Author: Courtney Patterson

September 12, 2024

Posted on by Courtney Patterson

QUESTION:
I saw in the August 22, 2024, edition of the HLE that the FTC regulations effectively outlawing restrictive covenants were invalidated by a district court in Texas.  Does that ruling apply in the entire country and did it have anything to do with the Supreme Court’s decision overruling the Chevron Doctrine?

OUR ANSWER FROM HORTYSPRINGER ATTORNEY HENRY CASALE:
The Federal Trade Commission issued final rules that were to go into effect on September 5, 2024 that would: (i) ban restrictive covenants in new employment agreements; (ii) permit a restrictive covenant in an acquisition; (iii) require employers to rescind covenants currently in effect; and (iv) not directly prohibit non-solicitation covenants, but a non-solicitation covenant would have been difficult to enforce under the final rules.

The FTC toiled mightily on these rules.  It was reported that the FTC received nearly 27,000 comments on the proposed rules.  According to a letter from the FTC that was sent to House Judiciary Committee Chairman Jim Jordan (R-Ohio), that was obtained by Bloomberg Law under the federal Freedom of Information Act, it was also reported that by late February 2024, the FTC had spent about $500,000 on this rulemaking effort and at that point, 47 agency employees, contractors, advisers and consultants had spent more than 6,000 hours on the rulemaking.

It is also interesting to note that the FTC was not alone in its opposition to restrictive covenants and that the Attorneys General from 18 states wrote a letter in support of the FTC’s proposed rules.

But all of that work was for naught, because after the rule was promulgated in final form, but before it could go into effect on September 5, 2024, as we reported on August 22, those rules were invalidated nationwide by U.S. District Court for the Northern District of Texas In Ryan LLC v. Federal Trade Comm’n, No. 3:24-CV-00986-E (N.D. Tex. Aug. 20, 2024).

Interestingly, the court did not discuss the demise of the Chevron Doctrine directly.  However, the district court cited the U.S. Supreme Court’s recent decision in Loper Bright Enterprises v. Raimondo, No. 22-1219 (U.S. June 28, 2024), the decision that overruled the Chevron Doctrine, several times throughout its opinion.

The district court concluded that the text and the structure of the FTC Act did not confer substantive rulemaking authority on the agency with respect to unfair methods of competition and so the FTC exceeded its statutory authority in promulgating the non-compete rule.

In addition, the district court found the FTC’s “lack of evidence” as to why they chose to impose such a sweeping prohibition instead of targeting specific, harmful noncompete covenants, rendered the rule arbitrary and capricious and beyond the scope of the FTC’s statutory authority.

Yes, the district court had the authority to invalidate the rule nationwide.  However, this decision does not affect the FTC’s ability to challenge a restrictive covenant on a case-by-case basis, nor does it affect state law on restrictive covenants.  But since FTC actions are likely to be few and far apart, that leaves the issue of the enforceability of a restrictive covenant to be a matter of state law.

However, the state law on restrictive covenants varies from state to state.  You also need to be aware that many states are currently looking at this issue and reconsidering whether they want restrictive covenants to be enforceable in that state.

Case in point, Pennsylvania just passed a law called “The Fair Contracting for Health Care Practitioners Act” (also known as Act 74) which will go into effect on January 1, 2025.  This new law significantly changes the law in Pennsylvania with regard to the ability of an employer to enforce a restrictive covenant with a physician, CRNA, CRNP or PA.

For example, under this new law, an employer may enforce a noncompete covenant if the length of the noncompete is no more than a year, provided that the health care practitioner was not dismissed by the employer.  So, if the employer ends the employment relationship, the otherwise permitted one-year restrictive covenant is rendered unenforceable.

The new law does include an exception that permits a restrictive covenant in an acquisition.  The law also permits an employer to include a term in its employment agreements that will allow the employer to recover reasonable expenses that are directly attributable to the employee and are accrued within three years prior to separation UNLESS the employee’s separation from employment is due to dismissal by the Employer – apparently even if the dismissal is for cause.  The employer can also recoup costs that are related to relocation, training and establishment of a patient base, regardless of how the employment relationship ends.  But these costs must be amortized over a period of up to five years from the date of separation.  There is also a patient notice requirement that will prohibit a patient non-solicitation term.

