AMA beating the med-mal crisis drum loudly.

N.Y. Times op-editorialist Bob Herbert has followed up on last Monday's column with another swipe at those who claim that soaring med mal insurance premiums are the result of massive incrases in med mal payouts. This time, though, it's the AMA who gets rapped for feeding the frenzy. Claiming that 20 states are now in a med-mal insurance crisis (up from 12 in 2002), the AMA has conveniently mapped out the whole country for all to see which states are in crisis, which ones are showing problem signs, and which states are "currently okay" (apparently only 6 states are in this last category). An interactive version of the map, with anecdotes, a smattering of statistics, and a description of the current state of the health-care liability laws, can be found here.

In today's column, Herbert claims that the evidence has been misstated or skewed by the AMA, at least as respects Missouri, Florida, and New Jersey. I'd add Texas to the list of so-called crisis states where the evidence seems to point to the opposite conclusion. After the surge of filings to beat the September 1, 2003, effective date of our med-mal reform statute, new filings seem to have virtually dried up. There's been little or no reduction in premiums in tort-reformed states, though, and I am betting (with Bob Herbert) that the docs have been sold a bill of goods about the causes (and cures) for their insurance-premium crisis. For more information, and a slightly more balanced view, check out the GAO report on the alleged med-mal crisis, discussed here last August 1.

Parkland: public hospital blues.

The Dallas Morning News' Sherry Jacobson has been doing a fine job in two recent pieces (6/23, 6/24) covering Parkland's financial woes. Bottom line: Parkland's caught in The Big Squeeze: Federal law requires the hospital to provide emergency medical care to anyone who needs it, regardless of their county (our country) of residence. But state law requires other counties to reimburse Dallas only for care provided to indigents. And each county gets to define "indigency" as it sees fit. So Collin County, which long ago decided it did not want to tax its own residents for indigent health care, has defined indigency to top out at about $4,000 a year for a family of four (about 1/4 the federal definition of poverty). Any Collin County resident making more than that gets treated by Parkland at Dallas County's expense. What is wrong with this picture?

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.