Discounting bills for uninsured patients: not as easy as it sounds.

The Wall Street Journal ran a good article (subscription required) Thursday on the difficult choices faces by hospital administrators when uninsured patients rack up hefty bills: Who should get a discount? And how much of the bill should be written off? Uninsured patients come in all shapes and sizes, and hospital policies are only a starting point for making the hard choices posed by uninsured patients.

More on tax-exemptions.

I particularly recommend a recent (June 22) publication by the staff of the Joint Committee on Taxation entitled "Description of Present Law Relating to Charitable and Other Exempt Organizations and Statistical Information Regarding Growth and Oversight of the Tax-Exempt Sector." It's a good overview of the tax-exempt industry and horn-book style overview of the legal basics.

Tax-exempt orgs much in the news.

There's a lot of scrutiny of tax-exempt organizations these days, much of it on the health care industry, and all of it of potential significance to tax-exempt health care providers. Here's a quick run-down of yesterday's developments:

• Richard Scruggs announced yesterday that he (or related firms) has filed 5 more class-action suits against 8 more defendants challenging the amount of charity care the defendants provide. The press release is on a litigation web page here, along with copies of all 18 complaints. As Charles Bailey, g.c. of the Texas Hospital Association, said in an article in The Dallas Morning News, it's surprising that two hospitals (so far) in Texas have been targeted, since Texas requires nonprofit hospitals to provide a minimum amount of charity care in order to maintain their nonprofit status. The "safe harbor" requirement is 4% of net operating revenues for charity care and unreimbursed govern-sponsored indigent health care and 5% in total community benefits.
• The Senate Finance Committee began hearings under the title, "Charity Oversight and Reform: Keeping Bad Things from Happening to Good Charities." There were three panels and a total of 13 witnesses, not counting Senators Grassley and Baucus, who presented their own member statements. The hearing can be viewed with streaming video through RealAudio. There's also a 19-page "staff discussion draft" of Tax Exempt Governance Proposals, if you want to see where these hearings are headed.
• The IRS announced at the Senate hearing that it is launching an enforcement initiative to examine compensation practices of tax-exempt and charitable organizations. You can read the details in Commissioner Everson's testimony or you can read about it in this AP article (via The Houston Chronicle).
• Over on the House side, the Oversight Subcommittee of the House Ways and Means Committee held its "First Hearing in a Series on Tax Exemption: Pricing Practices of Hospitals": two panels, nine witnesses. There's a good AP report (via Forbes.com) on the House hearings.

Not-for-profit litigation.

More suits were filed today against some health care giants, including Catholic Health Initiative and Baylor Health Care System. Here's a more stable link to the web page where the pleadings can be found: http://www.nfplitigation.com/NotForProfit/disclaimer.aspx.

Unpublished (i.e., negative) clinical trial results.

While I pondered how to blog this topic efficiently, along came the folks at Kaiser Family Foundation with a characteristically terrific summary of three recent newspaper reports on this important topic. If NY Attorney General Eliot Spitzer is right about this, GlaxoSmithKline's decision to withhold negative research results about the side effect of the antidepressant Paxil in children "the . . . studies . . . failed to demonstrate that Paxil is effective and . . . suggested a possible increased risk of suicidal thinking and acts."

Supreme Court: ERISA preempts state-law claim against HMOs.

As expected, the Supreme Court today decided that ERISA does, in fact, preempt the tort-like cause of action created by the Texas legislature in the Texas Health Care Liability Act, at least as against HMO's providing health care coverage through an employer. Indeed, the cause of action is completely preempted (§ 502(a)(1)(B)), so ERISA not only provides a defense, it also creates a basis for removal of the state-law claims from state court to federal court. This is a technical issue, and if you haven't been following it pretty closely, consider going to a news site like Bloomberg's or Reuter's for the 5¢ version. The 25¢ version is in the Court's syllabus (below). For all the gory details, you can read the unanimous opinion in Aetna Health Inc. v. Davila, No. 02-1845 (combined with CIGNA HealthCare of Texas, Inc. v. Calad, No. 03-83) here.

The Court's syllabus:

Respondents brought separate Texas state-court suits, alleging that petitioners, their health maintenance organizations (HMOs), had refused to cover certain medical services in violation of an HMO’s duty “to exercise ordinary care” under the Texas Health Care Liability Act (THCLA), and that those refusals “proximately caused” respondents’ injuries. Petitioners removed the cases to federal courts, claiming that the actions fit within the scope of, and were thus completely pre-empted by, §502 of the Employee Retirement Income Security Act of 1974 (ERISA). The District Courts agreed, declined to remand the cases to state court, and dismissed the complaints with prejudice after respondents refused to amend them to bring explicit ERISA claims. Consolidating these and other cases, the Fifth Circuit reversed. It found that respondents’ claims did not fall under ERISA §502(a)(2), which allows suit against a plan fiduciary for breaches of fiduciary duty to the plan, because petitioners were being sued for mixed eligibility and treatment decisions that were not fiduciary in nature, see Pegram v. Herdrich, 530 U.S. 211; and did not fall within the scope of §502(a)(1)(B), which provides a cause of action for the recovery of wrongfully denied benefits, because THCLA did not duplicate that cause of action, see Rush Prudential HMO, Inc. v. Moran, 536 U.S. 355.

Held: Respondents’ state causes of action fall within ERISA §502(a)(1)(B), and are therefore completely pre-empted by ERISA §502 and removable to federal court.

(a) When a federal statute completely pre-empts a state-law cause of action, the state claim can be removed. See Beneficial Nat. Bank v. Anderson, 539 U.S. 1, 8. ERISA is such a statute. Because its purpose is to provide a uniform regulatory regime, ERISA includes expansive pre-emption provisions, such an ERISA §502(a)’s integrated enforcement mechanism, which are intended to ensure that employee benefit plan regulation is “exclusively a federal concern,” Alessi v. Raybestos&nbhyph;Manhattan, Inc., 451 U.S. 504, 523. Any state-law cause of action that duplicates, supplements, or supplants ERISA’s civil enforcement remedy conflicts with clear congressional intent to make that remedy exclusive, and is therefore pre-empted. ERISA §502(a)’s pre-emptive force is still stronger. Since ERISA §502(a)(1)(B)’s pre-emptive force mirrors that of §301 of the Labor Management Relations Act, 1947, Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 65—66, and since §301 converts state causes of actions into federal ones for purposes of determining the propriety of removal, so too does ERISA §502(a)(1)(B).

(b) If an individual, at some point in time, could have brought his claim under ERISA §502(a)(1)(B), and where no other independent legal duty is implicated by a defendant’s actions, then the individual’s cause of action is completely pre-empted by ERISA §502(a)(1)(B). Respondents brought suit only to rectify wrongful benefits denials, and their only relationship with petitioners is petitioners’ partial administration of their ERISA-regulated benefit plans; respondents therefore could have brought §502(a)(1)(B) claims to recover the allegedly wrongfully denied benefits. Both respondents allege violations of the THCLA’s duty of ordinary care, which they claim is entirely independent of any ERISA duty or the employee benefits plans at issue. However, respondents’ claims do not arise independently of ERISA or the plan terms. If a managed care entity correctly concluded that, under the relevant plan’s terms, a particular treatment was not covered, the plan’s failure to cover the requested treatment would be the proximate cause of any injury arising from the denial. More significantly, the THCLA provides that a managed care entity is not subject to THCLA liability if it denies coverage for a treatment not covered by the plan it administers.

(c) The Fifth Circuit’s reasons for reaching its contrary conclusion are all erroneous. First, it found significant that respondents asserted tort, rather than contract, claims and that they were not seeking reimbursement for benefits denied. However, distinguishing between pre-empted and non-pre-empted claims based on the particular label affixed to them would allow parties to evade ERISA’s pre-emptive scope simply by relabeling contract claims as claims for tortious breach of contracts. And the fact that a state cause of action attempts to authorize remedies beyond those that ERISA §502(a) authorizes does not put it outside the scope of ERISA’s civil enforcement mechanism. See, e.g., Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 43. Second, the court believed the plans’ wording immaterial because the claims invoked an external ordinary care duty, but the wording is material to the state causes of action and the THCLA creates a duty that is not external to respondents’ rights under their respective plans. Finally, nowhere in Rush Prudential did this Court suggest that ERISA §502(a)’s pre-emptive force is limited to state causes of action that precisely duplicate an ERISA §502(a) cause. Nor would it be consistent with this Court’s precedent to do so.

