DISCIPLINARY ACTIONS

3 Types of Disciplinary Actions by Professional Boards:

1.Discipline of individuals licensed within the professions for actions deemed
unprofessional or contrary to the standard of care
-In Re Williams / Hoover / In Re guess
2.Discipline of individuals who are not licensed professionals but are providing services
typically requiring licensure.
-State Board of Nursing and Healing Arts v. Ruebke
3.Discipline of individuals who are licensed in another profession, but are providing
services typically provided by individuals in another licensed profession (scope of
practice)
-Sermchief v. Gonzales

Admin Process:
1.Dep’t of Health Files administrative complaint
2.Hearing Officer hears case and issues order
3.Dep’t of Health files exceptions
4.Board of Md. Accepts exceptions and amends findings; find MD in violation of practice act.
5.MD appeals decision of board to District Court
-Standard of Review: Order was based on substantial evidence.

One of the biggest defenses in an administrative hearing is that the agency board did not
provide adequate notice. This allows the standard of review to change.

If you go through the administrative process and there has already been a decision from the
administrative board – you are stuck only in the realm of the standard of review.
However, if you can get into court through an injunction or a different procedure, the court has
more ability to ask questions outside of the standard of review.

Telemedicine as it relates to Licensure

Practice of medicine through the use of electronic communications, including phone, Skype (or
its equivalent), email, etc.
If this becomes more widespread – how do individuals handle licensure which occurs at
a state level.
-most states just require that you meet almost full licensure of the state you are
providing service in.
-Approximately 42 states require full licensure and 8 allow for a telemedicine
license.
-TN basically has a telemedicine license but it is the same requirements as a full
license.
-Pros: Cost and Access of Telemedicine. Helps Rural Communities. Convenient.
-Cons: Not actually seeing the patient and the patient could just be telling the doctor
something to get prescriptions. No ability to see and touch the patient to see what is
going on. No uniform payment mechanisms for services.
National Practitioner Data Bank
-Set up originally to guard against physicians who are disciplined and lose their license in one
state, can’t just move states and get re-licensed.
-Who is required to Report?
-State disciplinary board and licensure boards.
-Hospitals and Entities with Peer Review Committees.
-Hospitals don’t always want to make it publicly known that they have bad physicians, so they
just quietly get physicians to leave and don’t have to report.
-Hospitals must confirm that newly hired practitioners are not listed and periodically confirm
that existing employees have not been listed.
-45% of physicians listed on NPDB also had reports of disciplinary actions.

Federal and State Regulation of Drugs

Relationship between states and the federal government in regulating prescription drugs
-States govern the practice of medicine and physician’s prescribing capabilities within
the state as an aspect of the practice of medicine.
-FDA approves and monitors the safety of drugs and devices; once approved physicians
can utilize non-schedule I drugs for any use (supported by medical practices).
-It is illegal for drug manufacturers to promote their drugs for any other purpose than
the intended use. I.E. cannot get something approved for back pain and then promote it
for some other purpose.
-DEA regulates prescribing practices through the Controlled Substance Act
-All physicians must have a permit to prescribe drugs (Schedule II-V)
-Physicians can be prosecuted for practices that are deemed by the DEA to be
outside legitimate medical practice
-Marijuana
-Schedule I drug
-It is illegal to prescribe

Complementary and Alternative Medicine

3 Types of ways state licensure boards get involved with alternative medicine:
-Licensed providers utilizing alternative medicine along with conventional medicine.
-Unlicensed providers providing alternative therapies that may constitute the unlicensed
practice of medicine
-Restrictions on practices of unlicensed providers in connection with the provision of
alternative medicine.

Some States with choose to license certain practices once they are more mainstream
-Acupuncture
-Chiropractic Services
-Massage Therapy
In re Guess (1990)
Would treat some of his patients with homeopathic therapy.
Homeopathy is the concept of “like cures like” where people will take things like onions
which make you cry and make it into a natural mixture to combat allergies, which also
makes you cry.
Issues:
1.Whether the statute only provides authority to the board for disciplining behavior that
causes harm to patients, and;
2. Whether the board’s decision regarding Guess’ use of homeopathic medicine in violation of
state licensure law was not supported by substantial evidence.

State’s police power regarding licensure

-statute must have a rational relationship to a legitimate public purpose – protecting
public health.
-such protection can include protecting from harm AND prohibiting practices that depart
from prevailing standards.
Why might states have laws that prohibit behavior irrespective of whether it causes harm to
patient?
-Can convince people they are getting something they are not getting (snake oil).
-If I think I am being appropriately treated, I won’t actually go seek out care from a
provider that I actually need.

Standard of Review for Decisions of Medical Board

-“If supported competent evidence, [a medical board’s decision] may not be disturbed
by a reviewing court”
-Guess also argues board’s decision was “arbitrary and capricious”
-Can appeal to state trial court after admin remedies exhausted.
Holding:
-Court reverses, finding that the decision by the Board of Medical Examiners that
homeopathy was not an acceptable and prevailing system of medical practice in North
Carolina and not arbitrary and capricious.
Counter Argument
If this isn’t harming someone, why do we care?
-yes, but this might prevent someone from seeking actual care.
-might be deceptive to consumers

State Board of Nursing and State Board of Healing Arts v. Ruebke

Procedural History:
Board of Healing Arts and Board of Nursing sought temporary injunction in district court
to stop Ruebke from practicing midwifery.
-Why seek an injunction?
 -attempting to shut down the entire practice and don’t want to go case
by case in the administrative process, even though the standard of care
would be more favorable.

Holding:
Reversed in Part
Healing arts Act and Nursing Act are not unconstitutionally vague.
Affirmed in Part
Injunction was appropriate because midwifery fell within the exception to the
Act.
Reasoning:
“The fact that a person with medical training provides services in competition with
someone with no medical degree does not transform the latter’s practices into the
practice of medicine.”
Used a historical approach to midwifery to discuss how midwifery has always been
around prior to licensure.

This could be a bit problematic as a statement because what stops someone with no
medical training from copying everything a doctor does and just saying it isn’t the
practice of medicine? I.E. how then do we distinguish what is the practice of medicine?
-Easy in the concept of surgery but outside of that portion… how do we
determine?

Doesn’t the quote above sound awfully like the unauthorized practice of law?

Takeaway:
Kansas first licensed certified nurse midwives under the Nursing Act in 1978 – what does
that court say about this?

What are the possible effects of a definition that states that pregnancy is not a change
of the normal health process?
Why is this problematic? Because it affects insurance if it isn’t classified as an
“illness.”
Disclosure Approach (California)
Tennessee Law
Tennessee passed a law in 2000 requiring that direct-entry midwives be certified
in order to provide services in the state of TN (T.C.A. § 63-29-108)

Different Approaches in States to the Regulation of Various Professions:

Licensure (Strictest)
Certification
Supervision Exceptions (least strict)
NOTE – essay exam on Midwifery and Licenses (sansa stark)
-in re guess case mirror
-the fact the hearing officer found something, and the board overruled it evidence of
not substantial evidence.
-physician supervision
-homeopathic medicine
-most of her essays doesn’t matter whether you vote yes or no its about analysis.

SCOPE OF PRACTICE REGULATION

Sermchief v. Gonzales (1983)

 Petition for a declaratory judgment and injunction brought by two nurses and five
physicians employed by the East Missouri Action Agency (Agency).
 Agency is a federally tax-exempt Missouri Not-For-Profit corporation that maintains
offices in Cape Girardeau, Flat River, Ironton, and Fredericktown.
 Provides medical services to general public in fields of family planning, obstetrics, and
gynecology.
 State Board of Registration of Healing Arts threatens action for unauthorized practice of
medicine to the nurses.
 Threatens action for aiding and abetting unauthorized practice of medicine to the
physicians.
 Through bringing the declaratory judgment in this way – asking the court to declare the
practices of the nurses valid – it cuts off the administrative process. None of the
administrative process has happened yet.
o We are in court to determine whether what they are doing is the practice of
medicine or not.
 Advantage: we are in court de novo without going through admin
process. – also the board is filled with physicians who are not a neutral
audience.
 Thus, we don’t have to have the deferential standard.
 Court will engage in statutory analysis.

Standard of Review:
Whether or not the nurse’s actions constituted the practice of medicine (and physicians thus
aiding and abetting in practice of medicine of unauthorized providers)
What if the Board had actually removed their licenses and case was an appeal of that
decision?

Holding:
Court reversed decision of district court finding that the nurses’ acts were authorized under
Chapter 335 (nursing act) and therefore, not the unauthorized practice of medicine under
Chapter 334 (healing arts act).
Within Scope of Practice, primarily what is looked at is:
1. Look at their own licensure rules.
As long as they are operating within the rules of their own license category, it will be
difficult to argue that they are doing the unauthorized practice of medicine.

North Carolina Board of Dental Examiners v. FTC (2011)

 FTC filed suit against Board claiming that its action in sending cease-and-desist letters to
individuals providing teeth whitening services claiming that such services constituted
the practice of dentistry without a license were anticompetitive.
 Goes up to the S. Ct.
 Everyone thinks that the S. Ct. is going to answer whether teeth whitening is the
unauthorized practice of dentistry.
 Rather, the S. Ct. defined the issue as whether the Board is a state agency. If it is, it is
immune from antitrust laws.
 If it isn’t a state agency, then it is not immune and can be sued for antitrust violations.
 To the extent that you have a Board and it is not actively supervised by the State, then it
is not a state actor.

QUALITY CONTROL REGULATIONS OF HEALTH CARE INSTITUTIONS

HOSPITALS V. NURSES HOMES

Hospitals – Patients
Nursing Homes – Residents

Quality Control Measures for Hospitals:

1. Medical Malpractice
2. Licensure
3. Ethical Norms
4. Third Party Accreditation
5. Internal Quality Assurance Structures
-Reimbursements
-Peer Review Committees
-Secret and not public because they encourage self-reporting.
6. Market Forces
7. Federal certification for Medicare and Medicaid.

Do these exist in Nursing Homes?

1. Medical Malpractice
This isn’t real because they are already old and no money because they are about to die.
Causation is difficult to prove.
2. Consumer Choice and Market Forces
People really don’t choose nursing homes. In an ideal setting, sure they choose.
However, a lot is done last minute and in a state of stress.

TO the extent that many of these quality-control forces do not apply to nursing homes, that
increases the need for public regulation.

What sorts of public regulation might help to correct some of the lack of current quality-control
forces?
How do you go about deciding what the relevant measurements would be?
How should you define effectiveness? When do we know that the services being
provided are of a sufficient quality?
To the extent that it is data driven or outcome driven, how do we assure that the data is
accurate?
What are the costs associated with making this data accurate?

If you impose fines?

It takes away money that would go to residents
If you shut homes down?
It takes away available beds

One tool that possibly helps with nursing home choice is: Nursing Home Compare

Nursing Homes and Arbitration

2016 HHS Final Rule: Outright ban on pre-dispute, binding arbitration agreements in nursing
home admission contracts.
2019 HHS Proposed Rule: Allows nursing homes to use pre-dispute, binding arbitration
agreements, but does not allow signing of the agreements to be a condition of admission.
-Allows 30-day recession of signed agreement.
Facilities must ensure that:
Agreement has been explained to the resident or representative that understands
Resident acknowledges understanding
Agreement allows for a) selection of neutral arbitrator agreed by both parties and b) selection
of mutually convenient location.
Agreement may not contain language that prohibits or discourages residents from talking about
federal or state local licensure violations.

Very limited Medicare Benefits for Nursing Homes

Majority is Medicaid Benefits.
In re the Estate of Michael Patrick Smith v. Heckler (1984)
Civil Rights Class Action Lawsuit
Plaintiffs are challenging that the regulations are not actually doing anything in accordance to
what they are supposed to be doing.
 Facility-Oriented regulations instead of Patient-Oriented regulations.
 The regulations are Facility-Oriented – this means that the regulations are
reviewing the policies of the nursing homes – not the actual applications of the
policies. They weren’t walking around facilities or asking patients.
Holding:
 Because the purpose of the Medicaid Act is to provide high quality medical care,
regulations promulgated by the Secretary were facility-oriented and thus, the Secretary
had failed to follow instructions of Congress and the regulations promulgated were
arbitrary and capricious.

Regulation and Licensing of Institutions

Defining quality care can different based on standards for individuals v. standards for facilities.
What does Donabedian state are the 3 major approaches to assessing quality:
 Structure
o Size of Hallways, Fire alarms, etc. Brick and Mortar.
o Super easy to implement and enforce.
 Process
o Must have a policy regarding bathing, etc. Evacuation procedures for fire.
o One downfall – they still don’t address care.
 Outcomes
o How are patients actually doing. Patients shall not have any more than 2
bedsores.
o Challenge: There are things outside of the process and structures you put
around the patient that impact the outcome. Even if you are doing everything
right – you can’t control for everything.
o Moving toward this outcome data might encourage healthcare organizations,
etc. to not accept high risk or chronic patients. Not everyone gets better.
o There is a point where improvement is not realistic.

