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