(d) Also unavailing is respondents’ argument that the THCLA is a law regulating insurance that is saved from pre-emption by ERISA §514(b)(2)(A). This Court’s understanding of §514(b)(2)(A) is informed by the overpowering federal policy embodied in ERISA §502(a), which is intended to create an exclusive federal remedy, Pilot Life, 481 U.S., at 52. Allowing respondents to proceed with their state-law suits would “pose an obstacle” to that objective. Ibid.

(e) Pegram’s holding that an HMO is not intended to be treated as a fiduciary to the extent that it makes mixed eligibility decisions acting through its physicians is not implicated here because petitioners’ coverage decisions are pure eligibility decisions. A benefit determination under ERISA is part and parcel of the ordinary fiduciary responsibilities connected to the administration of a plan. That it is infused with medical judgments does not alter this result. Pegram itself recognized this principle, see 530 U.S., at 231—232. And ERISA and its implementing regulations confirm this interpretation. Here, petitioners are neither respondents’ treating physicians nor those physicians’ employees.

307 F.3d 298, reversed and remanded.

This case had to come out the way it did. The Fifth Circuit's attempt to distinguish the THCLA cause of action against HMO's from the types of claims previously determined by the Supreme Court to be preempted by ERISA was completely off the wall.

That's not to say that the HMO's shouldn't be held accountable for their mistakes, nor that the ERISA remedy is, in many cases, a cruel joke. But existing Supreme Court interpretations of existing ERISA language leave little or no room for such an outcome. So the ball is squarely back in Congress' lap to make changes to ERISA, though its repeated failures to do so in its previous attempts gives little encouragement that they will be able pull off such a miracle, especially in an election year.

Living wills under fire.

It sounds like the old rap on living wills is being recycled. According to an article in the June 21 Newsday, experts are weighing in on the disutility of living wills. The old rap: (1) Writers of living wills have a hard time predicting with any precision the diagnosis and treatment options that will be their actual end-of-life reality, and so the document has almost no chance of addressing the actual decisions their surrogate decision makers will be confronted with. (2) Considering the imprecision of patient predictions, as well as the limits of language, living wills present sometimes insurmountable interpretive difficulties. (3) And in any event, hospitals seldom know about the existence of a patient's living will until after life-sustaining treatment has been started. In brief: living wills are often too little, too late.

The new rap:

Recently, two University of Michigan researchers, writing in the bimonthly Hastings Center Report, a journal that examines issues in medical ethics, concluded that living wills are useless.

"It's very hard for people to predict their preferences for an unknown health condition," said Angela Fagerlin, a research scientist and co-author of the article. In addition, "decision makers have a difficult time interpreting [living wills]," Fagerlin said.

And Carl Schneider, a law professor and Fagerlin's co-author, says: "In lots of ways, the unsolvable problem is that writing down your intentions clearly is a lot harder than people think it is."

Sound familiar?

Fact is, living wills were never the end-all and be-all of end-of-life decision making, but the weaknesses of the document can be overdrawn. They help the executor and her family get into a discussion mode that will help end-of-life decision making when the time comes. They can, therefore, help surrogate decision makers -- including those holding a medical power of attorney -- take on the emotion and psychological burden of decision making.

Would we be in a world of hurt if living wills were eliminated? No. Can their utility be over-estimated? Sure. But do they serve a potentially valuable function? I think so.

Med mal reform: speaking truth to power.

Bob Herbert nails the problem with med mal reform in the last third of an 800-word column that will appear in this morning's (6/21) N.Y. Times:

[T]he problem when it comes to malpractice is not the amount of money the insurance companies are making (they're doing fine) or the rates the doctors have to pay, but rather the terrible physical and emotional damage that is done to so many unsuspecting patients who fall into the hands of careless or incompetent medical personnel.

What is needed is a nationwide crackdown on malpractice, not a campaign to roll back the rights of patients who are injured. This is another utterly typical example of the Bush administration going to bat for those who are economically and politically powerful against those who are economically and politically weak.

Despite claims by the insurance industry, there is no evidence that soaring malpractice premiums are the result of sharp increases in the amounts of money paid out for malpractice claims. And, tellingly, industry executives are generally careful not to say that the tort reforms sought by the Bush administration will result in premium reductions.

This is all about greed. What tort reform will lead to, not surprisingly, is an unwarranted burst of additional profits for the insurance industry, which is why the industry is sinking so much money into its unrelenting campaign for "reform."

It would be helpful if the nation's many good doctors would blow the whistle on the insurance industry and its exploitive practices, and on the members of their own august profession who violate that essential maxim, "First, do no harm."

Boutique medicine comes to the Hamptons, big-time.

I've written about boutique medicine elsewhere (5Aug03, 14Aug03) - the practice by which a physician or group will charge an annual premium in return for which they will promise to return calls promptly, not keep the patient waiting in the waiting room, and generally provide the quality of care dinosaurs like me remember from the '50's. Today's N.Y. Times has an interesting opinion piece on the practice, but with a twist. Now it's a local hospital that's going boutique, and it's the emergency room where the rich are going to catch a break, if they've already paid the upfront fee. As the paper reports,

The 95-year-old financially ailing Southampton Hospital - the only serious medical emergency center on the South Fork - is offering a plan aimed at wealthy summer visitors whose primary doctors are back in Manhattan and out of reach, presumably along with the hospital's sense of propriety. For $6,000 per family, or $3,800 for individuals, not including doctors' fees, cardholders in the Southampton PLUS plan are entitled to "priority access" to medical care at the hospital from May 28 to Sept. 26. A brochure about the plan was mailed to several thousand summer homeowners from a mailing list the hospital purchased from a source it declined to identify.

Southampton Hospital lets you know that it understands what a drag all this messy medical stuff can be when you're on a busy summer weekend, careening from tennis lesson to benefit to cocktail party with nary a moment to waste sitting around a hospital emergency room. Since "a visit to the emergency department is gut-wrenching enough without the added frustration of filing out multiple forms," the brochure commiserates, PLUS members are pre-registered, which includes being met at the door of the hospital "by a member of the hospital's senior staff." The brochure confides, "You shouldn't have to wait around where your health is concerned,'' and adds, "While we can't guarantee you'll be seen first, we'll do everything possible to get you in and out fast." The plan covers not only family members, but also weekend house guests and "hired help," as the brochure so quaintly describes what must be the au pair.

The PLUS plan motto? "Peace of mind, all summer long." That is, if you're flush.

As the author points out, and the hospital has lately realized, "[i]t is, of course, illegal to give someone priority for medical care because of a cash payment in an emergency room. Since the controversial brochure was mailed, hospital officials have gone to great pains to say that PLUS plan members will have to wait their turn in line with hoi polloi. The plan has been greeted with howls of protest from local doctors, including a Southampton Hospital admitting doctor, Robert Semlear, who told a local newspaper he found the PLUS program 'morally repugnant' and 'elitist.'"

Testing for fetal defects.

Good article in today's N.Y. Times on testing for fetal defects. The ethical issue is an interesting one, succinctly described in the article this way:

The wider range and earlier timing of prenatal tests are raising concern among some bioethicists and advocates for disability rights who argue that the medical establishment is sending a message to patients that the goal is to guard against the birth of children with disabilities.

"By putting them out there as something everyone must do, the profession communicates that these are conditions that everyone must avoid," said Adrienne Asch, a bioethicist at Wellesley College. "And the earlier you can get it done the more you can get away with because you never have to tell anybody."

Some doctors, too, say they are troubled by what sometimes seems like a slippery slope from prenatal science to eugenics. The problem, though, is where to draw the line.

Mixing Morals With Education?

Well, as a teacher of bioethics at a Methodist school with a Center for Ethics and Public Responsibility, the debate over whether ethics has any place in a higher education curriculum is, to put it mildly, more than mildly interesting. The debate is set out well in Saturday's "Beliefs" column by Peter Steinfels in The New York Times.

Episcopal Diocese of Vermont issues guidelines for civil-union sacrament.

As reported in today's Washington Post, a task force of the Episcopal Diocese of Vermont issued a report on June 8 setting out the guidelines for ceremonies that recognize same-sex civil unions. The document itself includes a thoughtful analysis of the scriptural and theological underpinnings of the blessing of same-sex relationships. Vermont isn't the only diocese to take this step, but it is the only diocese in which the state recognizes same-sex civil unions, and the combination of sacramental recognition and governmental recognition has conservatives within the Episcopal Church USA upset -- as does the striking similarities between the marriage sacrament and the civil-union sacrament.

