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Searching for Articles published in June 2017.
Found 6 Results.

Free Parking, Yes, But No Stark Law Claim

Posted on June 21, 2017, Authored by Robert J. Reinertson, Filed under Health Care

A federal court recently dealt a victory to a health care provider over whistleblower allegations that free parking and valet service at a medical office building violated the Stark Law and the Anti-Kickback Statute.  In Bingham v. BayCare Health System (No. 8:14-cv-73, M.D. Fla.), a federal district judge adopted the report and recommendation of a magistrate judge that judgment be granted to the provider, BayCare.  The plaintiff, Bingham, is a real estate appraiser in Tennessee with no affiliation with BayCare.  It has been reported that Bingham has filed several whistleblower-type cases in the past and has received substantial settlements. BayCare is a non-profit corporation which operates a hospital.  BayCare entered into a ground lease with a real estate developer to construct a medical office building on the hospital campus.  The tenants of the building are limited liability companies that employ physicians who have practices in the building.  The building is classified as tax-exempt. Bingham alleged that BayCare violated federal law by providing the following remuneration to the physicians in the building in order to induce the physicians to refer patients to BayCare: Free parking for the physicians, their staffs, and their patients; Free valet parking for the physicians, their staffs, and their patients; and Tax savings which allowed the physicians to benefit from BayCare’s tax exemption.  Bingham also claimed that BayCare submitted false claims to Medicare and Medicaid for services provided to the patients who were allegedly referred illegally. The ground lease is between BayCare as landlord and the developer as the tenant.  The ground lease granted parking rights to the “Tenant and Tenant’s subtenants and Invitees”.  The subtenants are the tenants of the building, i.e. the limited liability companies.  BayCare provided valet services at the building through a contract with a third-party vendor. The Stark Law forbids a physician from referring Medicare or Medicaid patients to a hospital if he or she has a “financial relationship” with the hospital.  No remuneration can be given directly from the hospital to the physician for referrals. The issue in this case was whether a financial relationship existed between BayCare and the physicians who work in the building where the parking and valet services are provided.  Bingham claimed that a direct financial relationship existed between BayCare and the physicians because, in his view, the subtenants are the physicians and the invitees are their patients.  However, the judge ruled that the subtenants and the physicians are not parties to the ground lease and that the tenants have separate office leases with the tenant-developer through which the parking rights are conferred.  That means the physicians receive parking benefits through their employers, the limited liability companies.  It also means there is not a direct compensation arrangement between BayCare and the doctors. The judge also found that while valet parking was available and BayCare paid the third-party vendor for those services, there was no evidence the physicians in the building actually used the service.  And, there was no evidence that patients who used the valet service were referred to BayCare by physicians in the building. The judge went on to find that there also was no indirect compensation arrangement between BayCare and the physicians, because the physicians’ employment agreements with their employers are based on salary and productivity factors, neither of which are based on referrals.  In addition, the office leases between the developer and the subtenants provide that rent is calculated in part on square footage, which means higher rent for bigger spaces.  There was no evidence that physicians receive compensation from their employers based on the volume of patient referrals. For some of the same reasons, the court also dismissed Bingham’s claims regarding the Anti-Kickback Statute, which prohibits a hospital from providing remuneration to induce patient referrals.  Also, much of the court’s discussion was fact-intensive, finding that there was no evidence that BayCare, the tenant, nor the subtenants had the requisite intent to induce the doctors to refer patients, even if parking and valet services were available free of charge at the medical office building. This decision is instructive because the leasing arrangements involved in this case are not uncommon.  But, because whistleblowers have the opportunity to benefit financially by bringing cases under the Stark Law and the Anti-Kickback Statute, there will likely be no shortage of ways plaintiffs will frame their claims.

Forfeitures for Ordinance Violations - When Are They Excessive?

