Singularity Health Law Blog

IRS SPOILS PHYSICIAN RECRUITMENT CONTRACTS

One of the hallmarks of physician recruitment contracts offered by hospitals and physician groups is the incentive of "foregiveness" of "loans" offered t phy;sicians who are financially underwritten as an inducement to relocate and entier profesioal practice ina particular location. Typically, there is a subidiy of the practice for a few years followdd by a three year or so period of continuing practice ofbligaiton in the community, during which the origional subsidy "loan" is written of over time and the physician is given Form 1099C (cancellation of dept) in the later years of the guarantee arrangement.

Last April, a United States District Court judge in the State of Washington, agreed with the Internal Revenue Service that those kinds of "loans" were in fact compensation and not loans at all. It held that the physician group was liable for failure to withhold from the payments to its physicians. The case was The Vancouver Clinic, Inc. v. The United States of America, 111 AFTR 2d paragraph 2031-632 (2013 DC Wash.).

The Hon. Rondal B. Leighton entered summary judgment in favor of the IRS,holding that because both the group and the physician at the inception had no expectatoin that the incentives would be repaid and that there would never be a repayment of the "loan", it was not in fact a loan.

These kind of incentive arrangments will in the future likely to be designed to have the look and feel of actual loans with effective promissory notes and periodic payments over the term of the loan agreements, including the early years. This is just aother level of complexity in the three dimensional chess game of the multiagency oversight regulation of health care systems.

ON LINE PRODUCTS HELP OFFENDERS PASS DRUG AND ALCOHOL TESTS.

Late last month in St. Charles, Missouri, a 34 year old man named Sydney Levin, on probation for illegal substance possession and felony stealing, was discovered using a prosthetic product known as the Whizzinator to pass synthetic medical grade urine in lieu of his own. He was charged with possessing a “forging instrument” and released on a $25,000. bond. The Whizzinator contains an artificial penis connected to a 4 oz. bag to contain the synthetic urine.  There are heating elements in the apparatus that elevate the temperature to human body levels.  The device comes in three colors, white, black and brown. The product is advertised at $149.95 plus shipping and handling. Rapid Clean Clean Pee is advertised at $15.95 a pack.

SCOTUS REELS IN “STATE ACTION” ANTITRUST IMMUNITY DEFENSE

The United States Supreme Court, in a unanimous opinion written Justice Sotomayor, overturned an Eleventh Circuit Court of Appeals and Georgia District Court finding “state action” antitrust immunity in the case of FTC v. Phoebe Putney Health System, Inc. et al, No. 11-1160. Had they ruled otherwise there would have opened a huge whole in the FTC’s ability to regulate anticompetitive conduct by state sub-entities under a general grant of state authority. Georgia like many states has a hospital authorities law that permits counties and or municipalities to create quasi governmental entities with broad grants of powers to operate health care facilities.

“OFF LABEL” DRUG PROMOTION CONVICTION VIOLATES 1ST AMENDMENT

160 Common U.S. Food and Drug Administration (“FDA”) approved drugs which are used for “off label” purposes represent approximately 21 percent of all prescriptions in the United states. Physicians may prescribe FDA approved drugs for any therapeutic use that is appropriate in their medical judgment. The FDA, however, prohibits pharmaceutical companies and their employees from promoting the use of FDA approved drugs for “off label” use. Although there is no express prohibition in the Food Drug and Cosmetic Act or its regulations prohibiting the promotion of drugs for off label use, the government uses a criminal statute which prohibits the introduction of “misbranded” drugs into interstate commerce ( 21 U.S.C. 331(a) and 333(a)(1) to prosecute pharmaceutical companies, their employees and sometimes physicians who are “promoting” the off-label use of drugs.

 

OIG APPROVES PLAN FOR CALL-PAY

More and more physicians who used to accept on call duty at a hospital as part of their obligations of being part of the medical staff are insisting on receiving some form of remuneration for the inconvenience. On October 30, 2012 the Office of Inspector General of HHS posted an advisory opinion No. 12-15 approving a hospital’s plan to pay for on-call services of physicians on its medical staff.  These are for consulting physicians, not those physicians called on a regular basis to assist the ER, like intensivists, hospitalists, interventional cardiologists, etc. The concern of the OIG was the likely implication of the federal antikickback statute.  The personal services and management contracts safe harbor at 42 CFR Section 1001.952(d) doesn’t apply because it requires the aggregate amount of compensation to be identified in advance.

HAZARDS OF “CLONED” MEDICAL RECORDS.

One of the “advantages“of computerized medical records is the easy ability in some programs to develop templates for the development of physician history and physicals and other documentation requirements for billing Medicare and other third party payors for services provided or in some cases not provided in order to increase payments. According to a recent article in the New York Times there has been a substantial increase in Medicare payments as the result of computer based upcoding of Medicare payment requests due to the cut and paste of various unrelated medical records to develop documentary support for higher levels of reimbursement.

 

PEER REVIEW DAMAGES CLAIM WEARS THIN.

“Yo-yo litigation” bouncing back and forth between trial courts and appellate courts is wearing and expensive. Dr. Richard Chudacoff, M.D. should be able to attest to that.  Prior to moving to Las Vegas, Nevada in 2008, he was a renowned minimally invasive gynecological surgeon at Baylor University in Texas. In May of 2008, the University Medical Center of Southern Nevada, where he was an assistant professor, abruptly suspended his clinical privileges without notice or hearing. The action was described as a “routine administrative action” and not a 30 day emergency action based on immanent harm to patients. His university employment terminated because of the loss of his privileges.  The university hospital  forwarded a report of the suspension to the National Practitioner Data Bank in Washington asserting that the suspension resulted from “substandard or inadequate care.” Subsequently the “fair hearing” panel hearing his case disagreed with the grounds for the suspension and sent a recommendation to the Medical Executive Committee that his suspension be lifted and it was, in October, 2008.

HIPAA SECURITY BREACH SETTLEMENT

The Office of Civil Rights of the Department of Health and Human Services (“OCR”) announced a settlement with Blue Cross and Blue Shield of Tennessee  this month a compliant alleging a security leak, in violation of HIPAA. The case is interesting factually and resulted in the payment by Blue Cross of a $1,500,000.00 penalty and the imposition of a Corrective Action Plan.

 

Proposed Overpayment Rule Expands Exposure.

On February 16, 2012, the Secretary of Health and Human Services, Katherine Sebelius published a proposed new rule to implement Section 6402(a) of the Accountable Care Act that requires Medicare providers to report and repay government overpayments within the later of 60 days of being “identified” or of the date of submission of a required cost report.  The term “identified” is not defined in the Act and is the critical trigger for commencing the running of the 60 day period and the exposure for False Claims and Civil Monetary Penalty liability.

 

EIGHT REFORMS TO MEDICAL PEER REVIEW

The fundamental problem with medical peer review today is that there are large segments of medical practice that are more art than science and that all professionals are human beings and occasionally make mistakes. The system of peer review provided under the Health Care Quality Improvement Act of 1986 (“HCQIA”) sets up an intensely adversarial system in which those privileged to review their peers are not accountable for bias, bad faith or malice if there is any colorable justification for complaint about the judgment or quality of care provided by the reviewed physician. Further, the results can destroy a peer reviewed physician who may up with a “record” in the National Practitioner Data Bank.