Of course, the real cause for the conservatives' concern is not Vermont, it is their own General Convention, which in 2003 adopted a resolution that stopped short of authorizing an official liturgy for blessing same-sex relationships but did recognize that "local faith communities are operating within the bounds of our common life as they explore and experience liturgies celebrating and blessing same-sex unions." This all traces back to the controversial resolution adopted at the 2000 General Convention that, in the words of the Vermont task force's report,

that couples “in the Body of Christ and in this Church” are living both in marriage and in “other life-long committed relationships.” The resolution stated the expectation that “such relationships will be characterized by fidelity, monogamy, mutual affection and respect, careful, honest communication, and the holy love which enables those in such relationships to see in each other the image of God.” The resolution further said that “this Church intends to hold all its members accountable to these values and will provide for them the prayerful support, encouragement and pastoral care necessary to live faithfully by them.”

The Vermont task force's report is a strong and even inspirational document. Pages 9 to 15 summarize the Anglican case for sacramental recognition of same-sex relationships, and it includes -- of special interest to lawyers, I suppose -- a statement of principles of interpretation of scripture.

The parallels are striking between (i) the current debate over the immutability of the Constitution as a text with permanent and unchanging meaning handed down from divinely inspired authors, and (ii) the Anglican debate over the immutability of scripture as a text with permanent and unchanging meaning handed down from divinely inspired authors. The tensions -- between constitutional and scriptural faith, reason, and experience -- are age-old, both within the body politic of the United States and within the worldwide Anglican Communion. The Vermont report strikes an admirable balance that embraces experience and reason within a faith tradition:

Putting it perhaps too simply, one strand of Anglicanism -— the evangelical tradition —- has emphasized the authority of scripture, and some, but not all, among them have insisted on a more literalist reading of the Bible. Another strand -— the Anglo-Catholic tradition -— has emphasized the authority of the early church, and some, but not all, of them have resisted subsequent development of doctrine and practice. Many other strands lying between these two have looked to reason -— including to a greater or lesser extent, experience —- to mediate scripture and the tradition in light of the learning of science and culture.

All these strands, or traditions, of Christian living and believing have been embraced within Anglicanism, and they have remained in a lively tension, informing, enriching, and sometimes conflicting with one another. Each has had times or places in which it held greater influence than the others, but none has been able to claim that it was the tradition, exclusive of the others. We speak of “Anglican comprehensiveness,” or Anglicanism as the “via media,” not because we are wishy-washy or overly inclined to compromise basic principles, but because we value the ultimate goal of Christian unity and St. Paul’s understanding of the Body of Christ, in which no part may say to the other, “I have no need of you.”

“Doing” Anglican theology means taking Holy Scripture seriously as the primary source of our understanding of Christian faith. It means being consistent with the major creedal and doctrinal conclusions of the early church. It means honoring our liturgical tradition. And it means using our human capacity to learn about our world and to bring that learning into conversation with scripture and theological and liturgical tradition. We believe this is a dynamic and ongoing process in which we must always seek to be open to the guidance of the Holy Spirit.

Apart from the wise discussion of interpretations of authoritative texts, the Vermont report has at least one other thing to offer the current debate over the legal status of same-sex relationships: "One reality we want to highlight is the fact that many people often have a visceral response to same-gender relationships but cloak that response with intellectual or sentimental language. 'Head' and 'heart' language attempts to disguise what the 'gut' is saying." The report continues:

Let us be honest about our gut reactions. Ours is a culture in which people have widely divergent views about human sexuality and human intimacy. Mixed messages are common, and we internalize these mixed messages in varying degrees as we grow up. The culture both glorifies sexuality and conditions us to see sexual activity as “unclean” unless confined to particular circumstances. For some, any sexual intimacy evokes an “ick response.” For many, sexual intimacy between persons of the same gender evokes an “ick response.” However, there are some among us who find their most essential, God-given identities fulfilled in an intimate relationship with a person of the same gender. The “ick response” to sexual intimacy comes less from the head and heart and more from the gut; it involuntarily occurs within us. . . .

Another reality is that the Bible has been commonly understood to be unrelentingly opposed to same-sex sexual activity. We acknowledge that today there is genuine disagreement on these matters among faithful Christians who hold scripture in the highest regard. Our Anglican reliance on tradition and reason as means of informing our interpretation of scripture offers a way to bring head, heart and gut into fruitful and respectful conversation.

Would that our policy-makers on courts and in legislatures could learn from this report's wise words.

Complaints in the not-for-profit class actions.

The complaints in the NFP/charity-care cases mentioned here Thursday are here. [Update: that link now prompts you for a password. This link is better; it will take you to a home page that leads to the pleadings.] It looks as though the plan is for all litigation documents to be posted on this web site.

The Texas complaint (against East Texas Medical Center and related entities) is 22 pages long and is an amateurish job. The complaint alleges the breach of numerous express and implied contracts with the federal, state, and local governments (in return for tax exempt status)(Count 1); the breach of related duties of good faith and fair dealing (Count 2); violations of the Texas DTPA (Count 3); unjust enrichment/constructive trust (Count 5 - there is no Count 4 -- and only the unjustment enrichment part is a separate "count"; everything else (request for constructive trust and vague request for damages) belongs in the "Relief" section); and civil conspiracy and "concert in [or sometimes "of"] action (Count 6). The complaint seeks various forms of declaratory and injunctive relief (erroneously denominated Count 8 rather than beling listed under a separate heading for "Relief" - and there is no Count 7), as well as damages and the imposition of a constructive trust. Considering how much is allegedly at stake, you'd have thought this big-time class-action firm might have drafted the complaint with a little more care.

Right off the bat, expect the federal district court's subject-matter jurisdiction to be challenged. The complaint alleges the existence of general federal-question jurisdiction (28 USC § 1331) because of the existence of a contract with the federal government based upon the defendants' tax-exempt status. (What contract? And in any event, since when does a breach of contract claim state a federal question?) The complaint also bases jurisdiction on 28 USC § 1340, which gives federal district courts jurisdiction of any civil action arising under, among other things, the Internal Revenue Code. (This is the provision that gives jurisdiction over taxpayers' suits for refunds when they contest a tax bill; it will be interesting to see whether the court believes that it extends jurisdiction to the claims of former patients who complain of collection efforts by the hospital, allegedly in violation of the hospital's duty (pursuant to 26 USC § 501(c)(3)) to leave them alone.)

On the merits, the complaint is very strange. It is premised on the belief that a tax-exempt hospital shouldn't bill for services, or shouldn't try to collect on its bills, or shouldn't try very hard to collect on its bills. This is a strange conception of tax-exempt organizations. Indeed, if a tax-exempt hospital didn't try all reasonable means to collect on its bills, it might find its tax exemption in jeopardy ("private benefit") and the state Attorney General at its door (looking into the dissipation of assets held in a "public trust"). Okay, that last idea is a bit far-fetched, but less so than the allegation that tax-exempt hospitals shouldn't be run in a business-like manner. Among other things, donors might be more than a little concerned that their generosity is being used to fund the care of those who can pay, leaving less money to pay for the care of those who cannot pay. And how does a hospital figure out who can and cannot pay? By trying to collect from anyone who has not previously established their indigent status.

This is going to be interesting . . . . Unfortunately, it's also going to be expensive to defend this pointless lawsuit. What a waste.

If it can happen to Harvard . . .

Alice Dembner reports in today's Business section of The Boston Globe that Harvard University and Beth Israel Deaconess Hospital "will pay $2.4 million to settle allegations that they misused four federal research and training grants, improperly billing the government for salaries and expenses, the US attorney's office said yesterday." Universities and teaching hospitals around the country need to wake up and smell the coffee. Regardless of the source of the federal grant money -- NIH, NSF, you name it -- the era of playing games with the actual use to which funds are put is over:

[T]he agreement specifically leaves open the possibility of further action against Dr. Jeanne Wei, the geriatrician who was the principal investigator for the grants. The agreement also requires the institutions to cooperate with "the government's investigation of individuals" involved with the four grants.

Wei, the former head of Harvard's division on aging and Beth Israel's division of gerontology, resigned from those administrative posts in 1999 and left Harvard Medical School and the hospital in June 2002. She is currently a professor and executive vice chairman of the geriatrics department at the University of Arkansas for Medical Sciences. She did not respond to a request for comment yesterday.

"This settlement should send a message that institutions who accept federal grant money, no matter who they are, must strictly adhere to the terms and conditions of those grants," said US Attorney Michael J. Sullivan in a statement.

