THE HEALTH CARE industry is the largest sector of the United States economy, accounting for $1 trillion in annual expenditures and representing about 15 percent of gross domestic product. Like any other industry of size and complexity, health care generates myriad legal issues and, consequently, a large volume of work for lawyers.
Two commonly encountered questions asked of health lawyers (frequently at the same time) are "What is health law?" and "How do I get into it?" After five years of writing this column, we have covered only a fraction of the many topics that make up the health law specialty. Perhaps this is a good time to return to fundamentals and to explain briefly just what it is that health lawyers do. A later column will address careers in health law.
What the Law Is Not
At the outset it may be helpful to clarify what health law is not. It is not medical malpractice, which is a specialty area of tort law. That is not to say that health lawyers do not become involved in medical malpractice issues. An injury to or the wrongful death of a patient because of a failure to abide by acceptable standards of professional practice not only may involve a malpractice lawsuit against the hospital, physician, resident or intern, nurse or other personnel, but also often triggers a review of the circumstances of the case by regulatory agencies such as the Health Department (which licenses and regulates most non-federal health facilities), the Education Department (which licenses physicians, nurses and other medical professionals) and other government agencies.
It is not the law governing drugs, pharmaceuticals or medical devices, which is mainly the province of the intellectual property bar. After a drug or device is approved by the Food and Drug Administration, however, health lawyers may be called on for assistance in obtaining approvals of the Medicare or Medicaid programs or commercial health insurers and HMOs, to pay for the drug or device.
Health law is also not representing individuals to assist them in qualifying for Social Security, Medicare or Medicaid benefits, disability benefits and the like. Although health lawyers can and do specialize in Medicare and Medicaid payment issues, most often they do so on behalf of providers, who depend on those payors for much of their revenue.
What the Law Is
A health lawyer's clients can span a broad range of industry players, from a single doctor to a multi-state hospital chain and everything in between: nursing homes, clinics, certified or licensed home health agencies, pharmacies, clinical laboratories, physician groups, ambulatory surgery centers, state or municipal health departments, health insurers, health maintenance organizations and managed care organizations.
Clients are also senior residences, assisted living facilities, rehabilitation centers, nurse practitioners, health care-related trade associations, durable medical equipment suppliers, alcohol and substance abuse facilities, physician practice management companies, medical, dental, nursing, pediatric, chiropractic and other training schools.
Also included are ambulance and ambulette companies, ophthalmic dispensers, peer review organizations, hospital medical staffs, medical record transcription services, blood banks, medical billing services, accrediting commissions and agencies, psychologists, mental health programs and facilities and many more.
In representing these types of clients, a health lawyer may become involved in a variety of specialty areas of the law: corporate, regulatory administrative, securities, contracts, commercial, tax, litigation and other areas. Health lawyers sometimes have to deal with ethical and bioethical issues such as violations of professional ethics, the propriety of and protocols for human research and experimentation in health facilities and medical schools, death and dying issues, and so on.
The key to understanding the health law specialty is in understanding that health care is probably our most heavily regulated industry and also in understanding the underlying economic (i.e., reimbursement), regulatory and policy issues that permeate and affect it on a daily basis.
When, for example, a software company is sold, among the many issues that may arise are intellectual property and licensing, securities, tax, corporate, commercial, real estate, etc. When a corporation owns a health care provider and is sold, among the issues that may arise are most of those just mentioned, plus regulatory approval of the license transfer (an often lengthy, complex and cumbersome process depending on the state in which the facility is located); Medicare, Medicaid and other third party payor liabilities; transfer or termination of affiliations with other health care providers; residual malpractice, tax and ERISA liabilities; labor matters, and a host of other complex issues.
A merger of non-profit hospitals in New York, for example, will involve not only regulatory approvals by the state Health Department, but review and approval by the Attorney General's Charities Bureau, a possible Hart-Scott-Rodino filing with the U.S. Justice Department, filings with the Internal Revenue Service relative to maintaining the facility's tax exemption, negotiating with the Medicare and Medicaid programs and third party payors over new reimbursement rates, and governmental approvals if the facility has debt that is state or federally guaranteed.
Aside from regulatory approvals, such a merger may also involve the negotiation or re-negotiation of medical school or other academic affiliations if the combined facility has teaching programs, the possible creation (and licensing) of a corporate parent, liability insurance or self-insurance issues and many other substantive legal issues.
Fraud and Abuse
With the federal government's massive attack on fraud and abuse (Attorney General Janet Reno has repeatedly stated that health care fraud is the Justice Department's second-highest priority after violent crime) health care attorneys are focusing their attention on the prevention and correction of violations of the so-called fraud and abuse laws: the anti-kick back law,*1 the Stark anti-referral law*2 and the federal False Claims Act.*3 Virtually every transaction involving health care providers can have fraud and abuse implications that otherwise knowledgeable non-health lawyers often miss.
Because of the extraordinarily broad wording of the anti-kickback law, arrangements that in any way involve the referral of patients among independent providers raise potential anti-kickback issues. Creative accounting or even innocent billing errors can result in massive penalties to a provider under the False Claims Act.
