Healthcare Law (Contracts, Torts, Stark, and Anti-Kickback)
Hanlester Network v. Shalala
"Inducement"
community standard of care
"hometown" practice - we do things our way
Universal Health Services v. US ex rel Escobar
"implied certification"
US v. McClatchey
"one purpose";
Products Liability (Negligence)
1) Duty—reasonable care owed to any foreseeable P by commercial manufacturer/distributor/retailer/seller 2) Breach—failure to exercise reasonable care in inspection/sale of product (i.e., defect would have been discovered if D wasn't negligent) 3) Damages—actual injury/property damage, not pure economic loss 3. Causation—factual & proximate
Federal Anti-Referral Laws
1. Anti-kickback statute 2. stark statute 3. federal false claims act 4. civil monetary penalties laws
financial relationship is Stark's law
1. a direct/indirect ownership or investment in any entity that furnishes DHS or 2. direct/indirect compensation arrangement with an entity that furnishes DHS
Defenses against negligence
1. assumption of risk 2. contributory v. comparative negligence 3. release and settlement
anti-kickback investment safe harbor
1. big company investments 2. small company investments
4 required elements of a contract
1. competent parties 2. meeting of the minds 3. legal purpose 4. adequate consideration
personal service and management safe harbor
1. contract in writing 2. specifies all space or equipment 3. at least one year 4. if periodic, specifies intervals/times 5. aggregate rent set in advance; FMV
space/equipment rental safe harbor
1. contract in writing 2. specifies all space or equipment 3. at least one year 4. if periodic, specifies intervals/times 5. aggregate rent set in advance; FMV 6. no more space or equipment than reasonably needed
7 elements for an effective compliance program (according to the US Sentencing Commission)
1. develop written policies and procedures 2. designate a compliance officer and committee 3. conduct edu and training 4. develop effective lines of communication including anonymous reporting 5. audit and monitoring systems 6. enforcing disciplinary guidelines 7. responding to, correcting, and reporting detected problems
potential contracts
1. employee handbooks -- need disclaimers to say the handbook isn't a contract 2. medical staff bylaws 3. patient transfers 4. joint ventures 5. vendor contracts 6. insurance contracts
Proof of standard
1. expert witness 2. hearsay 3. statutory/regulatory/accreditation standards 4. never events 5. res ipsa loquitur
process of a criminal trial
1. felony charge 2. grand jury 3. true bill or no bill declaration from grand jury 4. arraignment 5. conference 6. criminal trial jury selection, opening statements, presentation of witnesses/evidence, summations 7. instructions to jury by judge 8. deliberations 9. verdict (must be unanimous decision) 10. appeal opportunity
Defenses used to challenge non-performance accusations
1. fraud 2. mistake -- mistake of fact (both parties made a mistake) or mistake of law 3. duress 4. illegal contract 5. impossibility 6. statute of limitations
common contracts in healthcare
1. health care payor contracts with providers 2. employee benefit contracts 3. employment contracts 4. contracts among healthcare providers
how do you determine standard of care?
1. look at law/administrative regulation 2. adopted by court from a law or regulation 3. established by judicial decisions (common law) 4. apply facts of case by judge/jury when no law, decision, or regulation available (need expert witness)
5 elements of fraud
1. misrepresentation by defendant 2. knowledge of falsit 3. intent to induce reliance on misrepresentation 4. justifiable reliance by the plaintif 5. damage to the plaintiff as a result of reliance on the falsity
3 levels of torts
1. negligent 2. intentional 3. strict liability regardless of fault
exceptions to compensation arrangements
1. office rental space 2. non-monetary up to $300 3. equipment rental 4. fair market value compensation
legal justification for restraint of pateint
1. person represents danger to self or others 2. criminal conduct 3. quarantine b/c has highly contagious disease as provided by state or fed statutes
anti-kickback statue safe harbors (that we need to know)
1. personal services and management contracts 2. space rental 3. equipment rental 4. investment interests
example of HC fraud outside of payment fraud and false claims
1. pharmacy -- bill for brand names but dispense generic 2. double billing or upcoding 3. accepting referral fees
5 elements of necessary to violate stark statute
1. physician (or family member) 2. referral 3. designated health service 4. medicare/medicaid patient 5. compensation or financial relationship
fair market value exception for stark
1. physician provides goods/services 2. arrangements in writing 3. compensation set in advance, FMV, unrelated of volume or value of referrals 4. commercially reasonable
2 situations where a provider is not a patient's provider
1. pre-employment physical 2. life insurance examination In both of these circumstances, provider is employee and accountable to employer or insurer
types of burden of proof
1. preponderance of the evidence (breach of contract, most torts) 2. clear/convincing (guardianship) 3. beyond a reasonable doubt (criminal cases)
4 elements required to establish strict liability
1. product was manufactured by defendant 2. product defective at time it left manufacturer 3. plaintiff injured by product 4. defective product was proximate cause of injury
ownership or investment interest exceptions in Stark's law
1. publicly traded securities 2. mutual funds 3. specific providers including: whole hospital and rural providers and Puerto Rican hospitals
group practice requirements for Stark
1. single legal entity 2. 2 or more physicians 3. 75% or more of services provided in group 4. special rule for productivity bonuses
elements necessary to establish breach of contract
1. valid contract was executed 2. plaintiff performed as specified in contract 3. defendant failed to perform as specified in contract 4. plaintiff suffered an economic loss
tort
A civil wrong not arising from a breach of contract. A breach of a legal duty that proximately causes harm or injury to another.
