top legal developments for hospitals ... top legal developments for hospitals & physicians...
TRANSCRIPT
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TOP LEGAL DEVELOPMENTS
FOR HOSPITALS & PHYSICIANS
2011-2012
Cindy WisnerFarmington Hills, MI
Jack SchroderBig Canoe, GA
We’re Doing Better!!
According to the CDC, hospital-acquired infection rates declined in 2010:
• A 33% reduction in central line-associated bloodstream infections
• A 7% reduction in catheter-associated urinary tract infections
• A 10% reduction in surgical site infections
• An 18% reduction in MRSA infections
CDC Press Release (10/19/11)http://www.cdc.gov/media/releases/2011/p1019_healthcare_inf
ections.html
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We’re Doing Better, BUT…..
The 2011 HealthGrades annual report found:• A 13% improvement in hospital mortality rates from 2008 to
2010 across 18 diagnoses & procedures
BUT, it also found wide quality gaps:• Patients treated in highest-rated v. lowest-rated hospitals have
• A 73% lower risk of dying• And a 63% lower risk of in-hosp. complications
• If all Medicare patients had been treated at highest-rated hospitals, 240,000 lives could have potentially been saved between 2008-2010
Source: www.healthgrades.com
We’re Doing Better, BUT…..
According to a JAMA report:• U.S. heart attack patients have higher readmission
rates than patients in 14 other countries
– U.S. 30-day readmission rates were 14.5% v. 9.9% average in other countries
• Notably, U.S. heart attack patients also have a significantly shorter length of stay– 3-day LOS in U.S. v. 8-day LOS in Germany
Source: Journal of the American Medical Assn. (Jan. 4, 2012)
http://jama.ama-assn.org/content/307/1/66.short
Gee whiz, do you think there might be a connection?
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We’re Doing Better, BUT…..
Grumpiest Hospital Patients Are In NYC, Chicago and Florida
Kaiser Health News (11/8/11)
• Those regions received lowest evaluations in patient satisfaction surveys
• Surveys asked how well their doctors and nurses communicated, whether their pain was always well handled, and whether their rooms were clean and quiet
• This is important because, under ACA, Medicare will use results as one factor in determining hospital reimbursement
For a region-by-region breakdown go to: http://www.kaiserhealthnews.org/Stories/2011/November/08/patient-satisfaction-table.aspx
Did You Know…?What are the top 10 cities for hospital care in the U.S., according to HealthGrades?1. Baltimore, MD 6. West Palm Beach, FL2. Phoenix, AZ 7. Chattanooga, TN3. Cedar Rapids, IA 8. St. Louis, MO4. Richmond, VA 9. Hartford, CT5. Cincinnati, OH 10. Grand Rapids, MI
Source: http://www.healthgrades.com/business/img/HealthGrades
TopCitiesforHospitalCare2012.pdf
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Who Says Videogames Are Bad?
Gamers solve AIDS molecular
puzzle that baffled scientistsmsnbc.com (September 18,2011)
• Scientists tried over 10 yrs. to figure out detailed molecular structure of protein-cutting enzyme from an AIDS-like virus
• Asked videogame players to help -- solved puzzle in 10 days!
– Could point way to cures for AIDS and other diseases
"After this discovery, young people might not mind doing their science homework“
- Carter Kimsey
National Science Foundation
The Return of the House Call?
• CMS will select 50 medical
practices to test the effectiveness
of primary care in the home– Will pay incentive fees to those
that reduce costs and provide
high-quality care
• Each practice must serve at least
200 Medicare patients with
multiple chronic conditions
and functional limitations
CMS Press Release (December 12,2011)
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…But Not This Kind of House Call!
Senior Who Allegedly Faked Being
Doctor to Give Breast Exams May
Agree to Plea DealFoxNews.com (10/12/11)
• Carrying doctor bag, 81 y/o man
went around FL apartment bldg
offering free breast exams
• Two women actually allowed him
into their apartment for an exam!
• Will serve 1 yr. in prisonPhillip Winikoff
Health Reform
For information and resources on Healthcare Reform:
http://www.healthlawyers.org/HCR/Pages/default.aspx
Debate Continues
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Confusion Continues
> Half of participants (56%) think law includes new government-run insurance plan (does not)
> Third (35%) think law will let government make decisions about end-of-life care for people on Medicare (does not)
December 2011 Kaiser polls
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& Sup Ct Will Decide• Chief Justice John G. Roberts Jr defended Court’s
ethical standard in 2011 annual report on state of federal judiciary
• Did not, however, mention Justices Clarence Thomas & Elena Kagan by name - have been called to disqualify themselves
• “I have complete confidence in the capability of my colleagues to determine when recusal is warranted” Chief Justice Roberts wrote.
• “They are jurists of exceptional integrity and experience whose character and fitness have been examined thought a rigorous appointment and confirmation process.”
US Sup Ct To Hear Challenge for 3 DAYS
March 26-285-1/2 hours of oral argument
Consolidated review of petitions filed by – National Federation
of Independent Business
– Department of Justice
– 26 State Plaintiffs
Decision expected by end of session in June
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CLASS Ends
• HHS Sec Sebelius told Congress in Oct 2011 administration decided to shelve program because it could not find “viable path forward for CLASS implementation at this time”
• Program was for workers to pay in premiums to receive daily cash benefit for long term care in event of a disability
• Steps to mitigate solvency risks could be found impermissible under ACA
• House had voted to repeal Community Living Assistance Services & Support (CLASS) program
CMS Holiday Announcement 32 Pioneer ACOs
• December 19, 2011 - 32 health care organizations across country will participate in a new Pioneer Accountable Care Organizations (ACOs) initiative under ACA
• Pioneer ACO initiative will encourage primary care doctors, specialists, hospitals & other caregivers to provide better, more coordinated care for people with Medicare & could save up to $1.1 billion over five years
• Medicare will reward ACO groups based on how well they are able to both improve health of Medicare patients & lower health care costs
• Estimated saving up to $1.1 billion
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Payment
Cost Savings AreOn Everyone’s Mind
ILL MAY Forbid Balance Billingby Docs in Par Facilities
• Fed Ct dismissed Constitutional challenge re prohibiting "balance-bill" to patients for services rendered at in-network facilities
• Ill law prohibits “facility-based providers” from “balance billing” insured patients for any amount above applicable deductibles & co-payments patient would pay to a participating provider
• Applies to services in participating facilities• Similar laws in Tex, La, Md, Col, Fla, W Va, Cal
& ConnPeoria Tazewell Pathology Group, S.C. v. Messmore, No. 11-cv-4317 (N.D. Ill. Sept. 23, 2011)
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Employer-Sponsored Health Premiums
Annual premiums for employer-sponsored family health coverage rose 9% this year, according to Kaiser Family Foundation/Health Research & Educational Trust 2011 Employer Health Benefits Survey.
Survey released in September 27
Amount workers contribute is not a statistically significant increase over 2010
Average annual premium for single coverage was 8% higher than last year at $5,429
Premiums increased significantly faster in 2011 than workers’ wages (2.1%) & general inflation (3.2%)
Medicare Reimbursement
Some Wins; Some Losses &Lots of Changes
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Physicians Must Sign
• CMS Rescinds Requirement For Physician Signatures On Lab Test Requisitions
• CMS issued retraction 6-30-2011
• Retracts requirem’t in CY2011 Physician Fee Schedule for signature of physician or qualified NPP on requisition for clinical diagnostic laboratory tests paid under Clinical Laboratory Fee Schedule
DME Bidding OK & Expanding
• DC Dist Ct dismissed challenge to financial standards established by HHS Secy for DME suppliers finding law establishing DME competitive bidding program precluded judicial review of contract awards & program’s design & implementation
• Only review is whether potential bidder “meets applicable financial standards specified by Secretary” Texas Alliance for Home Care Servs. v. Sebelius, No. 10-cv-747 (D.D.C. Sept. 9, 2011)
• CMS announced Round Two on 8-19-2011 to include 91 major metropolitan areas and changes to product categories subject to bid
• Bidding is slated to begin in winter 2012 and Round Two is expected to be operational July 1, 2013
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GME REIMBURSEMENT WIN: FTE MISCOUNT: DC Dist Ct found Sec’ys stance on reopening unlawful – lntermediary agreed GME FTE caps were
erroneous, but denied re-opening – PRRB reversed because adjusting FTE was = no
effect on reimbursement for any closed years – CMS Administrator reversed PRRB’s decision,
finding GME FTE caps were tied to closed cost reports & increasing caps would violate reopening limitation
– Then DC Dist Ct remanded to CMS to reopen
Kaiser Found. Hosps. v. Sebelius, No. 11-92 (D DC Dec. 12, 2011)
RACs Prepayment Reviews Delayed
• WIN? CMS will provide at least 30 days notice before implementing prepayment audits in 11 high-fraud states: Florida, California, Michigan, Texas, New York, Louisiana, Illinois, Pennsylvania, Ohio, North Carolina & Montana
• Until then, Medicare RACs will continue "pay-and-chase"
• CMS also will postpone prior authorization for scooters and power wheelchairs in high fraud & error states: California, Illinois, Michigan, New York, North Carolina, Florida & Texas
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• LOSS: Written rotation agreements still required for non-hospital settings
• Joining numerous other courts, the NY Dist Ct refused to invalidate a regulation that required a written agreement for hospitals to obtain Medicare reimbursement of graduate medical expenses (GME) for time spent by residents in non-hospital settings
GME REIMBURSEMENT
DHS REIMBURSEMENT• LOSS: CHARITY DAYS EXCLUDED: DC Dist Ct
upheld HHS exclusion of “charity care patient days” from DSH adjustment Covenant Health Sys v Sebelius, No. 08-cv-00828 (D DC Oct 24, 2011)
• WIN: MEDICARE+CHOICE (M+C) DAYS: DC Cir Ct held M+C days improperly excluded Northeast Hosp Corp v. Sebelius, No. 10-5163 (DC Cir Sept 13, 2011)
• WIN: EQUITABLE TOLLING PERMITTED: DC Cir Ct remanded equitable tolling for fact finding re relief due hospitals from allegedly erroneous Medicare disproportionate share hospital adjustments for fiscal years 1987-1994 Auburn Reg’l Med. Ctr. v. Sebelius, No. 10-5115 (DC Cir June 24, 2011)
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More REIMBURSEMENT Changes• Resident Slots Reduced & Shuffled: ACA provides
for reductions in direct GME & IME FTE resident caps & authorizes "redistribution" of estimated number of FTE resident slots resulting from reductions (changes released in August 2011) http://www.cms.gov/AcuteInpatientPPS/06_dgme.asp
• 3-Day Rule Updated: CMS issued FY 2012 Inpatient Prospective Payment System (IPPS) Final Rule clarifying which outpatient services are required to be bundled with inpatient services in submission of Medicare claims under the 3-Day Rule; More updates included in proposed changes to CY 2012 Medicare Physician Fee Schedule
Medicaid
Get a Little; Give a Little
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US Sup Ct to Decide:Can Medicaid Recipients Sue?
