The Department of Health and Human Services ("HHS") is hosting an online question and answer session open to the public at 7PM Eastern with a question and answer session.
Here is the link to the webcast:
Cases with opposing interpretations on this issue were decided within the past month. Heretofore, the basic question had been whether medical staff bylaws constituted contracts under state law. The majority of courts deciding these cases have concluded that medical staff bylaws were valid contracts. In the states with the opposite holdings, the basic theory was that bylaws merely implement state imposed licensing requirements and therefore lacked the fundamental requirement of “consideration.”
These recent cases more closely examine the actual wording of the bylaws.
In Smith v. Adventist Health System, a California state appellate court distinguished prior California decisions rejecting the contract theory by noting that the medical staff bylaws in question specifically stated that they did constitute a contract, and could therefore be enforced as such.
Conversely, a state appellate court in Indiana reached the opposite conclusion in W.S.K. v. M.H.S.B. The Indiana court also distinguished prior state case law; in this instance, Terre HauteRegionalHospital v. El-Issa, which held that medical staff bylaws could constitute a contract. This court reached the opposite conclusion because, as in Smith v. Adventist Health, the bylaws specifically addressed that issue. However, in this case the language stated:
“These Bylaws and the related Manuals shall not be deemed as a contract of any kind between the Board of Trustees and the Medical Staff or any individual member thereof.”
Information Regarding the Holding of April Claims for Services Paid Under the
2010 Medicare Physician Fee Schedule (3-26-2010)
The Centers for Medicare & Medicaid Services (CMS) is working with Congress, health care providers, and the beneficiary community to avoid disruption in the delivery of health care services and payment of claims for physicians, non-physician practitioners, and other providers of services paid under the Medicare Physician Fee Schedule (MPFS). As you are aware, the Temporary Extension Act of 2010, enacted on March 2, 2010, extended the zero percent (0%) update to the 2010 MPFS through March 31, 2010.
CMS believes Congress is working to avert the negative update that will take effect April 1. Consequently, CMS has instructed its contractors to hold claims containing services paid under the MPFS (including anesthesia services) for the first 10 business days of April. This hold will only affect claims with dates of service April 1, 2010, and forward. In addition, the hold should have minimum impact on provider cash flow because, under the current law, clean electronic claims are not paid any sooner than 14 calendar days (29 for paper claims) after the date of receipt.
Be on the alert for more information about the 2010 Medicare Physician Fee Schedule Update.
Senate failure to pass 30-day extension causes 21.3 percent cut to Medicare physician payments on April 1.
The Senate has adjourned for 2 weeks without postponing the Sustainable Growth Rate (SGR) Medicare Physician Fee Schedule reduction. For the past several months, since the problem arose 1/1/10, carriers have responded by advising physicians to hold claims for a 10 day period to provide Congress more time. No announcement has been made regrding any extension so far.
On Tort Reform and the Health-Care Bill: Where'd We End Up?
We've long thought that the health-care bill teed up two fairly compelling legal issues. The first we've spilled many many pixels on in the last couple of days: Whether the bill (now a law) is constitutional.
The second we've paid a bit less attention to: whether some sort of medical-malpractice reform provision would work its way into the bill. And if so, what would it look like?
Last September, President Obama indicated he would entertain at least the thought of urging Congress to tuck some sort of tort-reform provision in the bill. At the time, he acknowledged that excessive litigation "may be" contributing to rising health costs, and he proposed state "demonstration projects" to test medical tort reform.
So where'd we end up? The Senate included a provision that would provide $50 million for grants to states that want to launch these projects. And since the House effectively approved the Senate version of the bill, this is what we're left with on the tort-reform front: $50 million in demonstration projects.
Let's break it down.
According to the Senate bill, states that get money will be required to develop an alternative to current tort litigation that:
(A) allows for the resolution of disputes over injuries allegedly caused by health care providers or health care organizations; and
(B) promotes a reduction of health care errors by encouraging the collection and analysis of patient safety data related to disputes . . . by organizations that engage in efforts to improve patient safety and the quality of health care.