Posted on June 2, 2017, Authored by Robert J. Reinertson, Filed under Local Governments and School Districts

An age-old problem faced by municipal officials is what to do about residents and landowners who fail to take care of their properties and allow junk, debris, and other unsightly items to accumulate.  This often leads to citizen complaints and even health and safety issues. When municipalities take enforcement action against such properties, they usually seek a court order for remediation and for forfeitures as provided under their ordinances.  These ordinances usually set a minimum and a maximum amount of forfeiture for the violation, with each day of violation being a separate offense.  It is not uncommon for violations to exist for many months or even years.  Courts are then asked to answer the question: what is the appropriate amount of forfeiture to impose against the violator? Last week the Wisconsin Court of Appeals released a decision which dealt with this question.  While the opinion is unpublished, it does explain the law in Wisconsin and offers insight into how judges view municipal forfeitures.  The case, Town of Ixonia v. Knopps (No. 2016-AP-766), involved a town’s lengthy efforts to force a landowner, Knopps, to clean up junk, debris, and rubbish on his residential property.  The town sued Knopps for violating its junk storage and nuisance ordinances.  The junk storage ordinance provided for forfeitures of $5 to $500 for each day of violation, while the nuisance ordinance provided for forfeitures of $10 to $200 for each day of violation. The circuit court granted judgment declaring the property in violation and allowing the Town to clean up the property.  After the Town cleaned up the property, it came back to court seeking forfeitures for 773 daily ordinance violations.  The circuit court determined that by applying the minimum forfeitures, along with “add-ons” allowed by state statute, the amount for the junk storage violations would be $22,763.40 and the amount for the nuisance violations would be $27,633.30, for a total forfeiture of $50,396.70. However, the circuit court also decided that this amount would be an excessive fine prohibited by the Wisconsin and U.S. Constitutions.  It instead imposed a total judgment of $3,631.00. The Town appealed the forfeiture issue.  The appeals court judge agreed with the circuit court that the amount sought by the Town was unconstitutionally excessive and affirmed the $3,631.00 judgment. The appeals judge based his decision on what is known as the “proportionality test”.  Under this test, the following factors are to be considered: (1) the nature of the offense; (2) the purpose for enacting the regulation; (3) the fine commonly imposed upon similarly situated offenders; and (4) the harm resulting from the offender’s conduct. Taken together, the above factors require that “the amount of the forfeiture must bear some relationship to the gravity of the offense that it is designed to punish”.  The appeals judge found the following factors to be especially significant:        Knopp was a poor and disabled man who was simply incapable of maintaining his property in the condition called for under the Town’s ordinances. Knopp was not engaging in this behavior for profit, such as running an unlicensed junk yard. The “massive accumulation” of daily violations was at least partly due to the length of time it took the Town to abate the violations.  The judge felt that 773 days of violations may not compare with “similarly situated offenders”. Though it took a while, the remediation of the property was successful and no permanent harm resulted. In short, the judge concluded that “it would be disproportionate to the offense and shocking to the conscience for a poor disabled man to be penalized by such a large forfeiture that he could well lose his home”. Unfortunately, the opinion does not describe how the circuit court calculated the $3,631.00 forfeiture it imposed and which the appeals judge affirmed.  Apparently neither party challenged the basis for the alternative calculation.  However, there are some takeaways from this decision: A person who is unable to maintain his or her property because of poverty or physical ailment or disability will be treated differently from a person or business flouting the law by making money off junk-filled property. Unsightly property that is successfully cleaned up, either by the landowner or the municipality, will probably be considered as posing no permanent harm, no matter how long the process takes.  This likely would be different, however, if the property conditions lead to injuries, pollution, or hazardous waste releases. Municipalities should not expect a court to impose maximum forfeitures or daily forfeitures for long periods of time, unless the circumstances are particularly egregious. The principles discussed in the Town of Ixonia case apply to other local ordinance enforcement efforts, such those directed at zoning and land use violations. Feel free to contact us with any questions on this case or its applicability to specific situations.

