TWO-MIDNIGHT RULE DELAYED UNTIL 2016

CMS has decided to extend the enforcement delay of its often controversial Two-Midnight Rule through the end of 2015.  Before the delay, October 1, 2015 had been the start date.

STILL LOOKING

Plaintiffs who are victims of the numerous data breaches including Anthem, Advocate Health and others continue to look for a way to seek damages from those companies who allowed breaches.  The latest unsuccessful attempt included a class action against Advocate.  A few days ago, the United States Seventh Circuit Court of Appeals rejected the attempt to use the Fair Credit Reporting Act as a basis for asserting damages against Advocate.  The suit failed for various technical reasons, but it is unlikely that this will be the last attempt to use this Act or others to seek damages.  Plaintiffs in these suits argue that consumers whose data is disclosed should receive damages not only for their loss, but also to increase the ultimate cost of such data breaches to Anthem and Advocate and others so that they will take the necessary steps to have adequate security.

In at least one state, Connecticut, the Attorney General sued a company that allowed a data breach under state laws.  We are still waiting for the Indiana Attorney General to take any action of any kind against Anthem, MEI or other Indiana based companies who have allowed breaches.  Many argue it is obvious negligence when companies such as Anthem, MEI or others fail to encrypt PHI and financial data.  Encryption is clearly favored by HIPAA and its related laws, and it is unclear why large holders of PHI and financial data continue to fail to adequately encrypt this data. 

THOUGHT CRIMES

The federal government, and some state governments, have changed the historical use of the word “fraud” in healthcare matters.  Historically, fraud cases have required certain proof of intent and reliance and a “mistake” would not support a fraud claim.  HHS and some state agencies have now changed the civil fraud claim in healthcare to allow recovery for mistakes.

As if this is not worrisome enough, there are signs that HHS, at the least, is looking at criminal enforcement of issues or acts that have typically been civil matters.  In discussing this, I am not talking about the obvious criminal fraud cases where nonexistent care is billed over and over again to the government, or nonexistent patients are billed, but rather the situation in  which an actual licensed medical provider performs services or provides goods but either disagrees with HHS about how they should be billed, or “makes mistakes” in how they are to be billed.

In these true error and mistake cases, often the issue is “medical necessity”.  Recent steps by HHS though indicate that the most worrisome of all of criminalization is using clinical decision making as the foundation for indictments.  More worrisome, your clinical judgment may not be relevant to HHS’ decision about whether a treatment or good is “medically necessary”.  CMS has been publishing or citing medical necessity guidelines as the basis for civil, and it appears in the future, criminal charges based upon failure to comply with those guidelines.  The fact that you may disagree on a particular case or type of case is irrelevant, if you bill CMS for goods or services not indicated by CMS’ medical necessity guidelines, then according to CMS, you may be guilty of civil and criminal fraud.

This should bring an absolute chill to every physician, to every hospital and to every medical provider.  If disagreements can lead to civil and criminal fraud charges, then a decision needs to be reached as to whether you will surrender your medical judgment to CMS guidelines or whether you will cease to treat any Medicare/Medicaid patients.

DRAMA, DRAMA, DRAMA

A California physician recently had a $5.7MM judgment against Integrated Healthcare Holdings upheld by the California Supreme Court.  The basis of the lawsuit was that the former CEO of Integrated retaliated against the California doctor after he pointed out that Integrated had defaulted on loans.

Later, the doctor was arrested for allegedly waiving a gun during a road rage incident.  The police found a gun and cocaine in the doctor’s car.  However, DNA tests showed that he had never touched the gun and that his car had been tampered with, causing injury to his daughter and two Japanese exchange students who were riding in the car.

In 2008, the LA Times reported that Integrated’s CEO was resigning after an internal investigation.  There was some evidence in the internal probe that the gun had been planted which then raised questions about the cocaine being planted and the car being tampered with causing the doctor’s car crash.  Sadly, this sounds like a bad made for television movie that may have played out in real life.

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 on this newsletter or legal matters at (812) 402-1600 or pwallace@joneswallace.com.