PRIVATE INDIVIDUALS WANT TO SUE DIRECTLY UNDER SUPREMACY CLAUSE OF CONSTITUTION because Cal’s new rate structure is inconsistent with federal law Douglas v Independent Living Center consolidatd w/Douglas v California Pharmacists Assn and Douglas v Santa Rosa Mem HospArgued: 10-3-2011 Supp Briefs filed 11-18-2011
Medicaid RACs & Quality Measures Are Here
• Final Rule Published in September 2011Implements State Requirements for Medicaid Recovery Audit Contractors effective 1-1-2012
• HHS posted initial set of 26 quality measures that cover prevention, care coordination & chronic disease management required by ACA
• HHS must develop standardized quality reporting format by Jan. 1, 2013, & publish changes annually
• Many measures are currently in use in other programs- shared savings and NCCA effectiveness
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BIGGEST Medicaid Fraud --Service Not Provided
• OIG finds ongoing concerns about potential for fraud & abuse, particularly billing for services that were not actually provided in 12-14 report
• For report: Medicaid Managed Care: Fraud & Abuse Concerns Remain Despite Safeguards (OEI-01-09-00550), OIG reviewed program integrity efforts over a sample of 13 states & 46 MCEs
Lien OK on Medicaid Recoveries• 3rd Cir upheld State lien on Medicaid
beneficiaries’ recoveries from third-parties • States may assert liens on third-party
recoveries of medical costs by Medicaid beneficiaries
• Issue open since 2006 US Sup Ct decision• Liens limited to medical costs are not
prohibited by anti-lien & anti-recovery provisions of Social Security Act, which ban states from imposing liens on property of Medicaid beneficiaries
• Tristani v. Richman, Nos. 09-3537 & 09-3538 (3d Cir. June 29, 2011)
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Grassley Seeks MORE Drug Info Senator Charles E. Grassley is demanding that 34 Medicaid directors answer questions about oversight of physicians who may be overprescribing potentially addictive painkiller or mental health drugs
Letters were sent Monday 1-23-2012
“When a doctor writes more prescriptions than seems humanly possible, it makes sense to ask questions,” Grassley said in a written statement. … “Medicaid serves millions of people and costs billions of dollars. The more money wasted, the less there is for the people who rely on the program.”
He is also is asking for info from 12 states that didn’t respond to his initial request
Antitrust
Still a Hefty Weapon For the Little Guy
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The West Penn SagaWest Penn. Allegheny Hlth. Sys. v. Highmark & Univ.
of Pittsburgh Med.Ctr.• April 2009: West Penn sues largest hosp. & largest health plan in
area, claiming conspiracy to drive it out of business• Sept. 2010: 3rd Cir. finds sufficient evid. of antitrust injury,
conspiracy & monopolization to defeat S/J [627 F.3d 85 (3d Cir. 9/15/10)]
• UPMC breaks off negotiations with Highmark to renew its contract• June 2011: Highmark announces new “affiliation” with West Penn,
agreeing to infuse $475M to save hospital from closing• July 2011: Highmark sues UPMC to enjoin ads re effect of their
contract termination on patients; claims “false advertising”• Sept. 2011: U.S. Supreme Ct. denies cert. of 3rd Circuit decision• Oct. 2011: West Penn drops Highmark as a defendant
Magistrate recommends denial of injunction• Nov. 2011: Judge orders parties to mediation• Dec. 2011: Highmark/UPMC agree to mutual termin. of contract
The West Penn SagaIn graphic detail: Pittsburgh's catawampus healthcare market
Source: ModernHealthcare.com, “Of Interest” (January 11, 2012)
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The Phoebe Putney Saga• April 2010: 11th Cir. allows smaller hospital’s claims to
proceed over Phoebe’s exclusivity arrangements [604 F.3d 1291]
• Dec 2010: Phoebe agrees to buy smaller hospital, giving it 85% of market
• April 2011: FTC sues to block purchase & seeks injunction– Claims use of public hosp. authority as purchaser was
“strawman” to hide behind cloak of state action immunity• June 2011: Trial ct. dismisses, finding state action immunity
– Motivation for using public entity as purchaser was immaterial– Public hosp’s monopolistic control of all hosps. in area was
foreseeable by Legislature when it passed Hosp. Auth. Law• Dec. 2011: 11th Circuit affirms [2011 WL 6118565 ]
– Legislature clearly articulated its intent to authorize hosp. authority to engage in anticompetitive activity, such that it was protected by state action immunity
– Court may not look behind governmental actions for perceived conspiracy to restrain trade & may not probe their official intent
Another Win for the Little Guy
U.S. v. United Reg’l Health Care Sys., #7:11-cv-00030 (N.D. Tex. 2/25/11)(stipulation & prop. final judgment)
• DOJ settled with hosp. that controlled 90% of inpatient hosp. market
• Hosp. had exclusive contracts providing deep discounts to insurers, but only if they refused to contract with competing providers– Hosp’s average rates were about 70% higher than its closest
competitor & 50% higher than rates in comparable TX cities
• Settlement imposes 7-yr. ban on conditioning prices or discounts to insurers based on whether those insurers contract with other hospitals
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Singing the Michigan BluesU.S. v. BC/BS of Michigan, 2011 WL 3566486 (E.D. Mich. 8/12/11)
• Attacks “most-favored nation” clause:– Prohibits hospital from giving any other insurer a better rate
• Complaint alleges such clauses “inhibit hospitals from negotiating competitive contracts with BC/BS competitors”– Blues cover 60% of commercially insured population in the state– In contracts representing 45% of the state's tertiary beds,
hospitals required to charge up to 40% more to competitors• BC/BS’s motion to dismiss denied by court [2011 WL 3566486]
– Rejected argument that health ins. markets are “national” & not local
– No state action immunity since BC/BS is a private entity, as it argued successfully in prior cases
– Not exempt under Mich. antitrust law because MFN clause will not likely lead to lower prices
• BC/BS has filed interlocutory appeal
Singing the National Blues?
Justice Widens Blue Cross Probe Across Several States
Wall Street Journal
March 26, 2011
• As a follow-up to its antitrust suit against Michigan BC/BS, DOJ has subpoenaed documents from Blues plans in Missouri, Ohio, Kansas, West Virginia, North Carolina, South Carolina and D.C.
• Hoping to counter rising premiums by encouraging greater competition and help win support for health reform law
"The antitrust division is investigating the possibility of anticompetitive practices involving MFN clauses in various parts of the country.”
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The Case of the Deadly EmailIn re Promedica Health System Inc., 2011 WL 7003963
(FTC 12/12/11)
• Jan. 2011: FTC files admin. action to block ProMedica merger with St. Luke’s Med. Ctr. in Ohio
• March 2011: Fed. ct. enjoins completion of merger until admin. action is resolved [2011 WL 1219281 (N.D. Ohio 3/29/11)]
• Dec. 2011: ALJ rules in favor of FTC (surprise, surprise!)– Transaction would eliminate a close competitor, cause significant
increase in market power, provide ProMedica with increased bargaining leverage & increased power to charge higher rates
– St. Luke’s perilous financial condition doesn’t justify merger– Separate price negotiations (a la Evanston in 2007) not sufficient – Ordered ProMedica to divest all St. Luke's assets within 180 days– Smoking gun: Pre-merger email from St. Luke’s CEO which
emphasized ProMedica’s “incredible access to outstanding pricing on managed care agreements”
• Both parties appealing to 6th Circuit • Meanwhile, another Ohio hosp. announced plan to join system!