Anti-Kickback Statute
A criminal law that prohibits the exchange of anything of value to reward the referral of a patient sponsored by a government insurance plan.
how many elements need to be present to recover damages for negligence?
All 4
US v Greber
Any kickback to induce referrals is fraud; ''one purpose''
examples of intentional torts
Assault, battery, false imprisonment, defamation, fraud, intentional infliction of mental distress
examples of DHS
Clinical laboratory Imaging Radiation therapy services and supplies DME hospital services parenteral and enteral nutrition prosthetics home health PT, OT, speech therapy
gross negligence
Conduct that constitutes a willful or reckless disregard for a duty or standard of care; ex: amputation of wrong limb or leaving a sponge inside a patient during surgery
non-compete agreement
Contract law in which employee agrees not to leave employer for a # of years to work at a similar/competing company
in criminal law, what does action requires scienter?
Defendant needed to have intent to take action that constitutes violation, not intent to violate law
omission of an act
Failure to administer medications Failure to follow up on critical lab tests Failure to obtain consent Failure to monitor a patient; failing to do something
Intentional torts
Harm caused by a deliberate action
US v. Bay State Ambulance
If inducement is any purpose, than you can get in trouble
Perdue pharma case
Issue: CEO, EVP, GC pled guilty to charge of drug misbranding even though they claimed no knowledge Result: CMS excluded them from Medicare for 12 years because they could have done somethin
Forest Labs case
Issue: off-label marketing of its drugs was occurring. Company settled for $313M Result: CMS moved to exclude 83-yr old CEO from Medicare even though he was never accused of misconduct by HHS
scienter
Knowledge by the misrepresenting party that material facts have been falsely represented or omitted with an intent to deceive.
Vicarious Liability
Legal responsibility placed on one person for the acts of another.; ex: employer is in trouble b/c of employee's actions
malpractice
Negligence by a professional person; Ex: surgeon who does surgery on wrong body part, surgeon who leaves a sponge inside, etc.
is criminal negligence a tort?
No, the willful indifference to injury that could follow the act crosses over to criminal act and not a tort
Are referrals among members of a group practice a stark violation?
No, under certain circumstances
duty to mitigate damages
Obligation on non-breaching party (plaintiff) to use reasonable efforts to minimize damage resulting from defendant's breach of contract
Contributory Negligence - Defense
P must exercise due care to protect self from injury by D. (did P act as a reasonable person would under the same circumstances?); P's actions contributed to injury Complete Bar to P's recovery - only effective on negligence not intentional torts, recklessness or strict liability
designated health services (DHS)
Services defined by the Federal Physician Self-Referral Statute (Stark Law), which prohibits physicians from ordering certain services for patients from entities with which the physician or an immediate family member has a financial relationship; DOES NOT INCLUDE PHYSICIAN SERVICES
contract conditions
Specific requirements that must be satisfied by or for a party to a contract: one party has to complete something before 2nd party has responsibility to perform
Greer v. Medders
Subject: Intentional Torts/Infliction of Emotional Distress Info: Covering physician's abusive language to a patient and his wife willfully cause emotional upset: "I don't have to be your damn doctor"
nonfeasance
The failure to act when one should; ex: not ordering tests under the circumstances
Corporate Compliance program is required for providers and suppliers who want to enroll in Medicare, Medicaid or CHIP. T or F?
