Plaintiff then filed suit in Wayne County Circuit Court, claiming that Defendant’s delay in filling the prescriptions caused it to lose a valuable Medicaid program certification. As a result, Plaintiff was forced to cease operating as a nursing home, was charged with regulatory sanctions, and had its provider agreement with the Michigan Medicaid program terminated.
Plaintiff’s original complaint against Defendant alleged breach of contract, negligence, malpractice and fraud. After Defendant’s Motion for Summary Disposition was denied, Defendants appealed the case to the Michigan Court of Appeals, which held that Plaintiff’s contract claim warranted dismissal because Plaintiff had failed to provide copies of the pertinent contracts pursuant to MCR 2.113(F). The COA further held that Plaintiff should have filed a notice of intent and affidavit of merit with respect to its medical malpractice claims.
Defendant argued on appeal that any breach of the pharmacy agreement was a medical malpractice allegation, not a breach of contract claim. Upon review, the COA agreed, specifically holding that plaintiff’s asserted damages flowed from the loss of its certification as a Medicaid provider. Plaintiff did not allege to have suffered any expenses in having to obtain the pharmacy products elsewhere, and did not demand a refund for any monies paid for the faulty August 11 pharmacy order. Therefore, Plaintiff’s damages sounded in tort, not in contract. The COA then reversed and remanded the decision to the circuit court.
It is interesting to note that even though the COA explicitly stated that Plaintiff should have filed an affidavit of merit with respect to its medical malpractice claims, Plaintiff still failed to do so upon filing its case for the second time. This ultimately contributed to the COA dismissing the case yet again.
]]>Some of the highlights are as follows:
Stark or “Physician Self-Referral” law changes
The draft legislation eliminates the rural provider exception for hospitals and the “whole hospital” exception under the Stark laws. Physician-owned hospitals with provider agreements in effect as of January 1, 2009, would be grandfathered under the proposed legislation, although any increases in physician ownership percentages would be prohibited and hospitals would be greatly restricted in their ability to add operating or procedure rooms/beds. Grandfathered hospitals would also be subject to significant reporting and disclosure requirements, including a requirement to disclose to patients in writing if the hospital does not have 24/7 on-premises physician coverage.
Enhanced Penalties
In an effort to combat fraud and abuse, enhanced monetary penalties and administrative sanctions are created for false statements on provider/supplier enrollment applications, false statements in claims data, and delaying inspector general investigations in connection with all federal health care programs, including managed care organizations, Medicare Advantage Plans, prescription drug plan sponsors, etc. These enhanced monetary penalties/sanctions are in addition to other civil liability, such as suits under federal or state False Claims Acts.
Comparative Effectiveness Research
Under this provision, the Secretary of Health and Human Services would establish a Center for Comparative Effectiveness Research (the “Center”) within the Agency for Healthcare Research and Quality. The Center would be responsible for conducting, supporting and synthesizing research (including research conducted under the Medicare Prescription Drug, Improvement and Modernization Act of 2003) with respect to the outcomes, effectiveness, and appropriateness of health care services in order to determine how health care can be managed in the most effective matter. Such “comparative effectiveness research” has been met with strong opposition from physicians, who say that such bureaucratic mandates will impinge upon their autonomy and medical judgment.
Ensuring enhanced quality of care in nursing homes/hospice programs
If a hospice program is determined to not be in compliance with certain standards of care, then the Department of Health and Human Services would be permitted to take action ranging from terminating the hospice’s participation certificate to appointing temporary management of the program, along with other sanctions. In addition, the proposed legislation promotes transparency of information on skilled nursing facilities/nursing facilities in general by requiring the disclosure of ownership and implementing effective compliance and ethics programs.
Mandatory Compliance Programs
All providers and suppliers would be required to adopt compliance programs with certain delineated core elements as a condition of program participation.