Other Federal EnforcementIn re OSF Healthcare System, FTC #111 0102 (11/18/11)
• FTC challenged merger of two hosp. systems in Rockford, IL– Echoes court blockage of hospital merger in Rockford in 1989
• Here, FTC alleged the merged entity would control:– 64% of general acute-care inpatient hospital services– 37% of primary care physician services
• Only remaining competitor would be SwedishAmerican (ironically, same hosp. Rockford tried to buy in 1989 case!)– Those 2 competitors would control 99.5% of hospital market– Would increase incentive for 2 competitors to engage in
coordinated anticompetitive behavior
• Would also give merged entity “greater leverage to raise rates”• FTC filed concurrent suit to enjoin merger pending
administrative case
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State Enforcement
Penn. v. Geisinger Med.Ctr. #344 MD 2011 (Pa. Commw. Ct. 7/27/11)
• Penn. AG attacked merger of only two competitors in county
• Later approved merger upon settlement with following terms:– Hosp. will give health plans option of extending terms of M’care
Advantage contracts for 3 yrs. with price increases tied to inflation
– Hosp. will negotiate M’care Advantage contracts in good faith
– Hosp. will continue full med. staff privileges for MDs who had privileges at merged hospital without requiring them to become Geisinger employees
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Group Purchasing Organizations
Southeast Missouri Hosp. v. C.R. Bard Inc., 2011 WL 2201067 (8th Cir. 6/8/11)
• “Sole source” provision in GPO contract doesn’t violate antitrust
• GPO had Bard as only cath supplier in return for deep discount
– Contract did not require hosp. to purchase Bard’s caths
– Plaintiff claimed discounts so attractive they became de factoexclusive agreements
– Bard controlled 80% of Foley cath market
• 8th Cir. ruled contract was voluntary & non-exclusive bec. hosp. could purchase caths elsewhere– Hosp. didn’t buy other caths bec. its physicians preferred Bard's
In case you missed the point…
Healthcare sector facing increased antitrust scrutiny
Washington PostApril 4, 2011
• Cites United Regional & Michigan BC/BS suits as evidence of DOJ scrutiny of ways dominant hospitals, MD groups & insurers are conspiring to increase medical costs
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Credentialing
Not Much Good Newsfor Physicians
HCQIA Immunity Granted
Sternberg v. Nanticoke Mem. Hosp., 2011 WL 888115
(Del. Supr., 3/15/11)
• HCQIA immunity granted against disruptive physician even though his behavior did not put patients in imminent danger– Physician summarily suspended when he invited reporter
to observe him in the operating room
• Physician’s conduct threatened patient safety, given his long history of outbursts and uncontrolled anger, his deliberate disregard for hospital rules, and his continued disruptive behavior in the face of multiple warnings
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HCQIA – Immunity Granted
Summers v. Ardent Hlth. Svcs., 2011 WL 2020665 (N.M. 4/12/11)
• Physician’s privileges suspended for inappropriate sexually explicit language with two patients– Physician admitted facts involving first patient, but disputed second
• Ct. of App. refused to grant S/J, finding issue of fact whether hospital acted after “a reasonable effort to obtain the facts”– Evidence regarding second patient consisted solely of notes of case
manager who spoke to patient– Neither case manager nor patient was ever contacted or questioned
• Supreme Ct. reversed & granted HCQIA immunity– Presumption of reasonableness not overcome by simply identifying
one piece of factually questionable evidence; must show fact-finding process was unreasonable in its totality
– Subjective intent of review committees members is irrelevant– Failure to comply with bylaws does not render process unreasonable
HCQIA – Immunity GrantedGeorgopolus v. Humility of Mary, 2011 WL 2533871 (Ohio
Ct. App. 6/24/11)
• After two questionable cases, hospital req’d surgeon to be supervised for next six months– Reasons for review: lengthy operating time & excessive transfusions– MD claimed these weren’t measures of quality – only outcomes were– Thus, action not taken “in furtherance of quality care” as HCQIA req’d
• Ct. granted HCQIA immunity to defendants– Hosp’s subjective motivations for action were immaterial– MD does not have right to require review body to summon witnesses
on his behalf
“[T]he scope of ‘health care quality’ encompasses more than aphysician’s mortality and morbidity rates. The fact that [a] Plaintiff achieve[s] good patient outcomes does not mean that he was not creating unnecessary risks for those patients or for other patients.”
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HCQIA – Immunity GrantedTabrizi v. Faxton-St. Luke's Healthcare, 2011 WL 6842989
(N.D.N.Y. 12/29/11)
• Insurer raised concerns about MD’s treatment of patient – MD’s privileges suspended; affirmed after hearing
• MD sued hospital and 3 physicians
• HCQIA does not provide private cause of action– Although 2nd Cir. hadn’t ruled on issue, court decided to follow
precedent of 1st, 8th, 10th & 11th Circuits
Frelich v. Upper Chesapeake Hlth Sys., 2011 WL 6307871(Md. 12/19/11)
• After 2 yrs & 12 hearings, MD’s privileges not renewed due to disruptive behavior & numerous staff and patient complaints
• Court: retaliatory motive by some staff insufficient to show hosp. Bd’s action failed to meet HCQIA immunity standards
HCQIA – Immunity Granted
Pierson v. Orlando Regl Hlth. Sys., 2012 WL 98485 (11th Cir. unpublished 1/13/12)
• Hosp. received complaints from nurses, technicians, and other physicians re MD’s conduct– Excessive length of surgeries; delayed operative notes; claimed
elective surgeries were urgent
• Bd. removed MD from trauma and ER call; sent NPD report
• MD moved to Calif. & filed suit 4 years later
• 11th Cir. summarily affirmed trial ct. rulings granting S/J:– HCQIA is constitutional
– Specific adverse patient outcomes not necessary for immunity
– No antitrust standing
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HCQIA – Immunity DeniedSmigaj v. Yakima Valley Mem. Hosp. Ass'n, 2012 WL
75670 (Wash. Ct. App. 1/10/12)
• Hosp. summarily suspended MD for 11 days; hosp. claimed immunity under state law which incorporated HCQIA
• Court denied immunity, saying investigation & action didn’t meet HCQIA’s “reas. effort” & “adequate notice” standards– Comm. didn’t interview outside reviewer & imposed suspension
before obtaining his written report– Didn’t interview nurses or physicians who had knowledge– Didn’t give MD notice of two additional cases it was reviewing– Didn’t give MD copies of outside reviewer’s written report
• Also didn’t meet HCQIA’s special provisions for summary susp.– No “imminent danger” shown because investig. took 4 mos.– No “fair procedure” given because MD not told comm. was
considering suspension & bec. comm. included competitors– [Note: Ct. appears to have improperly applied procedural stds.]
Non-HCQIA Cases
Guier v. Teton Cnty. Hosp. Dist., 248 P.3d 623 (Wyo. 2/24/11)
• Surgeon’s disruptive conduct resulted in reappointment agreement including certain notice rights to surgeon
• Continuing disruptive conduct culminated in “Work Refusal Petition” signed by entire OR staff – MEC then took action allowed in bylaws: 29-day suspension
followed by investigation & recommendation of revocation
• Court affirmed hosp. board’s decision to revoke privileges– Burden of proof in bylaws was appropriate
• Fact that MEC didn’t follow all steps in Disruptive Practitioner Policy or Reappointment Agreement didn’t violate due process– Neither Policy nor Agreement carried same authority as bylaws
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Non-HCQIA Cases
Soriano v. Neshoba County, 2011 WL 2532479 (S.D. Miss. 6/24/11)
• After failure to transfer critical pt. to care of cardiologist, physician’s privileges were revoked by hospital– Physic. raised claims of due process, defamation, tortious
interference & various discrimination law violations
• Court found no issue of fact to support any claims– Hospital substantially complied w/ bylaws and there was no
injury from any deviation
– Failed to allege age & national origin discrim. before EEOC
– One stray comment by MD on investigatory comm. not enough for racial discrimination claim
– NPD report req’d by law & thus entitled to qualified immunity
DataBank Reporting
Lambert v. Baptist Mem. Hosp., 2011 WL 386823 (Miss. Ct.
App. 2/8/11)
• Hosp. terminated physician due to disruptive behavior and “freezing up” during surgery – Sent report to NPD saying he was “unfit to practice
medicine”• Court dismissed doctor’s lawsuit saying:
– Hosp. not req’d to seek second opinion on his fitness to practice before it suspended his privileges
– Hospital's report to the NPDB was not defamatoryZoher v. NCH Healthcare Sys., 2011 WL 5525338 (M.D.Fla.
11/14/11)
• Doctor sought injunctive & declaratory relief over NPD report• Court dismissed; HCQIA provided no private cause of action
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No Preliminary InjunctionRoudachevski v. All-America Care Ctrs., 684 F.3d 701(8th Cir.
8/8/11)
• Nursing home revoked medical director’s privileges• Physician sought injunction, claiming action tortiously
interfered with his physician-patient relationships– [Remember, this is in Ark., home of Baptist Health, 2010 WL
3835844 (Ark. 9/30/10)]
• Court affirmed denial of preliminary injunction– No irreparable harm because all physic/pt. relationships were
already terminated & all former pts already had other MDs– Patients could transfer to other facilities where he did have
privileges– No public interest since reinstatement would risk further
disruption to new physic/pt. relationships– Private facility has right to terminate nonconforming physicians
Only in California
El-Attar v. Hollywood Presbyterian Med. Ctr.,
130 Cal.Rptr.3d 441 (Cal. Ct. App., 2nd Dist. 8/19/11)
• Hosp. board recommends non-reappointment after two outside reviewers find serious quality problems
• MEC refuses to ratify & delegates to board power to appoint hearing review panel (bylaws say MEC appoints panel)
• Hearing proceeds over two years with almost 30 sessions, resulting in final decision to refuse reappointment
• Calif. Ct. of Appeal found panel was improperly constituted, so hosp. action vacated & new hearing granted
“Allowing the Governing Body to handpick the [hearing panel] membersjeopardizes the integrity of the hearing from the beginning and it undercutsthe medical staff’s right to perform this self governing function.”
