SZD Health Law Scan : Health Care Lawyers & Attorneys : Schottenstein Zox & Dunn Law Firm : Strategic Planning, Managed Care, Insurance : Columbus, Cleveland, Cincinnati, Central Ohio

It is well known that the American health care crisis has reached epic proportions, but a recent report from the Families USA Foundation finds the problem particularly acute in cities.  While the media tend to give most of their focus to the funding roles of state and federal governments, as well as employers and individuals, they often overlook the burden shouldered by city governments.  All of the cities participating in the Families USA survey state that they have seen an increase in the demand for services at safety net clinics over the past year.  Most cities are also seeing crowding in hospital ERs and growing demand for mental health, substance abuse and social services.  None of this should be a surprise given that more than 93 percent of Americans live in metropolitan areas.  However, unlike state and federal governments, municipalities rarely have the funding mechanisms to keep up with the rising cost of providing health care services to their citizens, not to mention indirect costs such as those associated with absenteeism in city schools.  Urban health care providers know this all too well.  Not only have urban ERs become a substitute for a functioning primary care system in many cities, but the closing of a growing number of inner-city hospitals has compounded the problem for those still in business. Continue Reading...

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Recent confirmation of the premise that labeling a document "peer review" does not automatically invoke the peer review privilege came via the Ohio 12th District Court of Appeals, which affirmed a trial court decision ordering the production of hospital EKG discrepancy reports.

Per hospital procedures, cardiologists overread emergency room physician EKG readings.  A discrepancy report was completed whenever the cardiologist's interpretation differed from the emergency room physician.  The defendants argued that the discrepancy reports were peer review documents and non-discoverable, based on Ohio Revised Code Section 2305.253, Incident or risk management report not admissible or discoverable; and Ohio Revised Code Section 2305.252, Confidentiality of proceedings and records within scope of peer review committee of health care entity.

Critical to the Court's finding that the trial court did not abuse its discretion in ordering production of the reports was evidence in the record that the reports were used for patient care.  The Court also cited a lack of evidence that the reports were actually examined by a peer review committee at the hospital.  And, the Court noted that the reports were not "incident or risk management reports" since the purpose of the forms is not to record a patient injury occurring at the hospital.

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The 2008 report to the President from the Corporate Fraud Task Force is now available.

The Report says DOJ has obtained nearly 1,300 corporate fraud convictions since July 2002.  This includes convictions of more than 200 chief executive officers and corporate presidents, more than 120 corporate vice-presidents, and more than 50 chief financial officers.  Some of the significant criminal cases are described in detail in the Report, including the National Century Financial Enterprises, Inc. case.  This case was prosecuted in Columbus, Ohio by the U.S. Attorney for the Southern District of Ohio and the DOJ's Criminal Division.  The Report describes the case as "one of the largest fraud investigations involving a privately held corporation ever conducted by the FBI."

Of course, the Corporate Fraud Task Force prosecutes "significant financial crimes," not  health care fraud offenses.  Thus, the Report's statistics do not include all the convictions of individuals and entities for health care fraud.  Because prosecuting fraud - health care, financial or otherwise -is never unpopular with the voters, expect more of the same in the future.

 

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CMS issued an advisory opinion concluding, based on the facts certified, that physician owners of a diagnostic center located in a micropolitan statistical area may refer patients to the center for designated health services (DHS) without violating the Federal physician self-referral (Stark) regulations because the arrangement would satisfy the "rural provider" exception.  The rural provider exception, which applies only to ownership or investment interests in DHS entities, requires that (a) the DHS is furnished in a rural area; and (b) substantially all of the DHS furnished by the entity (not less than 75%) must be furnished to residents of a rural area.  "Rural area" means an area that is not an urban area.  "Urban area" is defined at 42 C.F.R. 412.62(f)(1)(ii) to include Metropolitan Statistical Areas and New England County Metropolitan Areas (as defined by the Office of Management Budget) or certain specified New England counties.

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Medicaid providers who learn their employees, agents or owners are under investigation for health care fraud can't afford to wait for the criminal process to take its course before mounting a defense.  The indictment  alone of an employee, agent, or owner could be a financial death sentence for the provider.

