April, 2005
Volume 1, Issue 2
|
Welcome To BDB Health & Medicine Reporter
In addition to these articles, we bring you three items that will be regular features of BDB Health & Medicine Reporter. First is the attorney profile, and this issue features David Abromowitz. We also offer recent legislative updates and updates from the Office of the Inspector General. We hope that these items will help you stay current with legal developments. If you have questions, please call any member of our Health and Medicine Practice Group. ___________________________ is an Associate attorney and member of the Health & Medicine Practice Group. She can be contacted at pbathija@bdblaw.com or 614.227.4282.
|
||||
|
Physicians whose insurance policies include “election of consent” have a number of difficult choices to make if they are sued for malpractice. The issues of personal exposure, disruption of income, attendance at an extended trial, adverse publicity, health, reputation, personal values, financial stability, future credentialing, hospital privileges, pride, ego, honor and dignity all may play roles in these decisions. When coverage is minimal and the claimed injury severe, the decision can be excruciating.
An “election” policy gives physicians the power to send their malpractice cases to trial. The election allows for consent or withholding of consent to settlement and requires a signature on the “dotted line” to be effectuated. This multi-factorial decision is anything but simple. In many circumstances it is prudent to make this decision with the advice of personal counsel and the input of defense counsel as well.
CONSENT
Consenting does not dictate that the case will settle; it simply allows the physician’s insurance carrier to enter into settlement negotiations. Insurers don’t stay in business by breaking the bank with inflated settlements and may well determine that the case is worth less than the Plaintiff is willing to accept. If so, the physician will have his or her day in court.
The wording of the typical malpractice insurance policy makes consent unconditional and leaves the amount of settlement to the insurer. A provisional consent (for example, that the doctor’s consent is withdrawn if the case does not settle for less than $25,000) may be desirable, however, and personal counsel can be effective in obtaining these terms. Experience shows that such terms must be expressly negotiated, since policies are written to favor the insurer with unbridled discretion in determining case value.
Presuming consent is provided and the case settles, negative consequences can still ensue. The settled case is a reportable incident to the National Practitioner’s Data Bank, for example. The insurer will report the amount of settlement and briefly describe the circumstances surrounding settlement. The lower the settlement, the easier to explain at credentialing reviews or when seeking privileges.
WITHHOLDING CONSENT
Ohio favors settlement and has enacted laws promoting this policy, i.e., Ohio’s Prejudgment Interest statute. This complex area of the law poses a range of challenges for physicians if they decide to withhold consent. Ohio requires that parties broach settlement in “good faith,” the absence of which exposes the offender to prejudgment interest.
Before tort reform, when an adverse verdict occurs, the statute imposes 10% per annum back to the time of injury, if a party has failed to negotiate in good faith. The statute does not require “bad faith,” but merely the absence of “good faith,” which is a lower threshold of proof in the minds of Ohio courts. In effect, a physician may be penalized heavily for guessing wrong about his or her real exposure.
The following scenario illustrates the issues possibly arising out of election-of-consent decisions: Dr. Smith, a gifted surgeon, believes he acted without fault in treating patient Jones, who failed to survive surgery. Patient Jones sues. Dr. Smith refuses to consent. He fervently believes he met the standard of care. The matter proceeds to trial, but the jury returns a Plaintiff’s verdict in the amount of $2.5 million dollars. Although patient Jones died in December, 1999, the case did not go to verdict until December, 2004. Patient Jones files a post-verdict motion for prejudgment interest. Further discovery depositions are taken of the insurer’s claims representative. The claim file is produced for inspection by the court. In the claim file the court locates a review by a defense expert who did not testify at trial. The expert is a surgeon who was critical of Dr. Smith’s standard of care. The defense chose to utilize another expert surgeon to testify on the standard of care at trial. The court, in considering the motion for prejudgment interest, decides that a reasonable physician in the position of the defendant would have realized the potential of an adverse verdict. The court rules that the defense failed to act in good faith by not making a settlement offer, and awards $625,000 in prejudgment interest.
The above scenario would be especially concerning for the physician if he had only $1 million in coverage. The verdict alone exposes the physician to $1.5 million in excess of coverage.