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Patient Rights and Safety
Good News for Patients
Millions in $$ For Reductions inHospital - Acquired Conditions
• HHS will make awards to 26 organizations
• Partnership for Patients initiative will award $218 million to 26 state, regional, or national hospital system organizations called Hospital Engagement Networks to help reduce hospital acquired conditions, HHS said December 14
• Hospital Engagement Networks will identify solutions already working & work to spread them to other hospitals & healthcare providers
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Nursing Home Arbitration Agts Struck Down
FLORIDA: Fla Sup Ct found public policy violations Shotts v. OP Winter Haven Inc., No. SC08-1774 (Fla. Nov. 23, 2011) & Gessa v. Manor Care of Fla., Inc. No. SC09-768 (Fla. Nov. 23, 2011)POA does not permit signing arb agt Estate of Irons v. Arcadia Healthcare, L.C., No. 2D10-5712 (Fla. Dist. Ct. App. Aug. 3, 2011)
WEST VIRGINIA: W Va Sup Ct finds arbitration clause signed prior to negligence resulting in personal injury or wrongful death is public policy violation. Brown v. Genesis Healthcare Corp., No. 35494 (W.Va. June 29, 2011)
Nursing Home Arbitration Agts Struck Down
KENTUCKY: Ky App Ct finds arbitration agreement invalid –daughter not legal rep of resident Kindred Hosps. L.P. v. Smith, No. 2010-CA-001608-MR (Ky. Ct. App. Sept. 23, 2011)
ONE AGT UPHELD & ONE AGT MAY BE UPHELDMISSISSIPPI: Court upheld arbitration agreement signed for mother finding arbitration provision was prominently displayed in the admissions agreement, and dispute fell within scope. Cook v. GGNSC Ripley, LLC, No. 3:10CV018 (N.D. Miss. Apr. 14, 2011)SOUTH DAKOTA: S DAK high Court remanded for substitute arbitrator after National Arbitration Forum (named in agt) discontinued arbitrating consumer disputes. Husband signed for wife Court have not reviewed other defenses to compelled arbWright v. GGNSC Holdings LLC, 2011 S.D. 95 (S.D. Dec. 28, 2011).
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Patients Visitation Rights Enforced
• In Sept 2011 HHS issued new guidance to State Agencies enforcing rules requiring hospitals to protect patients’ right to choose visitors during a hospital stay, including a visitor who is a same-sex domestic partner
• Final rule was issued November 19, 2010 stating visitors chosen by patient must enjoy visitation privileges no more restrictive than those for immediate family members
• As part of stepped up enforcement of rule, CMS directed State Survey Agencies (SSAs) to enforce visitors'’ rights when conducting on-site inspections of hospitals on behalf of CMS
Rehab Act Applies TOO
• St. Edward Mercy Medical Center (Ark)settled violation of 504 of Rehab Act
• OCR complaint by visitor because Mercy refused toallow service animal to accompany visitor to ER patient
• Visitor told dog was not a “seeing eye dog” and visitor could not show vaccination records or tags verifying its health
• OCR found non-compliant policies and procedures– Inappropriately excluded service animals already in use by qualified
individuals w/disabilities other than vision impairment– Inappropriately denied access based on failure to produce
documentation
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Stem Cell Donors Can Be Paidfor Blood
• 9th Cir Finds Comp Not Prohibited By National Organ Transplant Act
• Compensating bone marrow donors of cells extracted by “peripheral blood stem cell apheresis” not barred by National Organ Transplant Act
• Because Blood is not covered under Act -- comp to donors is not prohibited
• Appeals Ct rejected govt’s argument that hematopoietic stem cells in veins should be treated as “bone marrow” & statute prohibits compensation not only for donation of an organ, but also “any subpart thereof”
• Flynn v. Holder # 10-55643 (9th Cir. Dec. 1, 2011).
US Acts to Prevent Drug Shortages
• FDA Rule Expands Notification Requirements For Sole-Source Manufacturers
• Interim final rule 12-15-11 requires manufacturers to report to FDA all interruptions
• Response to 10-31-11 Executive Order directing FDA & DOJ to reduce & prevent prescription drug shortages
• July 2011 AHA Survey Found Drug Shortages Increasingly Problematic At Nation’s Hospitals 99.5% of surveyed hospitals experienced drug shortage -last 6 months Hospitals reported -- delaying treatment (82%)
– providing less effective drug (69%)
– increased drug costs (92%)
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Health Care Regulatory BurdensCMS eliminating outdated, bureaucratic, & unnecessary requirements
• Streamlined Conditions of Participation
Estimated $940 million annual savings
• Reduced burdens on end-stage renal disease facilities & ambulatory surgical centers
Estimated $170 million first year savings & another $37 million per year
• Simplified conditions for coverage for Ambulatory Surgical Centers
Estimated $50 million in annual savings for ASCs
E-Health Info and HIPAA
35
Regs, Regs & More RegsHIPAA Disclosure Requirements (Proposed Rule)•Accounting of disclosures of PHI; individuals to have access report on PHI in designated record set; timelines and process
•76 Fed.Reg. 31426 (5/31/11)– Shortens to 3 years (from 6) time period for which covered
entities & BAs are required to account for disclosures
E-Prescribing (Final Rule)•Rules changing e-prescribing provisions
•Aligns with EHR incentives; expands hardship exceptions
•76 Fed. Reg. ______ (9/6/11)
Accreditor (Proposed Rule)•Rules on process for ONC-approved accreditor engaged in improper conduct, transitions to new accrediting organizations
• 76 Fed.Reg. 31272 (5/31/11)
Regs, Regs & More RegsPatient Access to Medical Data (Proposed Rule)• Allows patients access to test results reports directly from labs
• 76 Fed. Reg. _____ (9/14/11)
Electronic Funds Transfers (EFT) (Final Interim Rule)• Two standards for health plans to transmit claim payments to
providers via EFT conducted through the Automated Clearing House Network
• 77 Fed. Reg. _____(1/10/12); effective 1/1/12; compliance deadline 1/1/14
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A House of Cards?Report: Electronic records vulnerable
Associated PressMay 17, 2011
• HHS report concludes hosp-doctor links are being layered on system that already has glaring privacy/security problems
• HHS examined computer security at seven large hospitals and found 151 security vulnerabilities– Classified 4 out of 5 flaws as "high impact," meaning they could
result in costly losses, even injury and death– Inadequate passwords; computers that did not automatically log
off inactive users; unencrypted laptops that contained pt. data• Criticized agencies’ lax enforcement HIPAA security rules
“It's a little like putting a big lock on the front door of the house, but leaving the garage door open.”
Did You Know…?
Between Sept. 2009 & Dec. 2010:
• Medical records of about 7.9 million people were exposed in more than 30,750 healthcare-related security breaches
• This included 252 large-scale breaches that involved more than 500 records each
Source: http://www.hhs.gov/ocr/privacy/hipaa/administrative/breachnotificationrule/breachrept.pdf
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OCR’s “Wall of Shame”
Source: “http://www.hhs.gov/ocr/privacy/hipaa/administrative/breachnotificationrule/breachtool.html”
Some Notable BreachesTriCare: A TriCare contractor lost a backup tape containing PHI
of 4.9 million military patients
Sutter Health: Computer containing PHI on 4.2 million patients swiped from Sutter headquarters; class action suit filed
Stanford: One of its HIT vendors left records of 20,000 ER patients on a commercial website for nearly a year
WellPoint: Fined $100,000 for waiting 3 months to notify 32,000 Indiana patients of online breach
Emory: Identity theft ring hired hospital clerk to furnish PHI on 3,000 patients; used to file fraudulent tax returns
Southern Calif. Medical-Legal Consultants: This collection firm placed files of 300,000 patients on unsecured website
“Likely a case of felony stupidity.”- Aaron Titus, Researcher who discovered leak
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One Hosp. Turns the Tables
N.Y.C. System Sues Over Massive Data Breach
Modern Healthcare Daily Dose February 14, 2011
• NYC Health & Hosp. Corp. sued data storage co. after files in its possession were stolen from unlocked van
• Hosp. system notifying 1.7 million patients & employees and offering free credit monitoring for one year
• System suing to recover notification & other costs
Dumpster Diver’s Dream
North Carolina – Urgent care ctr. hired person to destroy records, who threw them into publicly accessible dumpster – Paid $50,000 fine to state AG
Massachusetts – Reporter discovered thousands of hospital records at city dump– Former owner of billing company found at fault
Massachusetts – Hosp. sent files to data destruction firm, but only a portion actually received & destroyed – Hosp. now trying to notify 800,000 affected patients
Rite Aid – TV outlets videotaped employees dumping patient records in trash bins– Company paid $1 million fine to HHS & FTC
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Super Snoopers
• Arizona - Tucson hosp. terminated 3 employees who accessed records of victims of shooting rampage involving Rep. Gabrielle Giffords
• Minnesota – Two hospitals fired 32 employees for improperly accessing medical records of patients hospitalized in the wake of a massive drug overdose at a party
The Perils of Preventive ActionHer case shows why healthcare privacy laws exist
latimes.com (Jan. 4, 2012)
• Pt. meets with local reporter & complains about hospital stay• Hospital CEO & CMO show up at reporter’s office with chart
– They discussed pt’s care in detail, showing parts of her chart– Based on hosp’s information, reporter decides not to publish article
• LA Times now demanding investigation for HIPAA violation– Hospital never got pt’s consent to release her medical information– Hospital claims patient waived privacy rights when she showed her
chart to local reporter
“Under the law, patients themselves can divulge anything they wish…Buta hospital’s obligation is to keep its mouth shut. A desire to deflect bad PRis not an excuse.” Michael Hiltzik, LA Times
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Federal Enforcement BeginsClinic fined $4.3 million for failing to provide
patients’ medical recordsWashington Post (2/23/11)
• First-ever fine under federal HIPAA privacy rule• Clinic refused 41 patients’ requests for their medical records• Even refused to honor HHS subpoena issued during
investigation
Mass. Hospital to pay $1 million settlementModern Healthcare Daily Dose (2/24/11)
• Hosp. employee left info on 192 patients on subway• Hospital required to submit to a corrective action plan
U.S. v. Kaye, #2:11-cr-99 (E.D.Va., indictment filed 6/21/11)
• MD indicted for improperly disclosing mental pt’s PHI to pt’s employer
State Enforcement Continues
Minnesota v. Accretive Health, #12-cv-145 (D.Minn., filed 1/19/12)
• Collection agency hired by hospitals placed PHI re 23,500 patients on laptop; info not encrypted– Laptop stolen from employee’s car
• Minn. AG filed suit, claiming violation of HIPAA for failing to use appropriate safeguards to protect PHI
• Also filed consumer fraud claim for failing to notify patients agency received incentive payments based on collections– Used private PHI to encourage investment in its private equity
fund
“Patients should have at least the same amount of information about Accretive's extensive role in their care that Wall Street investors do.” Lori Swanson, Minn. Atty. General
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Cases of InterestI.S. v. Washington University, 2011 WL 2433585 (E.D. Mo.