Caraco Labs previously issued major drug recalls in January 2009 in an attempt to recapture the defective medications. An FDA inspection completed in May of 2009 uncovered continuing cGMP standard violations. The drastic action taken during today's seizure will hopefully lead to major changes at Caraco's facilities.
The FDA's cGMP standards are designed to ensure that drugs are manufactured, handled, and repackaged correctly, and include strict requirements to ensure that unsafe pharmaceuticals are not introduced into commerce. The standards require drugmakers to obtain and use raw materials of appropriate quality, maintain reliable testing labs, eliminate cross-contamination with beta-lactam drugs, etc.
Drugmaker advertising has come under fire in recent months, and House Ways and Means Committee Chairman Charles Rangel has stated that it's improper for taxpayers to subsidize pharmacuetical ads because such ads actually encourage consumers to request drugs that they might not actually need. However, the proposed change has sparked outrage from drugmakers and ad groups, who claim that such measures violate First Amendment freedom of speech and unfairly target one industry.
While tax increases are seldom (if ever) met with universal approval, the fact remains that cuts and revenue-raising will have to take place at some level given the current budget deficit. Furthermore, taxpayers may be more amenable to plans that would tax drugmakers as opposed to taxing employer-provided health insurance, another idea which has been tossed around in Congress recently.
Supporters of the Bill, such as the Michigan Campaign for Smokefree Air, urge that such anti-smoking restrictions are necessary to protect the health of Michigan workers and consumers. However, HB 4733 has been met with opposition from restaurant and bar owners who claim such a bill would strip them of their autonomy as business owners. (Perhaps due to these sentiments, the current Bill includes an anti-provision which prohibits business owners from taking adverse action against employees who exercise their rights under the Bill.)
While restaurant and bar owners may claims that their "business autonomy" is restricted by bills such as HB 4733, it is important to note that such business have never been granted free reign over their operations. For example, there are restrictions imposed on restaurants/bars with respect to whom alcohol can be served and when. Such businesses must pay their employees at least minimum wage (with some exceptions, such as waitstaff) and obey health and sanitation regulations with respect to how food is stored and prepared. Few would argue that such laws and regulations are necessary to protect the safety and well-being of employees and consumers.
Given the ever-rising costs of health care, hopefully smoke-free workplace legislation will not only result in healthier work environments for Michigan employees, but will also help reduce medical resources spent on treating smoking-related ailments.*
*The opinions expressed in this post are solely those of the author, and do not necessarily reflect the opinions of other attorneys at Frank, Haron, Weiner and Navarro.
]]>Titled "Presenting Risk Information in Prescription Drug and Medical Device Promotion", the draft guidance describes how the FDA evaluates prescription drug and DME promotional materials to determine if they adequately address risk information. The draft guidance was issued in reponse to industry concerns over how to avoid FDA warning letters and other enforcement actions triggered by misleading advertising.
Often, as addressed in the draft guidance, simply stating negative side effects is not enough to avoid FDA scrutiny if the remaining content of the ad overwhelms any warning info. For instance, one example of "true but misleading" marketing cited is a TV ad for a cholestorol-lowering drug. Although the ad contains a factually accurate audio risk statement describing the drug's side effects and contraindications, this audio statement is juxtaposed with images of the patient smiling and happy, while upbeat music blares in the background. Therefore, the risk information may not be adequately communicated to consumers or healthcare professionals.
The guidance is not yet final, and interested parties may submit comments on the draft guidance to the FDA up until August 27, 2009. Although not specially cited by the FDA in the draft guidance, one ostensible reason for drug/DME industry's compliance concerns is the Supreme Court's recent decision in Wyeth v. Levine.
]]> In Wyeth, the high court held that drug manufacturers are not immune from tort liability for failure to warn simply because the FDA approved a warning label for a drug. Instead, the court reasoned that even if the FDA approves a drug warning label, federal law mandates that a drug manufacturer "bears responsibility for the content of its label at all times." .In other words - given the new FDA protocols and this year's Supreme Court ruling in Wyeth, Pfizer just may need to rethink it's "Viva Viagra!" campaign.