We checked in with folks from both sides of the aisle and, frankly, nobody seems all that troubled by this requirement. The trial lawyers are urging that states that apply for a grant to work on "patient safety" issues, rather than on other dispute-resolution techniques.
"We think patient safety is the way to go," Anthony Tarricone, the president of the American Association for Justice, told us in an interview. "If there's no medical error to begin with, then there aren't lawsuits." One example Tarricone tossed out: hand-washing programs at medical facilities to reduce infections.
But if a state does go the alternative-dispute resolution route - and sets up, say, an arbitration system presided over by a panel of medical experts - there's a huge loophole. The law allows any plaintiff to "opt out" of a program he or she doesn't like, and pursue his or her claims in state court.
It's this component of the bill - the opt-out component - that has folks on the tort-reform side rolling their eyes.
"I don't know anybody who thinks this is actual medical-liability reform, or finds this meaningful at all," says Lisa Rickard, the president of the U.S. Chamber of Commerce's Institute for Legal Reform. "You're not going to see pilot projects that might work well, you're going to get watered-down demonstration projects designed to let plaintiffs' lawyers opt-out at any time." Added Rickard: "The bill is a demonstration of the interests of the trial bar over the views of the American people."
NAMSS, the National Association of Medical Staff Services, has posted an early summary of the Healthcare Reform bill, which might be a little easier than reading the 2000+ page bill.
http://www.namss.org/Portals/0/Health%20Reform%20Summary.pdf
1. The Georgia Supreme Court struck down caps or limits on non-economic damages as unconstitutional according to Georgia state law. The Georgia state constitution provides that “the right to a jury trial shall remain inviolate,” and the state law limiting a jury’s right to award damages would circumvent that right. See AtlantaOculoplastic Surgery v. Nestlehutt.
2. The Health Care Reform Bill signed by President Obama, The Affordable Health Care for America Act, does not contain any significant tort reform measures.
This is a Stark settlement that will send chills down the spines of hospital compliance officers. Rush Medical Center has entered into a Settlement Agreement with the DOJ, in which they agree to pay approximately $1.5 in False Claims Act Penalties.
The settlement arose out of a qui tam (whistleblower) lawsuit filed in July 2004. The Department of Justice intervened on behalf of the whistleblowers. Among the alleged Stark Law violations were the lack of fully executed written leases and lease arrangements with inconsistent rental terms among physicians.
Since the financial relationships between Rush Medical Center and the physicians did not qualify for Stark exceptions, the referrals by the physicians to the hospital were prohibited, and billing for the illegally referred services by the hospital was prohibited – thereby generating the False Claims Act violations. The whistleblowers collected approximately $270,000 of the settlement money.
Note that the false claims were submitted by the hospitals and therefore the penalties were paid by the hospital, which is one of the reasons hospitals believe that the penalties for Stark violations fall unfairly upon the hospitals, even when the physicians are equally involved.
Although the effective date of February 17, 2010 for many HITECH Act provisions has passed, Health and Human Services Office of Civil Rights has announced that, through notice and comment rulemaking, it will provide specific information regarding the expected date of compliance and enforcement of the HITECH Act requirements.
In Badri v. Huron Hospital, which is part of the Cleveland Clinic Health System, the District Court for the Northern District of Ohio granted summary judgment to the defendant hospital in which Dr. Badri was alleging violations of the Americans with Disabilities Act, the Rehabilitation Act, and the typical emotional distress, tortuous interference, defamation and breach of contract causes of action arising out of the termination of his medical staff privileges.
Although the case reaches a fairly routine result, i.e. the dismissal of the claims on the basis of HCQIA immunity, it is notable in two respects.