Wisconsin Supreme Court Rules on Appleton School District Open Meetings Law

Posted on June 29, 2017, Authored by Robert J. Reinertson, Filed under Local Governments and School Districts

In a unanimous and much-anticipated decision released today, the Wisconsin Supreme Court ruled that a committee of school personnel formed to review materials for a high school course under a procedure set forth in school board rules is a “governmental body” subject to the Wisconsin Open Meetings Law. The case (Krueger v. Appleton Area School District Board of Education, 2017 WI 70), involved a committee that was formed by two department heads in response to an objection to a course reading list lodged by the father of a student in the class.  The father wanted to attend the committee’s meetings, but his request was denied.  He filed suit claiming that the committee was subject to the Open Meetings Law.  The circuit court and the Court of Appeals ruled in favor of the school board, finding that the committee was an “ad hoc” group, not a “governmental body”, and so was not subject to the Open Meetings Law.  Crucial to the Court’s decision was the school board had a rule that required selection of educational materials be delegated “to the professionally trained and certified personnel employed by the school system”.  In the Court’s view, this was the board’s formal authorization for the department in question to review and recommend educational materials for board approval according to procedures laid out in a board-approved “assessment, curriculum, and instruction handbook”. A governmental entity is subject to the Open Meetings Law if it is (1) “a state or local agency, board, commission, committee, council, department or public body corporate and politic” that is (2) “created by constitution, statute, ordinance, rule or order . . . or a formally constituted subunit of any of the foregoing”.  The Court concluded that the school review committee was a “committee” for purposes of the Open Meetings Law because it had defined membership charged with reviewing and selecting educational materials for board approval, as authorized by the board through its rule and handbook.  The Court also concluded that the committee was created "by rule" because the rule and the handbook that the school board had adopted delegated authority to district employees to form review committees. We will be analyzing this case in depth and will write further on this subject.  In the meantime, however, there are several points to consider: While this case deals with a school district, it is applicable to all units of government that may have or may set up committees, subcommittees, or other groups in a similar manner or under similar authority. The Court acknowledged that the creation of a governmental body is not triggered “merely by any deliberate meetings involving governmental business between two or more officials”, and that loosely organized ad hoc gatherings of government employees, without more, are not governmental bodies. As noted above, the district’s rule and handbook were very important to the Court’s decision.  The applicability of this decision to a particular local governmental entity’s governing rules and procedures should be analyzed. The Court, in closing, noted the district’s argument that subjecting committees like the one involved here would adversely affect the functioning of government.  The Court stated that “mere inconvenience” cannot exempt a body from the Open Meetings Law, and that such concerns should be addressed to the legislature.

Joint Employer Status Rebuffed?

Posted on June 14, 2017, Authored by Dean R. Dietrich, Filed under Employment

Recent action by the Trump Administration has raised a new question regarding joint employer status and whether particular employees hired (individually or through a company) to provide work for another company should be considered an employee of the hiring company.  The past Department of Labor issued various memos that indicated a crackdown on independent contractor status and projected that many situations where a company hires another company to provide workers would actually result in both companies being considered joint employers of the workers.  Many companies sought protection by claiming these workers were only employees of the hired company or were independent contractors and therefore not under the control or jurisdiction of the hiring company.  The directives from the Obama Administration caused a number of companies to scurry to determine whether or not they would be potentially liable for various employment matters or decisions because of the joint employer status. The withdrawal of this guidance does not necessarily change the law but does change the anticipated focus of Department of Labor investigations.  Companies can continue to hire individuals who would qualify as independent contractors or hire a company that would provide workers.  There will still be questions whether the workers are actually employees of the hiring company, especially if the claim is that the workers are each individual independent contractors providing some particular type of service to the hiring company.  The law regarding independent contractor status has not changed but whether it will be the topic of aggressive enforcement now needs to be determined. Employers should not breathe too easy nor go out of their way to risk a particular worker being considered an independent contractor or an actual employee of the company.  There is still potential liability if an individual worker is declared an independent contractor but actually qualifies as an employee of the company.  The company may be responsible for income tax withholdings, worker’s compensation coverage and other types of benefits if the employee is misclassified as an independent contractor and actually qualifies as an employee.  Employers should be careful but at least will be given a fair chance to show an individual is not an employee of the company.