As with any law the devil is in the details.  But, since January 1, 2025, will be here before you know it, employers in Pennsylvania need to change past practices in their new employment agreements in order to comply with this new law.  Employers in other states must constantly monitor this issue, as the current trend does not favor the enforcement of a restrictive covenant even if such a covenant may have been enforceable in the past.

If you have a quick question about this issue, please e-mail Henry Casale at hcasale@hortyspringer.com.

If you want to find more information on the demise of the Chevron Doctrine and its effect on Healthcare Compliance, please join Dan Mulholland, Henry Casale and Jerry Safran, Founder and CEO of YouCompli, for our September 30, 2024, webinar that is co-sponsored by HortySpringer, YouCompli and the Health Care Compliance Association, entitled: “What Does the Reversal of the Chevron Doctrine Mean for Healthcare Compliance?” To register, click here. 

 Also be sure to join Dan and Henry in Las Vegas at our Hospital-Physician Contracts and Compliance Clinic, November 14-16, where the FTC rule, Chevron and a whole lot more will be covered. For more information or to register, click here. 

September 5, 2024

Posted on by Courtney Patterson

QUESTION:
An applicant’s background check revealed a recent misdemeanor arrest that the applicant failed to disclose on their application. Are we allowed to ask the applicant questions about the arrest even though the background check indicated that the case has not yet been resolved?

OUR ANSWER FROM HORTYSPRINGER ATTORNEY HALA MOUZAFFAR:
Absolutely!

It is the hospital’s responsibility, through the credentialing and privileging process, to appoint only highly qualified providers.  To do so, the burden should be on the applicant to demonstrate current clinical competence and an ability to practice safely.  Therefore, it is important to keep the burden on the applicant to resolve any doubts related to their qualifications.  This includes answering additional questions and resolving any doubts that may come up in the course of reviewing their application.  An application that has red flags or outstanding questions should not be processed further until the underlying issues are resolved to the satisfaction of the hospital.

An arrest, for instance, is something that would certainly require follow-up.  Specifically, when was the arrest? Why was the applicant arrested? Were any charges brought against the applicant? Why did the applicant leave this information out of their application? These are questions for the applicant to resolve prior to the hospital processing the application further.

It does not matter if the applicant’s criminal case has not yet been resolved.  The hospital has the ability to ask those questions it feels need to be answered, and for documentation to support those answers, in order to properly resolve any questions about the applicant, and in this case their arrest.

August 29, 2024

Posted on by Courtney Patterson

QUESTION:
Our Credentials Committee is reviewing a reappointment application for a medical staff member who has had some pretty significant behavioral issues over the past year.  We want to recommend that she be reappointed for less than a full two-year appointment term to reinforce the need to change her behavior, but some members of the committee think that it would be an “adverse recommendation” and give her the right to a hearing. Is it?

OUR ANSWER FROM HORTYSPRINGER ATTORNEY LEEANNE MITCHELL:
The short answer is that whether or not a recommendation to grant appointment for less than two years (or three years for those hospitals that have made the switch to longer terms) is governed solely by the existing medical staff bylaws.  If your bylaws do not guarantee two-year appointment terms, and the grant of appointment for less than two years is not specifically listed as one of the things that gives an individual the right to request a hearing in the pertinent section of the bylaws, then no, it would not be considered adverse.

Arriving at this conclusion can be more challenging if, rather than listing specific, clear recommendations that trigger the right to a hearing, the bylaws instead provide that “any recommendation that adversely affects an applicant or member” gives the right to request a hearing.  Whether the hospital views a less than two-year appointment term as adversely affecting an individual or not could very well differ from the viewpoint of the medical staff member at issue.

Bottom line, medical staff bylaws should affirmatively state that medical staff appointment will be granted for “not more” than two (or three) years and should give the Credentials Committee and the Medical Executive Committee the clear ability to grant appointment terms of less than the relevant time period – without concerns that it constitutes an adverse recommendation.  A short-term appointment can be a helpful tool in the exact situation posed above – when medical staff leaders are trying to get someone’s attention, emphasizing the need to make changes during a shortened time period of more focused review.  It can also be helpful when a medical staff member is in the midst of a review process that will not be fully concluded before the current term expires, giving the ability to reappoint that individual on a short-term basis, pending the outcome of the relevant review process.