The press release from the U.S. Attorney's office details the misuse:

• salaries of physician scientists who did not work on the grant;
• salaries of physician scientists who did not meet the citizenship requirements of the grant;
• the salary of a physician scientist who did not meet the 75% effort requirement of the grant; and
• salary expenses of the Principal Investigator in excess of the budgeted amount;
• supply and equipment expenses incurred in connection with other projects not related to the grant, and expenses incurred by physician scientists who were not eligible to work on the grant or did not work on the grant; and
• expenses related to the use of research animals that were used for other projects not related to the grant or were used by physician scientists who were not eligible to work on the grant.

The use of the federal False Claims Act is particularly noteworthy for those school officers who may not think compliance is a big deal. Anyone with knowledge of the wrong-doing can bring a whistleblower (or "qui tam") action under 37 U.S.C. §§ 3729-3730, and if the fraud is proved, the whistleblower (technically, "the qui tam relator") almost always shares in the government's recovery, which may be up to two times the amount of damages actually sustained by the government. The whistleblower's share may be 15-25% of the recovery if the government took over the litigation of the suit, or 25-30% is the government declined to litigate the claim and the qui tam relator had to go it alone. In the Harvard/Deaconess case, if there had been a qui tam relator (which it appears there was not), her share (if she'd litigated without the government's assistance) would have been as high as $720,000. Small wonder that private qui tam actions under the False Claims Act constitute one of the fastest-growing areas of federal litigation around. (The Fried Frank firm's web page is a great resource for information about the Civil War-era statute and the litigation it has spawned.) And all the more reason why large grant recipients who don't invest in a compliance officer to make sure they stay clean are penny wise and pound foolish.

Nonprofit hospitals targeted for charging premium prices needy patients.

UPI has filed a story based upon an earlier Wall Street Journal report (requires paid subscription) about a series of suits -- with more to come -- against nonprofit hospitals:

Richard Scruggs, the Mississippi lawyer whose legal attack on the tobacco industry helped bring about historic changes -- and multibillion-dollar settlements -- is setting his sights on not-for-profit hospitals which he alleges are overcharging uninsured patients and subjecting some to harsh bill-collection tactics.

Late yesterday, Mr. Scruggs and other lawyers -- including some who collaborated with him on the tobacco litigation -- filed class-action suits in federal courts in eight states against about a dozen not-for-profit hospital systems, challenging whether those institutions deserve the tax exemptions they have enjoyed for so long.

The complaints have minor variations, but all are essentially breach-of-contract suits, centered around the notion that not-for-profit hospitals have an explicit or implicit contract with the government to treat needy patients with compassion in return for significant tax breaks. The suits argue that the hospitals have violated that contract by charging uninsured patients premium prices, while they negotiate deep discounts with insurers, HMOs and government programs such as Medicare and Medicaid. Some hospitals go further and use tough tactics to collect unpaid bills, including sometimes placing liens on homes and assessing interest, fines and legal fees.

According the Modern Healthcare's Daily Dose (requires paid subscription), "[t]he charges include breaches of charitable trust, consumer fraud, deceptive business practices, unjust enrichment, and violations of the Emergency Medical Treatment and Active Labor Act."

Think there's any connection between these suits and the letter from Tommy Thompson, Secretary of DHHS, to the president of the American Hospital Association last February, essentially scolding the AHA for suggesting that DHHS rules prohibit hospitals from charging indigent patients less than the full billed charge for hospital services?

Antitrust and hospital consolidations.

In a late-afternoon report today, Modern Healthcare's Mark Taylor wrote that "the American Hospital Association delivered a 17-page letter to the Federal Trade Commission and the Justice Department's antitrust division rejecting hospital consolidation as a key driver of healthcare costs and pleading for a review of health insurers' conduct. The AHA's letter anticipates the expected release this summer of the FTC and Justice Department's joint report on their two years of hearings on healthcare competition." After reading the analysis piece in the Harvard Business Review by Michael E. Porter and Elizabeth Olmstead Teisberg, it is hard to see how a sentient human being can argue that consolidations haven't had an impact on both health care costs and quality.

AMA resolution to allow denial of care to plaintiffs' lawyers and families.

I discussed this resolution here last week, and today the N.Y. Times reports that the resolution filed by Dr. J. Chris Hawk III "drew an angry response from colleagues on Sunday at the annual meeting of the association. Many doctors stood up to denounce the resolution in passionate speeches - even after its sponsor . . . asked that it be withdrawn."

Medical futility.

Today's Allentown (Pa.) Morning Call has a long, well-written article on medical futility. The author, Ann Wlazelek notes that

a national turnabout in medical ethics, one in which doctors no longer want to employ all that medical science has to offer to keep patients alive and families find themselves fighting for their loved ones' right to live.

It's a shift in thinking that evolved in the past decade from the realization that it may be more humane to comfort than to try to cure patients near the end of life.

Backed by court orders and medical ethicists, hospitals have adopted little-known policies that declare ''doctors know best'' in deciding when to withhold or withdraw potentially life-saving treatments. As a result, a patient's final wishes may not be carried out, even when dictated in a living will or other legal document.

''Years ago, it was the physician who wouldn't stop. Now, it's the opposite: The doctor wants to give up and the family doesn't,'' said Dr. Joseph Vincent, an internist and founding member and chairman of the medical ethics committee at Lehigh Valley Hospital.

Most times, doctors and families concur about end-of-life treatments such as resuscitation, ventilators and feeding tubes. But when they don't, relations can get nasty. Relatives who persist in their protest can find themselves confronted by security guards, out-of-pocket medical bills and court petitions for guardianship.

The turnabout has taken place over the past 10 years. Patients began losing trust in their physicians when health maintenance organizations paid doctors to restrict access to expensive specialists and tests. Also, studies proved the most advanced technology and medicines cannot always keep patients alive but can cause them harm. The example cited most often is the risk of breaking ribs or causing nerve damage when performing chest compressions during CPR.

The article discusses a hospital policy adopted at Lehigh Valley Hospital-Muhlenberg:

"If all of these steps are taken and the family remains unconvinced, neither the doctor nor the hospital are required to provide care that is not medically indicated, and the family may seek a substitute physican (if one can be found) and another hospital (if available). The Lehigh Valley Hospital will assist the family in their efforts to find those substitutes."

Stephen E. Lammers, a professor of religious studies at Lafayette College, said he helped Vincent draft LVH's guidelines as "a way of signaling to everyone that the insistence upon continued treatment went beyond accepted medical practice."

The difficulty with the guidelines is illustrated by the article's discussion of a heart-attack victim as to whom continued aggressive treatment was thought to be futile by the attending physicians, nurses, technicians, social workers, and a chaplain. Despite the hospital's policy, aggressive therapy was continued until the day the patient was transferred to another facility; she died the following day.

Under LVH's guidelines, when the family and medical staff cannot reach consensus, one of four things can happen: The medical staff concedes to the family's wishes and continues to treat aggressively; care is transferred to another doctor or medical facility, as in the Jandras case; a local judge or court is consulted; or the doctor refuses to treat the patient.

Vincent said the last option to refuse treatment ''takes courage'' on the part of the physician because he or she will most likely be sued. No doctor at LVH has refused to treat a patient, he said, but some patients have been transferred to other facilities.

The Lehigh Valley problem -- the dark cloud of legal liability -- has been addressed in Texas. Under the Texas Health & Safety Code § 166.046, a physician, other health care professional, or hospital that refuses treatment deemed not to be beneficial to the patient, including "futile" care, is immune from criminal liability, civil liability, or professional discipline, as long as all of the elements of the law's "due process" provisions are followed, include a mandatory ethics committee consultation and reasonable attempts to transfer the patient to another provider or facility if the family and health care team continue to be at an impasse.

The mandatory ethics consultation is a unique feature of the Texas law that was the first of its kind in the country and, to my knowledge, remains the only one. The newspaper article addresses the potential utility of ethics consultations:

Despite the shift in medical ethics, many relatives resolve their differences with doctors at LVH through the hospital ethics committee.

One satisfied consumer, Erica Robbins of West Chester, said the committee eased tension between a doctor and the family regarding her elderly aunt's need for a breathing machine and related surgery.

The specialist initially had told Robbins he would not recommend putting 91-year-old Olga Katz of Bethlehem on a ventilator because she had congestive heart failure and probably would not survive her hospital stay.

"I felt insulted that someone who had just met her 20 minutes earlier would make a decision about what she wanted," Robbins said.

At the same time, she didn't want to make the decision on her own, so Robbins and her family consulted two rabbis and researched Jewish law in Israel. The law said ventilate.

