collateral– Creditor must notify debtor of intent to

dispose of personal property unless not picked up by debtor (two 30-day notices required)

– Breach of the Peace rules apply



• Standard process if repossession not allowed– Court

• Small claims?• Corporation needs attorney

– Judgment– Enforcement– Or, bypass court if customer agrees on alternate

process• By contract• By post-default agreement



• Suppose customer hides equipment to hinder supplier?– Felony?



• Rentals:– Security interest– Default – right to collect?– Deposit forfeit?


Other Legal Issues

• Confession of Judgment– Document signed by customer upfront– Eliminates need for hearing


Other Legal Issues

• Confession of Judgment• Georgia:

– Not permitted prior to filing suit– Because: Unfair to ask party to waive

right to seek trial


Other Legal Issues

• Patient Abandonment– May not cause harm to patient– Not an open-ended obligation– Sufficient notice and opportunity for

alternate arrangements is key


Other Legal Issues

• Patient Abandonment– Harm, not inconvenience

•“Critical” harm?•For example, power mobility inside

home warrants more notice and care than outside home


Other Legal Issues

• Patient Abandonment• Georgia: Okay to end relationship

unless:– Service removed when caregiver knew

patient was at a critical stage of treatment; and

– Insufficient notice to find a replacement


Other Legal Issues

• Bankruptcy– Automatic stay on collection efforts– Proof!


Other Legal Issues

• Report on Credit Report?– Report must be 100% accurate– Any inconsistency allows removal from

report– Stays on Report four years


Contract Rights and Obligations

• Examples: Payer Contracts:– Medicare Participation Agreement– Medicare Advantage Plus Agreement– Payer Participation Agreement– Preferred Provider Agreement– HMO Agreement



• Examples: Customer Contracts– ABNs– HIPAA documents– Patient Rights and Responsibilities

Agreements

– Other?



• Many “rules” are actually contractual agreements– Manuals– Payment entitlements and conditions– Policies– Etc.



• Advance Beneficiary Notices– Use for goods and services which are

always denied for medical necessity– Experimental/investigational/new goods

and services– Certain frequency limited items or services– Non-covered items must be described with

sufficient detail so that patient can understand which items may not be reimbursed



• ABNs:– Q: Does ABN impose any contractual

restrictions on supplier’s right to sell, repossess, upgrade, seek additional monies if deficiency, exercise a secured interest, etc.?



• ABNs:– Patient makes promises if no

entitlement– Patient makes promises if entitlement

stops•No longer necessary•No longer eligible for coverage

– Patient makes promises if patient fails to comply with conditions for coverage



• ABNs:– So, why not also have patient

acknowledge he may keep equipment only if he complies with conditions?•Promise to pay what’s owed•Or, promise to return if entitlement

ends



• Amendments:– Sometimes changing the contract will

change enforceability•Late payment forgiveness



• Amendments:– Contract should say exceptions don’t

affect subsequent events or other contract provisions

– Changes should be in writing


Ethics

• Be nice?• Maybe, but …

– Choose your own charity– Other considerations?


Practical Considerations

• Keep customer aware of payment and compliance obligations– Physician office: “Payment expected at

time of service”


Practical Considerations• Patient Bill of Rights and

Responsibilities– Signed– Examples:

• “Patient agrees that rental equipment will be used with reasonable care, not altered or modified, and returned in good condition (normal wear and tear excepted).”

• “Patient agrees to promptly report to Supplier any malfunctions or defects in rental equipment so that repair/replacement can be arranged.”

• “Patient agrees to provide Supplier access to all rental equipment for repair/replacement, maintenance, and/or pick-up of the equipment.”


Practical Considerations• Patient Bill of Rights and Responsibilities

• “Patient agrees to use the equipment for the purposes so indicated and in compliance with the physician’s prescription.”

• “Subject to payer rules, Patient agrees to accept all financial responsibility for home medical equipment furnished by Supplier.”

• “Subject to payer rules, Patient agrees to pay for the replacement cost of any equipment damaged, destroyed, or lost due to misuse, abuse or neglect.”

• “Subject to payer rules, Patient agrees that any authorized modification shall belong to the titleholder of the equipment unless equipment is purchased and paid for in full.”

• “Subject to payer rules, Patient agrees that title to the rental equipment and all parts shall remain with Supplier at all times unless equipment is purchased and paid for in full.”


Practical Considerations• Give customer sufficient notice of intent

to pick up equipment for non-payment– Right to cure– If not fixed by deadline, then specific date

and time for pick up– Then call one/two days before pickup to

confirm

• If customer refuses, court remedy– Some states will allow Confession of

Judgment alternative



• Idea:– Obtain physician release prior to pickup

•when due to patient failure to comply•Or when due to physician failure to

follow-up


Practical Considerations• Lease Ideas:

– Document to provide that patient non-compliance is default, permitting immediate termination and reclamation?

– Define events of default precisely:• Failure to pay amounts due?• Failure to obtain re-certs, etc.?• Failure to keep equipment in good repair?• Misuse of equipment?• Change in acceptability of home care

environment?• Removal of equipment from delivered

address?


Practical Considerations• Lease Ideas:

– Post-Default Actions:•Written notice of default•Specific cure opportunity•Specific date and conditions for pick up•Documented call to customer before

pick up•Documented call to physician

– Tread very carefully if life-support equipment•Such as ventilators


Practical Considerations• Recerts, etc.

– Remind customer in writing of need for recertification•And of possible default and

termination if not obtained– Piggyback with physician notification– Include language in physician

notification to include duty to provide recurring care once care has begun•Use strong, but not offensive language


Practical Considerations• Recerts, etc.

– Consider “Hot Melts” or other branding to identify leased equipment as belonging to Supplier• Could be used for inventory purposes as well

(serial ID markings)• Alternative to UCC filings of PMSIs, etc.• Protect equipment from “poaching: by

competitors– Develop “plain English” pictorial booklets on

various categories of equipment• Outline customer’s obligations



• Need to ensure these protocols are implemented perfectly

• Need to ensure documentation is perfect

• Why?



• Why? Customer Complaints!– Withstand government pushback

•State•Federal

– Withstand payer pushback– Withstand self-doubt



• Why? Fiduciary Duty!– Medicare worries about scaring patient,

hurting patient– State law, too



• Best solution is to discuss with patient upfront– And repeatedly


DisclaimerMaterials in this presentation have been prepared by the Health Law Center for general informational purposes only. This information does not constitute legal advice. You should not act, or refrain from acting, based upon any information in this presentation. Neither our presentation of such information nor your receipt of it creates nor will create an attorney-client relationship.


HEALTH LAW CENTER RESOURCES

FOR FURTHER READING (Contact the Health Law Center for

complimentary copies of materials relating to the topics discussed in this presentation.)



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