Even if the physician was fortunate to have adequate coverage for the verdict (who can afford that in today’s market?), there is still personal exposure in the above scenario. The insurer may take the position that it advised Dr. Smith in a letter pre-dating trial of its belief the case should settle. The insurer may argue that it is not liable for the prejudgment interest since Dr. Smith withheld consent and thus prohibited an offer. Under current law, the court could find Dr. Smith personally liable for the prejudgment interest.
SUMMARY
There are a multitude of factors confronting physicians when making an election: When coverage is minimal and the claimed injury severe, the decision to give or withhold consent is excruciating. The decision is somewhat easier, however, if the physician has taken the appropriate measures to protect personal assets well before the lawsuit.
In the final analysis there is no set formula to answer the question. It comes down to a simple choice: Buy out the risk, or keep a stiff upper lip and face the jury. Either choice requires courage.
______________________________ Stephen Griffin is a Shareholder and Co-Leader of the Health & Medicine Practice Group. He can be contacted at sgriffin@bdblaw.com or 330.491.5262.
By: Philip Howes and Tom Himmelspach
But what happens when a guardian is appointed for a person of “unsound mind”? With the appointment of the guardian, is not the disability removed because of the guardian’s ability (and legal duty) to seek redress on the ward’s behalf?
These are the questions that were before the Supreme Court of Ohio in Weaver v. Edwin Shaw Hospital, [1] a case of first impression decided last December.
At age 17, Morgan Weaver suffered a traumatic brain injury from a bicycle-auto accident. Subsequently, while a patient at Edwin Shaw Hospital and at HealthSouth of Erie Rehabilitation Hospital, he allegedly sustained injuries in falls from wheelchairs at both facilities. Following the incidents (but not because of them), he was adjudicated an incompetent (a probate court found him to be of “unsound mind”), and his parents were appointed his legal guardians. The parents subsequently filed medical negligence claims against the hospitals for injuries from the wheelchair incidents. Medical negligence claims are subject to a one-year statute of limitations, and the hospitals moved for dismissal on grounds that the claims were filed outside that period. The trial court agreed and dismissed the actions.
On appeal to Ohio’s Fifth Appellate District, the trial court’s decision was reversed. The appellate court held that although guardians had been appointed for Morgan Weaver his “disability” hadn’t been removed and the statute of limitations was suspended. On application of the hospitals, the supreme court accepted a discretionary appeal.
The court held that the appointment of a guardian for a person of unsound mind neither removes the disability nor commences the running of the statute of limitations. The court reasoned that “disability,” as used in the tolling statute, refers to the status of the person entitled to bring an action, i.e., the ward. It then concluded that the tolling statute applies until “the disability is removed,” that is, until Morgan’s mental abilities are restored. The Weaver court held that a person’s lack of capacity to commence a legal proceeding, as the hospitals argued, is not the “disability” used in the statute; rather, that “disability” refers to Morgan’s mental condition.
While the court’s decision is in line with the rule in the majority of jurisdictions, there are compelling arguments against it: The concern for protecting the right of disabled persons to sue, which underlies the tolling statute, doesn’t arise where a guardian has been appointed; the date of a guardian’s appointment provides certainty in deciding when the statute of limitations begins to run; and holding the guardian to a statute of limitations will work to assure that claims are brought promptly, to the benefit of all parties. The court, however, didn’t address the policy concerns but confined its analysis to the language of the statute, concluding that since the legislature did not state that the tolling ended upon the appointment of a guardian, it wouldn’t read that qualification into the statute.
The court did not defend the soundness of its decision, writing instead that policy considerations are “best left to the general assembly.” For caregivers or others whose work entails contact with persons under a mental debility, the message to take from the Weaver decision is that damage claims brought on behalf of such persons may never be time-barred, unless relief is provided by new legislation.
Philip Howes is a Partner of the Health & Medicine and Litigation Practice Groups. He can be contacted at phowes@bdblaw.com or 330.491.5239. Tom Himmelspach is a Partner of the Health & Medicine Practice Group. He can be contacted at thimmelspach@bdblaw.com or 330.491.5284.