If you have a quick question about this, e-mail LeeAnne Mitchell at LMitchell@hortyspringer.com.

August 15, 2024

Posted on by Courtney Patterson

QUESTION:
We are in a mid-sized city with one other competing hospital.  Even though this other hospital appears to have a similar composition of specialists (at least on paper), it keeps transferring emergency patients to us claiming it doesn’t have anyone on call in certain specialties.  Our physicians are starting to feel like they’re on call for the other hospital as well as our own. Do we have to accept these transfers?

OUR ANSWER FROM HORTYSPRINGER ATTORNEY IAN DONALDSON:
Under EMTALA, a receiving hospital has the right to refuse a request for a “lateral” transfer.  A lateral transfer occurs where the same services are provided at both the sending hospital and the receiving hospital.  Such a refusal does not violate EMTALA even though it may be in the patient’s best interest for the transfer to be accepted.

However, if the receiving hospital has “specialized capabilities,” and also has the capacity to stabilize the patient’s emergency medical condition, then the receiving hospital must accept the patient.

EMTALA itself lists burn units, shock trauma units and neonatal units as examples of “specialized capabilities.”  However, courts and CMS have taken the position that an on-call physician also constitutes a “specialized capability.”  Thus, if your hospital has an on-call physician available, and the hospital proposing the transfer doesn’t have an on-call physician available, your hospital must accept the transfer if it has the capacity to take care of the patient.  This is true even if the sending hospital has specialists on its staff who could treat the patient if they were on call (but who are not actually on call).

This requirement has put hospitals in a bind, and while it may be patently unfair, refusing the transfer could create its own host of problems.  As such, we recommend accepting the transfer to avoid having patients get caught in the middle.  From there, you could consider how best to address the situation going forward.

If you have a quick question about this, e-mail Ian Donaldson at IDonaldson@hortyspringer.com.

August 8, 2024

Posted on by Courtney Patterson

QUESTION:
We are part of a ten-hospital system.  Each hospital medical staff has its own bylaws, policies, and rules and regulations.  While we have tried to make them consistent over time, there are still a lot of differences in our documents, including in nomenclature, appointment criteria, and the process for suspensions, investigations, and hearings.  Any suggestions??

OUR ANSWER FROM HORTYSPRINGER ATTORNEY SUSAN LAPENTA:
If it helps, you should know, you are not alone.  Most health systems grew through acquisition, one hospital at a time.  Each new hospital had its own medical staff which had their own governing documents which, of course, the medical staff was reticent to change.

At the same time, working with, maintaining, and updating multiple sets of medical staff governing documents is a herculean task.  It also creates the undesired but inevitable opportunity for the documents to become more divergent and even conflicting with time.

That is why many health systems are moving in the direction of rewriting their medical staff governing documents with a focus on the core objectives of consistency and uniformity.  The rewriting often starts with the development of template documents.  While the medical staff bylaws must live at the local level to comply with accreditation standards, starting from the same template document will result in the bylaws being almost identical throughout the system.

When it comes to other medical staff documents, you have more flexibility.  We advocate for the development and adoption of medical staff policies that live at the system level but that are implemented locally by each medical staff.  These policies typically include a system credentials policy, peer review policy, professionalism policy, and practitioner health policy.  The end result is that instead of there being different policies at each hospital medical staff, there is a single system.

An undertaking like this requires commitment, engagement, strong physician leadership, and an ability to “think outside the box.” But the rewards are long lasting.  If you are looking for a mantra to jump start your medical staff bylaws revision project, we offer the sage guidance from a system CMO:  “Our goal, across the system, is to make our medical staff documents as standardized as possible and as unique as necessary.”

If you have a quick question about this, e-mail Susan Lapenta at slapenta@hortyspringer.com.

July 18, 2024

Posted on by Courtney Patterson

QUESTION:
We asked a physician to attend a Leadership Council (a small group of Medical Staff leaders) meeting to provide input about some recent behavioral concerns we have had about them. The physician agreed, but only if they can bring their attorney. Our policies don’t address a provider’s ability to bring an attorney to meetings like this, so do we have to let the attorney attend the meeting?