Robbins lauded the ethics committee for allowing her, her husband and sister-in-law to speak about Katz as the vibrant person and Holocaust survivor that she was. Katz eventually left the hospital, Robbins said, and lived another six months.

This vignette illustrates another often misunderstood feature of hospital ethics committees: Any committee worth its salt will be just as open to the family in a futility dispute as to the treatment team, and when the case for "futility" just hasn't been made, ethics committees will recommend continued treatment.

The full article covers many important points and is well worth checking out.

Redefining parenthood.

Michael Douglas' ex-wife, Diandra, moves in with Zack Hamton Bacon III, a New York hedge-fund executive. When they try to have kids by IVF and failed, they tried a surrogate, and that failed, as well. (It's unclear whether the IVF attempts and the surrogacy attempt are the result of an infertility problem with one of the prospective parents or is simply a matter of preference. Both Diandra and Zack are parents of children from their previous marriages.) They engage the services of another surrogate in Southern California, where Diandra lives when she's not in NYC. The surrogate gets pregnant through IVF with a donated oocyte. In fact, she's carrying twins, who are born about 3 months early.

Diandra and Zack are now splitting. She's filed for custody in California. He's filed in Manhattan for an order that would force Diandra to bring the children to New York. If the case stays in California, is Diandra -- who is neither the genetic mother nor the gestational mother -- the mother of the boys and therefore entitled to assert parental rights? Students in this summer's Bioethics and Law course know the answer, courtesy of Johnson v. Calvert and Buzzanca v. Buzzanca. For everyone else, here's the end of today's article in the N.Y. Times:

If the case stays in California, the fact that Ms. Douglas is not the biological or genetic mother of the twins is unlikely to make a difference, because case law here emphasizes intent when deciding who is a legal parent, said Leslie Ellen Shear, an Encino lawyer who has been involved in many surrogacy cases.

Surrogacy, unmarried parents, relocation issues, allegations of domestic violence are all becoming common in family court cases, she said. Which doesn't mean that they are easy for courts to decide.

But she noted, "We invented courts to deal with all the difficult problems for which there is no social consensus."

Of course, all of this presumes that California law would apply. I don't know whether New York's law would be any different, but if it is, then this will shape up into an epic choice-of-law battle before it becomes an epic family-law or bioethics battle.

If California is still Diandra's domicile, and the contract was entered into and performed there, and the children are there, presumably California law would apply. Even if the case were litigated in New York, which seems to be what Zack is angling toward, New York courts might well conclude that California law should apply. Or not . . . .

Hospital accused of paying illegal remuneration.

Today's Wall Street Journal has a report (requires subscription) on the case against Alvorado Hospital Medical Center and its former CEO, Barry Weinbaum. Prosecutors charge that the recruitment deal that lured physicians to the hospital constituted illegal remuneration in violation of 42 USC § 1320a-7b(b), which makes it a crime to pay "any remuneration (including any kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or in kind" in return for a referral.

As common as such recruitment deals are in the health care industry, this is a case worth watching. The WSJ article can be found for free on the San Francisco Chronicle's web site.

U.S. won't appeal jury verdict in St. David's case.

St. David's can rest easy, finally. After an epic struggle with the federal government, St. David's Hospital in Austin can bank on a March 2004 jury verdict, which held that the hospital retained sufficient control after its partnership with HCA that it could remain tax-exempt. According to an item in today's Daily Dose, the U.S. won't appeal the trial court judgment (although it did file a notice of appeal, just in case). According to the article, "Had St. David's lost, it could have owed nearly $40 million in back taxes, interest and penalties, [St. David's CEO Carol] Clark said." You can get a pretty good summary of the case here; the opinion of the U.S. Court of Appeals for the Fifth Circuit lays out the whole case (before the remand that led to the district court judgment that isn't being appealed by the U.S.).

Should Doctors Help With Executions?

Good article in today's N.Y. Times about the ethics of physician involvement in executions. Here's the crux of the problem:

About 25 states allow or require doctors to be present at executions. But information on the number of doctors who participate in executions is hard to come by, as states generally refuse to name anyone who does so, citing security and privacy concerns. . . .

Many of the states that encourage doctors to participate in executions have seemingly contradictory laws that allow doctors to be disciplined by state medical boards for violating codes of medical ethics. Those codes almost universally forbid participation in executions.

The American Medical Association's ethics code, for instance, says that "a physician, as a member of a profession dedicated to preserving life when there is hope of doing so, should not be a participant in a legally authorized execution."

The code forbids doctors to perform an array of acts at executions, including prescribing the drugs, supervising prison personnel, selecting intravenous sites, placing intravenous lines, administering the injections and pronouncing death.

"They're not allowed to determine that the execution has been unsuccessful so that the execution can be repeated," said Dr. Stephen H. Miles, a professor of medicine at the University of Minnesota and author of "The Hippocratic Oath and the Ethics of Medicine."

But a survey of doctors in 2001 found that more than 40 percent would be willing to perform at least one of the forbidden activities.

Scholars who have studied the matter said they knew of no state board action against a doctor for aiding in a lawful execution. . . .

At least eight states . . . also seek to shield doctors from professional discipline through laws saying that aiding in executions is not the practice of medicine.

The AMA Code provision in question is E-2.06.

Interestingly, the Supreme Court may be heading toward a position that the absence of a physician's involvement in lethal injections may contribute to the execution's unconstitutionality. As the Times article points out:

In a unanimous decision on May 24 allowing a death row inmate to challenge lethal injections as cruel and unusual punishment, the United States Supreme Court appeared to suggest that a doctor should be required for at least some procedures.

The inmate in that case, David L. Nelson, had badly damaged his veins by long-term drug use, and went to court to fight a plan by Alabama prison officials to make a two-inch incision in his arm or leg to allow his execution to proceed. "There was no assurance," Justice Sandra Day O'Connor wrote in the decision, "that a physician would perform or even be present for the procedure."

The case in question is Nelson v. Campbell, No. 03-6821.

Doctors getting feisty: are there any ethical limits?

NPR's Morning Edition today ran a segment it describes this way:

A South Carolina doctor is asking the American Medical Association to approve as ethical a policy that would permit doctors to refuse treating medical malpractice lawyers. The proposal demonstrates how heated the debate over medical malpractice has become.

At 4 minutes and 2 seconds, it's well worth a listen. When the transcript becomes available, I'll offer some salient excerpts (in the spirit of Fair Use). For now, here's the gist: Fed up with the perceived effect of allegedly frivolous lawsuits, this physician believes he is so biased against plaintiffs' attorneys that he can't trust himself to provide competent medical care.

The Charleston (S.C.) Post & Courier ran a story about this physician's quest in its May 29 edition (requires free registration):

Tucked among the stacks of resolutions to be debated at the American Medical Association's annual meeting next month will be one that, if approved, is sure to inflame the already white-hot debate over medical malpractice liability reforms. It also may sound familiar to South Carolinians: The proposal urges the AMA to inform doctors that it is not unethical to stop treating attorneys and their families in non-emergency cases.

The man behind the idea is prominent Charleston surgeon Dr. Chris Hawk. In March, he urged doctors at the South Carolina Medical Association meeting to quit treating plaintiffs' lawyers and their families in an effort to soften trial lawyers' resistance to malpractice reform.

That call ignited a firestorm, leading to intense criticism from lawyers and some doctors who called it unethical and said it takes the debate over malpractice premiums too far. . . .

When the AMA's House of Delegates meets June 12, various AMA committees will sift through hundreds of resolutions that delegates will vote on over the course of the three-day meeting. . . .

The resolutions are typically filed by either medical specialty societies or state associations like the South Carolina Medical Association. In this case, Hawk, an AMA delegate, introduced the proposal himself -- a rare occurrence that happens just once or twice a year, an AMA official said.

How well Hawk's proposal will fare is far from certain. In March, when Hawk made similar comments at the SCMA meeting pushing doctors to drop attorney patients, the association's board made it a point to insist that it didn't endorse the idea.

One board member called Hawk's position "totally off the wall."

Hawk said that in his view, it's not unethical to deny care to patients as long as the doctor is not dealing with a medical emergency and as long as the patient is given 30 days' notice.