While the law of medical negligence is generally known, many are unfamiliar with the parallel, federal-law system that poses unique liability risks in the area of emergency medicine. In 1986, Congress enacted the Emergency Medical Treatment and Active Labor Act (“EMTALA”), [1] commonly known as the “Patient Anti-Dumping Act.” Although enacted to prevent hospitals from refusing to treat patients who are unable to pay, it applies to all patients without regard to their financial resources. Anyone harmed as a result of a hospital’s violation of the statutory requirements may recover damages under EMTALA.
Hospital emergency departments have two duties under EMTALA: to provide an “appropriate medical screening examination” to determine whether an emergency condition exists and, if so, to stabilize the condition before discharging or transferring the patient.
Screening Requirement EMTALA requires that hospitals provide “an appropriate medical screening examination within the capability of the hospital’s emergency department….” A screening is “appropriate” if it conforms to the hospital’s screening procedures, and is reasonably calculated to identify critical medical conditions that may be afflicting the patient. It isn’t a guarantee of a proper diagnosis, and the question of whether a provider met the screening requirement isn’t decided under a negligence standard. Rather, an appropriate screening is one that is applied uniformly to all emergency room patients.
When a hospital fails to give an emergency room patient the same screening it regularly gives to others under similar circumstances, and the variation is more than de minimis, it can be liable for damages under EMTALA. For example, in Correa v. Hospital of San Francisco, [2] a woman who entered a hospital with complaints of chest pain was given a number (forty-seven) and told to wait. She left the hospital after waiting over two hours and went to another facility where she died from hypovolemic shock. The court held that the hospital violated the EMTALA screening requirement.
Stabilization Requirement If the screening discloses that the patient has an emergency medical condition, the provider must stabilize the patient before discharge or transfer. Most courts have held the requirement applies only when the provider has actually identified an emergency condition. In other words, if the provider did an appropriate screening and discharged the patient without identifying an emergency medical condition, it isn’t liable under EMTALA, even though it may have been negligent in failing to diagnose the condition.
Once the provider determines that the patient has an emergency medical condition, it must use measures appropriate under the circumstances to stabilize the patient. The duty applies only where the patient is discharged or transferred; most courts have held it doesn’t continue after the patient is admitted.
What does a provider have to do to “stabilize” a patient? As in the case of the screening requirement, EMTALA doesn’t give the patient any guarantees. In the trial of an EMTALA claim, the jury will consider whether the treatment and subsequent release or transfer were “reasonable in view of the circumstances that existed at the time the hospital discharged or transferred the individual.” EMTALA requires that the provider “assure, within reasonable medical probability, that no material deterioration of the condition is likely to result from or occur during the transfer” or discharge.
Whether or not the patient is stabilized at the time of discharge or transfer is typically a judgment call, and courts will review the record for signs of acute distress. Hospitals transferring or discharging patients from emergency rooms face liability risks in cases where the patient’s stabilization is tenuous. The risks underscore the importance of thorough documentation of patient care, monitoring, and assessment.
Procedural issues EMTALA claims are subject to a strict two-year statute of limitations. The Ohio-law provision for 180-day letters to extend the statute of limitations in a medical negligence case won’t apply to an EMTALA claim. Likewise, there is no tolling of the statute for minors or persons under a disability.
Congress provided that plaintiffs suing under EMTALA can recover “those damages available for personal injury under the law of the state in which the hospital is located….” Because EMTALA claims don’t involve the standard of care inquiry used in medical negligence cases, there’s a dispute among the courts whether state-law damage caps on medical negligence claims apply to EMTALA lawsuits. Any state-law damage caps generally applicable to tort claims, however, would apply.
Conclusion This overview highlights only the major points of EMTALA, and there are many sub-areas within the broad discussion headings where the law affects emergency medicine practice.[3]
[1] 42 U.S.C. 1282. [2] (C.A. 1, 2002), 69 F.3d 1184. [3] Readers wanting more information on the subject can review a three-part series of articles in Buckingham’s newsletter, The Advisor (Vol., 12, Issue 3; Volume 13, Issues 1 and 2), available at BDBLAW.Com under the “News and Information” link. Tom Himmelspach is a Partner of the Health & Medicine Practice Group. He can be contacted at thimmelspach@bdblaw.com or 330.491.5284.