OUR ANSWER FROM HORTYSPRINGER ATTORNEY HALA MOUZAFFAR
Nope. In this scenario, you do not have a legal obligation to permit an attorney to attend. The meeting is not a hearing where you would be required to allow the physician’s attorney to be present. It is simply an opportunity for the hospital and physician to get together and discuss the concerns in a collegial manner.

The physician should feel free to consult an attorney, have the attorney accompany them to the hospital, etc., but once the doors shut to that meeting, you do not have an obligation to allow that attorney to be on the other side of them accompanying the physician.

Moving forward, there are some ways you can edit your policies, so you avoid this kind of conundrum in the future. Hospital policies should make it clear that in collegial and educational meetings, like the one you described, no counsel representing the practitioner, medical staff, or hospital will be permitted to be present. Putting something like this in writing gives you a clear place you can point to and say, “sorry our policy doesn’t allow that.”  By not allowing attorneys for any party, it also creates an equal expectation for all parties involved.  And, let’s face it, keeping attorneys out of these collegial/education conversations keeps them just that – collegial and educational. Once you add attorneys to the mix, that heat dial moves up whether you intend it to or not because things just feel more confrontational.

If you have a quick question about this, e-mail Hala Mouzaffar at hmouzaffar@hortyspringer.com.

June 27, 2024

Posted on by Courtney Patterson

QUESTION:
Is there any evidence that offering free trips or other freebies to a physician induces that physician to order the product sold by the person or entity that offered the freebie?

OUR ANSWER FROM HORTYSPRINGER ATTORNEY HENRY CASALE:
The federal government thinks so and so did the jury in a recent case.

In a qui tam case that was brought against the Cameron-Ehlen Group, Inc., d/b/a Precision Lens (“Precision Lens”), and its owner Paul Ehlen, the qui tam relator, and ultimately the federal government, alleged that Precision Lens and Mr. Ehlen provided kickbacks to ophthalmologists in various forms, including travel and entertainment, to induce those physicians to order Precision Lens’ Intraocular Lens (“IOLs”).

The unlawful “remuneration” in this case was alleged to consist of Precision Lens and Mr. Ehlen transporting certain physicians who had a history of using Precision Lens’ IOLs to luxury vacation destinations on a private jet – which was typically flown by Mr. Ehlen. The alleged remuneration included multiple trips, high-end skiing, fishing, golfing, hunting, sporting, and entertainment vacations, often to exclusive destinations such as New York City to see a Broadway musical, the College Football National Championship Game in Miami, and the Masters golf tournament in Augusta, Georgia.

Mr. Ehlen claimed that he was personal friends with these physicians and that the trips were gifts from one friend to another.  Mr. Ehlen and Precision Lens argued that the Antikickback Statute (AKS) does not prohibit a friend from providing a gift to another friend, even if the friends happen to do business with each other. Armed with this “friends” defense, Mr. Ehlen and Precision Lens rolled the dice, and risked a jury trial.

Unfortunately for Precision Lens and Mr. Ehlen, the government was able to convince a jury that the various “gifts” that Precision Lens, and its owner, Mr. Ehlen provided to the ophthalmic surgeons constituted unlawful remuneration that was intended to induce the physicians to order Precision Lens’ IOLs in cataract surgeries that were reimbursed by Medicare. It didn’t help that the government was also able to prove that Precision Lens maintained a fund, referred to internally at Precision Lens as a secret fund or slush fund, that was used to finance many of these multiple physician trips.

Another interesting aspect of this case that helps to explain the jury’s verdict was the government’s expert witness.  In order to convince the jury that the intent of the free trips was to induce the physicians to order Precisions Lens’ IOLs rather than IOLs manufactured by another company, the government presented a medical device marketing expert who provided testimony on how companies use gifts and incentives to influence physicians to use their products.  The expert witness provided research that showed that gifts and other incentives trigger the impulse to reciprocate, even if it was just subconsciously, and even at levels disproportionate to the gift.

This expert also testified that although doctors generally claim that their medical decisions are not influenced by the financial benefits they receive from product manufacturers, these benefits do in fact have a strong influence on medical decision making.