Here's the text of Hawk's Resolution 202 (Word file):

AMERICAN MEDICAL ASSOCIATION HOUSE OF DELEGATES

Resolution: 202
(A-04)

Introduced by: J. Chris Hawk, III, MD, Delegate, South Carolina

Subject: Reform of Civil Justice System

Referred to: Reference Committee B
(Michael J. Fischer, MD, Chair)

Whereas, Tort reform has been our number one legislative priority; and

Whereas, Our American Medical Association has been concentrating on MICRA-like reform, particularly a cap on non-economic damages, when in fact we need major reform of the entire civil justice system; and

Whereas, Our current efforts at tort reform have failed at a national level; and

Whereas, We need to get beyond tort reform to other issues that are vital to medicine and our patients; and

Whereas, Patients’ access to medical care has diminished progressively and is likely to continue to do so, due to high malpractice insurance premiums forcing physicians to reduce their scope of practice, relocate, and retire early; and

Whereas, Our Principles of Medical Ethics IX states, “A physician shall support access to medical care for all people”; and

Whereas, If trial attorneys were given the opportunity to experience the access problems caused by the professional liability crisis, then perhaps they would be willing to help change the system; and

Whereas, Our Principles of Medical Ethics VI states, “A physician shall, in the provision of appropriate patient care, except in emergencies, be free to choose whom to serve, with whom to associate, and the environment in which to provide medical care” therefore be it

RESOLVED, That our American Medical Association notify physicians that, except in emergencies and except as otherwise required by law or other professional regulation, it is not unethical to refuse care to plaintiffs’ attorneys and their spouses (New HOD Policy); and

RESOLVED, That our AMA organize a national task force, forum, or town meeting to reform the civil justice system, or get medical professional liability moved to an alternate dispute system, with report back by the 2005 Annual Meeting (Directive to Take Action); and

RESOLVED, That our AMA continue our efforts to reform the US health care system.

Fort Worth Star-Telegram editorial writer Linda Campbell has an eminently sensible response to Dr. Hawk's crusade:

This jaw-dropping measure, presented as a means of addressing diminishing access to health care, laments the medical profession's inability to impose a $250,000 national cap on pain and suffering damages in medical malpractice lawsuits - as though that were the magic antidote for chronically bloated insurance premiums.

Among its whereases, the resolution suggests that "if trial attorneys were given the opportunity to experience the access problems caused by the professional liability crisis, then perhaps they would be willing to help change the system."

So, Hawk believes, the AMA should "notify physicians that, except in emergencies and except as otherwise required by law or other professional regulation, it is not unethical to refuse care to plaintiffs' attorneys and their spouses."

Forget about that Hippocratic oath.

Let's indulge in discrimination according to livelihood - not to mention guilt by marital association.

Hawk told The Post and Courier in Charleston, "My obligation now is to try to improve the system, because we already have patients not getting care."

It requires truly warped logic to imagine that this tactic would advance that cause in any fashion.

If anyone thinks that Hawk's effort is merely an aberration, consider that the Christian Coalition of Alabama recently asked candidates for judicial office whether they would pledge to spurn campaign funding from personal injury trial lawyers, The Birmingham News reported. The organization considers Roe v. Wade an "activist" decision, and judges backed by trial lawyers tend to be "judicial activists," and so, of course, you see the connection.

What all this really accomplishes is to distract from meaningful debate about daunting problems.

Forty-three million Americans remain without health insurance. Many suffer for want of treatment. Someone has to pay to treat them when they get sick. But the cost of medical care climbs.

Medical malpractice insurance companies continue to hike premiums even in states that have limited awards for non-economic damages.

Texas voters last fall approved a constitutional amendment capping non-economic damages, but it hasn't immediately translated into lower malpractice insurance rates for many physicians.

Texas Medical Liability Trust reduced its rates by 12 percent, as promised.

But, late last year, the Joint Underwriting Association asked to raise rates 35 percent for physicians, surgeons and other health care providers and almost 68 percent for hospitals, a request denied by Texas Insurance Commissioner Jose Montemayor.

Yet another insurer, General Electric Medical Protective, switched to an unregulated type of insurance so that it could increase premiums by 10 percent.

In Ohio, malpractice premiums are expected to go up 10 percent to 40 percent this year, even though the state adopted pain-and-suffering caps, "The Advocate" newspaper in central Ohio reported in February.

She ends with a comment that gets to the nub of the problem:

Brooklyn Law School professor Anthony J. Sebok wrote in December that the usual suspects with the loudest voices on America's "liability crisis" miss the point about what needs reforming in the tort system.

"It is so expensive to litigate that few deserving victims sue, and many blameless defendants settle just so they can escape the expense and uncertainty of the civil justice system," he wrote on findlaw.com.

That can't be corrected with simplistic solutions or absurd ethical practices.

Dylan, poet redux.

What are the chances that the holder of the poetry chair at Oxford's latest poetical exegesis would land in 13th place on the Amazon.com bestseller list based on pre-publication sales alone? Pretty good, apparently, if the book gets hyped on page one of The New York Times. Less than 24 hours ago, it was at 109 (and that was a few hours after the Times article hit, so it was probably already reflecting the publicity). By the way, for an even more amazing reality check, the punctuation book, Eats, Shoots & Leaves, is holding steady at #3! What's up, America?

Getting the bad news with the good news about a drug.

Today's Philadelphia Inquirer has a good piece about drug studies that are tubed by the drug companies that sponsor them. Here's the set-up:

A doctor is thinking of trying a new drug on a 67-year-old patient because a study shows it works well in men only slightly younger. But the doctor doesn't know about a clinical trial that found serious side effects in older patients. Those results were never published.

John Schneider, a doctor of internal medicine and a member of the American Medical Association's Council on Scientific Affairs, fears that that scenario happens all too often.

Because drug companies often do not reveal the contents of studies that make their drugs look bad, he said, many doctors are frustrated because they sometimes prescribe medications without knowing all the information about them and possible side effects.

Now, the AMA is considering asking the federal government to open up this secretive world. The group's House of Delegates will vote during a meeting that starts Saturday on a resolution urging the U.S. Department of Health and Human Services to create a registry of all clinical trials and their results.

The power of a front-page story in The Times.

When I put up the message below (less than 3 hours ago), Ricks' book on Dylan was ranked 109. Right now, it's ranked 28. The power of the press, indeed. I wonder what it was ranked yesterday at this time (before the Times piece hit the Web). . . .

Bob Dylan -- master poet.

Christopher Ricks, professor of humanities at Boston University and the newly minted Professor of Poetry at Oxford, has a thing for Bob Dylan, and has published a 500-page tome, "Dylan's Visions of Sin" (Ecco Press), in support of the claim that Dylan is a master poet, according to an article in today's N.Y. Times. The Amazon.com sales rank for this book, which will be officially released on June 15, is already 109. Sometimes it pays to be cool.

Organ trafficking.

There was an interesting piece in yesterday's The Christian Science Monitor on international organ sales. Between this article and the lengthy one in the N.Y. Times Magazine on May 23, this topic is getting a lot of attention these days. Is the U.S. policy against organ sales eventually doomed?

A prescription for healthcare.

Does Harvard's Michael E. Porter have the right idea for reforming the health care system? You can sample his ideas in this story from today's Boston Globe. It summarizes an 18-page piece ("Fixing Competition in U.S. Health Care (HBR Research Report)" by Porter and Elizabeth Olmstead Teisberg) in the June issue of The Harvard Business Review. Here's HBR's description of the piece:

The U.S. health care system is in bad shape. Medical services are restricted or rationed, many patients receive poor care, and high rates of preventable medical error persist. There are wide and inexplicable differences in costs and quality among providers and across geographic areas. In well-functioning, competitive markets, such outcomes would be inconceivable. In health care, these results are intolerable. Competition in health care needs to change, say the authors. It currently operates at the wrong level. Payers, health plans, providers, physicians, and others in the system wrangle over the wrong things, in the wrong locations, and at the wrong times. System participants divide value instead of creating it. (And in some instances, they destroy it.) They shift costs onto one another, restrict access to care, stifle innovation, and hoard information--all without truly benefiting patients. This form of zero-sum competition must be replaced by competition at the level of preventing, diagnosing, and treating individual conditions and diseases. Among the authors' well-researched recommendations for reform: Standardized information about individual diseases and treatments should be collected and disseminated widely so patients can make informed choices about their care. Payers, providers, and health plans should establish transparent billing and pricing mechanisms to reduce cost shifting, confusion, pricing discrimination, and other inefficiencies in the system. And health care providers should be experts in certain conditions and treatments rather than try to be all things to all people. U.S. employers can also play a big role in reform by changing how they manage their health benefits.

HHS OIG publishes draft revised hospital compliance guidance.