6/14/11)
• Even though HIPAA has no private cause of action, violation of HIPAA can form basis for state law negligence per se claim– HIPAA simply provides the standard of care by which to
adjudge the defendant's negligence
Kapp v. Jewish Hosp., 2011 WL 2669457 (S.D.Ohio 7/7/11)
• Ohio physician-pt. priv. not applicable in federal ct., but HIPAA protects info anyway
Whitaker v. Health Net of California Inc., 2012 WL 174961(E.D. Cal. 1/20/12)
• Class action from data breach affecting 800,000 persons• Court: No standing bec. injury is “conjectural & hypothetical”
– No evidence any 3rd party has accessed their data– Distinguished prior cases which “arose from the theft of information, not
its loss” and where threatened harm was imminent and impending
Cases of InterestOpis Management Resources LLC v. Dudek, 2011 WL
6024092 (N.D. Fla., 12/2/11)
• Florida law preempted by HIPAA because it authorized some persons to receive patient’s PHI who would not qualify as “personal representative” under HIPAA; so not more stringent
Isidore Steiner DPM, PC v. Bonanni, 2011 WL 1327682 (Mich. App. 4/7/11)
• Michigan physician-pt. priv. more protective, trumps HIPAA
Ohio Health v. Ryan, 2012 WL 68733 (Ohio App. 1/10/12)
• Hosp. filed collection suit; pt. counterclaimed for hosp’s disclosing to 3rd party that pt. was uninsured
• HIPAA permits the use or disclosure of individually identifiable health information when it is for purposes of obtaining payment, so disclosure was authorized
• Also, HIPAA does not allow a private cause of action
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Drugs, Devices and
Telemedicine
More Regulations
State Labeling ReqmtsOverruledFed drug regs prevent manufact’rs from independently changing generic drug safety labels to satisfy state law re warning labels for generic drug metoclopramideCourt heldFed drug regs preempted state law claims because satisfaction of state law requires Fed Govt's special permission & assistance --dependent on exercise of judgment by fed agency PLIVA, Inc. v. Mensing – US Sup Ct 09-993 (6-23-2011)
43
2 BIG Cancer Drug ChangesMedicare Will Cover Immunotherapy Drug For Prostate Cancer - Provenge® (6/30/2011)Provenge is 1st immunotherapy for prostate cancer to receive FDA approval
Medicare Coverage for Breast Cancer Drug Avastin will end after FDA in Nov revoked approval of use for breast cancer
There’s a Reg For That: Med Device Reviews -
• FDA Issued Draft Guidance On Device Changes Requiring New Premarket Submission
• To streamline 510(k) process for reviewing medical devices FDA issued clarifications in July when changes to previously cleared device trigger need for new premarket submission
• FDA will regulate mobile apps which “either have traditionally been considered medical devices or affect performance or functionality of a currently regulated medical device.”
• FDA plans oversight only for those mobile medical apps that present greatest risk to patients when they don’t work as intended
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Stroke Network OK’d• Providing neuro-emergency clinical protocols &
immediate consultations via telemedicine technology to area community hospitals treating stroke patients would not result in administrative sanctions under AKS, HHS OIG said in 9/6/2011 advisory opinion
• Proposed arrangement was structured to reduce risk remuneration under agreement could be an improper payment for referrals of federal healthcare program business
• & proposal unlikely to increase costs given design to reduce volume of transfers of stroke patients & ensure better care Advisory Opinion No. 11-12 (HHS OIG 8-29-2011)
BUT BEWARE Phone Advice Created Hospital Liability
NY Appeals Ct found question of fact re Hospital vicarious liability for advice given by consulting physician over phoneLower court’s refusal to grant motion to dismiss case was proper
Appeals Ct warned its decision “should in no way be construed as standing for proposition that any sort of telephone consultation between colleagues in an emergency room setting necessarily exposes admitting hospital to vicarious liability for any opinion rendered by physician so consulted.”Brink v. Muller, No. 511684 (NY App Div 7-28-2011)
45
False Claims, Fraud,
OverbillingPhysicians Sentenced &
Recoveries Continue
What’s NEW in Stark?• NOTHING new in SRDP (voluntary disclosure protocol)
• Christmas gift for Providers -- Stark challenge may proceed • Association may invoke district court’s general federal
question jurisdiction without first seeking administrative review under Medicare Act
• DC Dist Ct had avoided ruling on merits of challenge that as of October 1, 2009 ownership interests are illegal under new Stark Law regulation declaring that entities providing under-arrangement services are furnishing DHS
• COUNCIL FOR UROLOGICAL INTERESTSV SEBELIUS, DC Cir No. 11-5030 (12-23-2011)
46
DOJ Recovered Record $5.6 billion in Fraud in 2011
• 167 % since 2008 & new record
• HHS also will prevent Medicare fraud by telling Part D prescription drug plans to withhold payment when they see signs of suspicious activity related to OxyContin, Percocet, & other narcotics & painkillers
Failure to Comply with Physician Supervision = False Claim
• Tenn Dist Ct found FCA violation for failure to comply with Medicare physician supervision requirement
• Court “borrowed” applicable state statute of limitations for FCA retaliatory discharge claim from state law, making claim time-barred because new 3 year SOL not yet effective
• United States ex rel. Hobbs v. MedQuest Assocs., Inc., No. 3:06-01169 (M.D. Tenn. Aug. 23, 2011)
47
Convicted Pain Doc Says Patients Duped Him
• Utah orthopedic surgeon turned pain physician, Dr. Dewey C. MacKay, given 20 years for illegally prescribing pills that led to a patient's death and caused harm to dozens of other victims
• MacKay was convicted in August -- sentence is minimum mandatory term required by federal law
• MacKay, a 64-year-old Army veteran, accepted little responsibility for wrongdoing, saying that patients "duped" him into prescribing them painkillers
• MacKay wrote 20,612 prescriptions for hydrocodone products from January 2005 to October 2009, & wrote highest volume of prescriptions for hydrocodone in state for five years in a row
• MacKay v DEA, 10th Cir, No. 10–9556 (12-23-2011)
Texas Pain Mgt Physician Sentenced to 25 Years
• Pain management physician Anthony Francis Valdez was sentenced on 1-6-2011 to 25 years in federal prison followed by three years of supervised release
• Estimated $42 million fraudulent billing scheme• Valdez was ordered to pay $13,356,645 restitution
& to forfeit – more than $1.7 million in cash, – his residence in El Paso, – his residence in San Antonio, & – 5 vehicles
• US Atty W Dist Tex: http://www.justice.gov/usao/txw/press_releases/2012/Valdez_medfraud_sentencing_final.pdf
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AKS & STARK Settlements Continue
AKS & STARK Settlements Continue• Mismanaged Recruiting Arrangements at W Va hosps
– Costs in excess of actual additional incremental costs – Student loans without written recruitment agt – Unwritten extensions
• Improper Call Compensation Incentives and Marketing Services in Cal– Incentives for physicians to refer medically indigent adult
patients to hosptial & insured patients to private practice– Marketing services under joint mktg agreement not rendered
• Missing Contract & Payments Not Collected or Too High in Wisc and NY– Space, services, & supplies to physician group without
written contract & without payment– Payment in excess of FMV and services not performed
• Expired and Unsigned Contracts and Improper Leases in Wash
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US Atty Stark Settlement in NYPhysician Recruiting Violations
$3.6M – Recruited Physician Whistleblower
DOJ & STATE Settlements Continue
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Settlements Under $150 Million W/Interesting Facts
Denver Health settled admission/observation whistleblower case for $6.3M
Denver Heath Medical Center agreed to pay $6.3 million to settle allegations of misclassifying patients admitted in June ‘09 announced by Colo AG 1-5-2012
Whistleblower was former internal auditor
Settlements Under $150 Million W/Interesting Facts
• LHC Group Inc. $65M improperly billed for services not medically necessary and for services rendered to patients who were not homebound
• Laboratory Corporation of America $49.5M overcharged California's Medicaid program and gave doctors kickbacks for patient referrals
• Abri Health Plan Inc. and Universal American Financial Corp.$4.8M for misleading customersabout the scope of the Medicare Part C coverage plans and sometimes enrolling them without their consent
51
Settlements Under $150 Million W/Interesting Facts
• Hill-Rom Company, Inc. $41.8M for submitting numerous false claims to Medicare for certain specialized medical equipment for patients who did not qualify for equipment & patients who had died or were no longer using equipment
• GE Healthcare $30M for padding billings for a drug used to diagnose heart disease
• Cardinal Health Inc $8M for paying kickbacks to induce referral orders for its prescription drugs
Maxim Healthcare Services Agreed to $150 Million Settlement
• Resolves criminal & civil charges
• Announced 9-12 by DOJ - Maxim agreed to corporate integrity agreement with HHS OIG
• "The government’s willingness to enter into a DPA with Maxim is due, in significant part, to company’s cooperation & reforms & remedial actions company has taken--beginning particularly in May 2009--including significant personnel changes," the press release said
52
Merck Agrees To $950 Million Vioxx Settlement
• Merck, Sharp & Dohme agreed to pay $950 million to resolve criminal & civil claims related to its promotion & marketing of painkiller Vioxx, DOJ annc’d 11- 22
• Merck pled guilty to a one-count information charging a single violation of Food Drug & Cosmetic Act for introducing a misbranded drug into interstate commerce
• Merck voluntarily withdrew Vioxx from marketplace on 9-30-2004
• Merck also agreed to corporate integrity agreement with HHS OIG
Drug Pricing Fraud Settlements Help w/State Deficits
• Sandoz (Novartis) is paying federal government - $86.5M; Florida - $15.2M & California - $40M and remaining $8.3M to the whistleblower • Pur Pharmaceutical Inc. will pay $154 million to US and Texas, Florida, Kentucky, South Carolina, & Alaska • Actavis will pay $84M to Texas• Merck will pay $24M to Massachusetts• J&J Sub-Jansen will pay $158M to Texas for
Risperdal
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GlaxoSmithKline Agrees To $3 Billion (with a “B”) Settlement
• GlaxoSmithKline (GSK) has reached agreement in principal to pay United States $3 billion to resolve what it characterized as company's "most significant ongoing Federal government investigations" into possible improper activities, GSK said November 3.