]]>In light of the new presidential administration's proclaimed committment to revamping the health care system, these topics and others will undoubtedly be addressed in greater detail in future posts. Most importantly, however, this blog's authors look forward to continuing to provide updates and commentary on new health care-related legislation and case law.
]]>The U. S. District Court for the Middle District of Georgia was more active than I was, however, when it recently held that a physician who unsuccessfully sued the hospital where he worked, and some other physicians on staff, must pay the defendants' attorneys fees and costs because he had signed an "Applicant's Consent and Release" when he was applying for medical staff privileges at the defendant hospital. The amount to be paid is yet to be determined but could be substantial because there were 3 defendants seeking fees, including two physicians and their group professional corporation.
In the case of Adeduntan v. Hospital Auth. of Clark City, No.3:04-CV-065 (CDL)(M.D. Ga. July 31, 2008), arising out of the medical peer review of plaintiff's performance during an emergency abdominal aortic aneuryism procedure, the Court found that "...[Dr. Adeduntan] was required to execute the form in order to apply for mediacal staff appointment and privileges at Athens Regional and that [his] signature appears on multiple copies."
The language of the document provided:
"If...I [Dr. Azeez Adeduntan] institute legal action against the Hospital [Athens Regional] and/or its Medical Staff members and do not prevail, I agree to reimburse the Hospital and any Medical Staff members named in the action for any and all costs incurred in defending the legal action, including reasonable attorneys fees."
Recognizing that credentialing litigation is on the rise because of numerous decisions allowing such disputes to move into the courts, and most American courts cannot impose attorney fee obligations on losing litigants, in the absence of a contractual requirement, I would expect that most staff privilege applications would be promptly amended to include such language.
Depending on the applicant's specialty, and state law, the language may or may not be negotiable. A good healthcare attorney, however, is essential to review the application, research the issue and attempt to obtain any modifications. As always, even the most innocuously appearing document--a simple "application" may contain time-bombs that lay dormant for many years.
]]>The State of Michigan can recoup extra funds from combined state/federal recoveries because of the provisions of the federal Deficit Reduction Act of 2005 ('DRA"). To explain, shortly after the the Michigan Medicaid False Claims Act amendment passed the Michigan Legislature and Governor Granholm signed the Act, the U.S. Congress passed the DRA providing for a 10% incentive to States which enacted a "compliant" Qui Tam statute addressing Medicaid fraud. Specifically, the Medicaid program is a joint federal/state program. Thus, in Michigan, the federal government pays about 56% and the state 44% of the costs of the Medicaid program and fraud recoveries are divided on the same percentage.
If the state has a "compliant" Qui Tam statute, the state receives an extra 10% of the recovery--that is, 54% in Michigan--of the recovery--instead of 44%--a significant amount of money since most recoveries are in the tens of millions of dollars or more!!
However, on December 21, 2006, the U.S, Department of Health and Human Services/Office of Inspector General ("HHS/OIG") advised the state, by letter, that its Medicaid False Claims Act was NOT "DRA compliant" (that is, a mirror image of the federal False Claims Act).
In order to comply, all that was needed was a simple bill adding civil monetary penalties of at least $5000 for each violation and making one other technical amendment. Since the revisions would not have had any negative fiscal impact on the state and would have had a potentially tremendous positive impact in the event of any recovery, one would have expected Representative Law to quickly introduce a clarification/modification bill and obtain quick passage--after all, the State would most certainly not turn down the opportunity to reverse the flow of funds from Michigan to Washington??
Unfortunately, in 2006 and 2007, petty partisan bickering was rampant in the Michigan Legislature--we were paralyzed by the absurd budget fight and leadership was non-existent.
Rep. Law, finally, on September 17, 2007, introduced a one-page bill. The date of introduction is significant. In addition to being a Saturday, the day of the Notre Dame-UM football game (a game, I suspect, Rep. Law, a Notre Dame grad, was attending), it was three days before Ray Sayeh, then a WXYZ-TV investigative reporter, had scheduled (at my request) an interview with the representative to discuss the failure to take action on the revisions.