First, with respect to the discrimination and failure to accommodate counts, the analysis of the court points out the difficulties for physicians in making these assertions. Principally, the physicians must have admitted or alleged sometime during the pre-dispute time period that they actually had a disability and needed accommodations. After the fact allegations that they had been treated discriminatorily make it difficult to qualify for the protections of the Acts. In connection with this issue, the case also illustrates the difficult of trying to establish discriminatory treatment in peer review actions, because the peer review actions, investigations, accommodations, etc. regarding other physicians are typically confidential. In this case, Dr. Badri merely alleged that Huron Hospital had a long history of working with physicians with disabilities and made reference to an unnamed physician with an addiction problem, but provided no other evidence. The court concluded that Dr. Badri had failed to fulfill his burden of establishing that the peer review process had been used merely as a pretext for discriminatory treatment.
Second, the case also deals with the issue of establishing whether a reasonable investigation had been conducted. The HCQIA Standards specifically state that the action must have been taken “after a reasonable effort to obtain the facts of the matter.” This issue arises frequently. One popular reference, although not cited in this case, is the Singh vs. Blue Cross case, in which the court concluded that the physician was not entitled to a “perfect” investigation. The court concluded in this case that an alleged problem, i.e. giving undo creditability to a mistaken report, was not enough to establish that the hospital had not otherwise conducted a reasonable investigation.
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NAMSS announces the following: TJC Board of Commissioners Approves MS.01.01.01 Posted: 15 Mar 2010 11:40 AM PDT Chuck Mowll, Executive Vice President of Business Development and Government and External Relations, has announced that The Joint Commissioner's (TJC) Board of Commissioners has approved the Task Force revision of MS.01.01.01 (formerly MS.1.20) for implementation.
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Contributed by Paul Welk
pwelk@tuckerlaw.com, 412.594.5536
Orthopedic Institute of Pennsylvania ("OIP") and the Department of Health and Human Services Office for Civil Rights recently settled a Complaint filed by a prospective patient who is deaf. The Complaint was filed after OIP declined the patient's request for a sign language interpreter when he called to schedule an appointment to discuss a surgical procedure. The Office of Civil Rights said that OIP's blanket policy of not providing sign language interpreters denied patients who required an interpreter an equal opportunity to have access to OIP's programs and services, in violation of Section 504 of the Rehabilitation Act of 1973 and its implementing regulations. The Settlement Agreement requires OIP to adopt policies and procedures approved by the Office of Civil Rights for insuring effective communications with patients who have impaired hearing, train staff to implement such policies, and submit reports to the Office of Civil Rights documenting its compliance with each provision of the settlement.
On March 10, 2010, the U.S. Senate passed legislation (H.R.4213) on a 62-36 vote, which would reportedly delay a scheduled 21.2 percent Medicare payment reduction for physician services until October 1, 2010
The American Medical Association has created a resource for physicians to understand the HIPAA Privacy and Security Rules and their changes as a result of the 2009 economic stimulus package.
This resource outlines new requirements:
It also provides the compliance schedule and all relevant compliance deadlines.
The web address is as follows: www.ama-assn.org/ama1/pub/upload/mm/368/hipaa-guidance.pdf.
Maria Danaher and Ogletree Deakins have posted an article on a medical staff discrimination case that focuses on the contractual requiremants and the medical staff bylaws issue at http://www.employmentlawmatters.net/. Not only does it raise the issue of the 1981 requriements, but also how Georgia views medical staff bylaws.
President Obama has signed H.R. 4691, "The Temporary Extension Act of 2010", into law. H.R. 4691 re-instates the therapy cap exceptions process until March 31, 2010. Outpatient therapy service providers may now submit claims with the KX modifier, when an exception is appropriate, for services furnished on or after January 1, 2010 through March 31, 2010. To view full text of the bill, click here.
Special Medicare payment update: President signs extension of physician payment freeze
Late last night, the president signed H.R. 4691, the Temporary Extension Act of 2010 into law. This legislation includes a provision that freezes Medicare physician payments at their current level until March 31, 2010. The legislation also extends the therapy cap exception process through until March 31, 2010. The bill passed the Senate by a vote of 78 – 19. The House of Representatives had unanimously approved a companion bill by voice vote on Feb. 25.