• Specifically, proposed settlement would address allegations of inappropriate use of nominal price exception under Medicaid Rebate Program & of improper development & marketing of company’s drug Avandia.
Is Embezzlement One?
54
Record Year for Embezzlement in Health Care?
Great American Ins Co filed a lawsuit against a former executive of what is now Christus St. Vincent Regional Medical Ctr. for allegedly embezzling more than $3 million through false claims before being terminated for cause in 2008
Former accountant of Michigan's Munson Healthcare who pleaded guilty to stealing more than a million dollars from the organization was sentenced December 2011 to nearly four years (46 months) in federal prison
Former hospital financial officer was arrested and charged with stealing a quarter of a million dollars from Colorado's Valley View Hospital and another employee, her daughter-in-law, in November 2011
William Roe embezzled $95,000 from Danbury Hospital and $75,000 from his previous employer, St. Rita Hospital in Lima, Ohio, by submitting false invoices from a fake software company, and additional $46,166 by overestimating the appraisal value of his Ohio home that he sold to take the Danbury Hospital job. He had ongoing financial troubles after his wife discovered an affair. Fired in August 2010, sentenced to 33 months in prison in July 2011
Sadly, Attorneys Have Stolen, Too
• Former general counsel to Children's Hospital, Roosevelt Hairston Jr. in July 2011 pleaded guilty to embezzling $1.7 million for more than a decade during his time at Children's Hospital where he held multiple senior positions
• Attorney and Former Edgewater Hospital Owner Indicted for Allegedly Lying and Obstructing Justice to Impede U.S. and Bank Efforts to Collect Judgments Totaling More Than $188 Million in proceeds from the closure of Edgewater Hospital
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Guilty of Attempting to Bribe
• MediSys Health Network's CEO David P. Rosen in September was found guilty on multiple counts of bribery of hundreds of thousands of dollars in exchange for favors from three New York legislators.
• In 2008, Rosen attempted to bribe Sen. Carl Kruger (D-Brooklyn) to steer $400,000 in state funds to help MediSys acquire Caritas Hospitals, according to the Department of Justice.
• Dr. Robert Aquino, former owner of Parkway Hospital, is also accused of paying $60,000 in bribes to Kruger through shell companies, reported the Queens Chronicle.
Governance, Guidance & Gulag
The Vultures Are Circling
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Executive & Director Compensation
State querying N.Y. not-for-profits
on executive compensationModernHealthcare.com (August 25, 2011)
• Governor formed Task Force to study “startlingly excessive salaries” of nonprofit executives
• Sent lengthy questionnaire to hospitals seeking info on payments to execs & board members– Asks for description of compensation programs & names of their
compensation consultants
– “What justifies you being a not-for-profit?”
– “Do you believe recoupment and/or claw-back of executive and/or board compensation is necessary?”
Director Compensation
Massachusetts Lawmakers Consider BanningPay to Directors of Nonprofit Health Insurers
BNA Health Law ReporterSeptember 29, 2011
• Mass. AG issued report finding no justification for nonprofit insurers’ compensation of directors since vast majority of nonprofit directors volunteered their service– As result, 2 nonprofit plans suspended payments, while others
continued to pay their directors, citing need to retain highly skilled directors
• AG introduced bill (H. 3516) to prohibit director pay w/o prior AG approval– Applies to all nonprofit entities, not just insurers– Bill still under consideration after hearing before Joint Judiciary
Comm.
57
Fiduciary Duty to SubsidiariesLifespan Corp. v. New England Medical Center,2011 WL 2134286 (D.R.I. 5/24/11)
• Nonprofit hospital system owed fiduciary duty to hospital sub• Started as suit over $$ due under disaffiliation agrement• NEMC & AG filed c/c for misconduct & breach fiduciary duty
(1) Failure to improve NEMC’s contracts with payors- Contracts allowed to “evergreen” at old rates w/o inflation increase- Failed to jointly negotiate contracts w/ other system hospitals- Ct. found this a “clear and gross” departure from standard any
reasonable parent corp. should exercise; awarded $5.8M(2) Parent’s CFO insisted on using personal friend to facilitate risky
transaction for sub w/o disclosing relationship or risks of deal- Ct. found this violated COI policies & constituted “intentional misconduct” subject to indemnification provision; awarded $8.3M
(3) Ct. rejected 2 other claims:- Breach of obligation to improve sub's financial performance-Charging excessive overhead costs to sub
• After offsetting these amounts, NEMC still owed $273,000
Lifespan (cont’d)
“Lifespan specifically owed a fiduciary duty to NEMC with regard to payor contracting, by virtue of the control that Lifespan… exercised over NEMC in that area and the ‘faith, confidence, and trust’ that NEMC placed in Lifespan's judgment and advice.”
******************************************
“[Lifespan’s CFO] failed, in each instance, to exercise ‘utmost good faith’ toward NEMC…Each of those acts and omissions therefore constituted a breach of his—and Lifespan's—duty of loyalty to NEMC.”
58
Individual Director LiabilityIn re Lemington Home for the Aged, 659 F.3d 282 (3d Cir. 9/21/11)
• Reinstated claims brought by unsecured creditors comm. against individual officers and board members of bankrupt nursing home
• Evidence suggested they may have improperly allowed the insolvency of the organization to deepen while acting in pursuit of their own interests Largely absent administrator; no treasurer or Finance Comm. No financial records Board mtg. attendance low; minutes incomplete/nonexistent No minutes of Exec. Comm. where compensation discussed Commingling of nursing home assets with related entity Warnings from auditors
Bd. failed to ensure proper care; 2 residents died from neglect
Caveat Counsellor!U.S. v. Farha (M.D.Fla. 3/3/11)
• 5 former WellCare execs,
including its Gen. Counsel,
indicted for Medicaid fraud
• Alleged to have "inflated
expenditures by submitting
fake documents”
• Based on annual M/caid expenditure certificates they signed
• Already paid $80M in restitution in 2009
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Responsible Corporate Officer DoctrineThe Doctrine from Hell…!!