In today's Federal Register we have the latest addition to the growing body of "compliance guidance" from the Office of Inspector General, this time in the form of changes to the previously published hospital compliance guidance (63 Fed. Reg. 8987 (February 23, 1998)). All of the OIG compliance guidance documents are collected here.

According to the preamble,

When the final version of this document is published, it will supplement the OIG’s prior compliance program guidance for hospitals issued in 1998. This draft contains new compliance recommendations and an expanded discussion of risk areas. The draft takes into account recent changes to hospital payment systems and regulations, evolving industry practices, current enforcement priorities, and lessons learned in the area of corporate compliance.

Among other things, the draft revises the OIG's list of compliance "risk areas":

This section addresses the following areas of significant concern for hospitals: (A) Submission of accurate claims and information; (B) the referral statutes; (C) payments to reduce or limit services; (D) the Emergency Medical Treatment and Labor Act (EMTALA); (E) substandard care; (F) relationships with Federal health care program beneficiaries; (G) HIPAA Privacy and Security Rules; and (H) billing Medicare or Medicaid substantially in excess of usual charges. In addition, a final section (I) addresses several areas of general interest that, while not necessarily matters of significant risk, have been of continuing interest to the hospital community.

Final section (I) discusses (1) discounts to uninsured patients, (2) preventive care services, and (3) professional courtesy.

Pfizer pleads guilty to marketing drug illegally.

While doctors can prescribe drugs for any use, the promotion of drugs for these so-called "off-label uses" is prohibited. The FDA's guidance in this area is relatively clear, although the agency has been somewhat constrained by a federal district court (Washington Legal Foundation v. Friedman (requires WestLaw subscription)). So it was a big deal when Pfizer admitted in a Boston case yesterday that it had engaged in just such illegal marketing, including paying doctors to put their names on ghostwritten articles about the anti-seizure drug Neurontin. The Boston Globe's article is here.

Pediatric deaths due to error - Report.

As reported in today's Daily Dose, Pediatrics has published an article (link is to abstract only) that estimates thousands of pediatric patients die each year due to medical error:

Thousands of children die unnecessarily in hospitals because of medical errors stemming from patient-safety lapses, and the extra cost of care for pediatric patients exposed to 20 types of safety problems exceeds $1 billion annually, according to a study in the June Pediatrics. The study confirmed that medical errors are a significant problem for children as well as adults, and it identified the very young and the very poor as more vulnerable than children in general. Researchers from the department of pediatrics at Johns Hopkins University, Baltimore, said the figures on patient deaths were conservative. The methods used to identify 4,483 unnecessary deaths from an analysis of 5.7 million records in 2000 "can detect only a small portion of the types of patient safety events that actually happen in hospitals," according to the article.

More than 51,000 cases of medical error were discovered, and four of the 20 types of treatment failure occurred at a rate exceeding 100 per 10,000 discharges. Those were failure to rescue a patient suffering from a threatening event, postoperative sepsis, and obstetric trauma with and without the use of instrumentation. The study also recorded the financial cost of each of the 20 types of treatment failure. For example, each case of sepsis resulted in an average of 26 extra hospital days and $118,000 in extra charges.

The abstract concludes: "Patient safety problems for hospitalized children occur frequently and with substantial impacts to our health care industry. Unmeasurable by this study are the additional "costs" and "burdens" of safety events that our patients are forced to handle. Additional work to describe and quantify better these outcomes in addition to ones measured here can help solidify the "business case" for patient safety efforts."

Washington Post analyzes Kerry's health plan.

In its Saturday issue, The Washington Post ran an article by Ceci Connolly on the Kerry health plan. In the "we've heard this before" category, the plan seeks to obtain health-care savings (and therefore reduced premiums, and therefore more coverage for the working uninsured) through electronic medical records and disease-management requirements. The plan would also position the federal government as payor of last resort for catastrophic claims, in much the same role as it plays as ultimate reinsurer after natural disasters and terrorist attacks. The federal government would pay employers 75% of the cost of "catastrophic claims," defined as a single employee's claims over $50,000 in any one year. As Connelly notes: "Such catastrophic claims account for less than half of 1 percent of all claims but generate 20 percent of the nation's health care costs, according to the latest federal data." The relief felt by employers, insurers, and employees (hopefully) would come at a cost: "In exchange for the benefit, Kerry would require employers to offer insurance to every worker and to provide health programs that detect and manage chronic illnesses such as high blood pressure early enough to prevent the diseases from worsening." And the federal tab? "Emory University health economist Kenneth E. Thorpe estimates the reinsurance program would save businesses and employees $288 billion in premiums over a decade but cost the government $257 billion because of administrative reductions." Most of that price would be covered by rolling back tax breaks delivered to the wealthy after the 2002 mid-term elections.

How Private Is My Medical Information?

The Privacy Rights Clearinghouse has a good report on medical records and privacy, with a special emphasis on information that is not covered by HIPAA.

50-state rundown on gay-marriage laws.

Stateline.org has published a very helpful summary (updated June 4) of pending legislation, including constitutional amendments, from around the various states. Stateline.org says it "is a non-partisan, non-profit online news publication that reports each weekday on state government. Funded by The Pew Charitable Trusts it was created in 1999 to strengthen and enrich U.S. political journalism by providing information about political activity in the 50 state capitols. In an era of declining news media presence in statehouses, Stateline.org helps fill the coverage gap." Good web site to know about . . .

Stem cell research ethics debated.

Yesterday's Cincinnati Enquirer ran an interesting debate over the ethics of stem-cell research, with Jeffrey Kahn arguing in favor and John Willke arguing against the practice.

Indigent care: Texas Attorney General Op. No. GA-0198.

Texas Attorney General Greg Abbott issued an AG Opinion on indigent health care yesterday. It seems the Amarillo Hospital District sold its hospital, Northwest Texas Hospital, to Universal Health Systems of Amarillo, Inc., in 1996. UHS acquired, along with the hospital, the county's indigent-care obligations pursuant to Chapter 61 of the Health and Safety Act. Since then, UHS has noticed that some patients appear to have voluntarily waived their right to obtain employer-sponsored health insurance, preferring instead to obtain hospital services as indigent patients rather than as insured patients. UHS wanted to know whether they could require these patients to sign up for health insurance benefits with their employers so that UHS could obtain reimbursement for services rendered. The AG's answer, in a word, was "no." Here's the rationale:

In this case, the [Indigent Health Care and Treatment] Act does not contemplate that a health care provider may require an applicant for indigent health care to obtain insurance through the applicant's employer in certain circumstances. Section 61.007(5) of the Health and Safety Code, requiring an applicant to provide information regarding the "existence of insurance coverage," is phrased in the present tense. Tex. Health & Safety Code Ann. § 61.007(5) (Vernon 2001). It is concerned with an applicant's coverage at the time of the application, not the availability of coverage or the potential for coverage in the future. The Department's [i.e., the Department of State Health Services'] rule requiring an applicant to list information about any medical insurance household members "receive," see 25 Tex. Admin. Code § 14.101(a)(3)(E) (2004), similarly focuses on whether the applicant is insured at the time he or she applies for indigent health care. No other provision in chapter 61 of the Health and Safety Code or in the Department's rules expressly or implicitly authorizes a hospital district to require an applicant to purchase health insurance as a prerequisite to receiving indigent health care.

Moreover, absent a provision in the special law creating it, a hospital district has no authority to require an applicant to obtain insurance before the applicant is eligible for indigent health care. "A hospital district has only such authority as is expressly conferred on it by statute or necessarily implied from the authority expressly conferred to effectuate the express powers." Tex. Att'y Gen. Op. No. JC-0068 (1999) at 1. Without express authority, a hospital district may not adopt a standard for determining an applicant's income and resources that is stricter than the Department's standard. See Tex. Health & Safety Code Ann. § 61.052(a)(2) (Vernon 2001); see also id. § 61.052(e) (stating that, if the Department changes its income and resources requirements so that the hospital district's standards become stricter than the Department's, the hospital district must change its standard to at least comply with the Department's requirements). Because neither the statute nor the Department's rules permit a requirement that an applicant purchase insurance, any such hospital district requirement would be more restrictive than the state requirements and, absent express authority, would be impermissible under the statute.

Schiavo case on fast track to Florida Supreme Court.

The 2nd District Court of Appeal has approved Michael Schiavo's request that Jeb Bush's appeal go directly to the Supreme Court, which allows the litigants to bypass the intermediate appellate stage in the dispute over the validity of "Terri's Law," according to an article in the Tallahassee Democrat. Thanks to Kathy Cerminara for the heads up on this.