Apparently, the jury believed this expert witness along with the other evidence presented by the government because the jury concluded that the free trips were unlawful kickbacks provided to the ophthalmic surgeons with the intent to induce their use of the Precision Lens’ IOLs in cataract surgeries reimbursed by Medicare.  The jury then entered a judgment against Precision Lens and Mr. Ehlen in the amount of $487,048,705.13, which in early 2024 was reduced to a mere $216.7 million.

The OIG and DOJ believe that the fraud and abuse laws level the playing field for all competitors. They argue that a company such as Precision Lens should be competing with the manufacturers of similar products, on price and quality, not by giving the physicians who order their products lavish gifts.  The expert testimony in this case supported this argument.  That expert testimony should be kept in mind any time a referral source considers providing something of value to a referring physician.

If you have a quick question about this, e-mail Henry Casale at hcasale@hortyspringer.com.

If you want to learn more about the OIG, the Anti-Kickback Statute, the Stark Law, the False Claims Act, exclusive agreements, the recent FTC regulations on noncompete agreements, and much more, check out our latest episode of The Kickback Chronicles podcast and also join us at the Hospital-Physician Contracts and Compliance Clinic Seminar in Las Vegas from November 14-16, 2024!

June 20, 2024

Posted on by Courtney Patterson

QUESTION:
We liked those tips for running an effective meeting that you gave two weeks ago. Do you have any more tips for running an effective meeting?

OUR ANSWER FROM HORTYSPRINGER ATTORNEY NICHOLAS CALABRESE:
Sure, let’s get right to them!

The first tip deals with post-meeting tasks.  The meeting attendees should have clear goals and assigned tasks after leaving the meeting.  For example, does research need to be done?  Be clear on the specific issue that is to be researched, how it is to be presented (a memo?  Oral report?), when it is due (one week prior to the next meeting?  At the next meeting?) and to whom the results are to be reported (the chair?  Everyone on the committee?).

The second one deals with how a chair keeps order at a meeting.  By strict adherence to Robert’s Rules of Order?  No!  We recommend that Robert’s Rules be looked to for guidance, but not be binding, and that the chair reserve the power to make all definitive procedural rulings.  Why?  Because if there is a parliamentarian on the committee, he or she can dominate the discussion just because he or she knows Robert’s Rules inside and out.  Also, it’s impractical to expect everyone on the committee to know all of the rules, and we don’t want to put them at a disadvantage during meetings.  So, don’t get bogged down in Robert’s Rules – think fundamental fairness.

The last one deals with how to record what happened at a meeting.  You should have someone take notes to prepare the minutes of the meeting.  The minutes record the decisions of the committee.  We’ll save what should be in minutes, and what should be left out of minutes, in a future Question of the Week, which hopefully, won’t be in two weeks.

If you have a quick question about this, e-mail Nick Calabrese at ncalabrese@hortyspringer.com.

June 13, 2024

Posted on by Courtney Patterson

QUESTION:
We have several clinical departments that have either weak chairs or chairs who are there entirely by “default” and really seem to have very little interest in the position.  Our support staff then have to spend a significant amount of their time chasing down these chairs for the documentation and other input they are required to provide into our processes – which takes these folks away from their own functions.  Department chairs are relied upon to perform a really important role.  How can we get stronger leaders interested?

OUR ANSWER FROM HORTYSPRINGER ATTORNEY LEEANNE MITCHELL:
In many hospitals, it has been traditional to rotate the department chair position so that everyone gets (or is forced to take?) their turn.  However, not every physician, quite frankly, has an aptitude for, or interest in, medical staff leadership.  One answer might be to develop stronger qualifications for serving in medical staff leadership roles, including officers and department chairs, and to provide compensation for these roles.  Another question to ask is if there are too many departments.  Consider consolidating departments.  By having fewer positions to fill, you then have a larger pool of qualified people who want to serve.

That said, one of the biggest changes that we have seen in medical staff leadership in the recent past (and one which we now recommend strongly!) is to eliminate the use of “ad hoc” nominating committees for identifying medical staff leaders – whether they be officers, department chairs, or committee chairs – and the movement toward a standing committee dedicated to leadership development and succession planning that meets throughout the year.  Having a standing committee in place allows the leadership to take a more comprehensive look at the medical staff, identifying new members who might make good leaders in the future – giving them time for training, education, and development.