Q & A: The Implications of the Revised Regulation to the Fair Labor Standards Act
How have the new regulations changed overtime requirements for nurses and other health care professionals?
The most significant change is the raise in the minimum salary level to $455 per week. As of August 23, 2004, most employees who earn less than $455 per week will be entitled to overtime, regardless of their duties.
Additionally, the new regulations clarify that LPNs are not exempt under the professional exemption and must be paid overtime pursuant to the Act. RNs have always been considered to be exempt professionals; they are still exempt under the new rules. The new regulations also verify that registered or certified medical technologists, dental hygienists, and physician assistants fall within the learned professional exemption, while paramedics and other first responders do not.
What requirements must an employee meet to be exempt from the minimum wage and overtime requirements of the Fair Labor Standards Act (“FLSA”)?
There are two tests that apply to most of the “white collar” exemptions to the overtime requirements of the Fair Labor Standards Act:
1. Compensation to the employees must meet the “salary test”; and
2. Their job duties must satisfy one of the “duties tests” set forth in the regulations promulgated by the U.S. Department of Labor for the executive, administrative, professional, computer employee, outside sales, or highly compensated employee exemptions.
What is required for the employee’s compensation to meet the “salary test”?
Employees must receive a predetermined salary amount each pay period. That amount cannot be subject to reduction because of variations in the quality or quantity of the work performed. The employee must receive the full salary for any week in which the employee performs any work without regard to the number of days or hours worked. The minimum salary level for most employees qualifying for the executive, administrative and professional exemptions is $455 per week.
Are there any exceptions to the rule that the employee must be paid his or her entire salary, without reduction, for each week in which the employee performs any work?
Yes, there are seven specific exceptions to the no reduction in salary rule:
1. Deductions when an employee is absent for one or more full days for personal reasons, other than sickness or disability.
2. Deductions for absences of one or more full days for sickness or disability, if made in accordance with a bona fide plan, policy or practice of providing compensation for such absences.
3. The employer can off-set any amounts received as jury fees, witness fees, or military fees (cannot deduct full pay).
4. Deductions for penalties imposed for violations of major safety rules.
5. Deductions for disciplinary suspensions of one or more full days for infractions of workplace conduct rules, made pursuant to a written policy applicable to all employees.
6. Deductions where the employee works less than a full week in the employee’s initial or terminal week of employment.
7. Deductions for FMLA leave.
Are there any alternatives to paying exempt employees on a salary basis?
Those employees who are exempt pursuant to the professional, administrative or computer exemption may be paid on a fee basis: a set amount per task or single job. However, to qualify for the exemption, the employee must be paid strictly on a fee basis; if the employee is paid hourly for some tasks and on a fee basis for others, the employee will not qualify for the exemption.
Is there any way an employer who inadvertently makes improper salary deductions can protect itself from losing the exempt status of its employees?
Yes. The new regulations contain a “safe harbor” rule, which provides an opportunity for the employer to maintain the exempt status of an employee even if improper isolated or inadvertent salary deductions have been made. To qualify for the safe harbor, the employer must:
1. Have a clearly communicated policy that prohibits improper pay deductions;
2. Have in place a mechanism to handle employee wage and hour complaints;
3. Reimburse the workers for any deductions improperly made; and
4. Make a good faith commitment to comply with the act in the future.
What is the duties test for the executive exemption?
For an employee to be an exempt executive, his or her duties must meet all of the following requirements:
1. The primary duty must be the management of the enterprise or a customarily recognized department or subdivision of the enterprise;
2. The employee must customarily and regularly direct the work of two or more other employees; and
3. The employee must have the authority to hire or fire other employees, or the employee’s recommendations regarding hiring and firing must be given particular weight by the decision-makers.
What duties must an employee perform to fall within the administrative exemption?
