WAIVING CO-PAYS

HHS has long prohibited waivers of cost sharing amounts for recipients of Medicare or other federal healthcare programs.  HHS has characterized such general waivers as violations of the anti kick back statutes (AKS).  While the reasoning may or may not be valid, HHS’ position is longstanding.

Recently, a county fire department sought approval of waiver of co-pays or cost sharing for emergency ambulance services.  OIG approved this.  Truly, it is a no brainer given that there is an existing rule which specifically approves such arrangements.

The takeaway on this though is the reminder that HHS, through OIG, intends to continue enforcing cost sharing waivers as violations of AKS.  You should review the arrangements in your practice or hospital with regard to such matters so that you may establish that such waivers are made on an individual basis only based upon some criteria relating to ability to pay (hardship).

FALSE CLAIMS

The Eighth Circuit Court of Appeals in the Bayer Healthcare case adopted a new theory by the Government in seeking false claims act damages.  Until now, the Government has been generally unsuccessful asserting a “fraud in the inducement” theory unless specific acts and damages are proven.  This case is particularly troubling since the claim was that Bayer fraudulently induced the department of defense into contracting for the inclusion of their drug under a federally financed healthcare program.

The fraud claim is what makes this case unusual.  The drug was actually prescribed, actually delivered and charged for as agreed with the Government in a contract.  However, the U.S. claimed that Bayer made false representations about the drug’s safety.

Since the drugs were actually ordered, made and filled with an FDA approved drug, paid for at the approved price, no individual claim for reimbursement was false in the classic sense of claiming that a drug was not delivered or specified, or that the price was too high.  In other words, no specific claim for reimbursement was objectively false.  The Government apparently convinced the Eighth Circuit Court of Appeals that all claims for Bayer’s drug were “false”.  The basis of this was the amazing claim that the Government would not have agreed to purchase the drug if Bayer had been truthful and completely advised the Government of the risks, even if the Government suffered no identifiable economic loss or damage.  (Inadequate risk disclosure = fraud)

As the dissent in this case was quick to point out, this theory has never been successful unless the Government could allege in specifically, in identified cases, that the Government paid inflated prices, incurred additional costs, or suffered some potential economic harm.

Expect this or a similar case to be considered soon by the Supreme Court since there is now a split among the federal circuits on this issue.  In the mean time, expect many more suits of this type, not only against pharmaceutical companies, but also against hospitals and other large healthcare providers on the basis of inadequate description, disclosure of risk.

HOSPITAL/PHYSICIAN INDEPENDENT CONTRACTOR LIABILITY

A recent Illinois case provides additional guidance on the issue of whether hospitals are liable for the negligent acts of physicians which occur at the hospital.  This issue is a much litigated issue in recent years.

In this case the consent form, signed by a patient presenting himself in pain at urgent care, contained a paragraph that stated that none of the physicians which would be treating the patient were employees, and that all were independent contractors.  The patient indicated later that he assumed the physicians were employees, and did not read the consent form.

The Illinois court held there was no ambiguity in the consent form language, the language in the consent form notifying the patient that the doctors were independent contractors would control, and that the doctrine of assumed or apparent authority would not apply.  The court distinguished this case from other cases in which the consent language was ambiguous in stating that some of the treating physicians were independent contractors, or which included contradictory language.

For Illinois hospitals and medical practices, this case provides guidance.  However, if you have a mix of employed physicians and independent contractor physicians, it may be difficult in Illinois to obtain this same result.

Physicians should be clear about their status at any hospital or clinic, and have the appropriate insurance in place if they are independent contractors.

This newsletter is edited by Paul Wallace of Jones • Wallace, LLC, a member of the American Bar Association Healthcare Law Section and the American Health Lawyers Association who has been representing physicians and healthcare practices for over 25 years.  Mr. Wallace assists physicians in health practices in contract items, federal legal compliance, creation of practice entities, estate and wealth planning and similar issues.  Please feel free to call if you have any questions about this newsletter or any other matter at (812) 402-1600 or pwallace@joneswallace.com.