The Ohio Department of Job and Family Services  ("ODJFS") has always been required to terminate a Medicaid provider agreement if the provider is convicted of certain criminal offenses.  As of September 27, 2007, ODJFS is now required to suspend a provider agreement based only on an indictment for certain offenses.  The statute applies to "noninstitutional providers," which means any person or entity with a Medicaid provider agreement other than a hospital, nursing facility, or intermediate care facility for the mentally retarded.  The indictment can be against the provider, as well as an owner, officer, authorized agent, associate, manager, or even employee of the provider. The suspension continues until the proceedings in the criminal case are completed through conviction, dismissal of the indictment, plea, or finding of not guilty.  In addition to suspending the provider agreement, ODJFS must terminate Medicaid reimbursement to the provider for services rendered.

The statute permits the provider to request a reconsideration of the suspension.  The grounds for requesting reconsideration are limited.  The important ground is whether the provider, owner, or owners can demonstrate that they did not directly or indirectly sanction the action of the authorized agent, associate, manager, or employee that resulted in the indictment.

The statute is particularly troublesome for providers because the indictment of an employee or agent  triggers the suspension.  The provider is then forced to demonstrate to ODJFS that it did not directly or indirectly sanction the illegal conduct. All the while, Medicaid reimbursement has stopped.  In addition, the Medicaid suspension may result in the suspension or termination of other third-party payer agreements.  Unless the suspension is lifted, the provider may be out of business by the time the criminal case concludes.

The statute is Ohio Revised Code Section 5111.031 and the corresponding regulation is Ohio Administrative Code Section 5101:3-1-17.5. 

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According to its Semiannual Report to Congress, the Department of Health and Human Services Office of Inspector General ("OIG") is expected to recover $2.2 billion for the first half of fiscal year 2008.  Also for this period, the OIG reported exclusions of 1,291 individuals and organizations for fraud or abuse of federal health care programs; 293 criminal actions against individuals or organizations; and 142 civil actions such as False Claims Act cases, Civil Monetary Penalties Law settlements, and other administrative recoveries.  The report was issued on June 12, 2008.

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The Fourth District Court of Appeals in Ohio recently released an opinion indicating that the trial court erred by refusing to grant a motion to quash a grand jury subpoena requesting medical records from a physician.  The grand jury had issued a subpoena ordering the physician to produce the medical records of over 50 patients.

The case is instructive regarding application of the physician-patient privilege to grand jury subpoenas in Ohio.  Under Federal privacy regulations, a covered entity may disclose protected health information without a "HIPAA-compliant" authorization in compliance with and as limited by the relevant requirements of a grand jury subpoena.  See 45 C.F.R. 164.512(f)(1)(ii)(B).  However, an Ohio court has recognized that the state law physician-patient privilege is more stringent than the Federal privacy regulations.  See Grove v. Northeast Ohio Nephrology Assoc., 2005-Ohio-6914, Paragraphs 18-23.

The Ohio Supreme Court has stated that in the absence of a prior authorization, a physician or hospital is privileged to disclose confidential medical information in those special situations where disclosure is made in accordance with a statutory mandate or common law duty, or where disclosure is necessary to protect or further a countervailing interest that outweighs the patient's interest in confidentiality.  Biddle v. Warren Gen. Hosp., 1999-Ohio-115 (syllabus).

In this case, the Court found no statutory exception to the physician-patient privilege.  In addition, the Court refused to "judicially create a public policy exception to the privilege statute for grand jury subpoenas."  Physicians and hospitals should be aware of this opinion (and its analysis) when responding to grand jury subpoenas requesting medical records.

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DOJ Press Release -  On May 29, 2008, the U.S. Attorney for the Northern District of Ohio announced the indictment of seven individuals on various offenses in connection with the transportation of Medicaid beneficiaries in vehicles called ambulettes.  The charges include mail fraud, wire fraud, health care fraud, and conspiracy.  According to the press releases, ambulette services contract with the Ohio Medicaid program to transport patients in vehicles known as ambulettes.  An ambulette is a specially equipped van designed for wheelchair passengers.  Medicaid pays ambulette operators for driving Medicaid beneficiaries to and from Medicaid-covered appointments, so long as:  (1) the patient rides in a wheelchair; (2) a medical doctor certifies the need for the wheelchair and ambulette; and (3) the ambulette itself otherwise meets safety specifications.  The defendants are charged with scheming to defraud Medicaid by charging Medicaid for rides of patients who did not use wheelchairs or require the need for wheelchairs.

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