Medicaid Fraud Control Units Report Focus on Personal Care Services

Posted on June 27, 2017, Authored by John H. Fisher, II, Filed under Health Care

The Department of Health and Human Services (HHS) Office of Inspector General (OIG) has released a report summarizing activities of State Medicaid Fraud Control Units (MFCUs or Units) for fiscal year 2016.  The OIG is the designated Federal agency for oversight of state MFCUs.  The report found a total of 1,564 convictions of which approximately one-third involved personal care service attendants.  Personal care convictions included prosecution of personal care attendants, agency representatives, and home care aides.  The report also identified 998 civil settlements and judgments and nearly $1.9 billion in civil and criminal recoveries. Around one-fourth of the convictions related to fraudulent billings and other fraud issues.  Another quarter of the convictions involved patient abuse or neglect, including patient assault occurring in long-term care facilities.  The focus on the personal care industry is highly problematic because personal care agencies are often smaller, local businesses operating on relatively thin margins.  Personal care businesses generally involve a nurse that has supervision authority over personal care workers.  Personal care workers may be assigned to provide basic care to a small group of patients in their homes.  Sometimes the personal care worker is even a resident in the home of the patient and may be a distant relative of the patient.  Smaller organizations may not have the resources to proactively deal with compliance issues.  At the same time, there are numerous areas of compliance risk in the personal care business.  Some risk areas that might catch the attention of personal care businesses include: Personal care workers must be appropriately qualified and trained.  Verification of qualifications should be performed and documented by the agency. A registered nurse is generally responsible for assuring each personal care worker is properly training in certain core competencies.  Periodic and remedial training may be required to meet training requirements. Failure to properly document training provided to personal care workers presents risk; even if the training actually took place.  Training needs to be completely documented or reviewing agencies may deny payment or seek repayment from the provider. Personal care worker documentation must appropriately document the service provided.  The service must be within the allowable scope of service and the start and stop time of the applicable service must be accurately recorded.  Insufficient documentation is one of the most frequent grounds for investigation. The service provided by the personal care worker should match the plan of care for the specific patient. The personal care worker’s documentation must be properly maintained and must make sense in context of the specific care relationship.  Timesheets and claims must match.  Time increments claimed by an agency must be supported by documentation by the personal care worker that matches the claim. Claims must be submitted by the same personal care worker who records the time in the patient record. Avoid using timesheets where the recorded information is photocopied.  Each personal care worker visit must be considered unique and documentation must match the nature of the service provided during that visit. Timesheets must be prepared and signed by the personal care worker and should never be recreated by the agency.  Reviewers will look for evidence a worker’s signature is forged or copied. Reviewers will look for patterns in documentation that do not make sense.  For example, one or more patient records might be compared to determine whether the personal care worker documents services provided at the same time at two different locations.  An example cited in the report involves a home care aide who submitted timesheets for services rendered while the patient was in an acute-care hospital.  This made the entry patently false and subjected the care worker and agency to legal exposure.  In fact, the care worker in this case was fined and convicted to two years in state prison. There are numerous compliance “traps” that apply to personal care services.  Compliance requirements based on applicable state requirements and reimbursement rules should be identified as part of the agency’s compliance function.  Monitoring and auditing should take place in areas where most compliance risk exists.  It is highly preferable for an agency to identify areas of non-compliance through its own internal processes.  Last and not least, the agency must maintain and actively operate an effective compliance program.  Regulatory requirements are numerous and virtually all agencies discover deficiencies over time.  Maintaining an effective compliance program is the best protection against an agency being exposed to potentially devastating results of a government investigation, prosecution, or overpayment demand.