Sunshine Haven Nursing Operations v. U.S. Dep’t of Health and Human Services (2016)
Procedural History:
 ALJ Held hearing April 12-13, 2010 on Sunshine’s appeal of CMS’ imposition of remedies
for noncompliance with federal regulations
 August 5, 2011 ALJ finds Sunshine Haven was not in “substantial compliance” with
Medicare program requirements from Nov. 5, 2008-May 6, 2009 – upholds penalties
and termination of Provider agreement with CMS.
 Sunshine appeals to Dept Appeals Board, which affirms ALJ judgment on April 23, 2012.
 Sunshine appeals to 10th circuit on June 20, 2012 and on Feb. 14, 2014 upholding the
penalties and transferring termination of provider agreement to district court.
Standard of Review:
 Review the Secretary’s ALJ decision to determine whether the factual findings are
supported by substantial evidence in light of the record and whether correct legal
standards were applied.
Holding:
 Sunshine’s petition to reverse the Denial of Payment for New Admissions and
termination of the provider agreement are denied, affirming the determination of the
DAB, and case dismissed (2016).

Types of Violations:
 Failure to comply with requirement that facility “ensure that resident who is unable to
carry out activities of daily living receives necessary services to maintain good nutrition,
grooming, and personal and oral hygiene.
o Process regulation
o Sunshine has policy and procedure that requires residents be bathed at least 2
times per week- residents were not in compliance.
 Failure to comply with regulation that “resident has the right to be free from any
physical or chemical restraints imposed for purposes of discipline or convenience, and
not required to treat the resident’s medical symptoms.
o Process regulation
o Resident had leap belt for which there was no physician purpose.
 Failure to comply with requirement that facility ensure that “environment remains as
free of accident hazards as possible” and that “resident receives adequate supervision
and assistance devices to prevent accidents.”
o Structure and Process regulation.
o Residents were bruised because of improper transfers
 Failure to comply with Life Safe Code requirements regarding presence of smoke
detectors, sprinklers, etc.
o Structure regulation
o Did not have appropriate equipment.

How did Sunshine Defend these claims?

 Bathing – argued outcomes were not harmful and surveyor lacked knowledge to assess
outcomes.
o This is true but it is a process regulation – this was a loser argument.
 Physical restraints – submitted plans for correction
 Bruising and transfer issues – transfer policies were adequate, and bruises were
accidents, even though policies did not address all types of transfers
 Life Safety Code Violations – had a contract in place.
Did the process work? If behavior is correct, should there be a penalty?
 Fear is that people will just wait until they get caught and correct since there is no
penalty.

Accreditation of SNFs
 Accreditation is a nongovernmental voluntary activity in which provider organizations
voluntarily agree to be reviewed and assess by the agency in exchange for
“accreditation.”
o Joint Commission is the largest – largely accredits hospitals.
 Hospitals who are accredited will be “Deemed” to have complied with Medicare
requirements.

Policy Arguments:
 There is an incentive for accreditation agencies to be soft on their clients to prevent
them from going to competitors.

Exam Question: What kind of regulation is this and how would you defend against it?

Chapter 4 – The Professional-Patient Relationship

1. Duty of Care
Are we sure that there is a provider-patient relationship?
2. Standard of Care

Esquivel v. Watters (2007) (No duty to discover)

Key Facts:
 Ms. Esquivel is pregnant and patient of Dr. Watters
 Obtains prenatal counseling at Ark City Clinic and Coupon for “gender reveal” sonogram
at SCKMC
 Nov. – Sonographer at SCKMC notices baby has gastroschisis: notifies Watters orally and
sends images to ACC.
 Watters neglects to tell Ms. Esquivel after some initial attempts.
 Baby is born in Feb. at 38 weeks and cannot be saved: dies in March.
Duty of Care:
 District Court grants SJ dismissing Ark City Clinic (the one who issued coupon).
 Issue: whether a legal duty exists on the part of SCKMC or Dr. Watters.
o There is not a patient-provider relationship here.
o Dr. Watters was under no duty to discover or disclose problems in the person
under examination.
 She independently sought out this sonogram. He had no duty to seek out
the result of this independent sonogram.
 Problem with holding him liable for something the patient does outside
of his care, the doctor could be liable for anything they do. It creates this
duty to discover.
 o SCKCM made it clear that they were not treating her. They were just doing a
sonogram.
 They had no negligence in the performance of the sonogram.
 Note: Establishing the physician-patient relationship is a prerequisite to a professional
malpractice action against a physician – no legal duty of care, no obligation to provide
the standard of care.
o Major Case Takeaway.

White v. Harris (2011)

 14-year-old girl has ongoing mental health issues
 Case manager recommends participation in a research study regarding telepsychiatry.
 Does 90 min video conference, completes pre-assessment documentation, and a
questionnaire.
 Psychiatrist conducting research was clear that no follow up treatment would be
provided, and no medication prescribed. He did, however, submit a report to her
primary doctor.
 June 10, 2007 patient commits suicide by ingesting lethal combination of drugs. None
prescribed as part of research study.
 Is there a duty of care here?
o Reversed and Remanded, finding that the psychiatrist had indeed formed a
doctor-patient relationship with decedent, despite its brevity or duration, and
duty of care was owed.

How can we reconcile Esquivel and White?

 White looks more like treatment – the report he generated to treatment team with
recommendations looks like treatment.
 If all he did was say “thanks” and provided no information to treatment team, perhaps it
looks more like Esquivel. Teacher thinks if there was no report – probably no duty.
 This looks like Independent Medical Evaluations used in criminal or insurance purposes.

All the court said in White is that there was enough to create a duty – they did not reach the
merits on whether he violated a standard of care.

Duty of care does not mean we jump to saying the provider was negligent. It is just saying
there is a duty.

Consultations:

Release:
More likely to be upheld if it is specific to the thing that the person is assuming the risk of.
(Shorter v. Drury)
Less likely if the release is just a general “Hey you can’t hold us liable for anything (Trunkl)
CONFIDENTIALITY AND DISCLOSURE IN THE PHYSICIAN-PATIENT RELATIONSHIP
Exam: Is this or is this not a Breach under HIPAA?
Will not ask about a specific permitted disclosure. But, do understand the basic structure of
HIPAA.
It is permissible for entities to share data that is PHI for treatment, payment, or healthcare /
hospital operations. (in order to bill, you may have to share PHI to the payor to get paid).
(providers can talk among each other). (credentialing, physician applies for medical staff
privileges and as a result, physician has to provide evidence of successful treatment).
No private right of action under HIPAA – so if there is a question about breach of confidential
information, you will only tell her about state law claims. If she asks what the remedies under
HIPAA are, the remedy is just complaining to the OCR. In connection to the state law claim,
HIPAA is often used as the standard of care for purposes of proof of a breach of confidentiality.
If you have a policy that is HIGHER than HIPAA, your own policy will likely be the standard of
care, not HIPAA.

1. STATE LEVEL PRIOR TO HIPAA

2. FEDERAL (HIPAA)

The purpose of a physician’s ethical duty to maintain patient confidentiality is to allow the
patient to feel free to make a full and frank disclosure of information to the physician with the
knowledge that the physician will protect the confidential nature of the information disclosed.

Breach of Confidentiality:
Humphers v. First Interstate Bank of Oregon (1985)
 Girl trying to find biological mother.
 Seeks out delivering doctor
 Doctor lied on girl’s behalf so she could get records from Hospital.
 Mother did not want to be found and sued Doctor’s estate.
o 5 claims
 Left with 2 claims – Breach of Confidentiality and Invasion of Privacy
 How does the court analyze the historic basis for an invasion of privacy claim?
o Appropriation of the Plaintiff’s name or likeness
o Unreasonable and Offensive intrusion on the seclusion of another
o Public disclosure of private facts
o Publicity that places the Plaintiff in a false light in the public eye.
 Does the court believe any of these exist in this case?
o No
 On what basis does the court find this is a breach of confidentiality?
o Finds duty is “outside the tort claim”
 Legal obligation by physician to report child abuse and certain diseases
  Laws that disqualify physicians from licensure or discipline physicians for
divulging a professional secret
 Laws regarding privilege of information in hearing.
o Based on holding of the court, if Mackey had been alive, would there be other
actions to be taken?
 Maybe she could have sought to have his license removed?
 Takeaway: Courts have found a duty to a confidential relationship, in terms of breach of
confidentiality,

Birth Records:
 Patients under HIPAA are permitted to request their own medical record and such
medical records must be disclosed, unless certain exceptions apply.
 Most states today allow any adoptee who is at least 25 years old to get a non-certified
copy of their original, pre-adoption birth record.
 The state permits birth parents to indicate whether or not they would want to be
contacted in a form that will be sent to the adoptee but does not prevent the adoptee
from having access to the record.

Doe v. Medlantic Health Care Group, Inc. (2003)

 PRE HIPAA
 Doe (HIV Positive) – had a coworker that also worked at the hospital.
 Coworker got his last name and looked up why he was in the hospital, found out he had
HIV and then she told everyone at their mutual job that he had AIDS.
 Sued Hospital for Invasion of Privacy and Breach of Confidentiality.
o Whether expert testimony was necessary to establish the applicable standard of
care owed by WHC.
 No need for expert testimony here
 Standard of Care: The jury could rely on existing protocols as the
applicable standard of care and could take into account whether the
protocol is followed.
 Failure to adhere to protocols: although no evidence that protocols were
deficient or breached, evidence that there were consistent lapses in
enforcement and of Goldring being the source that jury could conclude
duty had been breached.
o Whether there was sufficient evidence to determine that WHC’s protocols
regarding confidential health information had sufficient lapses such that they
breached the confidentiality of the medical records.
 What is Breach of Confidentiality: (4 ELEMENTS)
  Unconsented, Unprivileged Disclosure
 To a third party
 Of nonpublic information that
 Defendant had learned within a confidential relationship.
 Was it necessary to provide an expert in order to prove standard for
protection of records?
 Their own protocols sufficed.

HIPAA (Health Insurance Portability Accountability Act of 1996)

Transactions and Code Sets Rule
Privacy Rule
Security Rule
Enforcement Rule
Unique Identifier Rule
HITECH (Health Information Technology for Economic and Clinical Health Act -
2009)

If you are a “covered entity,” you cannot share data except with:
1. Patient
2. Secretary of Health and Human Services
UNLESS – one of the exceptions apply

Covered Entity means:

 A health plan
 A health care ClearingHouse
 A health care provider who transmits any health information in electronic form in
connection with a transaction covered by this subchapter.

Is a person, business, or agency a covered health care provider?

Does the person, business or agency furnish, bill or receive payment for healthcare in the
normal course of business?
 Yes
o Does the person, business or agency transmit any covered transactions
electronically?
 Yes
 Stop! Covered Health Care Provider
 No
o Stop, NOT a Covered Health Care Provider

Business Associates:
 Members of a Covered Entities’ workforce are not considered Business Associates.
 An entity/individual can be both a Covered Entity and a Business Associate
  Business Associates are directly liable for violations of the HIPAA Privacy and Security
Rules – Change after HITECH
 BA Includes a subcontractor that creates, receives, maintains, or transmits protected
health information on behalf of the business associate.

General Rule Regarding Privacy Information:

 A covered entity or business associate may not use or disclose protected health
information, except as permitted or required by the Privacy Rule.
o Required to Disclose Only to 2 Parties:
 Individual
 Secretary of HHS
o Permitted Disclosures (can make a choice)
 Permitted Without Notice
 To the individual
 For treatment, payment, or health care operations (most
common)
 Incident to a use or disclosure otherwise permitted
 Unless otherwise prohibited, pursuant to a valid authorization
 Pursuant to an agreement to allow the individual to object
 As permitted under regulations 164.512, and 164.514(e), (f), and
(g).
 Permitted With Notice
 All information not specifically permitted without authorization
under the rules about a valid authorization
 Psychotherapy notes (subject to exceptions for treatment,
payment or operations, or a required disclosure)
 Marketing
 Sale of PHI

How we define Breach NOW:

 2013 HITECH amendments changed definition of breach – an impermissible use or
disclosure of PHI is presumed to be a breach, unless it can be demonstrated that there is
low probability that phi has been compromised based upon a risk assessment:
 o Nature and extent of PHI involved
o Unauthorized person to whom the disclosure was made
o Whether the PHI was actually acquired or viewed
o The extent to which the risk to PHI has been mitigated.
 Just as a heads up – HITECH requirements of EHRs is where the entity is accepting
federal funds (like Medicare or Medicaid).

An impermissible use or disclosure of PHI is presumed to be a breach, unless it can be

demonstrated that there is low probability that PHI has been compromised based upon a risk
assessment.