Unfortunately, again because of partisanship and Democratic control of the House of Representatives, the bill went nowhere while the Attorney General continued to obtain recoveries from fraud-feasors and the unclaimed 10% incentive was lost to Washington.
Finally, on February 19, 2008, Representative Marc Courveau (D., Northville) introduced HB 5757. The amended FCA, as presented in HB 5757, would allow the Michigan FCA to become DRA compliant. Once again, the small changes made by HB 5757, as required by the federal HHS/OIG., would cost the state nothing in administrative or other costs and would bring millions of dollars in the future back from Washington.
HB 5757 quickly passed the House with NO opposition and was sent to the Senate.
Tragically, because of continued political maneuvering, the Bill sits in the Judiciary Committee.
It seems that Rep. Courveau was elected at the expense of a Republican and the leadership of the Judiciary Committee and Senate Majority Leader, Mike Bishop will not allow this largely unopposed, fiscally responsible bill, to be brought up at the committee or floor level because it would give "points" to Rep. Courveau!!!!
The State of Michigan is in a deep recession/depression, unemployment sits at 8.5%, the highest in the nation, GM is in deep trouble, the City of Detroit is selling assets and landmarks--such at the Detroit-Windsor tunnel--and the Legislature cannot pass a one-page bill that will bring money to the state and its Medicaid recipients.
This Bill is under the radar, unfortunately--Ray (now Rez) Sayeh has joined CNN International and is posted in Pakistan, columnists such as Brian Dickerson and others have been unresponsive despite my entreaties, my solicitations to the Legislature and the use of my contacts have been unavailing.
I am frustrated. Medicaid fraud is rampant, the Attorney General is acting diligently in pursuing the cheaters, and we have been filing qui tam cases under the new Act, but even if all of these activities are successful--and they will be--the State will not receive the full benefit of its recoveries!!!
I will not stop my efforts, but it will take action by my readers to move this along. Sen. Mike Bishop may be contacted by email and his office phone number is( 517) 373-2417
The other Senators on the Judiciary Committee may be emailed at: senwkuipers@senate.michigan.gov Sen. Kuipers - Chair senacropsey@senate.michigan.gov Sen. Cropsey senasanborn@senate.michigan.gov Sen. Sanborn senbpatterson@senate.michigan.gov Sen. Patterson sengwhitmer@senate.michigan.gov Sen. Whitmer - minority vice-chair senhclarke@senate.michigan.gov Sen. Clarke senmprusi@senate.michigan.gov Sen. Prusi
Senator Ted Kennedy made his first appearance on the Senate Floor since his brain tumor was discovered.
]]>WPS indicated that this ruling has its genesis In the final physician fee schedule regulation published in the Federal Register on November 2, 1999, where the Centers for Medicare & Medicaid Services (CMS) stated that it would implement a policy to pay only the hospital for the TC of physician pathology services furnished to hospital patients. Prior to this proposal, any independent laboratory could bill the carrier under the physician fee schedule for the TC of physician pathology services for hospital patients. At the request of the industry, to allow independent laboratories and hospitals sufficient time to negotiate arrangements the implementation of this rule was administratively delayed. Subsequent legislation formalized a moratorium on the implementation of the rule. As such, during this time, the carriers and, more recently, Medicare Administrative Contractors (MAC), have continued to pay for the TC of physician pathology services when an independent laboratory furnishes this service to an inpatient or outpatient of a covered hospital.
The most recent extension of the moratorium was established by the Medicare, Medicaid, and SCHIP Extension Act (MMSEA). Section 104 of the MMSEA expired on June 30, 2008, thus ending the moratorium.
Michigan Medical Law Report is published by Dolan Media Company. Frank, Haron, Weiner & Navarro was asked to contribute to this prestigious magazine sent to 20,000 practitioners.