To be exempt under the administration exemption, the employee’s duties must meet two qualifications:
1. The employee’s primary duty must be performing office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers; and
2. The employee must exercise discretion and independent judgment with respect to matters of significance.
How are the duties of an exempt professional defined?
To be exempt as a learned professional, the employee’s primary duty must be:
1. Performing work that requires advanced knowledge;
2. The advanced knowledge must be in a field of science or learning; and
3. The advanced knowledge must be customarily acquired by a prolonged course of specialized intellectual instruction.
Do nurses qualify for the professional exemption?
Registered nurses generally qualify for the professional exemption. The Department of Labor has specifically articulated, however, that LPNs do not meet the professional exemption because the knowledge required for the position of LPN is not customarily acquired by a prolonged course of specialized intellectual instruction.
Are there any circumstances in which an LPN can be exempt from the overtime requirements of the Fair Labor Standards Act?
Yes. If an LPN’s job duties meet the description of another exemption, the LPN would be exempt. For example, if the assistant director of nursing is an LPN, and his or her primary duty is management of a customarily recognized department of the facility, he or she customarily and regularly directs the work of two or more other employees, and he or she has the ability to hire or fire other employees, or his or her recommendations regarding the hiring and firing of other employees is given particular weight, the LPN would be exempt as an executive.
Likewise, if an LPN holds a position, such as Staff Development Coordinator, in which his or her primary duty is the performance of office or non-manual work directly related to the management or general business operations of the employer, and he or she exercises discretion and independent judgment with respect to matters of significance, the LPN would fall under the administrative exemption.*
What is the new exemption that has been created for highly compensated employees?
Employers may classify a worker as exempt under the executive, administrative or professional exemption if he or she:
1. Earns at least $100,000 a year, at least $455 per week of which is paid on a salary basis;
2. Performs a primary duty of office or non-manual work; and
3. Customarily and regularly performs at least one of the exempt responsibilities falling under the executive, administrative, or professional duties test. *If you have an LPN functioning in a capacity where you believe she/he is exercising independent judgment, please review the standards of nursing practices to ensure compliance with the law, then contact your attorney for additional guidance. __________________________________ Jan Hensel is a Shareholder in the Employment & Workers' Compensation Practice Group. She can be reached at jhensel@bdblaw.com or 614.227.4267.
HIPAA SECURITY RULE: COMPLIANCE DEADLINE! Have you complied with HIPAA’s Security Rule? The Security Rule directs covered entities to use certain administrative, physical, and technical safeguards to protect the confidentiality, integrity, and availability of “electronic protected health information.” Covered entities—health care providers, health plans, and health care clearinghouses—must comply with the Security Rule by April 20, 2005 (small health plans have an additional year to comply). For assistance in assuring that you comply with the Security Rule, contact Shila Nalawadi, Don Antrim, or Joe Feltes. ____________________________________
Covered entity may disclose protected health information in lawsuit as long as safeguards are taken. The Office for Civil Rights (a division of the United States Department of Health and Human Services) explained when protected health information (“PHI”) can be disclosed in litigation in nine FAQs announced on January 19, 2005. Covered entities (i.e. providers, payers, and clearinghouses) under HIPAA do not have to account for disclosures of PHI for litigation if the individual has authorized the disclosure or if the disclosure is part of the covered entities’ health care operations and the covered entity is a party to the litigation. The FAQs also address whether a covered entity not a party to a legal proceeding may disclose PHI in a legal process (e.g. subpoena) without a court order (answer: yes, if certain requirements are met).
If a disclosure is made, safeguards must be taken by the covered entity to make “reasonable efforts” to limit the disclosure to the “minimum necessary” to accomplish the disclosure’s purpose.
For assistance on this topic, contact Shila Nalawadi, Don Antrim, or Joe Feltes. You can access the FAQs yourself at http://www.hhs.gov/ocr/hipaa/
OFFICE OF INSPECTOR GENERAL UPDATES
OIG approves hospital chipping in for key physicians’ insurance. On December 30, 2004, the OIG issued an opinion (No. 04-19) approving a hospital’s request to pay the increased cost of key physicians’ malpractice insurance premiums. Such an agreement will only have the OIG’s approval if the following factors are met: 1) the premium support does not depend on the physicians’ referrals, 2) premium hikes alone are reimbursed, not the premiums the physicians paid before, and 3) there is clear need in the community for the key physicians’ services. You can read the opinion at http://www.compliancealert.net/ao0419.