So, Breach Analysis Steps:

1.. Is there some sort of waiver that you signed that allowed for release of information? (if this
is some sort of a disclosure issue and not like a loss of PHI)
2. Look at State Law Claims
Breach of Duty of Confidentiality (potential tort claim)
Could use HIPAA as a Standard of Care (depends on jurisdiction) (very common)
3. Complain to OCR
4. It is presumed to a breach under HITECH 2013
5. Next, analyze the four factors to determine whether or not there is a low probability that the
PHI has been compromised.
o Nature and extent of PHI involved
o Unauthorized person to whom the disclosure was made
o Whether the PHI was actually acquired or viewed.
 If you are in gray area and can’t tell if it has been or not, then the
presumption puts us where we assume it has been viewed.
o The extent to which the risk to PHI has been mitigated.
 Recovery of laptop example.

Also, analyze separate HIPAA violations under the Security violations (i.e. are these actually
encrypted correctly) – although most of her questions will be limited to a breach under the
Privacy Regulations. Still, could bring up this point briefly.

Rationale: The Presumption pushes providers to go ahead and make notice to patient. Notice
never really hurts except for a PR (public) perspective. Maybe Notice is expensive though.
 Thus, if you think there is any possibility of a breach, you might as well go ahead and
provide notice.

True or False:
 Anyone who has had his/her PHI disclosed in violation of HIPAA can sue for such
unauthorized disclosure in a private right of action under HIPAA.
o FALSE
 Only recourse under HIPAA is to complain to the Office of Civil Rights.
  Violations of HIPAA can result in civil monetary penalties ranging from $100-$50,000 per
violation, capped at $1,500,000 annually, in the discretion of the Secretary of HHS
o TRUE
 A state law that creates greater protections for PHI than required under HIPAA is
preempted by HIPAA and thus, unenforceable.
o FALSE
 HIPAA is a floor, not a ceiling.
 If the State Law has greater protections, then it is fine so long as it
doesn’t directly conflict with something in HIPAA.
o Example: Mental Health Records usually have stricter
regulations than normal HIPAA.
 Large Scale Breaches (over 500 individuals) are required to be posted on the HHS Privacy
Website known as the “Wall of Shame.”
o TRUE

76% of HIPAA Breaches due to Human or Staff Error.

HIPAA Pre-Emption
 HIPAA is a floor not a ceiling – thus states, can enact laws that are MORE stringent or
strict than HIPAA, but not less; also
 Pre-Emption under HIPAA
o 45 CFR 160.203:
 A more stringent is state law UNLESS it is contrary to HIPAA.
 Test: If you find it impossible to follow both state and federal law, then
the state law standard is contrary to HIPAA and thus, preempts.

Byrne v. Avery Center of Obstetrics and Gynecology (2014)

 Two Issues:
o Whether HIPAA preempts a state law negligence claim arising out of an alleged
breach under HIPAA regarding Subpoenas.
o If we allow this to go forward, whether HIPAA regulations can be used as
evidence of the “standard of care.”
 Court answers YES to both.
o HIPAA was not intended to preempt state tort law actions arising out of
unauthorized release of records; AND
o HIPAA regulations may be used to inform the standard of care in state law claims
regarding disclosure of medical records.
 Does the court conclude this is a breach of confidentiality under state law?
o No, no decision on whether this is actually negligence, but decides this only on
the basis of HIPAA pre-emption.
  This case follows the trend in ALL jurisdictions – is this the right result or a back door?

Leaking Patient Information – Page 201-202

1. To the extent that Dr. Jasmine operates a cash-only business and has no submission of claims
which are required to be submitted electronically to the federal government) then technically
he is not required to comply with HIPAA
2. This is technically a violation of HIPAA because PHI is open and accessible to others. Patient
could file a complaint with OCR. Solution – forms could just be put in a closed box or turned
upside down.
3. This is technically a HIPAA violation because the phone number is PHI and maintained on the
phone. Solution = delete the phone number after calling.
4. This is a violation of HIPAA. Can’t sue the individual or the lab because there is no private
right of action in HIPAA – Can complain to OCR – this may result in sanctions, but the athlete
would need a state law claim to sue the individual or the lab.
5. Need more information – covered entity must obtain patient authorization, unless this is for
purposes of her treatment or for a refill or reminder of prescription. REGARDLESS, a mass
mailing that is open is ill-advised. Perhaps you could argue she consented to the marketing
because she is enrolled in a wellness program but either way, just staple the ad shut.
6. The facts in Doe would be a clear HIPAA violation; patient could file a complaint with OCR
and Medlantic would likely pay a fine; while patient could not file a private action, court could
use HIPAA as standard for appropriate behavior.
7. Clear HIPAA violation because they had no consent or authorization from the patients. The
law firm is likely also subject to sanctions as a business associate.

One of the main purposes of HITECH Act was to establish an Electronic Health Information
Exchange.
 This has sort of died on the vine – many difficulties with sharing info while keeping safe.
o One possible front is a BLOCKCHAIN approach.
 Health Information Exchange is the mobilization of healthcare information electronically
across organizations with a region, community, or hospital system.

CHAPTER 5 – LIABILITY OF HEALTH CARE PROFESSIONALS

Adverse Events v. Medical Error

 What is the difference between these two things?
o Adverse Event is injury caused by medical management rather than the
underlying condition.
 Classic Example: Patient Falling Out of Bed
 Does an adverse event imply negligence?
o This is harder – would have to apply Res Ipsa Loquitur.
o If you have an adverse event, you should report it to the joint commission,
although not required
 BUT, if they come in and find out about it and you did not report it, then
they could impose fines and penalties retrospectively.
o Medical Error is a failure of planned action to be completed as intended . . . or
the use of a wrong plan to achieve an aim.
 Example: Left a sponge in a patient’s body.
 Does a Medical Error Imply Negligence?
o It pretty much has to.
 Medical Error is the THIRD leading cause of Death in the US.
 251,451 yearly deaths.

Hall v. Hilbun (Miss. 1985)

 Procedural History:
o Case had been dismissed at D.Ct. level because testimony of both Drs. Hoerr and
Sachs were excluded, thus making plaintiff unable to prove her case.
o CoA originally affirmed the directed verdict for the Defendant but is
reconsidering that on rehearing.
 Holding:
o Court reversed and remanded for new trial, given that the testimony of Drs.
Hoerr and Sachs were improperly excluded.

 “Locality Rule”
o Physician may with reason and fairness be expected to possess or have
reasonable access to such medical knowledge as is commonly possessed or
reasonably available to minimally competent physicians in the same specialty or
general field of practice in the community.
 On what basis does the court find that application of the locality rule might no longer be
applicable?
o Ascendency of national standards
 Medical school curricula are national
 Physicians are mobile
 Basic matters of learning skills and competencies are the same “that a
patient temperature is 105 means the same in NY as it does in MS.
 What does the court call the “competence-based national standard of care?”
o Majority Standard
o Physicians should have reasonable access to such medical knowledge that is
commonly possessed or reasonably available to minimally competent physicians
in the same specialty throughout the United States
o Duty to have practical working knowledge of the facilities equipment resources
and options reasonably available to him or her as well as the practical limitations
on the same.
 What is the Resource-Based Caveat?
o Physician’s duty of care is limited by available resources.
 I.E. specialized facilities and equipment.
 Some states still apply a locality rule?
 TENNESSEE CONTIGUOUS STATE RULE
o Before you go outside to find an expert witness, you must find one from the 9
contiguous states around TN.

EXPERT TESTIMONY
 Daubert – changed evidentiary standard for scientific testimony – up to the trial judge to
assess the reliability of the expert’s testimony and whether it is based on scientifically
valid principles (as opposed to generally accepted practices)
 Kumho Tire Expanded this definition to extend to all expert testimony – including
malpractice
 You might not actually be able to present innovative practices in Medicine because
perhaps it isn’t based on scientifically valid principles YET.

Overview of Medical Malpractice Analysis

 Malpractice actions involve standard tort principles (Must Show These):
o Establish Duty of Care
o Establish Standard of Care
o Show breach of such standard
o Show that P was damaged by such breach (injury)
o Show that such breach was the proximate cause of the injury
 Malpractice actions and individual liability is typically assessed under 1 of 2 standards:
o National Standard of Care
 Resource Based Caveat
o Locality Rule
o Think about Scope in this context as well – What was the scope of the standard
of care.
 Malpractice Defenses:
o Standard of Care Exceptions (Clash of Experts)
 Followed SoC
 Two schools of thought or Respectable Minority
 Two Schools of Thought – Both are relatively equal
 Minority – Yeah there is SOC but here is a minority position
o Clinical Innovation (here is a reason why I didn’t follow standard)
 Procedural innovation
  Off label use
o Affirmative defenses (here is a reason why I didn’t follow standard)
 SOL
 Good Samaritan Acts
o Contributory Fault of Patient (Including comparative negligence)
o Scope
o Causation
o Adjustment of Damages
 Loss of Chance Doctrine
 Punitive Damages

ESTABLISHING THE STANDARD OF CARE

Conn v. United States (Miss. 2012)
 Guy goes to VA hospital complaining of chest pains – has high levels of certain things
that show he was at risk for Heart attack.
 Discharged – came back next day with a heart attack.
 Why does MS law apply to the VA?
o Erie – Federal Tort Claim Act says when you sue Fed Gov. for a negligence claim,
look to state law.
 Gov. Attacks the Expert Report in 3 ways:
o Offers no SOC
o Does not show that the VA breached such standard
o Does not establish that the breach caused Conn’s injury.
 Court only gets to issue 1.
 Holding:
o Court affirms, stating that Conn has failed to produce an expert report that
establishes the standard of care under MS Law:
  AMA and American College of Cardiology merely suggests one standard
used by a group (not objective)
 Explains his personal treatment choices, as opposed to a standard.
 Vague.
 He just generically referred to the guidelines. Didn’t point out
specific provisions in the guidelines.
 Standard of Care in MS:
o Must be specific and requires a showing that the physician is minimally
competent in physician’s practice.
 Problem in this case, it wasn’t specific enough.
 Practice Guidelines as SOC – SPLIT Page 227.
 If we adopt hard and fast national guidelines – perhaps that is difficult and excludes all
individual assessment for patient care.
o Also, if you present a book, can’t cross examine a book.

ACA POP QUIZ:

Section 10303 of the ACA does require the development of outcome measures, and mandates
research on best practices, but only requires that the guidelines be disseminated to physicians
for use. No requirement the guidelines be followed.
Section 1181(8)(A)(iv) states that the research findings shall not be construed to mandate
certain practice guidelines or coverage determinates.

ACA and Reduction of Medical Practice Variation

MPV is just the concept that care in one jurisdiction is different from another jurisdiction.
-Why does Fed Gov. care?
-They are paying.

IMPACT OF COST CONTAINMENT AND MANAGED CARE

Wickline v. State (Cali. Ct. App. 1986).
 Managed Care controls over treatment:
 Pre-authorization requirements for certain procedures
o Need authorization prior to care.
 Post-authorization (utilization review)
o After the care review and can withhold payment / appeal if denied.
 Requirements regarding referrals
o Can only be referred to physicians in network
 Second Opinion Programs
o After you have gotten recommendation from one physician, you need second
opinion from another to ensure procedure necessary.
Med-Cal does prospective review
o Plaintiff was diagnosed with Leriche’s Syndrome, for which the physician recommended
surgery.
o Her GP submitted a Medi-Cal required pre-authorization and surgery approved with 10
days of hospitalization.
o Complications and required second surgery
o Specialist said it was medically necessary to stay an additional 8 days
o Medi-Cal reviewed form and approved only 4 days extra stay.
o She was discharged as stable and discharge met prevailing standards of practice.
o Experienced complications after discharge and was readmitted
o Specialists claim that the clot in her leg would have been identified if she wasn’t
originally discharged and her leg could have been saved (her leg was amputated).
Holding:
o Reverses, finding that the decision of Medi-Cal, while perhaps affecting the professional
judgment of physicians, did not OVERRIDE the medical judgment of the physicians who
had the ultimate responsibility regarding her care and treatment.

The court here doesn’t really like prospective or retrospective review but if you say Medi-Cal
you can’t do either, you could disrupt the whole system and drastically increase insurance
rates.

If the physicians really feel that the patient needs to stay, the physician SHOULD have appealed
or fought for an extra stay.
o You cannot discharge the patient unless you believe it is an appropriate discharge.
o To the extent that the physicians really believed that the patient wasn’t ready to be
discharged, they should have called Medi-Cal.
o Medi-Cal has both obligations to the patient to keep them healthy but also obligations
to the state to maintain a financially sustainable program.