Friedman v. Sebelius, 2010 WL 5079937 (D.D.C. 12/13/10)
• Former Purdue Pharma gen. counsel excluded from M&M for 12 yrs for conduct in Oxycontin misbranding scheme
• “Responsible corporate officer doctrine” under FDCA holds execs responsible even if they personally did no wrong
U.S. v. Norian Corp., #09CR00403 (E.D.Pa., filed 6/16/09)
• 4 Synthes execs pleaded guilty to misdemeanor for off-label use of bone-cement product which allegedly led to 3 pt. deaths– Company's own expert warned use was illegal & immoral
– Synthes previously pleaded guilty to felony and 110
misdemeanors, $23M fine
• First execs imprisoned under RCO doctrine
The Gulag Is WaitingGlaxoSmithKline general counsel indictment dismissed…then re-indicted…then acquitted
U.S. v. Stevens, 2011 WL 1033707 (D.C.Md. dismissed 5/10/11)
-Nov., 2010: Asst. GC indicted for obstruction of justice & false statements in FDA investigation of Wellbutrin promotion
• In charge of Glaxo’s response to govt’s document request
-March, 2011: Indictment dismissed (2011 WL 1033707)
• Erroneous instruction to grand jury on advice of counsel defense
• Told jury advice of counsel was irrelevant to indictment on false stmts
-April, 2011: New indictment returned
-May, 2011: Ct. dismissed all counts after 10 days of govt evid.• No evidence to trigger crime fraud exception to advice of counsel
defense; atty not engaged to assist client in perpetrating crime/fraud
• Judge scolded government, saying atty should never have been prosecuted
118
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The Gulag Is Waiting...Or Is It?GlaxoSmithKline GC (cont’d)
“I conclude on the basis of the record…that only with a jaundiced eye and with an inference of guilt that’s inconsistent with the presumption of innocence could a reasonable jury ever convict this defendant.”
********************************
“ There is an enormous potential for abuse in allowingprosecution of an attorney for the giving of legal advice. Iconclude that the defendant in this case should never have beenprosecuted and she should be permitted to resume her career.”
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Are You Next??Getting personal: Feds pursue top execs in health care fraud cases previously settled for cash
Washington Post, May 31, 2011
“To our way of thinking, the men and women in the corporate suite aren’t getting it…[M]aybe we have got to have the individuals who are responsible for this held accountable. The behavior of a company starts at the top.” Lewis Morris, Chief Counsel OIG
“I do think we’re going to see an increasing number of casesagainst individuals.” Mary E. Riordan, OIG Senior Counsel
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One Way to Stay out of Jail?
HEAT Provider Compliance Training Website:http://oig.hhs.gov/compliance/provider-compliance-
training/index.asp
INCLUDES:• 3 hour 45 minute training video
• Shorter videos broken down into
discrete subject areas
• Sample presentation slides &
handouts
• Tips on Stark Physician Self-Referral Law and Anti-Kickback Statute compliance
• Advice on role of Governing Board in compliance program
Liability
Ya’ll Be Careful Out There,Ya Hear?
62
Pop Quiz
Question: Which state had the highest rate
of multimillion-dollar liability claims against
healthcare providers over the past decade?• California?
• Florida?
• Mississippi?
• Connecticut?
• Pennsylvania?
• None of the above?
Pop Quiz
Answer: Which state had the highest rate
of multimillion-dollar liability claims against
healthcare providers over the past decade?• California?
• Florida?
• Mississippi?
• Connecticut?
• Pennsylvania?
• None of the above?
63
The Biggest Losers
Aon/ASHRM Hospital and Physician Professional Liability 2011 Benchmark Analysis (Beazley Group)
Did You Know That…..?
According to a recent study:• Medical malpractice cases with the most severe
injuries settle 20% faster in states that have apology laws relative to states that do not
• Apology laws reduce claim payouts of the most severe cases by $58,000–$73,000 per case (a 14%-17% reduction)
-“Does Sorry Work? The Impact of Apology Laws on Medical Malpractice”; Journal of Risk and Uncertainty, Volume 43 (Aug. 12, 2011)
-Wall Street Journal/WSJ.com (August 26, 2011)
64
A Peek into the Future?Murray v. UNMC Physicians, 2011 WL 4104935 (Neb.9/16/11)
• Plaintiff alleged hosp. delayed giving wife expensive treatment in order to determine if insurance would pay for it– Expert testimony: physicians were weighing risk of delay against
risk of starting treatment, then having to interrupt it
• Court ruled patient's ability to continue to pay for treatment was a medical consideration, not an economic one– Physicians determined the care would not benefit the patient if it
was started & then discontinued
“[T]he decision to defer Flolan treatment was not based on its financial effect on UNMC…UNMC’s physicians were weighing the risk to Mary’s health of delaying treatment against the risk to Mary’s health of potentially interrupted treatment…[I]t was a case in which the physicians determined that the care would not be beneficial if it was later interrupted. In fact, it could be deadly.”
Corporate Negligence Gone Haywire
Deya v. Hiawatha Hosp. Assn., 2011 WL 1698774 (D.Kan. 5/4/11)
• Child died from alleged improper treatment for jaundice• In addition to malpractice, plaintiff filed administrative negl.
claim for hosp. CEO’s failure to establish or implement policies or educate staff re treatment of jaundice– Relied on Restatement (2nd) Torts §324A
• Court refused to dismiss plaintiff’s claim– No physic/pt relationship required bec. it’s an administrative
negligence claim, not malpractice– §324A could apply to admin. duty to maintain policies &
procedures necessary for the care of hosp.’s patients– At this early stage of case (motion to amend complaint to add
claim), court unwilling to rule claim was futile
65
Restatement (2d) of Torts § 324AOne who undertakes, gratuitously or for consideration, to render services to another which he should recognize as necessary for the protection of a third person or his things, is subject to liability to the third person for physical harm resulting from his failure to exercise reasonable care to protect his undertaking, if
(a) his failure to exercise reasonable care increases the risk of such harm, or(b) he has undertaken to perform a duty owed by the other to the third person, or(c) the harm is suffered because of reliance of the other or the third person upon the undertaking.
No Good Deed Goes Unpunished
Mort v. Lawrence County Children & Youth Svcs.,2011 WL 3862641 (W.D. Pa. 8/31/11)
• Hosp. notified county agency of mother’s positive prenatal drug test – agency removed child from parents’ custody– Mother attributed positive result to bagel containing poppy seeds
– Subsequent tests were all negative; baby returned several days later
• Parents filed §1983 claim against county and hospital
• Trial ct. denied hospital’s motion for summary judgment– Hosp. participated in adopting & implementing county policy
requiring test & report; therefore, it could be deemed a “state actor”
– Baby removed based on single test with no further investigation of mother’s or baby’s individualized circumstances
– Actions “so clearly arbitrary that is shocks the conscience” and “counter to the traditions, precedents and historical understanding of the Constitution and its meaning”
66
A Liability Wake-Up Call?
Md. hospital to pay $1.8 million
over unneeded stentsModern Healthcare Daily Dose (8/12/11)
• Surgeon convicted July 2011 of fraudulent billing from implanting unneeded stents in over 100 patients
• Evidence showed senior medical staff failed to investigate complaints from cath lab staff
• Peninsula Reg’l Hospital later agreed to repay proceeds from such stents and submit to corporate integrity agreement
Wrongful Birth Damages Limt’dOKLAHOMA: Oklahoma Supreme Court held July 6 state recognizes a claim for wrongful birth, but damages are limited to “extraordinary expenses” over & above that of raising a healthy child, not normal & foreseeable costs of raising a normal, healthy child Shull v. Reid, No. 109136 (Okla. July 6, 2011).
NEW MEXICO: New Mexico High Court on August 17 says recovery for wrongful conception only when physician fails to notify patient of fertilityProvencio v. Wenrich, No. 32,344 (N.M. Aug. 17, 2011)
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Free Speech and Transparency
Free Speech &Public Access Restored
FREE SPEECH v PATENTS?Patent issued on observed correlation between blood test results & patient reactions to
prescription drug
• IS CORRELATION PATENTABLE?
• CAN PATENTS LICENSE PURE THOUGHT?
Mayo Collaborative Services v. Prometheus Laboratories Argued: 12-7-2011
US Sup Ct to Decide:
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Free Speech Restored in Vermont
U.S. Sup Ct Finds Vermont’s Prescribing Data Restrictions Unconstitutional Vermont Law restricted sale, disclosure, & use of
pharmacy records reveal’g prescrib’g practices of doctors
Court found content-based & speaker-based burdens on protected expression & Vermont's justifications did not withstand heightened scrutiny
Affirmd 2nd Cir finding law unconstitutionally burdened speech of pharmaceutical marketers & data miners without adequate justification
Sorrell v. IMS Health Inc., #10-779 (U.S. 6-23-2011)
Physician Payments Sunshine Act
Regs ReleasedCMS released proposed rule 12-14-2011 and DELAYED compliance dateSunshine Act – was part of ACA
• To increase public awareness of financial relationships between manufacturers & providers
• Requires public disclosure of financial relationships between physicians & pharmaceutical, medical device & biologics industries
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Public Access Restoredto NPDB Files
• On 11/9/2011 Health Resources & Services Administration (HRSA) restored access to National Practitioner Data Bank’s Public Use File
• Users must review & agree to a Data Use Agreement (DUA) that spells out specifics of how data may be used
Managed Care
A Relatively Quiet Year
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Regulatory Response to Rate Hikes
45 C.F.R. §154.101, et seq. (effective 9/1/11)
• Any proposed rate increase of 10% or more for individual and small-group plans must be reviewed by:– the applicable state, or
– HHS, if a state does not require rate increases to be filed
• Insurers must also provide HHS & consumers with information justifying the increase and posting it on their website and HHS’ website
• 42 USC §300gg-94 of PPACA authorized annual review of “unreasonable increases in premiums for health insurance coverage”
• Note: HHS has no power to block the increase
The Result
Health insurer charging unreasonable rate increases
HHS Press Release (November 21, 2011)
• First federal rate review performed under Affordable Care Act• Everence Insurance of Penn. proposed 12% rate increase • HHS’s independent auditors concluded insurer used national
cost data rather than state data• Everence’s response:
• Jan. 12, 2012: HHS also criticized Trustmark Life for 13% premium increase in 5 states
“Everence based the rate increase on a two-year experience period; HHS used a one-year experience period. Using the two-year period, the loss ratio history in Pennsylvania has been approximately equivalent to the national ratio in the Everence plan. Understandably HHS did not come to that same conclusion because its methodology was different.”