Michelle Bayer's article on Internet pharmacies is entitled "They're efficient, but mail-order Internet pharmacies have intricate legal requirements."
Mercedes Varasteh's article entitled "Joint Commission standard fosters collaboration between medical staffs, hospitals" covered the application of MS 120.
Louis Szura wrote on revisions to Section 179 of the Internal Revenue Code in an article, "Economic Stimulus Act offers big tax breaks for health care providers."
David Haron instructed providers on the federal False Claims Act in "Exposing fraud and abuse--what a private citizen may do."
Finally, Melinda Balian and Ross Hammersley gave excellent employment related information in "Employees--your biggest risk and your biggest ally."
Such problems cause significant difficulties for patients. The obvious problem is the loss of the curative properties of prescribed drugs. Less apparent is the effect these unfilled prescriptions have on the efficacy of drugs--that is, when the patients return to their physician for follow-up care--and the previously diagnosed condition has not been alleviated or affected, embarrassed patients often do not advise the physician that the original prescription was not filled. This leads to inaccurate future diagnoses or, worse, prescriptions for more potent dosages--strength that might not have been needed had the original prescription been filled and used. Increased use of some drugs can also lead to immunities and weakening of the efficacy of these drugs.
Why is this happening in America? Why are the drug companies encouraging physicians to write more and more prescriptions--often at higher and higher dosages?
What can be done to encourage and assist patients to fill their prescriptions and to force physicians to follow-up with the patients? One solution is better follow-up calls by physician office staff. Another interesting possibility is office drug drug dispensing using a service/product such as Dispensing Solutions which is legal in all states (with some restrictions in 5 states) and approved by the FDA. More information is available at the Dispensing Solution web-site.
]]>This case raised the issue of whether a physical therapy clinic, incorporated under the Michigan Business Corporation Act, was lawfully rendering services entitling it to reimbursement from its auto-accident injured patient's No-fault insurance carrier.
Allstate Insurance Company argued that a physical therapy clinic-a medical service provider-needed to incorporate under Michigan's Professional Service Corporation Act in order to lawfully render services under Michigan's No-Fault auto-insurance act, even though the physical therapist actually performing the services was a lawfully licensed physical therapist.
The lower courts permitted the claim and the Supreme Court issued its opinion affirming those decisions on July 2, 2008, although not for the same reason the lower courts did.
Essentially, the Supreme Court held that once a corporation, of any sort, files its Articles of Incorporation with the State, it is conclusively determined that the incorporation is lawful--unless the state Attorney General successfully challenges that incorporation in a court proceeding. this conclusion was based on statutory language and the Supreme Court's interpretation of long-standing Michigan law.
I believe the result in this case is correct (although one of the two concurring Justices, Elizabeth Weaver, believes that the Court's tortured logic in reaching the decision was incorrect because of a long-standing battle she has on the Court's Standing decisional process (a topic for some law professor's blog some day))because, as the Court stated, allowing challenges to every corporation in every suit brought by a corporation would affect the very stability of the economy. Every patient would have to verify compliance by every provider with every corporate statute before accepting treatment and whether payment would be made would depend on the creativity of every insurance lawyer in every case when payment decisions were made.
For once, the Supreme Court majority seems to have gotten it right.
Let's see if the Michigan Legislature and the Department of Labor and Economic Growth follow suit and picks up on this decision and clarifies the incorporation requirements as Michael Hamblin of our firm has described on his blog, Michigan Business Lawyer, for peripheral medical and other licensed providers.
Until they do, however, every licensed practitioner and other individuals in Michigan must immediately consult competent health care business lawyers such as my firm, to review their corporate status and to consider re-incorporation as Professional Corporations if permitted and advisable.
HAVE A HAPPY AND SAFE 4TH OF JULY HOLIDAY---AND GOD BLESS AND KEEP OUR TROOPS AND THEIR FAMILIES. LET'S BRING THEM HOME SOON!!!