DEFENSES FOR MED MAL:

A. Standard of Care Exceptions

B. Clinical Innovation / Procedural Innovation Defense:

1. Procedural Innovation
Brook v. St. John’s Hickey Memorial Hospital (1978)
 At approximately two years of age, Terry Lynn Brook (plaintiff) was diagnosed as having
a possible urological disorder that would need to be confirmed by injecting her with a
contrast medium and then taking x-rays.
  Dr. Fischer (defendant), a radiologist, injected the contrast medium into the calves of
Terry’s legs despite the instruction on the package label that it should be injected into the
buttocks.
 About four months later, Terry’s right leg became stiff and her heel began to lift off of
the ground. It was later determined that a shortening of her Achilles tendon was the cause
of her leg problem which was subsequently corrected via two surgical operations.
 Tracy’s father, Arthur, brought suit against Fischer, St. John’s Hickey Memorial
Hospital, and two other physicians, alleging that Fischer went beyond common medical
practice by negligently choosing an improper site on Terry’s body to inject the contrast
medium and that his decision amounted to a medical experiment.
o At trial, the court refused to give the Brooks’ jury “instruction number 4” which
stated that any new medical procedure should pass through an experimental stage
and that “a radiologist is not authorized in trying untested experiments on
patients”. Brook appealed.
 The court of appeals found that Fischer’s choice of injection site may have
been a medical experiment since other physicians did not use the calf
muscles as injection sites for the contrast medium.

He didn’t follow the SOC, but his defense is:

 He said it wasn’t a medical experiment but an innovation. He didn’t follow SOC because
it was dangerous to follow SOC in relation to a child.
o Fischer read several medical journals which cautioned against the injection of
contrast medium into the buttocks and thighs of infants and small children;
previously used the same injection site successfully on other children; and had not
heard or read anything that cautioned against the use of the calf muscles as an
injection site.
o Evidence of a medical experiment has not been introduced at trial. Thus, it is
improper to give an instruction covering medical experiments. The judgment of
the trial court is affirmed.

Court says this is procedural innovation and not medical experimentation.

 Physician had several compelling professional reasons for choosing court of action.
 Considered this medical judgment and not medical experimentation.

So what is Medical Experimentation?

NIH Defines research as a systematic, intensive study intended to increase knowledge or

understanding of the subject studied, a systematic study specifically directed toward applying
new knowledge to meet a recognized need, or a systematic application of knowledge to the
production of useful materials, devices and systems or methods, including design, development,
and improvement of prototypes and new processes to meet specific requirements.

Vs.

In the room with the patient, thinking about what is best for this patient, in this instance, and only
thinking about it in the current setting. Not thinking about a study. (this is not medical
experimentation for purposes of exam) (Could highlight ambiguity of – what if you do this
process multiple times and then decide to publish a paper? Blurs the line a bit). Could have a
policy arg here.

2. Drug Therapy Innovations: Off-Label Uses

 FDA reviews and approves drugs for a specific purpose: to the extent that manufacturers
want a new use, they must obtain new approvals OR prescribe off-label.
 Off-Label Use: Circumstance in which a patient uses a prescribed drug or device in a
manner that varies in some way from the drug’s or device’s FDA-approved labeling.”
 Richards v. Miller (2000)
o Physician has no restrictions to prescribe a drug for off-label use.
 What does the lack of FDA approval for a use indicate?
o It just hasn’t been rigorously tested for that use.
 Why do we allow off-label use?
o Timing issue – don’t want to wait like 20 years to go through FDA Process.
o Perhaps more cost efficient to use one drug over another and the cost of the
approval process will cause manufacturer to increase price of drug.
o We want to encourage innovations
 AZT, which is the main drug used for the combatting the progression of
HIV to AIDS, has been around since the early 60;s and was originally
used to treat cancer patients. It was used in 1985, experimentally, to treat
AIDS.
 The fact that a drug has been used off-label and against packaging information can be
used as evidence but CANNOT ESTABLISH STANDARD OF CARE.
o TCA 29-26-115 requires a showing that care was consistent with practice of other
physicians in the community.

C. Affirmative Defenses
Affirmative defenses are defenses that do not relate to any underlying negligence or the merits of
the claim, but are a legal mechanism for dismissing the case. 2 Main Affirmative defenses in
medical malpractice actions:

1. Statute of Limitations
The time for filin go fthe claim has passed and defense can raise an affirmative defense (which
will completely throw out the case, if successful) that the claim was not filed in accordance
within time limits set by applicable law.
2. Good Samaritan Acts
Defendant is immune from civil liability for any damages caused if defendant renders emergency
aid
 Usually must be an emergency, but sometimes extends to professional in the emergency
room setting in the hospital.
o These are like physicians in the community that have access to hospital that are
called in to try and help with emergency.

D. Contributory Fault of the Patient

Ostrowski v. Azzara (1988)
 Ostrowski (plaintiff) consulted Dr. Azzara (defendant), a podiatrist, for a sore left big toe.
Ostrowski was heavy smoker, an insulin-dependent diabetic, and obese.
 Azzara diagnosed Ostrowski with a fungal disease of the toenail requiring its removal.
Tests conducted by Azzara also revealed that Ostrowski had very high blood sugar levels
and some peripheral vascular disease.
 Azzara explained to Ostrowski that she could lose a limb if she did not better monitor her
blood sugar levels and her weight. A
o After the procedure was performed, Ostrowski continued to smoke against
Azzara’s medical advice. Also, her toe became painful, discolored, and pre-
gangrenous due to a lack of blood circulating to the toe to aid in the healing
process.
o As a result of her poor circulation from the diabetes and her smoking habits,
Ostrowski required two operations and a vein transplant procedure in an attempt
to save her foot and leg from amputation.
 Ostrowski filed suit against Azzara for malpractice and at trial, Azzara
was permitted to present evidence that Ostrowski significantly contributed
to her injuries because she continued to smoke against medical advice and
failed to maintain her weight, diet, and blood sugar at acceptable levels.
No medical expert for either side testified that Ostrowski’s post-treatment
health habits could have caused her need for surgery six weeks after
Azzara’s toenail removal.
 The jury found Azzara acted negligently by removing Ostrowski’s
toenail without adequate consideration of her vascular condition
but denied Ostrowski any damages because she was more at fault
for continuing to smoke and failing to properly take care of herself
after the procedure. The court of appeals affirmed the jury’s
verdict in favor of Azzara and Ostrowski appealed.
Issue: May a patient’s poor post-procedure health habits act as a bar to recovering damages in a
medical malpractice action when the patient’s actions did not cause the injuries?
 No. Negligence law generally calls for a reduction of damages to a plaintiff when her
negligence is found to be a substantial contributing factor in increasing the resulting
harm.
o To determine the extent of Ostrowski’s contribution, if any, to her injuries from
her post-treatment habits, several relevant doctrines must be examined including
avoidable consequences, the particularly susceptible victim, aggravation of a
preexisting condition, comparative negligence, and proximate cause.
 o Under the doctrine of avoidable consequences, a plaintiff who suffers an injury
may not recover damages for any portion of the resulting harm that could have
reasonably been avoided.
 This doctrine often comes into play when the injured party’s carelessness
occurs after the defendant’s negligence as opposed to the doctrine of
contributory negligence which comes into play before the defendant’s
negligence occurs.

o Under the theory of the particularly susceptible victim, a defendant takes a

plaintiff as he finds him.
o The doctrine of aggravation of preexisting condition is very similar to avoidable
consequences, except that the injured person’s conduct is irrelevant. A defendant
whose acts aggravate a plaintiff’s preexisting condition is liable only for the
amount of harm actually caused by the defendant’s negligence.
o Comparative negligence is intended to leave the door open to those plaintiffs
whose fault was not greater than the defendant’s and will qualify the doctrine of
contributory negligence when that doctrine is applicable as a limitation on a
plaintiff’s recovery.
o Finally, proximate cause binds it all together.

o Each of these doctrines has some application in this case.

 Ostrowski failed to minimize her damages that she might have otherwise
sustained due to mistreatment. Such mistreatment may or may not have
been the proximate cause of her ultimate condition.
 Ostrowski is not responsible for her initial injury, i.e. the complications
arising from the toenail removal. However, Ostrowski is more susceptible
to experience complications than other patients due to her underlying
health conditions, but that is the condition in which her physician found
her.
 Although Azzara must take Ostrowski as he finds her, Azzara cannot
reverse Ostrowski’s poor health condition. Azzara is not responsible to the
extent that Ostrowski’s condition would have deteriorated absent Azzara’s
negligence.
 Also, Ostrowski’s recovery should be reduced to the extent that she could
have avoided her complications by not smoking and taking better care of
herself in accordance with medical advice. Taking these doctrines and
applying them to the facts in this case is undoubtedly a difficult task and
there may not be easy answers. However, the judgment of the trial court is
reversed, and the matter is remanded for a new trial for the jury to
consider each party’s conduct in light of the theories and doctrines
mentioned.

DEFENSE DOCTRINES

PRIOR INJURY
Doctrine of the Particularly Susceptible Victim:
o Defendant must take plaintiff as defendant finds them (Eggshell Skull Plaintiff Rule).
Contributory Negligence (Old Rule – still followed):
o To the extent that plaintiff contributed to the injury, plaintiff shall be prevented from
recovery.
Comparative Negligence (New Rule):
o Allows for reduction to the plaintiff’s award based on percentage of fault.
o Some jurisdictions permit recovery only if plaintiff was not more at fault than
defendant, comparatively.
Note – These happen prior to the incident. Not after. (Prior Injury)

AFTER INJURY
Doctrine of Avoidable Consequences:
o Plaintiff cannot recover for any portion of the harm that could have been avoided by the
exercise of ordinary care.
o Rule of Damages and not a defense that would BAR a claim. Offsets damages.
Doctrine of Aggravation of Pre-Existing Condition:
o Also, a rule of damages, but not dependent on the conduct of the plaintiff (limitation on
recovery still possible even if NOT the fault of plaintiff).
o Exists when plaintiff has a pre-existing condition and NEGLIGENCE MAKES SUCH
CONDITION WORSE – the plaintiff can only recover for damages related to negligence.
o E.g. – Plaintiff injured knee playing football in college and walks with a cane;
plaintiff is involved in a car accident and injures leg; physician performs surgery
negligently on leg; plaintiff cannot recover damages sufficient to restore leg to
full use.

Assumption of Risk is another defense, more often used in cases where unconventional
treatment is applied but is sometimes challenging unless acceptance of risk was ABSOLUTELY
CLEAR.

Causation is a requirement for proof of a negligence claim, but what are the most frequent
challenges:
1. Pre-Existing Condition
2. Joint Tortfeasors

CHRONIC CONDITION TRIVIA

 True or False: More than 75% of health care costs are due to chronic conditions.
o True
 Of Medicare beneficiaries, the state with the highest incident of diabetes is MS.
o False – it is NJ
  Of Medicare beneficiaries, the state with the lowest incident of chronic obstructive
pulmonary disease is Utah.
o True
 For those 65 and older, how many individuals have multiple chronic conditions?
o 3 in 4.

PROFESSIONAL RELATIONSHIPS IN HEALTH CARE ENTERPRISES

This talks about the relationship between physicians and hospitals
 Physicians often have privileges to admit patients and / or perform procedures at a
hospital and are members of the medical staff of the hospital under the hospitals
medical staff bylaws.
 Hospitals may terminate, limit, or deny hospital privileges for 3 main reasons:
o Concerns over quality of care (Sokol)
o To enter into exclusive contracts (Mateo)
o Control physicians’ utilization and costs and avert competition (Mahan)

I. STAFF PRIVILIGES AND HOSPITAL-PHYSICIAN CONTRACTS

Sokol v. Akron General Medical Center (1999)

o Sokol (plaintiff) was a cardiac surgeon on staff at Akron General Medical Center (Akron)
(defendant).
o The Medical Council at Akron became concerned about a high number of Sokol’s
patients dying when they underwent coronary artery bypass graft surgery (CABG).
o The Council established a task force to review the entire cardiac surgery program, led by
Dr. Michael Pine.
o Pine determined that Sokol’s decision to select high-risk patients for the CABG
procedure, which often led to their deaths, warranted review.
 Thereafter, an ad hoc investigatory committee concluded that Sokol had
not adequately screened out high-risk patients and had not taken sufficient
precautions to protect patients from having heart attacks just prior and
during the CABG procedure.
 The investigatory committee made recommendations to the Medical
Council which would adversely affect Sokol’s clinical privileges.
 Sokol appeared before the Medical Council when it voted to
approve and implement all of the committee’s recommendations.
 A hearing committee recommended that all of Sokol’s CABG
privileges be reinstated. The Medical Council rejected the
committee’s decision and reaffirmed its own determination.
o Under hospital bylaws, Sokol then appealed to a hospital
executive committee which affirmed the Council’s
decision.
o Sokol sought injunctive relief in federal district court. A
district court magistrate judge agreed with Sokol and held
 that the notice provided to Sokol was insufficient and that
the decision made by the Medical Council was arbitrary.
Akron then appealed to the court of appeals.
Issue: Is a private hospital required to provide procedural due process in adopting and
implementing reasonable and nondiscriminatory criteria when making medical staff selection or
termination decisions?

o Yes. In Ohio, private hospitals are given broad discretion to determine who will have
staff privileges.
o Courts should not interfere with those decisions unless the hospital abuses its discretion.
o However, hospitals must provide physicians who are granted or denied staff privileges
with procedural due process, including meaningful notice of adverse actions and the
grounds for those actions.
o Akron’s bylaws provide a procedural due process mechanism that exceeds what is
required under state law.
o The magistrate judge concluded that the notice provided to Sokol was insufficient
because it failed to provide him with specific cases where he had engaged in poor case
selection and heart attack protections.
o However, that was not Akron’s sole focus.
o The hospital was concerned that too many of Sokol’s patients were dying. The
investigatory committee noted that Sokol’s selection of high-risk patients and insufficient
heart attack safeguards were just two possible causes.
o The magistrate judge also concluded that the Medical Council’s decision was arbitrary
based upon Sokol’s mortality rate.
o However, if all of Sokol’s patients died, the Medical Council would not be arbitrary in
revoking his privileges. T
o he case against Sokol was supported by some evidence, the strength of which is not for
the court to decide. The judgment of the district court is reversed.