Providers are not alone in this spotlight: insurers such as Blue Cross and Blue Shield plans that function as carriers or intermediaries for the Medicare program are often investigated and fined for improperly collecting payments from Medicare. The importance of creating effective internal compliance programs cannot be over-emphasized, and the input of experienced health care lawyers is virtually indispensable in the process.
Managed care has spawned the development of many new delivery structures, an alphabetical maze of entities such as the MCO (managed care organization), IPA (independent practice association), PPO (preferred provider organization), PHO (physician-hospital organization), PSO (provider service organization), IHS (integrated health system), MSO (medical service organization, sometimes referred to as a PPM, for physician practice management), IDS (integrated delivery system) and others.
Managed care's legal issues range from the corporate structures of these provider entities, to licensing, regulatory and professional ethical issues, to negotiating payment arrangements with HMOs and other MCOs. In representing HMOs, health lawyers may deal with such issues as denial of payment for necessary treatment, possible malpractice liability, negotiating capitated payment arrangements with providers, compliance with applicable provisions of the Public Health Law and Insurance Law governing an HMO's finances, payment policies, marketing practices, quality and utilization review procedures.
Hospitals and some other types of facilities, such as large diagnostic and treatment centers, have organized medical staffs responsible not only for the medical care provided by the facility, but for many internal procedural functions as well: reviewing and approving the admission of new members to the staff and renewals of the privileges of existing staff members; peer review and quality assurance functions corrective and disciplinary actions, and so on.
Health lawyers play an important role in advising medical staffs on how their bylaws are worded and enforced, assisting the staff in compliance with the bylaws' Due Process provisions in disciplinary cases and in carrying out the many other functions and procedures required by the bylaws, as well as by law, regulation and the standards of various accrediting organizations.
Rights of Patients
The area of patient rights has become increasingly important in health care law. Obtaining the proper consents for medical treatment and/or conducting medical research has raised many justifiable concerns over the years, as have the more recent issues involving right-to-die and assisted suicide. The appointment of guardians for incompetent patients often involves many clinical and legal issues, particularly where invasive procedures such as surgery may be necessary.
A patient's reasonable expectation that the confidentiality of his or her medical information will be respected and protected is another issue that has come to the forefront, particularly with the advent of computerized medical records and the electronic transmission of medical information to and among providers, insurers, clearing houses and other interested recipients. Both the federal government and many states are currently working to increase confidentiality protection, and it is likely that we will see an increase in regulatory enforcement actions as well as private suits when breaches in confidentiality occur.
Since the vast majority of American hospitals are nonprofit and tax-exempt, the tax issues facing health facilities can be a sub-specialty of both tax lawyers and health lawyers. The IRS recently has been pressing nonprofits to justify their tax-exempt status by demonstrating the levels of uncompensated services and benefits that they provide to their communities. Entrepreneurial hospitals can jeopardize their tax-exempt status by engaging in too many for-profit activities and joint ventures.
Among other areas under active scrutiny by the IRS are private inurement in the form of excessive executive compensation, use of tax-exempt premises and resources for profit-making activity, self-dealing by officers, directors/trustees and key employees and improper recruitment incentives for physicians. Not only are many of these a concern from a tax point of view but they raise serious issues under the fraud and abuse statutes as well.
Institutional health care providers are both capital-intensive and labor-intensive, and handling labor matters for a health care provider requires familiarity with, among other things, those employed professionals who fall under collective bargaining classifications and those who are exempt. Disciplinary actions against employees of health care facilities often involve such clinical issues as deficiencies in rendering patient care, failing to follow medical protocols and procedures, etc.
The employment of individuals with disabilities such as HIV, physical handicaps and the like can raise complicated legal issues, for example, if their job responsibilities place them in a clinical workplace. The ability to draft hospital-physician employment agreements properly is a health law staple.
The foregoing barely skims the surface of this specialty area of the law. Health law's burgeoning growth stems not only from the expanding demand for legal services in a rapidly evolving marketplace, but also from the range of interesting and challenging legal, financial and policy issues that health lawyers face on a daily basis.
Those interested in learning more about health law should consider joining the American Health Lawyers Association (202) 833-1100, which sponsors numerous educational programs during the year and distributes to members a newsletter, useful articles and case digests on a monthly basis. (Membership in the AHLA is not restricted to lawyers.)
Membership in the New York State Bar Association's Health Law Section (518) 463-3200 offers access to New York-specific programs and a periodic newsletter, as well as the opportunity to get to know other New York lawyers who practice in the field. Local bar associations, such as the Association of the Bar and the New York County Lawyers' Association, also have health and health-related committees.
Francis J. Serbaroli is a partner at Cadwalader, Wickersham & Taft.
- 42 USC Sec.1320a-7b.
- 42 USC Sec.1395nn.
- 31 USC Sec.3729 et seq.
This article is reprinted with permission from the July 30th issue of the New York Law Journal © 1998 NLP IP Company.