The Senate is also currently debating H.R. 4213 the American Workers, State, and Business Relief Act of 2010. This legislation extends the freeze on Medicare physician payments until Sept. 30, 2010. It also provides an extension to the therapy cap exception process through Dec. 31 , 2010 and an extension of the geographic practice cost index floor through Dec. 31, 2010. If approved by the Senate, the bill would have to be approved by the House before transmittal to the president.
MGMA does not support these continued short-term congressional interventions and urges members to contact their senators and representatives to support permanent repeal of the sustainable growth rate formula.
In Patterson v. Methodist Health Care-Memphis Hospitals, the Tennessee Court of Appeals affirmed an order of summary judgment, allowing a Tennessee hospital to terminate the medical staff membership and clinical privileges of two physicians for a breach of contract. The contract was established by the medical staff bylaws, which required a certain level of continuous uninterrupted professional liability insurance coverage. Upon termination of the membership and privileges, the physicians sued challenging the breach of contract and asserting tortious interference with contractual relationships.
The court concluded that the bylaws constituted a contract, that there was substantial undisputed evidence to establish that the doctors consented to the terms of the contract by applying for medical staff membership, that they violated the terms of the contract and were not excused from performing the contract.
With respect to intentional interference with contractual relationships, the court concluded that the hospital was entitled to exercise its own business judgment by terminating physicians who do not satisfy the professional liability insurance coverage requirements, and that decisions made for valid business objectives do not satisfy the improper motive requirements for proving the tort of intentional interference. The court stated “we conclude that Methodist acted pursuant to a valid business objective when it enacted and enforced revised bylaws requiring members of its staff to maintain a minimum level of insurance coverage.”
There have been many articles written about the negotiation and enforceability of physician restrictive covenants, but there are just a few fundamental concepts crucial to understanding and successfully navigating these issues.
1. The Myth of Unenforceability. Many physicians either completely ignore or dismiss the significance of restrictive covenants because of the mistaken belief that restrictive covenants are unenforceable. Except in those states which statutorily ban restrictive covenants, such as California and Kentucky, this is simply not true.
2. Suspect Enforceability. It is true the courts in many states look with disfavor upon restrictive covenants; courts often search for exceptions and methods to invalidate restrictive covenants, because of the significant impact upon the individuals involved. However, this attitude does not make restrictive covenants unenforceable. It simply means that courts respond favorably to the arguments of making sure that the restrictive covenants are reasonable both in time and scope. However, that is certainly no reason for any individual to believe that a court will find a way to minimize the potential harm or impact of a restrictive covenant.
3. Injunctions and Liquidated Damages. Restrictive covenants are often enforced through injunctions, which are court orders specifically prohibiting a physician from violating the terms of a restrictive covenant, i.e. preventing practice within the time and area described by the contract. Injunctions in these matters are issued routinely. Some contracts include liquidated damages provisions, which gives the practice the option of seeking money damages instead of an injunction. If the liquidated damages are fairly low, that might actually be a benefit to the physician, who can argue that the parties have already agreed upon the damages so that an injunction is not necessary. Although the presence of a liquidated damages clause in a restrictive covenant might benefit the physician, it would be a gamble to rely upon that argument.
4. Unenforceability and Breach. The restrictive covenant is part of a contract between the practice and the physician. If the practice breaches its agreement, it is logical and reasonable for the physician to believe that he would not be bound by a contract and a restrictive covenant that have been breached by the practice. That is a legitimate and a reasonable outcome, but it necessarily depends on proving the antecedent breach.
5. Negotiation of Options. The harm and impact of the restrictive covenant is twofold, not only does it prohibit certain practice activities, but it provides the practice overwhelming leverage in future negotiations. Your initial negotiation strategy should always include an attempt to limit the scope of the restrictive covenant so that the physician will later have some reasonable practice alternatives that limit the leverage in this situation.
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