Dissent (Merritt, J.)

Sokol was treated unfairly by Akron. The hearing committee had completely exonerated Sokol
and recommended that the Medical Council restore his CABG privileges. There has not been one
instance cited where Sokol made a mistake in the care of his CABG patients.

o COURTS APPLY HUGE DEFERENCE TO HOSPITALS TO CONTROL MEMBERS OF THEIR

OWN MEDICAL STAFF.
o Courts should not interfere with this discretion unless the hospital has acted in an
arbitrary, capricious, or unreasonable manner.

SOKOL is a MINORITY rule in terms of review.

 SOKOL actually gets into the evidence.
MAJORITY of STATES handle review of privilege decisions:
 MAJORITY OF STATES ONLY LOOK AT WHETHER BY-LAWS ARE FOLLOWED.
During this whole time, Sokol was still practicing.

Immediate suspension can be remedy.

 Hearing rights still in place but allows the hospital to ensure that no quality issues occur
while hearing is pending.
 Was Sokol practicing unrestricted during the entirety of the hearing process.

OPEN STAFF v. CLOSED STAFF MODELS.

TYPICAL DEPTS THAT ARE CLOSED STAFF:
 Pathology
 Radiology
 ER
 Anesthesiology

HCQIA Immunity:
Health Care Quality Improvement act, in addition to establishing the National Practitioner Data
Bank, provides immunity to hospitals from credentialing decisions to the extent that such
decisions meet procedural and statutory standards.
 Credentialing decisions are presumed to comply, but can be rebutted if plaintiffs prove
by a preponderance of the evidence:
o Hospitals did not act in the reasonable belief that the action was in furtherance
of quality health care;
o Hospital did not make a reasonable effort to obtain the facts of the matter;
o Hospital did not afford the physician adequate notice and hearing procedures
and such other procedures required by fairness under the circumstances; or
o Hospital did not act in the reasonable belief that the action was warranted by
the facts known after such reasonable effort to determine the facts and after
meeting the procedural requirements.

Mateo-Woodburn v. Fresno Community Hospital (1990)

 FCH had open anesthesiology department, which led to corruption in patient selection
and services.
 Hospital decides to close the anesthesia department by entering into an exclusive
contract with a group and new medical director.
 Hass is named as the new director of anesthesia and sets up PC; anesthesia department
is closed.
 Hospital sends notice to physicians about closure, giving 2 choices:
o Enter into approved contract with the Hass PC or
o Relinquish privileges.
 Required to sign and waive hearing rights under Medical Staff bylaws.
  7 of 13 anesthesiologists sign the contract with Hass; 5 didn’t sign and the last one was
not offered a contract.

Holding:
 Court affirmed, finding that, given the issues with staffing, decision to close the staff was
not irrational, unreasonable, arbitrary, or capricious.
o Court will not interfere with the contract between Hass and the physicians as a
result of the decision.

“Clean Sweep” Provisions:

 Provides that termination of the contract ill result automatically in termination of staff
privileges without benefit of the procedures in the medical staff bylaws.
o Most jurisdictions have upheld and enforced contractual clean sweep provisions.
 Mateo-Woodburn.
o Minority of jurisdictions have found that clean sweep provisions unenforceable
unless they are expressly permitted by the medical staff bylaws.
 Satilla Health Services, Inc. v. Bell et al., (Ga. App. 2006).

Mahan v. Avera St. Lukes (2001)

 Avera St. Lukes (ASL) is a private, nonprofit, acute care hospital in South Dakota and
Orthopedic surgery specialists (OSS) is a physician group that owns and operates a
freestanding surgery center.
 1996, ASL desires to recruit 2 neurosurgeons and 2 orthopedic spine surgeons, but
neurosurgery candidates are unwilling to come with new spine surgeons because of
competition; ASL decides to recruit only neurosurgeons.
 OSS builds their new surgery center, which competes with ASL, resulting in a decrease in
1000 hours of lost or usage.
 June of 1997, ASL Board passes 2 motions:
o Close medical staff for spinal fusions, closed fractures of the spine, and
laminectomies.
o Close the medical staff of orthopedic surgery privileges (except 2 currently being
recruited).
 Summer of 1998, OSS recruited Mahan
o Denied privileges
 Mahan and OSS file suit seeking injunction ordering ASL to consider
Mahan’s application.

Holding:
 Court affirmed finding that the physicians have standing to sue.
 Court reversed breach of K, finding that Board has authority as a matter of corporate
law to make decisions without consulting the medical staff and such decisions were not
made in bad faith.
This closure was made by a CORPORATE board.

What is the Court’s position regarding whether the plaintiffs have standing?
 “well-settled in South Dakota that a ‘hospital’s bylaws constitute a binding contract
between the hospital and the hospital staff members.’”

How was the decision of Mahan distinct from Mateo-Woodburn?

 Rationale for closing the department is different.

Economic Credentialing and Conflicts of Interest

 Economic Credentialing is when a hospital makes decisions based on financial
considerations as opposed to quality; the AMA opposes this practice.
o Murphy v. Baptist Health – Baptist adopted a conflict of interest policy that
stated:
 A physician who holds a direct or indirect ownership or investment
interest in a competing hospital is ineligible for medical staff privileges.
 Court found policy unconscionable and illegal, stating: the heart of this
case is the patient-physician relationship. The relationship is entitled to
special protection.
 Can’t have provisions in bylaws that prohibit physicians from
competing with you economically.
o If the medical staff is employed – courts come out
different… more discretion to hospital.

Conclusions:
 Under typical hospital structures, physicians are often not employees, but serve on a
medical staff of a hospital.
 Courts allow broad discretion to hospitals in being able to choose members of their
medical staffs.
 Medical staff member is governed by by-laws, which are viewed as a K between
physician

HYPOS IN CLASS: (Sept 30)

1. What aspects of the ACA might make your client’s position hard to defend? What would
her best defense be? Also, can she respond to the Yelp ad to defend herself publicly?
a. The ACA can’t require that states should adopt a particular standard of care for
med mal claims. BUT what ACA has done is they have started the website that is
providing comparative effective research. They are promoting this idea that we
are going to start putting information out there. Thus, physicians are on notice
that there are new methods of care. It is a “best practice guide” and this
complicates the way that you should look at standard of care in certain
 jurisdictions. To the extent that it puts the physicians on notice of best practices,
perhaps then the locality standard doesn’t apply. Nonetheless, if the jurisdiction
has a locality standard and you can prove that everyone is doing surgery as
opposed to physical therapy, a physician might still have the idea that the
information is out there, but it is probably still easier to defend against that. If
the jurisdiction applies a national standard, then these studies from the ACA
website will come into play.
b. DO NOT RESPOND to yelp ad. You risk talking about the particular case and you
risk giving out information that violates HIPAA. If a physician responds to a yelp
accuser, they are admitting they treated the patient and that they treated the
patient for the exact condition. IN response, you could respond generically
about how you treat all patients. Or, get friends to leave you good reviews.
i. This wouldn’t be in the marketing exception of HIPAA. Marketing is
typically in the realm of health plans that send information about certain
diseases that and individual MAY have.
2. Explain the process for review before the Board of Medical Examiners and what she can
expect. What might be her best defense to the Board for her actions? To the extent
that the Board takes adverse action, such as suspension, what remedies might your
client have.
a. Procedural argument that the physician did not have proper notice of the
adverse claims against her.
i. But counter argument is if you knew that the notice was about surgeries,
you could re-examine the surgeries you did and see if there were
alternative procedures. You do have some awareness of what the
allegation is.
ii. The fact that it is a procedural hook is better because it has a better
standard of review. If you are just arguing whether the Board is right or
wrong, then you have lots of deference.
iii. If you can get a procedural argument, the case can get tossed because
they didn’t follow their process. Then Board can determine if they want
to provide new notice. Thus, the board isn’t getting tossed because it
was A&C.
iv. At a claim coming from a hospital medical staff issue – They will only look
at whether they followed the by-laws. That is all you have to prove.
UNLESS you are in a minority jurisdiction like Sokol.
3. Nursing Home Compare
a. Tell me everything I know about Nursing Home Compare.
4. Restraints at a rate of higher than 5% and failure to have sprinklers and visual fire
alarms in each patient room.
a. Staff is structural regulation.
i. Combat this by saying adequate for the time or location. Whether there
was sufficient staff at the time of the accident. Just argue adequate v.
inadequate.
b. Restraints
 i. Outcomes regulation.
1. Combat this by saying that there was some reason for the
restraint usage. Restraints in this instance includes locked doors,
etc. This doesn’t necessarily mean they are tied to their beds.
c. Sprinklers / Visual Fire Alarms
i. Structural
1. Combat via corrective action plan within a reasonable period of
time.
5. Joint Commission
a. Accreditation – worry about joint commission which gets us Medicaid and
Medicare. This solves payor issues.
b. Need to get licensed in your state. Can’t apply to joint commission unless you
are licensed in the state. Seek a certificate of need. The state will determine if
there is a need for one of those entities in that state. Once you have that
document, you then have to apply with applicable licensure procedures with
setting up hospitals. Then, are there anything we need to worry about from a
state law perspective beyond joint commission required. Typically, joint
commission is most onerous.
6. Adverse Event v. Medical error
a. Readmitted within 30 days for same condition – Medicaid won’t pay for this. If
you are discharged and readmitted for the same condition, we won’t pay.
i. Hospitals really aren’t supposed to bill patients for this.

PHYSICIANS AS AGENTS
GENERAL RULE:
Hospitals cannot be held vicariously liable for the acts of physicians unless they are employees.
If physicians are employees, the hospital can be held liable for the acts of the employees.
Employers control their employees enough to hold them responsible.

All of these cases are examples of how people get around this general rule.

Actual Agency and the “control” test:

Scott v. SSM Healthcare St. Louis (2002)
 17-year-old Scott is in a car accident – treated and released.
 How does hospital get around these factors?
o Delegate some of the control over to the PC.
o Hospital should have fewer controls over RIC.
o More control = more liability, less control = less liability, BUT less control = less
control to tell them what to do or when to show up, etc.
o By definition, they are independent contractors but because of the level of
control by hospital, they are considered agents.

Apparent Agency:
Burless v. West Virginia University Hospitals (2004)
 We’re not sure what you are, but principal you are holding this person out to the public
and indicating to the public that they are your employee or agent. To a third party, the
reasonable third party, the physician is an agent.
 Holding: Affirmed, finding that although there was no actual agency, there was sufficient
evidence to establish a material question of fact regarding whether there was apparent
authority on the part of WVUH.
 Look exclusively at plaintiff’s position. Was it reasonable for them to believe that the
physician was an agent of the hospital and did the plaintiff rely on that belief to his or
her detriment.
TEST:
 Apparent agency in hospital setting could be found if:
o The hospital either
 Committed an act that would cause a reasonable person to believe that
the physician in question was an agent of the hospital, or
 By failing to take an action, created a circumstance that would allow a
reasonable person to hold such a belief, and
o Plaintiff relied on the apparent agency relationship.
Emergency physicians are already considered agents.
 Why?
o We as consumers do not have a choice and cannot say no, we only want an
employee. In the ER, you don’t get a choice. Whoever is there is who is
assigned.

How to REBUT?
 Provide meaningful notice to patients that this person is not an employee and is not an
agent.
o Why wasn’t the release sufficient for purposes of negating the agency
argument?
 The release only released resident physicians and faculty, but consumers
really had no way to identify who these were. It was not readily obvious
who the people were.

Residents (teaching hospitals)

 Gray zone – they are technically probably employees because they are somewhat
funded through federal government in Medicare program but to the extent that they
take orders from an independent contractor, perhaps there is an argument the hospital
shouldn’t be liable.

What is the nondelegable duty doctrine?