Antitrust Challenge to Narrow Network Products – 7th Circuit Rules in Favor of Exclusive Agreement

Posted on June 28, 2017, Authored by John H. Fisher, II, Filed under Health Care

The health care market has recently seen a resurgence in narrow network products.  To a significant degree, the resurgence of these products has been driven by the need for managed care plans looking for new avenues to help reduce the cost of care.  Traditionally, health care plans have been able to manipulate risk through exclusion of pre-existing conditions and exclusion on covered services.  Health care reform ended much of the opportunity to utilize these methods to reduce costs.  In their place many products in the market contain some sort of limitation on the provider network, either through creation of an exclusive arrangement with a system or network, or through creating more than one level of provider with preferred providers costing less in out-of-pocket expenditures to beneficiaries. Limited or narrow network products create winners and losers.  The winners are the networks who successfully negotiate a level of exclusivity in their arrangement with one or more health care plans.  The losers are the system or networks who are taken out of the market as a result of an exclusive provider arrangement or other limitation.  Network adequacy requirements tend to push exclusive arrangements toward the larger systems that are able to fulfill the entire spectrum of care.  A larger system can provide “one stop shopping” covering at least the required core elements. In some instances, exclusive dealing arrangements can be anti-competitive and can also be challenged under state and/or federal antitrust laws.  The critical issue is whether the exclusive arrangement unreasonably restricts competition in the market.  Restriction on competition is the central concept promoted by the antitrust laws.  A smaller system or provider network may challenge an exclusive arrangement as being anti-competitive.  Case law interpreting the antitrust laws in connection with narrow or limited network products is not incredibly well developed, at least as applied to the specific facts involved in the health care insurance market.  There are some cases that provide guidance on specific concepts that are applicable in the health care market, but for the most part the law in this area is still developing.  That is why a case decided by the 7th Circuit Federal Court of Appeal holds such significance. The case Methodist Health Svcs. Corp. v. OFS Healthcare System, d/b/a Saint Francis Med. Ctr., Case No. 16-3791 (7th Cir. June 9, 2017) was brought by a smaller system that had been taken out of the market by a larger system that negotiated an exclusivity provision in its contract with one of the major health insurance plans in the region. The smaller system, Methodist Health Services Corporation brought suit challenging a contract between Saint Francis Medical Center and major health care insurers in the market.  Together, Methodist and Saint Francis make up the majority of the health care market in the Peoria, Illinois area.  The suit brought by Methodist alleged that the exclusive contract created an unreasonable restraint of trade because it significantly impeded the ability of Methodist to enter private commercial insurance contracts. The exclusive contracts created two tiers of providers: in-network providers and out-of-network providers.  Beneficiaries were responsible for more out-of-pocket costs when using out-of-network providers.  Saint Francis took the restriction to yet another level by specifically prohibiting the insurers from making Methodist an in-network provider.  More than half of the commercial insurance contracts in the market were alleged by Methodist to include this type of restriction. The 7th Circuit Court of Appeals was hearing none of the arguments that Methodist made.  Instead, the Court focused on the fact that Saint Francis offered a more complete range of services that Methodist was unable to offer through an exclusive arrangement.  Additionally, the Court emphasized the short term nature of the contract between Saint Francis and applicable insurers.  The Court found that the short term nature of the contracts (most had a one year term) created very little restriction on competition.  In fact, the Court opined that the short term nature of the exclusive arrangements permitted excluded providers to negotiate each year.  This actually was seen as promoting competition in the market rather than impeding competition.  The Court left open whether longer term exclusive arrangements might create legitimate restrictions on trade.  The Court also placed a lot of weight on the ability of Saint Francis to offer a variety of services that could not be offered by Methodist or any other provider in the market. Judge Posner authored the decision and seemed to find nothing anticompetitive resulting from Saint Francis’ ability to leverage its more complete array of services.  The Court also found that Methodist was not restricted from creating a competitive array of services that are required to achieve network adequacy. The case is far from a decisive repudiation of potential antitrust claims that challenge narrow network products.  Certainly, the right facts could establish more convincing arguments that the exclusive nature of a contract restricts trade.  Every market contains different dynamics and antitrust cases tend to be factually based on the nature of competition in the market.  At the same time, the 7th Circuit Court of Appeals opinion illustrates the difficulty in bringing antitrust cases in many markets.  It will be interesting to see how various Federal court circuits apply the antitrust laws to narrow network products in other jurisdictions.  Given the dynamics in the health care market, suits in other jurisdiction are virtually inevitable.