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An Epiphany on Premium Increases?
Blue Shield of Calif. plans net income cap, refund
ModernHealthcare.comJune 7, 2011
• March 2011: Blues forced to drop 59% premium increase due to public and regulatory outcry
• July 2011: Promised to cap future net income at 2% of revenue – Will refund $180M (2010 earnings which exceeded 2% of revenue)
“Everyone is going to need to do the kind of soul-searching we've done.”
Bruce Bodaken, Blue Shield Chairman/CEO
Notable SettlementsWellCare -- $428 Million and counting• Charged with falsely inflating expenses in Fla. Medicaid
managed care program– Whistleblower suit $137 million
– Federal criminal investigation $80 million
– SEC investigation $10 million
– Shareholder class action suit $201 million
• WellCare has sued 3 former execs (including GC) to recoup
CIGNA Healthcare of N.C. -- $1.3 Million• Overcharged policyholders between 2002-2004
– Also failed to process claims in timely or accurate manner
• Includes a $600,000 fine & $637,974 refund to policyholders
• CIGNA must also conduct “look-back” self-audit for years 2005-2010
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Cases -- Wins for the PayorSelective Ins. Co. of America v. Rothman, #A-60 (N.J.
1/18/12)
• Physician not entitled to reimbursement for EMG test performed by physician assistant– State law didn’t authorize PAs to perform such tests
Mem. Hermann Hosp. Sys. v. UnitedHealthcare, #11-3545 (S.D. Tex. 1/11/12)
• ERISA preempted hosp.’s breach of contract claim for payment– Issue of “medical necessity” determined by plan terms, so ERISA
triggered
• However, misrepresentation claim not preempted– Not based on plan terms, but rather on administrator’s
preauthorization of claim
Cases -- Wins for the Patient
Blue Shield of Calif. v. Superior Court, 2011 WL 431162(Cal. Ct. App. 2/9/11)
• Policy language allowing 3 yrs. to file suit trumped state law’s 2-yr. statute of limitation
• Insurers allowed to use different language in policy that is more favorable to the insured
Khani v. Regence BlueShield, 2011 WL 4383655 (W.D. Wash. 9/20/11)
• Plan covered obesity services but not cosmetic surgery– Denied coverage for removal of excess skin & fat during hernia surgery
• Court ruled plan violated policy language, failed to clearly explain basis for denial & did not act in good faith– Non-hernia portion of surgery was medically necessary based on
medical opinions and post-op photographs
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Cases -- Wins for the Provider
HealthEast Bethesda Hosp. v. United Commercial Travelers, 596 F.3d 986 (8th Cir. 3/9/10)
• Payor confirmed on admission that patient was covered
• After getting bill and reviewing pt.’s records, payor rescinded policy for misrepresentation & refused to pay hospital bill
• Court ruled payor did not investigate pt.’s health history before approving policy, so it bore the risk of mistake
EMTALA
Mostly Good News for Hospitals
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Medical Screening Requirement
Nice Try AwardBuras v. Highland Comm. Hosp., 432 F. App’x 311,
2011 WL 2650968 (5th Cir. 7/7/11)
• Patient visited hospital ER twice with same symptoms, receiving different treatment each time– He claimed this proved disparate treatment and a violation
of EMTALA’s medical screening standards
• Court granted S/J to hospital– Disparity of treatment immaterial because he never had an
emergency medical condition to begin with– Fact that physician ordered antibiotic not sufficient
evidence of an emergency medical condition
Stabilization Requirement
Morin v. Eastern Maine Med.Ctr., 2011 WL 1158386 (D.Me. 3/25/11)
• $200,000 jury verdict against hospital upheld on appeal– Included $150,000 punitives for alleged malice in denying care
• EMTALA applies to pregnant women, even if fetus nonviable– Hospital claimed pt. suffering from “missed abortion” with dead
fetus
• Nurse was qualified to testify on certain issues within purview of license
• Lacked authority under EMTALA to grant general relief that would require hosp. to change policies re pregnant women
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Screening & Stabilization Requirements
Richard v. Univ. Med. Ctr. of S. Nevada, 2011 WL 1098968 (D. Nev. 3/21/11)
• In this premature labor case, ct. granted S/J against claims for both inadequate screening & stabilization
• Medical screening requirement:– No evidence hosp.’s treatment differed from exams given
other women in premature labor– Mere allegation hosp. could have conducted additional
testing does not, standing alone, support inadequate screening claim
• Stabilization requirement:– No evidence hosp. knew she had an emergency med.
condition– EMTALA doesn’t apply unless pregnant pt. having
contractions
Transfer Requirement
Ramos-Cruz v. Centro Medico del Turaba, 2011 WL 1332168 (1st Cir. 4/8/11)
• ER physician transfers pt. to another hosp. because no gastroenterologic services available at his hosp.– Merely writes “gastroenterologist” on transfer form explaining
how benefits of transfer outweighed risks of transfer
• Court found entry was a sufficient “summary statement”
• Also, hosp. complied with pre-transfer treatment requirement– Plaintiff argued hosp. had to provide “best” treatment
– But ct. said hosp. only flunked requirement if it violated hosp. policy
– Plaintiff’s interpretation would create fed. malpractice cause of action
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Discovery Issues
Guzman-Ibarguen v. Sunrise Hospital & Med. Ctr., #2:10-cv-1228 (D. Nev. 6/1/11)
• Patient filed claims for both med. malpractice & EMTALA
• Sought discovery of root cause analysis & CMS investig. dox
• Ct. distinguished between two categories of dox: – Those relevant to malp. claim (which would be protected by state
peer review priv.) and
– Those relevant to EMTALA claim (which would be discoverable)
• Ct. determined to conduct private review to determine
whether dox included information relevant to EMTALA claim
Employment
Reservists & Congress Win
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Watch Out For This One!!Kiblitsky v. Lutheran Med. Ctr., 2011 WL 1756992
(N.Y.Sup. Ct. 5/6/11)
• Physician fired “for cause” after death of one of her patients; termination reported to state agency
• Sued hosp. for “compelled self-defamation”– She was req’d to publish hosp’s defamatory
statements re her qualifications every time she applied for new job or renewed her license
• Reviewing dichotomy bet. NY state & fed. cases, ct. declined to recognize first claim, noting she failed to identify potential employers she interviewed
• However, ct. allowed 2nd self-defamation claim as to hosp’s report to state agency, even though her license was renewed 3 weeks after report filed!!
Employers Must Reserve Jobs for Reservists
Jury found employmentdiscrimination
Employee challenged firing claiming hostility toward military
US Sup Ct revd 7th Cir cat’s paw case & held employer liable for hostility to military services of supervisors even tho HR decision-maker had no hostilityStaub v. Proctor Hospital, # 09-400 (U.S. 2011)
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Congress wins v OFCCP
• OFCCP: Federal Employees Health Benefit Program (FEHBP) & TRICARE contracts = government contracts that create OFCCP jurisdiction
• CONGRESS: Pres. signed 12/31/2011 US House & Senate addendum to National Defense Authorization Act for Fiscal Year 2012 to preserve TRICARE managed care network of providers by specifying that providers are NOT federal contractors or sub-contractors
• Appeal was pending in DC US Dist Ct in OFCCP v Florida Hospital of Orlando
Teaching Hospital Will Pay $115,000 for I-9 Violations
University of California San Diego Medical Center agreed to pay a $115,000 civil penalty for improper I-9 procedures
Medical Center required non-US citizens to produce specific pieces of documentation for purposes of Form I-9 completion
Medical Center must also *implement new I-9 procedures *conduct I-9 training & *work with DOJ moving forward to ensure continued compliance
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Tax More Fraud
More Reporting More Reviews
Guilty Plea to Tax Fraud
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NEW in 2011 forTax Exempt Hospitals
• IRS collected comments – on Schedule H to assure hospitals conduct
community health needs assessment every 3 years, adopt financial assistance policy, limit charges for medical care, & restrict billing & collection practices as required by ACA. (IRS Notice 2011-52)
– CHNA requirements are not effective until taxable years beginning after March 23, 2012
• IRS provided guidance in August re post-issuance compliance procedures for tax-exempt bonds– IRS found only 15% of conduit borrowers that
participated in compliance check program had implemented formal, written procedures & policies governing post-issuance compliance
IRS Whistleblower Program =10,000 Cases
• IRS whistleblower program now has more than 10,000 cases of tax fraud in excess of $2 million filed
• August 2011 GAO report found Incomplete Data Hinders IRS’s Ability to Manage Claim Processing Time and Enhance External Communication
• GAO recommends improvements and corrective actions http://www.gao.gov/new.items/d11683.pdf
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Illinois Denies 3 Hospitals’ Property Tax Exemptions
In August Illinois Dept of Revenue Denied Three Hospitals Property Tax Exemptions due to not enough charity care – Northwestern Memorial Hospital’s Prentice
Women’s Hospital in Chicago
– Edward Hospital in Naperville
– Decatur Memorial Hospital in Decatur
Gov Called For Review in September