 Essentially the Emergency Room physician concept. Where there are some things that
patients don’t get a choice about and thus, you can’t delegate responsibility or liability
away.
Direct Liability of Hospitals
Negligence:
Washington v. Washington Hospital Center (1990)
Holding:
 Affirmed, finding there was sufficient evidence for the jury to conclude that the
hospital’s failure to have monitors that would have alerted the physician and nurse to
the issue of the tubing being inserted incorrectly
 What did the court describe as the plaintiff’s tripartite burden?
o Applicable standard of Care
o Deviation from the standard
o Causal relationship between the deviation and the plaintiff’s injury
 What standard of care was applied here?
o National Standard
 There is a reference to acknowledgement of availability of resources – why was the
resource-based caveat not applied here?
o They had knowledge this was the new trend and the new standard and refused
to follow it.

For hospitals, there is not really a locality rule, primarily everyone just applies national
standard.
There can be a resource-based caveat.

Corporate Negligence:
Darling v. Charleston Community Memorial Hospital (1965)
 Broken Leg – immediately cast.
 Swollen leg leads to cut off circulation. Amputation required.
Holding:
 A jury could reasonably conclude that the hospital’s duty of care was breached when
the hospital
o negligently failed to have sufficient number of trained nurses for the bedside to
notice the foot was progressing towards a gangrenous condition AND
o Failed to require consultation with or examination by members of the hospital
surgical staff.
 Allegations of Corporate Negligence:
o Negligence in permitting Alexander to do this work.
o Negligence in failing to supervise medical staff.
o Negligence on the part of the nurses in not monitoring the patient.
 No liability if nurse is acting pursuant to a physician order unless
obviously negligent.
o Negligence on part of administrator in not monitoring nurses.
“At that point it became the nurses’ duty to inform the attending physician, and if he failed to
act, to advise the hospital authorities so that appropriate action might be taken. As to
consultation, there is no dispute that the hospital failed to review Dr. Alexander’s work or
require a consultation; the only issue is whether its failure to do so was negligence. On the
evidence before the jury, a jury could reasonably have found that it was.”
Is this an easy call?
Difficult to put the obligation on the nurse to question the decision of the
physician.
Facing repercussions?
How far does this obligation go?

Hospitals cannot just sit idly by and allow care to patients to be lacking because the physician
fails to monitor the patient.
 There needs to be some protocol in place for nurses to feel safe to report incidents.

Thompson v. Nason Hospital (1991)

Sets out the BEST TEST FOR EXAMS - CITE THOMPSON V NASON ON EXAM
IF YOU HAVE CORPORATE NEGLIGENCE CLAIM
 Holding:
o Sufficient question of material fact regarding the hospital’s failure to
appropriately supervise the quality of care of the hospital on the theory of
corporate negligence.
 4 GENERAL AREAS OF HOSPITAL’S DUTIES:
o Duty to use reasonable care in the maintenance of safe and adequate facilities
and equipment;
 (Washington v. Washington Hospital potential example).
 Slip and fall example
o Duty to select and retain only competent physicians;
 Negligent Credentialing (Carter) (Sokol)
o Duty to oversee all persons who practice medicine within its walls as to patient
care;
 (Darling Case)
o Duty to formulate, adopt, and enforce adequate rules and policies to ensure
quality care for the patients.
 (Washington) – you had a letter from chief radiologist saying we need
monitors and you failed to implement them.
 Anything that relates to failure to follow or implement policy
appropriately.
o THIS CASE ADDS THIS FIFTH DUTY: Duty to uphold proper standard of care.
 General catch all that you have an obligation to make sure there are
adequate safety measures in place.
  Note that for any of these – hospital MUST have actual or constructive knowledge of
the defect or procedures that created the harm.

What does the court say is necessary to show in terms of the hospital’s duty to sustain a
corporate negligence claim in the Thompson context?
 Hospital had actual or constructive knowledge of the defect or procedures that have
created the harm.
 Been a substantial factor in bringing about the harm.

Last two cases show there is a pretty high burden on nurses and administrators to be aware of
what is happening and be willing to report it.

Carter v. Hucks-Folliss (1998)

Classic example of negligent credentialing.
Plaintiff does not have to first prove that the physician was negligent before filing negligent
credentialing claim.

SKIPPING PEER REVIEW IMMUNITY.

OUTLINE

QUALITY HEALTHCARE

 Laws and Regulations to Assure Quality Care

o Licensing Health Care Professionals
o Licensing and Accreditation of Health Care Institutions.
o Professional Patient Relationship
 Duty of Care
 Informed Consent
 Confidentiality
o Liability of Health Care Professional – Med Mal
o Relationship b/w Hospitals and Physicians
o Liability of Health Care Institutions (Corporate Negligence

ACCESS TO CARE

 Laws and Regulations to Assure Access to Care

o EMTALA and State Law Requirements
o Anti-Discrimination Statutes
o Affordable Care Act
HEALTHCARE COST
  Laws and Regulations to Control Cost
o Affordable Care Act

ACCESS TO HEALTHCARE SECTION

State Law Duty to Treat

Ricks v. Budge (1937) (CITE THIS CASE FOR WAYS PHYSICIAN CAN TERMINATE)
 Patient was being treated at hospital for infected hand and was discharged on March
15; told by S.M. Budge to return to him if hand started to get worse.
 March 17, conditions worsens, and patient comes to office
 Budge and D.C. Budge look at hand and tell patient to go back to hospital
 At hospital, Budge says that he will not treat the patient until the patient pays his past
due bill
 Patient does not have money, so he gets dressed and walks in rain to Cache valley
hospital. Dr. Randall concludes he needs immediate surgical attention
 Eventually hand was so bad the middle finger had to be amputated.
Holding:
 Case should proceed to trial, finding that a physician is under a duty to treat his/her
patient even in the absence of a contract for so long as the particular case requires
attention unless such relationship is lawfully terminated.
Defendant’s Defense:
 No contract of employment between plaintiff and defendants and thus, no obligation to
treat.
 Even if a K existed, there was no evidence that Budge’s refusal to treat the patient
resulted in damage.
Termination of Obligation to Treat:
 The condition no longer requires attention
 The patient fires the physician
o Only really works if physician is on notice.
 The physician withdraws and provides reasonable notice so as to enable the patient to
secure other medical attention.
o Most typical when the patient is disruptive or a non-compliant patient.
o Typically need a formal letter and need AT LEAST 30 days. Also, must have
patient identify a new physician and send the patient records to the new person.
o Otherwise, it is considered patient abandonment and is actionable.
 Potentially if after 30 days, the patient calls back and says I can’t find
another physician, the physician might have an obligation to arrange for
care.
 Most cases, after the letter is sent out, the patient just finds a new
physician.
Duty to Treat in the Hospital Setting
Childs v. Weis (1969)
 Daisy Childs (plaintiff) was about 27 weeks pregnant when she went to a hospital
emergency room in the town where she was visiting, complaining of labor pains and
bleeding.
 Childs claimed that she was examined by a nurse who then telephoned a doctor for
instructions.
 The nurse returned and informed Childs that she would have to travel back to her
hometown to see her personal physician.
 Childs claimed that the nurse told her that she had time to make the trip because she had
just started labor.
 Childs delivered the baby in her car about an hour after leaving the emergency room. The
baby died 12 hours later.
 The doctor that the nurse spoke to, Dr. Weis (defendant), had a different version of
events. He claimed that he told the emergency room nurse to ask the woman to call her
personal doctor for further instructions.
 He had never spoken to Childs nor personally examined her. He also indicated that he
never agreed to examine or treat Childs. Childs sued the On-Call Physician (Weis). The
trial court awarded summary judgment to Weis.
Holding:
 No duty of care. Court finds no evidence of a relationship between physician and
patient, given that Ms. Childs shows up in the emergency room and has never received
care from Dr. Weis before.
 Dr. Weis’ position to recommend that Ms. Childs seek advice from her own doctor was
reasonable.
 Physicians have FREEDOM TO CONTRACT.
What does the court state is the law regarding physician-patient relationships?
 To the extent that no “contract” (either impliedly or expressly) has been entered into,
the physician is under no obligation to treat the patient at the time the patient present
him/herself.
What about what the nurse actually told her? Should there have been a duty on the part of the
facility?
 Potentially could argue corporate negligence. Nurse was not acting pursuant to the
physician’s orders.

Common Law Obligations

Williams v. U.S. (2001)
 Berlie White went to the emergency room due to respiratory problems at the Cherokee
Indian Hospital (CIH), located on the Cherokee Reservation and operated by the United
States Public Health Service (US PHS).
 The hospital was funded under the federal Indian Health Care Improvement Act that
prohibited the hospital from treating non-Indians, except for emergency medical
treatment in which treatment became discretionary.
  Federal employees at CIH refused to treat White or refill his oxygen tank because he was
a non-Indian.
 They referred White to the Swain County Hospital, which was 10 miles away.
 When White arrived at Swain County Hospital he was in severe respiratory distress and
died. Williams, the adminstratix for White (plaintiff), filed a complaint alleging that the
USPHS run CIH (defendant) caused his death by refusing to provide access to any
treatment.
 The United States filed a motion to dismiss the action, as well as other asserted claims.
The district court dismissed the suit. Williams appealed to the court of appeals.
Holding:
 Court affirmed dismissal, finding that there were no causes of actions under the
applicable claims, as none provided a private right of actions.
What were the claims attempted?
 N.C. insurance law prohibits nonprofit hospitals from discriminating on the basis of race,
color, and national origin.
o Insurance provision does not apply to all private hospitals and does not provide a
private right of action.
 N.C. hospitals financing law prohibits hospitals from discriminating on the basis of race,
creed, color, or national origin.
o Does not provide private enforcement mechanism; that is to be enforced by the
N.C. Medical Commission.
 N.C. Patients’ Bill of Rights under licensure law would prohibit this.
o Enforcement mechanisms is only for Dept. of Health, not private individuals.
 Common law finds a duty to treat based on the theory that an emergency room is a
public utility (citing GA law).
o Fails, limited to public hospitals in the state, not private.
o Was this really a private hospital?

Common Law Contract Claims:

 Ways to terminate a patient/cease to provide care.
 Freedom to Contract prevents many common law claims where discrimination might be
a subtext.

Courts actually did this sort of thing in HIPAA by applying HIPAA as a SOC to common law
breach of confidentiality claim.

EMTALA
 1986, Congress enacts a law that states:
o All hospitals that (1) participate in Medicare and (2) have an emergency
department are required to provide a medical screening to all patients who
present to the hospital (campus) within the capability of the Hospital’s ER to
determine if a medical issue exists.
  IF the screening reveals an emergency medical condition (EMC), the
hospital is required to stabilize the medical condition prior to any
transfer UNLESS
 Individual after being informed of hospital’s obligations and risks
of transfer, requests a transfer in writing, OR
 Physician has certified that benefits of care at another facility
outweigh the risks of transfer; AND
 The transfer is an “appropriate transfer.”

Note – There is a private right of action under EMTALA for negligent screening or improper
transfer.

EMTALA IS NOT A FEDERAL MALPRACTICE STATUTE

 If you are going to sue under EMTALA, the only question the court will ask is if there was
an appropriate screening. Only DID the hospital follows the rules?
Could occur if Hospital is on diversion (hospital is full, and beds are full).
 Hospital could get in trouble and be in violation of EMTALA if they lie about being on
diversion.

Baber v. Hospital Corporation of America (1992)

Facts:
 Ms. Baber sought treatment at RGH ER for nausea, agitations, and concerns of
pregnancy; had also stopped taking antipsychotic medications was not not having
orderly thought patterns.
 Baber was wondering around ER, fell, lacerated head.
 Dr. ran a series of tests and in interim, Baber had a seizure.
 She was examined and symptoms appeared consistent with previous symptoms, so she
was stitched up.
 Arrangements were made for a transfer to a psychiatric facility.
 Once transferred, she was checked every 15 minutes. She ended up having a grand mal
seizure. She died the next day.
Holding:
 Physician met the applicable EMTALA standards because the hospital’s screening
examination did not deviate from the evaluation procedures that would have been
applied for all similarly situated individuals.
What does the court state is a hospital’s obligation regarding the medical screening?
 Does not impose a national standard of care in screening patient.
 The screening requirement only requires a hospital to provide a screening examination
that is “appropriate” and “within the capability of the hospital’s emergency
department,” including “routinely available” ancillary services.
o If what we are trying to do is ensure that Hospital doesn’t discriminate against
people, then just treating everyone the same should work.
 o Although, it is possible that standards become so low that it is basically no
screening at all.
o BUT basically, what we care about is how one individual is treated in comparison
to the rest of the patients.
o AT NO POINT does motive come into play at EMTALA. Look only at screening
provided and determine whether it was consistent or inconsistent with other
screenings.

