Healthcare Law News - Volume 133
Better Late Than…
In 2017, the Association of American Medical Colleges (AAMC) reported the majority of first year medical students were female. Now AAMC reports women are 50.5% of all United States medical students.
Drug Price Limit Bill
The U.S. House of Representatives, on December 12, 2019 passed a Bill to limit and lower prescription drug prices. The Bill, HR3, would allow the US government to directly negotiate drug prices for Medicare recipients, something it has been prohibited previously from pursuing by law. The Bill would be phased in over a number of years with additional drug negotiation and price limits being established.
My understanding of the Bill is whatever price is achieved by negotiations by HHS/CMS, should be available to individuals covered both by private plans and by Medicare. This could be a significant cost savings to both private pay and Medicare recipients. We can also expect this will also be available to Medicaid plans in each state.
The future of the Bill is unknown since the United States Senate leadership has indicated no plans to bring the Bill to vote in the Senate.
Trouble With Liquidated Damages and Non-Competes
Physician practices and hospitals often require physician employees and NP employees to sign employment agreements that contain non-compete provisions, non-solicitation of client and employee provisions and which may include provisions for “liquidated” damages amounts.
These agreements have long troubled courts asked to enforce them. A decision by the Indiana Supreme Court on December 18, 2019 by a deeply split Indiana Supreme Court indicates that there will continue to be issues in enforcing such non-compete and non-solicit agreements. The case does not involve physicians but is very instructive on how to create a more enforceable non-compete and non-solicit agreement. The court in this case was troubled by liquidated damage provisions that it felt were not good approximations of the damages incurred by the former employer but were rather amounts that were intended to be penalties and therefore keep employees from having the opportunity to seek new jobs and to recruit business.
In summary, this recent case tells us:
- Liquidated damages amounts that are not fixed amounts will get special scrutiny.
- Liquidated damages amounts must appear on their face reasonable and reasonably likely to approximate the former employer’s damages. While the courts acknowledge that it is unlikely that any liquidated damage amounts would be a perfectly accurate amount, it must bear some relationship to the actual damages the former employer incurs.
- If employer chooses to use liquidated damages it needs to be ready to make a reasonable showing of proof to the court the liquidated damages amount in the contract is reasonably correlated to the actual loss.
- Simply stating in the contract the parties have agreed to a liquidated damages amount will not work. The court brushed this lip-service provision aside quickly. The court noted the former employer “…has provided no rational relation as to how damages arising from someone’s actions reasonably result in damages…”
- The final issue on page 10 of the Indiana Supreme Court’s Opinion also indicates problems for former employers trying to enforce a tortuous interference claim (a new employer wrongfully interfered with the employee’s former employment contract). The court made it clear summary judgment will not be appropriate in such cases and that issue will likely need to be tried by the court in almost every instance. The court also hinted the necessity of proving the new employer acted without a legitimate business purpose and the new employer maliciously and exclusively directed a breach to the injury and damage of the former employer may be difficult to prove.
Practices and hospitals that utilize non-compete and non-solicit agreements and especially those with liquidated damages clauses should carefully consider whether their current agreements are enforceable.
More Problems With ONC-Certified EHRs
A research letter published in JAMA indicated a number of issues in ONC-Certified EHRs after safety reviews. It points to an EHR that deleted a decimal point in a drug dosage entry. Rather than receiving 2.5 milligrams the EHR indicated 25 milligrams.
Other issues included inaccurate medication codes and laboratory results failing to import properly into the EHR record. The products with these potential issues are from nine different vendors. The authors of the study pointed to several issues including the fact that using EHR platforms across multiple hospitals and providers may multiply the safety risk. The researchers also point out that customization and configuration of each during implementation may create an implemented product that is very different from the product that was certified by ONC.
This newsletter is edited by Paul Wallace of Jones • Wallace, LLC, a member of the American Health Lawyers Association who has been representing physicians and healthcare practices for over 25 years. Mr. Wallace assists physicians, practices and hospitals in contract items, federal legal compliance, practice entity creation, estate and wealth planning and similar issues. Please feel free to call if you have any questions on this newsletter or legal matters at (812) 402-1600 or firstname.lastname@example.org.