June 6, 2024

Posted on by Courtney Patterson

QUESTION:
Our chair runs the most horrible meeting ever.  The problem with that is that I’m the chair!  Do you have any tips that could help me?

OUR ANSWER FROM HORTYSPRINGER ATTORNEY NICHOLAS CALABRESE:
Do we ever.  The chair is the presiding officer and being the chair is hard work, so here are some tips for the chairs, or anyone, to have an efficient meeting:

Tip #1. Start on time.  If a meeting isn’t started on time, chances are it won’t end on time.  Starting on time shows that the chair has expectations for his or her meeting.  If the chair is taking the meeting seriously, the participants will more than likely take it seriously, and not treat it as a weekly, monthly, etc., casual get‑together.

Also, if a meeting always starts on time, the participants will more than likely be there on time.  No one likes to walk into a meeting late.  But, if the meeting never starts on time, the participants may start thinking “Well, it’s 15 minutes past the start time, so the meeting probably didn’t start, but if it did, I’m not going to be that late.”  Or, being late becomes a joke “I can believe you started already – it’s only 15 minutes past the start time!  What happened, did everyone synchronize their watches?”

Being late to a meeting disrupts the meeting.  The participant who is late may not pick up on the discussion, or if the chair summarizes what has already been discussed for the late-comer, the chair may “lose” those who were there on time.

So, start on time, no matter who is in the room, don’t summarize for late-comers – that can be done after the meeting, and no excuses for being late.  It sounds rigid, but when the word gets around that you start on time, that’s one building block in running an efficient and effective meeting.

Tip #2. Encourage participation.  The chair should get every attendee involved.  Some attendees may not speak because he or she may be shy, or feel intimidated, but the chair should draw those attendees in to get multiple points of view.

Tip #3. Limit the conversation.  This doesn’t mean that the chair should not hear from everyone who wants to contribute their point of view.  The purpose of a meeting is to get different points of view, then make a decision.  What “limit the conversation” means is that if a couple of people in the room are making the same point, over and over again, that’s unproductive, so the chair should step in and say “Ok, any other points of view that we haven’t discussed yet?”  Also, if a discussion “drifts,” the chair should step in and restate the purpose of the discussion.  This can be hard to do, because chairs don’t want to be seen as dictators, but it is a skill that needs to be developed.  Otherwise, the participants start thinking the meeting is a waste of time, and the downward spiral begins.

Tip #4. Take an issue off-line.  There are times when a meeting is getting bogged down because no one has the information needed to make a decision.  For example, is the bylaws revision being discussed a Joint Commission Standard?  A Medicare Condition of Participation?  A best practice?  If no one knows for sure, further discussion will not help the committee make a decision, so that issue should be taken off the agenda until the next meeting, to research the issue.

Another reason to take an issue off the agenda is because there are so many conflicting points of view that won’t be able to be resolved at the meeting.  The chair should be able to recognize that no matter how much more discussion there is, the issue won’t be resolved.  So, at that point, the chair should stop the discussion, and maybe appoint a small group to investigate or research the issue, then bring the results back to the committee.

Tip #5. End on time.  If a meeting is to end at 8:30 a.m., end the meeting.  Although some attendees don’t mind going over, the majority will start thinking about work that needs to be done, or another meeting to go to, or an appointment to make.  A meeting that runs on and on and on isn’t efficient and becomes much less effective as time goes on.  The chair should remember that he or she is dealing with attendees who have volunteered their time to participate on this committee and be at this meeting, so respect their time.

Also, not ending on time affects meeting attendance.  If an attendee knows that the meeting always goes over, he or she is less likely to attend the meeting.

It’s just a fact that sometimes agendas are just too full, or there may have been too much discussion on one issue, etc. – that happens.  But, instead of plowing on through with more and more disinterested attendees as each minute ticks by, just end the meeting, and hold those agenda items over for the next meeting.  The exception is if the issue is of critical importance, but that will be few and far between.

Final Tip: Introduce visitors.  The chair should introduce visitors, or participants who are attending their first meeting and may not know everyone in the room.  This will make them feel welcome, and keep everyone focused on the meeting instead of asking, or thinking “Who is that, and why are they here?”

If you have a quick question about this, e-mail Nick Calabrese at ncalabrese@hortyspringer.com.