Meanwhile, Terri's parents are again contesting her husband's right to make medical decisions for her -- an issue that has been litigated and re-litigated and always comes out the same way every time - in favor of the husband. The Second District Court of Appeal's opinion from last June neatly summarizes the issue. Apparently "finality" is a foreign concept in Florida's court system.

For more on the lower court's opinion and other recent developments in this case go here and here.

Additional thoughts on late-term abortions.

If the Administration and Congress were serious about having a law that would pass constitutional muster, Pub. L. No. 108-105 needs only two simple changes. First, make it clear that the prohibition does not apply to any procedure that is performed before the fetus is viable. Second, include an exception so that the prohibition doesn't apply when it is necessary to protect the health of the pregnant woman. Both provisions are easy to write. Both come directly out of the Stenberg opinion, in which the Supreme Court struck down Nebraska's partial-birth abortion law because it failed to include these two provisions. And both would probably have increased support for the bill in Congress.

The absence of these two simple features suggests a number of possibilities:

• Maybe Congress and the Administration were more interested in a confrontation with the federal courts over partial-birth abortion than they were in enacting any meaningful legislation.


• Or perhaps Congress and the Administration were more interested in creating a campaign issue for the summer and fall of 2004 than they were in banning a procedure that is so rarely used but has such potent political symbolism.


• Finally, it is possible that the Administration and both houses of Congress truly believe that if this loose thread can be successfully pulled away from the body politic, the entire fabric of Roe v. Wade will surely follow.

Health insurance coverage and the kindness of strangers.

Health Affairs' May/June issue has an interesting article that show that workforce characteristics are a bigger influence on health care coverage rates than state health policies. Here's the journal's press release and summary:

Working In Communities With Greater Number Of ‘Advantaged’ Workers
Increases Likelihood Of Employer-Sponsored Coverage
BETHESDA, MD — Although there is wide variation across the country in the rate of employer-sponsored insurance, almost all of the variation can be accounted for by variation in individual demographic characteristics, employment characteristics, and a community effect, according to a new paper published today by Health Affairs and the California HealthCare Foundation.

Author Richard Kronick, a professor with the University of California, San Diego, and two colleagues use Current Population Survey data to demonstrate that community characteristics exert a strong “contextual effect” on employer-sponsored coverage. . . .

According to Kronick, all individual and job characteristics being equal, workers are more likely to receive employer-sponsored coverage in communities with a large proportion of high-income adults and greater numbers of manufacturing and public administration jobs, rather than those whose economy is weighted toward low-income adults, minority workers, and small-business jobs.

Kronick and colleagues conclude that the demographic characteristics of a community have more bearing on rates of employer-sponsored insurance (ESI) than do state policies aimed at reducing the number of uninsured, such as small-group market reform or elimination of benefit mandates.

“In almost all states the actual rate of ESI is within one or two percentage points of the level that would be expected based on demographic and employment characteristics and the contextual effect,” Kronick says.

“Other than Hawaii, there is very little that states have done to move the rate of ESI either substantially above or below the rate that would be expected based on the demographic and employment characteristics of the people who live in the state. The only effective action that any state has taken to substantially increase the level of ESI among workers is to require employers to offer insurance,” as Hawaii has, Kronick says.

The authors find that a worker with a given set of characteristics (age, race/ethnicity, income, family structure, size of employer, industry, health status, home ownership, and union membership) is 3.5 percentage points more likely to have employer-sponsored insurance if they live in a metropolitan area with a high-wage, high-skill economy than if the workers lives in an average metropolitan area.

“There is a strong contextual effect on coverage rates,” Kronick says. “Although there are wide variations across states in the rate of (employer-sponsored insurance), almost all of the variation can be accounted for by the combination of individual characteristics and the contextual effect.”

The authors offer three potential explanations for the “contextual effect”:

In areas where there are the types of workers who expect to have ESI (well-educated, higher-income, native-born Anglos), employers will be more likely to offer coverage. As a result, the search costs for a marginal worker to find a job offering insurance will be lower than in areas where there are fewer employers offering insurance

Total compensation, including ESI and other benefits, is more likely to higher in areas with larger numbers of higher-skilled workers

Workers in high-coverage areas may prefer to search longer for jobs with ESI, while workers in low-coverage areas may find it more acceptable to go without coverage

In other words, poorer and less urban states, with a less skilled workforce and fewer high-end and skilled jobs, can't do much to raise the rate of ESI, short of attracting more skilled jobs, more high-end employers, etc. And that means simultaneously granting tax breaks and spending more on improving public services, paying attention to public education and public health, all of which requires a stronger tax base. How does a comparatively poor state dig itself out of this hole?

The skewed politics of assisted suicide.

Liberals touting states' rights. Conservatives pooh-poohing individual liberty and freedom. The are just some of the political side-effects of the debate over physician-assisted suicide in the wake of the 9th Circuit's opinion last week telling the Justice Department (and John Ashcroft personally) to take a hike and leave Oregonians and their Death With Dignity Act alone. Today's on-line Wall Street Journal surveys the political wreckage (requires subscription), and helpfully provides links to various commentators:

• Associated Press article;


• Newsday editorial;


• Seattle Post Intelligencer editorial;


• spokeswoman for American Catholic Bishops Conference;
and

• editorial in LifeNews.com.

NY Times' extensive coverage of life and death under Oregon's PAS law.

The New York Times has a series of articles today about the reality of living and dying under Oregon's physician-assisted suicide law. The lead article is here. There is also a multimedia presentation on the voices of the terminally ill, which links off the main story page, and a brief story (with photos) of a woman who invited her friends in to experience her death together.

More on partial-birth abortion ruling.

Here's the essence of Judge Hamilton's ruling this morning (see below).

1. The partial-birth abortion law is unconstitutional in three respects.
a. The statutory definition of the procedure could apply to previability D&E procedures as well as inductions. It could also apply to the interventions performed by physicians who treat a woman experiencing a spontaneous second-trimester miscarriage. Physicians may face criminal prosecution under the statute for procedures than cannot always be predicted when they begin to treat their patients. This could reduce the availability of such procedures and could have an adverse impact on the physicians who continue to do the procedures. All of this amounts to an "undue burden," as that phrase has been explained in Casey and Stenberg: the law "has the effect of placing a substantial obstacle in the path of a woman seeking an abortion of a nonviable fetus." The Nebraska law at issue in Stenberg was struck down for the same reason.
b. The law is unconstitutionally vague in two material respects: "partial-birth abortion has little if any medical significance; "living fetus" adds to the vagueness of the law because it does not pertain to viability or to the framework of Roe and Casey; and neither the "overt act" nor the scienter requirements of the statute save the law from unconstitutional vagueness.
c. Notwithstanding the extensive findings of Congress to the contrary, the Court concluded that the intact D&E procedure (referred to in Stenberg as "D&X" or "dilation and extraction") is relatively safe, and it may be safer than any of the alternative procedures under some circumstances. Therefore banning the procedure could endanger women's health. The Nebraska law at issue in Stenberg was struck down for the same reason.

2. The extensive Congressional findings in support of Congress' conclusion that intact D&E is never necessary for the health of the mother were reviewed by the court under an intermediate review standard, neither de novo (as the plaintiffs argued) nor with the extreme deference sought by the government's lawyers. Applying a standard akin to a "hard look," the court concluded that these findings were "unreasonable and . . . not supported by substanttial evidence [that] was available to Congress at the time."

Federal court declares partial-birth abortion law unconstitutional.

At 9:00am this morning, Federal District Judge Phyllis Hamilton issued a 117-page order permanently enjoining the enforcement of the federal partial-birth abortion law. The order is here (PDF); the statute may be viewed here.

As reported this morning by the San Francisco Chronicle:

The ruling applies to the nation's 900 or so Planned Parenthood clinics and their doctors, who perform roughly half of all abortions in the United States.

U.S. District Judge Phyllis Hamilton's ruling came in one of three lawsuits challenging the legislation President Bush signed last year. . . .

Federal judges in New York and Nebraska also heard challenges to the law earlier this year but have yet to rule. . . .

Late last year, Hamilton, a Clinton appointee, and federal judges in New York and Lincoln, Neb., blocked the act from being enforced pending the outcome of the court challenges. They began hearing testimony March 29. . . .

The Nebraska and New York cases are expected to conclude within weeks. The outcomes, which may conflict with one another, will almost certainly be appealed to the Supreme Court.

The New York case was brought by the National Abortion Federation, which represents nearly half the nation's abortion providers. The Nebraska case was brought by a few abortion doctors.