PAYMENT / INSURANCE ISSUES WITH EMTALA

Because of challenges that hospitals have had with not getting paid, due to failure to seek pre-
authorizations, ACA has a provision that requires insurance companies to pay for emergency
care under a “prudent layperson standard” – if a prudent layperson would believe the
emergency services to be medically necessary.
 IN other words, insurance companies can’t interfere with EMTALA requirements for
stabilization / screenings.
Still a great deal of confusion with on-call coverage issues; physicians can be found personally
liable under EMTALA.
 In other words, under EMTALA, hospital emergency departments can’t just say “hey
sorry a physician not here right now.”
 If a physician fails to respond when assigned as the on-call physician, physicians can be
personally liable.
 If certification for transfer is knowingly false. Physician can be personally liable.
 If physician is working in specialty hospital.

EMTALA Kind of a shitty choice for a lawsuit claim but I guess why not throw it in there.

TITLE VI
 Prohibits discrimination on the basis of race, color, or national origin (including use of
criteria or methods of administration that have effect of subjecting individuals to
discrimination) by programs receiving federal assistance.
o For a time only applied to hospitals and not physicians, but now applies to
physicians.
 Changed with the ACA.
 Enforced by the Office of Civil Rights or private right of action. Limited to only
intentional discrimination (ONLY OCR could bring disparate impact action) – maybe.

Note – After enactment of Medicare/Medicaid, HHS declared that physician’s reviewing Part B
payment under Medicare were not subject to Title VI.
Regulations have been enacted for application of Section 1557 and recognize a new right of
action specific to health care:
 Patient can bring disparate impact claims without proof of intentional discrimination
(similar to Linton) which had previously been prohibited.
Linton v. Commissioner of Health and Environment (1990)
Facts:
 Lead P – Linton, was patient at GVHCC and had been a Medicaid Patient with skilled
nursing care (SNF) and was downgraded to Intermediate care (ICF).
 She was told that the bed that she was in was not a Medicaid ICF bed and she would
have to pay or leave.
 Another patient, Carney, an AA woman, was diagnosed with Alzheimer and needed long
term care, but all Medicaid beds were occupied because TN policy regarding the
number of available Medicaid beds.
Holding:
 Court orders the agency to submit a plan for course approval that will redress the
disparate impact upon eligible minority patients’ access to qualified nursing home care
due to the policy.

TN LAW:
 All nursing homes must have a waiting list, and everyone is put on the list. The nursing
home must give the next available bed to the next person on the list, regardless of payor
status.
o Exception: Acute Care Need.
A lot of nursing homes can just say “We won’t take Medicaid” BUT Medicaid is the biggest
payor for nursing homes and so it’s difficult to reject all that money.

Bryan v. Koch (1980)

Facts:
 NY Closing 1 of 17 hospitals.
Holding:
 Affirmed, finding that plaintiffs showed disproportionate racial impact, but the CITY
acted without discriminatory intent and Title VI does not required consideration of
alternatives beyond an assessment of all municipal hospitals.

Most cases under TITLE VI are now INTENTIONAL discrimination. The Above were the last two
cases with just DISPARATE IMPACT.

ADA and 504 of FRA

 American Disabilities Act
o Prohibits discrimination against individuals with disabilities on the basis of their
disability.
 Federal Rehabilitation Act
o Prohibits discrimination against individuals with disabilities solely on the basis of
their disability.
Bragdon v. Abbott (1998)
 Dentist won’t do filling without going to hospital because patient has HIV.
 Having this done at the hospital would cost a lot of additional funds.
 Dentist argued “direct threat to safety of others.”
 This is an exception to the reasonable accommodation rule for the ADA.
o She says, it was not a reasonable accommodation for us to go to the Hospital.

Holding:
 Remanded to the CoA to determine whether certain studies would change their position
regarding whether Dr. Bragdon presented sufficient evidence that there is a question of
fact regarding the risks of treating patients with HIV. Lower Court granted SJ in favor of
Abbott – this isn’t a reasonable accommodation.

Takeaway from this court: “The Direct Threat to the health and safety of others” defense for an
ADA action.
 Defendant has to show:
o It cannot be the physician’s medical judgment. Must have objective scientific
evidence.

AFFORDABLE CARE ACT

ACA’s system of establishment of insurance exchanges from private market insurance is
historically a “Republican” strategy. – True

Over half of the states opted for Medicaid expansion and will receive federal dollars to offer
care to individuals whose income is less than 133% (138% disregarded income) of the poverty
line. - True
34 states, including DC, elected to expand Medicaid, 14 currently not participating, 3
considering.

While not “universal cover” per se, the ACA at the time enacted tried to achieve universal
coverage by requiring each individual to purchase insurance (employer or on the exchange) or
face a penalty. – True.

3 Basic Policy Goals:

 Improve how patients receive and experience health care. I.E. let’s make it better.
 Improve the health of populations across the United States. I.E. let’s eliminate a system
of the haves and have nots.
 Reduce overall healthcare costs for families and individuals. Let’s get people insured
and subsidized.
To achieve those goals, the ACA focuses primarily on:
 Increasing access to insurance and the number of people who are insured and
 Improving quality and efficiency within the current infrastructure
 Reducing costs in the system.

“Three-Legged Stool”
 Actual Affordability
 Guaranteed Coverage
 Personal Responsibility

Insurance:
 Eliminate Problems with Current System:
o No insurer can deny an individual for pre-existing conditions.
 Problem then becomes, insurance agencies must off-set this by either
getting more healthy people to get insurance or increasing costs.
 If we can no longer deny for pre-existing conditions, which is how they
guard against their risks, then Gov needs to give us something else.
o Insurance must have minimum coverage obligations.
 Ensure people are not just buying shell policies. There has to be
something of substance there that they are buying.
o Guard against “adverse selection” by ensuring young and health buy insurance –
apply a “penalty.”
 In order to incentivize them to buy, we apply a penalty.
 As long as you have insurance, no penalty.
 BUT this was a sliding scale.
 Thus, at the beginning it started $95 per adult or 1% of taxable
income. In 2014.
 In 2015, $325 per adult or 2% of taxable income.
 In 2016, $695 per adult or 2.5% of taxable income.
 In 2017-2018, $695 per adult plus COLA or 2.5% of taxable income
adjusted annually.
 In 2019, the penalty ends.
Individual Mandate:
 As originally drafted, to guard against adverse selection, all individuals were required to
maintain health insurance either through their employer, a private plan, the individual
marketplace, or a government plan or face a tax penalty UNLESS:
o Individual’s income is below $12,140 (single) or $16,460 (married) for 2019.
 o Individual would have to pay more than 9.5% of their income in 2017 for
insurance premiums (after employer contributions and subsidies).
o Citizens who earn less than 100% of the federal poverty line, but do not qualify
for Medicaid expansion (because they are in non-expansion states).

There is a coverage gap where individuals were supposed to be in the Medicaid expansion but
are not eligible for any subsidies and credits even though they should. (this is in non-Medicaid
expansion states). The way the law was drafted, these people were supposed to be covered
under Medicaid expansion but some states didn’t expand.

Premium Assistance Tax Credits:

 Which statement is not true?
o The credit applied is equal to the lesser of (i) monthly premium costs or (ii)
monthly premium for second lowest “silver” plan for taxpayer and family minus
1/12th of the product of the applicable percentage and the taxpayer’s household
income. (TRUE)
o The percentage of premium that is applied as the credit is not constant but will
be adjusted based on risking premiums and income but not age (THIS IS NOT
TRUE, CAN ADJUST BASED ON AGE AND TOBACCO USAGE.
o A family of 4 earning $97,200 or less a year purchasing non-group insurance will
be eligible for the credit. (TRUE)
o Individuals with incomes below 100% of the poverty line and who live in states
that don’t accept the Medicaid expansion will not be eligible for the premium tax
credits. (TRUE)
 If you get on the marketplace and state an income lower than what you actually earn,
you will just owe money on the back end when you file your taxes. This works in the
reverse and well. Ultimately, government just looks and sees how much you made and
whether you actually qualified for the tax credits.

True or False
 Cost-Share Reduction Payments are made directly by the federal government to the
eligible individual.
o False
 There is nothing that goes directly to the individual.
 It was supposed to go to the insurance companies. Meant to off-
set costs. Deductibles, Out of pocket costs, etc.

Ideal Scenario: (IF everyone expands Medicaid)

If you have 0-100% of the FPL – you have to get on Medicaid.
101%-138% Can choose (odds are good that most will elect Medicaid) – also gets subsidies and
credits.
139% + Create some subsidies and credits.
NFIB v. Seblius made Medicaid Expansion optional. Thus, if someone is living in a state that
didn’t expand Medicaid, those who are 0-100 Wow, so in TN, if you are a male, you are just
screwed. Those 0-100% just don’t get Medicaid. Regardless of how poor you are. However,
you still get subsidies and credits if you are above 100% FPL.

States didn’t adopt Medicaid Expansion, despite getting money from Federal Gov. because it
only gave money (It was first two years 100%, next two years 95%, and
then next two years 90% before it dropped off completely) for years and
then dropped off and states didn’t want to have to eventually pay for the expansion. Also, very
political.

STATES EXCHANGES:
 States had the options of setting up their own exchanges – some did, but most did not.
o 22 states have a state-based marketplace (12 states), a state-based marketplace
using the federal platform (5 states), or a state partnership marketplace (6
states)
o 28 states defaulted to the federal government website – healthcare.gov –
including TN.
 All exchanges can only offer “qualified health plans” that are certified based on specific
criteria including offering 10 essential health benefits.
o Including preventative and wellness services, which includes birth control.
(controversial).

EMPLOYER RESPONSIBILITY
o Sections 1151 – 1515 require employers to pay penalties for certain activities:
o If a certain number of their eligible employees buy insurance off the exchange as
opposed to through employer-sponsored plans.
o If employer requires their employees to pay more in premiums than 9.5% of
income or if insurance does not cover 60% of allowable expenses – you will pay a
penalty.
o Cadillac Plans also targeted: by 2018, employers will have to pay a large excise
tax (40%) on employment related coverage that costs more than $10,200
(individual) or $27,500 (family).
 This has been delayed to 2022. We don’t want employers to offer crazy
plan prices.

TEXAS v. UNITED STATES (5th Circuit)

 Whether the ACA is still constitutional now that it does not have a penalty (tax) and this
was the whole basis as to why the ACA was constitutional under NFIB v. Sebelius.
 Key Facts:
o Tax Cuts and Jobs Act of 2017, as a budget reconciliation bill, change the tax
penalty owed (known as the shared responsibility payment) to $0 such that
 there would no longer be a penalty for not purchasing health insurance (known
as the individual mandate).
o Budget reconciliation = process in Congress for passage of spending/revenue bill
(change to law must be tied to budgetary item). In other words, couldn’t go in
and make substantive changes to the ACA. So they just changed the money
portion. So, we still have the technical “individual mandate” but there is just no
money penalty associated.
o Several states file a lawsuit saying ACA is now unconstitutional since it no longer
looks like a tax.
 3 Questions:
o First – Standing – do the litigants have standing?
o Second – Constitutionality of Individual Mandate
o Third – Severability
 Procedural Posture:
o Came in as an injunction but flipped to summary judgment (on the legal merits).
 Plaintiffs:
o Certain States; citizens and residents of the state of Texas.
 Defendants:
o Federal Government (arguing that the individual Mandate is unconstitutional but
severable).
o State Intervenors (arguing that the individual mandate is constitutional).
 Injury:
o Complying with the law (even though no penalty is owed).
 Could argue that they can pay the “penalty,” but the payment is just $0.
In other words, still complying with the law.
 Republicans worried about severability because they like some portions of the ACA:
o Example: Kids staying on parents’ insurance until 26.
o If un-severable – whoops good luck until you pass something new.
NFIB v. SEBELIUS
 This is constitutional (ACA) because it is a TAX.
 Holding: Congress does not have the power to require the individual mandate under the
commerce clause, but the penalty required to be paid by individuals to the extent that
they do not purchase insurance is within Congress’ power to lay and collect taxes.

King v. Burwell
 Issue: Whether the Act’s tax credits are available in States that have a Federal Exchange
rather than a State Exchange.
o IRS answered yes – Taxpayer is eligible for a tax credit if he/she enrolled in an
insurance plan through “an exchange.”
 Holding: Tax credits are available to individuals who purchase insurance either on a
state exchange or a federal exchange. (Did not apply Chevron because it is too
important for deference).
 Court says there are 3 key reforms under the ACA
 o Guaranteed Issue – Health Insurers cannot deny individuals for pre-existing
conditions (can only “rate” for age and tobacco use).
o Individual Mandate – To Guard against adverse selection, all individuals are
required to purchase insurance or pay a penalty.
o Insurance Credits – In order to ensure everyone can afford the required
insurance, individuals with incomes between 100-400% of the poverty line are
eligible for tax credits.