True because of PPACA but if provider is already enrolled and has no compliance program, it will be grandfathered in
is a job performance appraisal an example of libel?
Usually no because the appraisals are not . meant for publication
Stark Statute
a civil statute that prohibits physician referrals to entities with which the physician has a financial relationship for Medicare or Medicaid patients
implied contract
a contract that comes about from the actions of the parties; dr/patient relationship example
responsible corporate officer doctrine
a court may impose criminal liability on a corporate officer who participated in, directed, merely knew about a given criminal violation, OR was in a position to end/prevent activity and failed to do so
What is a referral in stark's law?
a request or establishment of a plan of care that includes designated health services, including request for a consultation with another physician and any test or procedure made by the 2nd physician
commission of an act
administering wrong medication, performing wrong surgical procedure, etc.; doing something
criminal law
aka penal law is both statutory and common law that deals with crime and legal punishments of criminal offense
False Claims Act
an act that allows employees to sue employer for false claims, qui tam, then the gov't may join suit; requires intent and party has to knowingly file false claim
contract
an agreement, written or oral, that involves legally binding obligations between two or more parties that is designed to : -specify legally enforceable agreements -force participants to be specific in understanding -minimize misunderstanding
"duty to warn"
an obligation to warn third parties when they may be in danger from a patient
circumvention arrangements
arrangements made to work around Stark's law where if the subsequent referrals were made directly to the physicians, than there would be a violation; $100K penalty
product liability defenses
assumption of risk, product misuse, obvious risks, statutory limits, disclaimers, comparative fault, drug label compliance
negligence
civil or personal wrong; unintentional commission or omission of an act that a reasonable prudent person would or would not do under given circumstances almost always involves failure of some duty
Non-Monetary compensation exception
compensation in form of items or services (free parking, drs lounge, etc) cannot exceed $300/year adjusted for inflation
types of contract condition
conditions precedent and condition subsequent
intentional infliction of mental distress
conduct that is so outrageous that it goes beyond bounds tolerated by decent society; catch all for an intentional tort when other categories don't apply
executory contract
contract not fully performed on both sides
types of competent parties
corporations, partnerships, agents, individuals, independent
actual damages
cost of replacement
test for foreseeability (proximate cause/causation)
could a person of ordinary prudence and intelligence have anticipated danger to others caused by negligent act?
is fraud a tort or contract?
could be either depending on the context
"Mens Rea"
criminal intent
consequential damages
defendant has to pay for lost profits while plaintiff waits for replacement
assault
deliberate threat coupled with apparent ability to do physical harm to another
are exclusive contracts in healthcare illegal
depends -- usually not illegal when dealing with ancillary services because hospital has a burden to supply those services 24/7
magic 11 words relating to renumeration
directly or indirectly, overtly or covertly, in cash or in kind
Respondeat Superior Doctrine
doctrine that makes an employer liable for the tortious acts of employees committed in the scope and furtherance of their employment
US ex rel Drakeford v. Tuomey
don't shop around for legal opinions
Crocker v. Winthrop Laboratories
drug manufacturer represents its product to be from addiction and it wasn't -- breach of warranty suit
direct liability
duty is owed directly by the hospital corporation
4 elements of negligence
duty to use due care, breach of duty of care, injury/actual damages, proximate cause/causation (foreseeability)
malfeasance
execution of an unlawful or improper act; ex: doing a partial birth abortion when prohibited by the law
contract types
express, implied, voidable, executory
ordinary negligence
failure to do (or not do) what a reasonably prudent person would (or would not) do -- carelessness
HC examples of battery
failure to obtain consent prior to surgery; administering . blood against patient's express wishes
compliance
familiarizing yourself with and following the laws and regulations governing your industry
mental distress can include what?