OIG approves hospital gainsharing plans. On February 18, 2005, the OIG issued two more advisory opinions approving gainsharing arrangements. These gainsharing agreements are almost identical to the last four cost-sharing arrangements the OIG permitted. Both advisory opinions allow a hospital to give a group of cardiac surgeons it employs 50% of the money it saves by opening and using only necessary supplies.
§ Opinion No. 05-05 referred to an arrangement in which a hospital would share with a group of cardiologists the first-year cost savings expected to result from specific practices in the cardiac catheterization lab.
§ Opinion No. 05-06 dealt with an arrangement between a hospital and a group of cardiac surgeons in which the hospital would share with the group the first-year cost savings expected to result from measures taken to reduce wasteful use of supplies in operating rooms.
The OIG found that these gainsharing agreements implicated both the civil monetary penalty provision and the anti-kickback law. Despite the potential for violations, the OIG decided not to impose administrative sanctions based on the protections incorporated into the gainsharing agreements.
You can read these opinions at http://oig.hhs.gov/fraud/advisoryopinions/opinions.html.
OIG supplements compliance program guidance. The OIG published its first Supplemental Compliance Program Guidance for Hospitals on January 31, 2005. Importantly, it details what the OIG examines when deciding if a compliance program is “effective.” The document identifies areas susceptible to fraud and abuse, identifies claim submissions as the biggest risk area for hospitals, and gives examples of hospitals that improperly claimed supplemental payments.
The OIG states that its supplemental guidance may be used as a benchmark for hospitals’ effective compliance programs. Such programs should prevent, detect, and correct compliance issues to be effective, and the programs should be reviewed at least once a year. The OIG details that an “effective” compliance program must have a unit with the resources and autonomy to enforce compliance, systems to assist employees’ compliance, open communication for the detection of problems, annual training, and auditing and monitoring procedures in place.
The OIG has issued compliance program guidance in several areas of practice including individual and small group physician practices and clinical laboratories. You can access all of the OIG’s compliance program guidelines at http://oig.hhs.gov/fraud/complianceguidance.html.
If you have questions or concerns about any of these OIG updates, please contact Tom Hess, Don Antrim, Bob Preston, or Joe Feltes.
In February, 2005,
Richard S. Milligan, Buckingham CantonSM,
spoke at the Stark
______________________________
_______________________________
_______________________________
_______________________________
_______________________________ If you are interested in obtaining information on upcoming seminars or would be interested in having speakers from BDB make a presentation to your organization, please contact: Lorna J. Henderson, Client Relations Administrator, at 800.686.2825 ext. 473 or lhenderson@bdblaw.com.
|
||||
|
It is an axiom of American jurisprudence that a right of
action, once acquired, can be lost with the passage of
time. Thus, In Ohio, actions for bodily injury or property
damage must be commenced within two years after the injury
or damage occurs. The law, however, gives claimants under
a “disability” extended periods of time in which to bring
an action. Persons of “unsound mind” and persons within
the age of minority (less than eighteen years) are not
required to file an action until after the “disability” is
removed. For a person under eighteen, the “disability” is
removed when the age of eighteen is attained.
County
Bar Association Elder Law Committee Luncheon on
Ethics and the Elder Law
Practice. In addition, he spoke to
the National Association of Railroad Trial Counsel on
Ethics and Deposition Practice
at their Winter Meeting in Orlando, FL.
Mr. Milligan also gave a presentation to the Guidant
Corporation on Documentation
and Legal Liability for the Coronary Care Nurse.
In April, 2005, Mr. Milligan spoke to the
Community Legal Aid Services in Ravenna, OH, on
Ethics for the Legal Aid
Practitioner. Finally, he presented
Medical Malpractice and the
Coronary Care Nurse to the Aultman Heart
Center.
In
March, 2005,