Subsidies and Cost-Sharing Reductions

 Individuals will receive premium subsidies based on stated income, reconciled on taxes.
 CSR payments are payments to insurers to offset cost-sharing discounts low-income
individuals required under the ACA.
o No reconciliation like premium subsidies.
 October 12, 2017 – President Trump announces that he will not pay CSRs, fanning fears
of insurers cancelling plans or massively increasing premiums.
 October 17, 2018 – Announced bi-partisan deal.
o Extend catastrophic health insurance plans to those older than 30.
o Ease 1332 waiver restrictions
o Funding of CSRs through 2019 (but changing funding mechanism to a rebate)
o Didn’t even make it out of committee.

Nothing covers undocumented immigrants and so if someone overstays a visa, nothing will
cover them.
Tourist Visa wouldn’t work. Not eligible – tourists can’t just come and be eligible. Tourists will
just get the full bill if they go to hospital.

Remember: Can qualify for Medicaid if there is a disability that qualifies.

1. Income Criteria
2. Disability

Note: Reconciliation doesn’t happen with Medicaid expansion – you are either off or you are
on. So, if you get a job and are suddenly not eligible – you will get kicked off.
Reconciliation is for when you get credits through the marketplace but got more credits than
you were supposed to.

MEDICARE SECTION
Medicare is a social program.
 Eligible for everyone.
 Just need to be 65+
  Does not matter what income level you are.
Medicare is a fee-for-service program paid for by government to private providers and insurers.
 If you have Medicare, you go into the hospital and say you are covered by Medicare and
when you leave, the hospital bills Medicare.
VA has services provided directly by the government through government employees.
 Only at VA Hospital.
Some people say “let’s forget all of this and instead, let’s just provide vouchers or credits for
the purchase of insurance. Paul Ryan’s suggestion in budgetary cuts.
 This allows individuals to buy whatever health insurance they want from private
insurers.

FOUR PARTS OF MEDICARE:

 Part A
o Hospital Only
 Covers hospital-related services and emergency care.
 Part A and Part B funded differently.
 If you have traditional Medicare, You will have Part A for hospital visits
 Hospitals will bill for the “facility fee.”
 The facility fee comes in to play if you are in-patient or out-patient in the
hospital. They just get more $$$ for in-patient than they do for out-
patient, but they can still bill for out-patient.
 Requires a yearly deductible and daily co-pay after 60th day in hospital.
 Places Covered:
o Acute Care Hospitals
o Critical Access Hospitals
o Inpatient rehabilitation facilities
o Long-term care hospitals
o Note that Medicare Part A only covers 90 days in hospital
per benefit and an additional 60 days of reserve days.
 Places Part A DOES NOT cover
o Private-duty nursing home
o Private room (Unless medically necessary)
o TV and phone
o Personal care items like razors or socks
 Potential Costs:
o $1,316 deductible for each benefit period
o Do not pay any monthly payments.
BUT anytime you go to the hospital, hospice, etc. there will
be a charge for that. There is a daily rate that is like a co-
pay or co-insurance. There are hospital days that are
covered. After 90 days you are into your 60 reserve
 lifetime days. You only get 60 your whole lifetime. After
you use those, you are at 100% of each stay.
 Part B
o Covers Doctor’s office visits and physicians.
 If you have traditional Medicare, you will have Part B for doctor’s office
visits.
 Physicians will bill for the “professional fee.”
 This is the physician billing only for their time doing the surgery,
etc.
 Note – If you are a hospital and you have hospital employees – they will
bill for both Part A and Part B. The hospital will apply to bill both.
 Example: Vanderbilt University Hospital Center will bill Part A for
hospital Fees and Vanderbilt Physician Group will bill Part B for
the physician services.
 So, the Professional Fee doesn’t really matter about location. It’s more
for their services.
 Requires a monthly premium that is slightly means tested.
 There are monthly premiums – minimum monthly premium is something
like $144. Higher the income, the more you will pay.
 If you choose Part A and Part B, you need to elect for Part D at the time
of enrollment.
 Part C
o Covers both Part A and Part B with additional Coverage.
o Alternatively – You can elect to have Medicare Advantage Plan, which is Part C.
 Note – this is NOT traditional Medicare.
o Under Part C, what you do is buy insurance and pay premiums to a separate
insurance company that contracts with Medicare.
o Acts, looks, and smells a lot like an employer sponsored plan.
o Biggest distinction – there will be out-of-pocket maximums. This is not true with
traditional Medicare.
o Just like normal insurance, there are in network providers and out-of-network
providers.
o Requires monthly premiums and deductibles and co-pays and co-insurance just
like a commercial policy.
o Feels like employer based healthcare. Probably will pay a little more but usually
it covers a little more of the gap. Biggest advantage: Most insurances have an
out of pocket maximum.
o Part D can be offered as a part of the Medicare advantage plan or you can buy it
separate.
o Mostly personal preference as to what is the best.
o BUT if you travel a lot, Medicare Advantage might have some downsides because
typically it involves a small network. Typically it is a more local product.
 Part D
 o Covers Prescription Drugs
o Can elect it either as a separate thing with Part A and Part B
 Run by separate (third-party) Pharmacy benefit managers.
o Or, you can elect Part C that has a prescription drug option.
o Can come from 3 sources:
 Private prescription drug plan (with traditional Medicare)
 Part of Medicare Advantage Plan (like commercial insurance)
 Employer plan for employees and retirees.
o Plans are individualized, but all include cost-sharing similar to standard
commercial plans.
 “Doughnut Hole” was part of original 2003 law, although it is attempting
to be plugged by the ACA.
 Originally covered drugs up to 3700 and then would not kick back
in until 8000+ dollars.

Note – Coverage and rates are established by CMS or MAC or MA plans.

Who should play what role in administering the program?

 Medicare is run by federal government vs. Medicaid is administered in large part by the
states.
 Medicare Advantage or some Medicaid programs are administered through private
insurance (managed care companies).

How should the program be financed?

 Payroll Tax – Medicare Part A currently paid by payroll taxes.
 General revenues and premiums pay Part B. Higher earning individuals pay higher
premiums.

Safety Nets:
 Medicare – elderly
 Medicaid – indigent (but not all).
 VA – Veterans
 TRICARE – Military
 Indian Health Services – Native Americans
 Public Health Centers – All, including indigent (States and Cities)
 FQHC’s – All, including indigent.
 Government Hospitals and Clinics – all, including indigent.
 Non-Profit Hospitals and Providers

Who is eligible for Medicare?

 Permanent residents over the age of 65 are eligible for Medicare Part A.
o Or if you have ESRD (End state renal disease) or ALS
 Part A may be provided at no cost, if:
 o You receive or are eligible to receive Social Security
o You receive or are eligible to receive railroad retirement benefits.
o Your spouse, living or deceased, including divorced, receives or is eligible to
receive either of the above.
 Anyone who is eligible for Part A at no cost can enroll in Part B by paying a premium –
Part B covers all physician services.
o Sliding Scale based on income.
 If not eligible for Part A at no cost, can buy part B without part A, if 65 and older and you
are a:
o US Citizen
o Lawfully admitted noncitizen who has lived in US for at least 5 years.
 Note that failure to sign up during enrollment periods could result in late fees.

Means Testing – Shifts Medicare from a social program available to all to a Welfare program
only available to some. This looks closer to Medicaid. The concept that those who have the
means to pay will not be eligible to participate in the program.

“Spend Down” – Medicaid is a welfare program. Currently there is this concept called spending
down which is where individuals can get rid of their assets so they can be eligible to Medicaid.
In order to guard against people gaming the system, there are all these rules in the State
Medicaid system that talk about what counts as income.
IN other words, rich people giving away all their wealth to kids so that they now are Medicaid
eligible. People spend their money to get to the point where they are eligible.

Stigma associated with welfare programs.

In the Case of the Estate of W.D. / Heckler v. Ringler

 The only way to actually sue based on a Medicare program is pursuant to the statute.
No court has jurisdiction to hear Medicare or Social Security claims. This is largely
meant to prevent lawsuits every time someone doesn’t get the amount of $$ or
disability percentage they want.
 Medicare denials / coverage / lawsuits, etc. must go through the administrative agency
process. You can still go to court, but you have to exhaust administrative remedies.
 In order to actually appeal your case into the Medicare process, you must have had the
procedure and been denied coverage and the claim must be in excess of 1600 dollars.

MEDIGAP
 Part A and Part B doesn’t always cover everything and thus, individuals can purchase
supplemental insurance to cover some of the “gaps.” This can include extra hospital
days.
Any Willing Provider Law
 Some protections for beneficiaries through state laws and federal laws that allow any
PDP’s willing to accept the price as able to participate.
 Formularies are a list of drugs that a particular insurer, PDPD, or provider might have
that is their “preferred” or “Covered” list – large leeway here.
States have range of “any willing provider” laws:
 TN has pharmacy only (see slides)

Local Coverage Determinations:

9 Jurisdictions – Print out Slide.
The MAC’s have jurisdiction over their states.
 LCDs are more common and are made strictly to the local MAC
o These reviews have to go first through an ALJ and then can go to the
Departmental appeals board for Medicare and then to the normal courts.
 Remedy is making the previous determination invalid.

National Coverage Determinations

 National Coverage Determinations (NCD) are requests that go directly to CMS and affect
Medicare as a whole.
o Requests can come by external party for new NCD, external party for
reconsideration of existing NCD, aggrieved party to issue an NCD, or CMS for
new NCD or reconsideration.
 Normally if it comes from CMS, it is because there is a fight among the
jurisdictions. CMS might implement its own NCD process to resolve
disputes at the local coverage determination level.
 Note that if beneficiary is in need of covered service and an NCD is being reviewed, final
decision must be made in 90 days.

Medicare Shared Savings Program:

Accountable Care Organizations (ACO’s) retain cost control aspects of health maintenance
organizations (HMOS) but add external oversight and regulations in the form of quality metrics,
structural requirements, and patient centeredness.

Medicare beneficiaries whose physicians are participating in an ACO are NOT required to stay
with their physician through the program year.

MC:
What is not a feature of the Medicare Shared Savings Program:
1. A primary care physician can participate in more than one ACO, although a beneficiary
will only be assigned to one ACO
 2. The ACO can transition in year 3 to a population-based capitation model
3. An ACO may choose in the beginning to be in one of two tracks, which impacts the
financial risk taken by the ACO.
4. An ACO’s shared savings is impacted by its compliance with 33 quality measures.

ACO Risk Models

See slide

Requirements to be an ACO – P. 657.

MACRA – p. 662.
Medicare Access and CHIP reauthorization Act of 2015 reauthorized the CHIP program, which
has wide-spread and consistent bi-partisan support an eliminated the physician sustainable
growth rate.
i. Enactment of Medicare Access and CHIP Reauthorization Act of ’15
(MACRA) – P. 662.
1. Eliminated the physician SGR
2. Created 2 new value-based reimbursement:
a. 1) Merit-Based Incentive Payment (MIPS) & 2) Alternative
Payment Models (APMs)
b. ACO’s qualify as an APM.
i. If you were an ACO you could ignore this new law.
c. Both programs attempt to tie increases in reimbursement
or shifts in reimbursement to quality improvement, as
opposed to increase related to cost-of-living or other
adjustments
3. Also directed CMS to come up with new reimbursement
structures that will reduce pharma costs under Part B by
reimbursing drugs
If you are in MIPS you will either get a bonus or get docked pay – because it is budget
neutral. If you give out 400 bonuses, you must give out 400 penalties. This is based on
a report card that individuals fill out every year. If you do well on the report card, you
get a bonus, if you do poorly, you get a penalty.
Must be in one or the other – thus, most flocked to ACO’s because it was outside of
MIPS.

Shalala v. Illinois Council of Long Term Care:

What does holding in effect mean for the nursing:
 Have to violate statute, have sanctions imposed, and then object to the sanctions.
If you are the government, why might this holding be especially critical to you?
 It is going to have to go through the agency.
Big Takeaway: This narrows the exception in Michigan Academy.

Medicaid Benefits

It was a voluntary program on the part of the states when it was first enacted. When we think
about Medicaid as a program, the thought process in the 1960’s thought about 3 categories:
1. . “Deserving Poor” – Aged, blind, and disabled on social security or state disability.
a. This was who was initially hoped to be protected.
2. Categorically needy – dependent children and relative caregivers.
a. Over the years, Medicaid was expanded to include.
3. “Medically Needy” – These are people that but for their medical condition, they would
not be considered poor, etc. However, indigency caused by medical conditions.
Sufficient funds until medical expenses incurred cause indigence.
a. The real question here is whether or not we should cover the medically needy.
This is sort of determined on a state by state basis.

In the traditional Medicaid – Income and Assets are considered.

In the expansion Medicaid context – only income is considered for qualification

If an individual goes on the marketplace and think they will get Medicaid expansion, but
actually qualifies under the traditional criteria, the state will only match the traditional amount,
and not the expansion amount.

“Medicaid Expansion Mandate = Gun to Head”