grief, shame, public humiliation, despair, loss of pride, resulting clinical depression
Illegality as a defense in Healthcare
hospital doesn't have to pay contract if compensation is above FMV because than Stark's law kicks in which makes original contract illegal
misfeasance
improper performance of a lawful act; ex: wrong site surgery
defamation of character
intentional tort in which the offender injures someone else's character, fame or reputation by false and malicious statements (written or verbal)
invasion of privacy
intentional tort that violates one of our rights to be: left alone, free from unwarranted publicity, free from exposure to public view, have personal privacy, have records kept confidential
false imprisonment
intentional tort; unlawful restraint of individual's personal liberty or unlawful restraining or confining of an individual
battery
intentional touching of another's person in socially impermissible manner without person's consent
product liability - strict liability
liability without fault -- always involves a product and not a service
types of defamation
libel (written) and slander (oral)
HC example of false imprisonment
locking patient in secluded room for failing to attend therapy session
impact of ACA on Stark and anti-kickback
makes it easier to prosecute; easier to be a whistleblower
types of negligence
malfeasance, misfeasance, nonfeasance
national/industry standard
most currently accepted standard of care on national basis within the industry
is intent present in negligent torts?
no, but intent is present in intentional torts
due care (element of negligence)
obligation (duty) to conform to a recognized standard of care
breach of contract
occurs when there is a violation of one or more terms of the contract
misdemeanor
offense designated by law and punishable by fine and/or generally less than 1 year in jail
felony
offense designated by law or punishable by death or imprisonment in state or fed prison, generally more than one year
implied warranty
one that the law derives by inference from the nature of the transaction or the relative situations or circumstances of the parties; ex: consumers have the right to assume food isn't contaminated
express contract
oral or written contract -- explicit contracted laid out
levels of negligence
ordinary and gross
US ex rel Baklid-Kunz v. Halifax Hospital medical center
overall bonus pool could be increased with referrals; didn't matter that individual physicians' percentage didn't go up
remuneration
payment for work done (doesn't just have to be money)
comparative negligence
plaintiff's negligence acounted for X% of damage so plaintiff only gets 100%-X% of the damages
big company investment safe harbor
publicly traded company with $50M or more in assets is okay because the portion a physician would get is so small
realty v. personalty in contracts
realty relates to real estate while personalty is non-realty
what is the standard for ordinary negligence?
reasonable person
criminal negligence
reckless disregard for the safety of another
small company investment safe harbor
referral sources less than 40% ownership and generates less than 40% of total referrals; investment terms don't differ for referral sources; investment can't be purchased with loaned funds; distributions based on ownership interests
examples of false claims in HC
services not provided at all; services were medically unnecessary; wrong provider; wrong time, location, frequency, intensity, or duration; incorecct symptoms and diagnosis; wrong supplies indicated; lack of proper supervision
arbitration
settling a dispute by agreeing to accept the decision of an impartial outsider; some contracts specify forced arbitration to handle contract disputes
space and equipment rental exception for Stark
similar to anti-kickback safe harbor
crime
social harm defined and made punishable by law
forseeable risk
some providers have an obligation to persons other than the patient - Tarasoff case
is a willful act present in negligent torts?
sometimes but you can be charged with a negligent tort b/c you fail to take sufficient care of something
remedies for breach of contract
specific performance, monetary damages, actual v. consequential damages, duty to mitigate damages, arbitration
express warranty
specific promises or affirmations made by seller to buyer
Johnson v. Women's hospital
subject: intentional tort; intentional infliction of mental distress Info: Mother was shown deceased premature infant by hospital staff which caused mental distress
standard of care
the degree of care that a reasonably prudent person should exercise under the same or similar circumstances
Breach of warranty
the failure to uphold an express or implied promise to abide by certain terms and conditions relevant to the sale or lease of goods
reasonable person
the law's version of an average person who represents the community ideal of reasonable behavior
Products liability
the liability of manufacturers, sellers, and others for the injuries caused by defective products; tort
defenses to defamation action
truth: if words were true, than no defamation occurred; privilege: absolute or qualified
dual capacity issues
usually occurs when a provider is an employee of health system and gets healthcare from same place: employment contract and patient/provider
provider-patient contract
when relationship starts, it must be properly terminated
condition subsequent
when x happens, no longer on the hook
qui tam
who as well; the whistleblower; shown on court cases as Ex rel
fraud
willful and intentional misrepresentation that could cause harm or loss to person or property
condition precedent
x must happen first before y
is there a difference b/w tort of assault and crime of assault?
yes
proof of defamation
• A false & defamatory statement. • Communication of a statement to a person other than the plaintiff. • Fault on the part of the defendant. • Special monetary harm
products liability legal theories
• Negligence • Breach of warranty - Express - Implied • Strict liability