1. Research a real case where a crime was committed in a healthcare context
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2. Summarize the facts for the class and discuss the criminal aspects of the case
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Answer the questions attached after reading the article.
https://www.cdc.gov/pcd/issues/2015/15_0230.htm
Criminal Aspects of Health Care, Contracts
Learning Objectives
Criminal procedure brief overview
Healthcare fraud and kickbacks (Anti-Kickback Statute and Stark Laws) are very important topics in health law
Patient abuse and other criminal acts in healthcare
Homicide, Manslaughter, Criminal Negligence
Contracts
Contracts in health administration
Employment contract, partnership, agent, independent contractor
Criminal Law
Criminal law is the body of law that deals with crime and the legal punishment of criminal offenses.
Crime: Social harm defined and made punishable by law
Misdemeanor: Offense punishable by less than 1 year in jail and/or a fine
Felony: Imprisonment in a state or federal prison for more than 1 year
Criminal Procedure: Arrest and Arraignment
Arrest
Prosecution for a crime generally begins with the arrest of a defendant by a police officer or with the filing of a formal action in a court of law and the issuance of an arrest warrant or summons.
Arraignment
Formal reading of the accusatory instrument
A generic term that describes a variety of documents, each of which accuses a defendant of an offense
Includes the setting of bail
Criminal Procedure: Indictment
A felony complaint or grand jury indictment commences a criminal proceeding.
The accused may be tried for a felony after a grand jury indictment.
A defendant can waive presentment to the grand jury and plead guilty by way of a waiver.
Criminal Procedure: Conference
Meeting for purposes of deliberation
Plea bargaining time
Commences with the goal of an agreed-upon disposition
If no disposition can be reached, a case may be assigned to a trial court.
Criminal Trial
Jury selection
Opening statements
Presentation of witnesses and evidence
Standard of proof must be beyond a reasonable doubt
Summations
Instructions to the jury by the judge
Jury deliberations
Verdict
Must be unanimous decision
Opportunity for appeal
Prosecutors need to prove:
The act itself is a criminal act, known as actus reus (guilty act)
The intent to commit the criminal act provides the requisite mental state (mens rea)
The attendant or surrounding circumstances of the crime demonstrate that the crime was committed by the defendant
All of these elements are defined by criminal statute
Healthcare Fraud
Deception for personal gain
Acts characterized by intentional deception
Financial drain on the healthcare system
Knowingly presenting a false claim for payment
Making a false record to get a false claim paid
Conspiring to defraud the government
Making a false record to avoid an obligation to pay or transmit property to the government
Proving Fraud
Need to establish:
1. The defendant engaged in a scheme constituting a systemic course of conduct.
2. The defendant did so with the intent to defraud more than one person.
3. The defendant obtained property from one or more persons, at least one of whom has been identified.
Provider Frauds
Billing for services not rendered
State v. Cargille
Physician had multiple billings for single office visits
United States v. Larm
Billing the insurer when patients administer allergy injection themselves
Provider Frauds
Falsifying a patient’s diagnosis to justify tests, surgeries, or other procedures that are not medically necessary
USA v. Farid Fata
Physician misdiagnosed patients with cancer and other illnesses they did not have, then performed medically unnecessary treatments and blood tests
Provider Frauds
Up-coding services (billing for a more costly service than the one actually performed)
United States v. Raithatha
Physician instructs staff to raise the Current Procedural Terminology code on invoices when the physician actually provided a lower cost service
Provider Frauds
Billing for unnecessary services (services that are not medically indicated)
Farlow v. North Carolina State Board of Chiropractic Examiners
Chiropractor prescribed a course of treatment that was not justified by the injuries patients received
Provider Frauds
Overbilling the insurance carrier or benefit plan
Culver v. State
Regulations prohibit providers from billing Medicaid for an amount greater than the lowest price routinely offered to the public (same service/item/date)
Laboratory charges Medicaid $200 for each urine test offered to self-pay patients for $19.20.
Provider Frauds
Misrepresenting procedures performed to obtain payment for non-covered services, such as cosmetic surgery
Up-coding medical supplies and equipment (billing for more expensive equipment than what was delivered to the patient)
Unbundling (billing each stage of a procedure as if it were a separate procedure)
Waiving patient co-pays or deductibles
Prevention of Fraud
Develop policies and procedures.
Appoint a Compliance Officer.
Communicate the organization’s compliance program to employees.
Establish monitoring and auditing systems for detecting fraud.
Prevention of Fraud
Publicize steps for reporting criminal conduct.
Address criminal conduct when detected.
Periodically review & update the compliance program.
Work with state & federal enforcement agencies, regulatory agencies, & insurance companies to prevent, detect, & prosecute fraud.
Home Care Fraud: hard to detect
Individuals receive healthcare services from providers at home
Numerous frauds are caused by:
difficulty in supervising services provided in the home setting
Medicare’s failure to monitor the number of visits per person
Lack of accountability to the patient by failing to explain services provided
No co-pays for beneficiaries (except for medical equipment)
Fraud and Abuse Real Life Examples
https://www.youtube.com/watch?v=XYQu9I2KaT4 (home care fraud and patient abuse)
https://www.youtube.com/watch?v=pMnWAvw_Afo (Medicare fraud)
Kickbacks
Two important laws:
Medicare and Medicaid Patient Protection Act of 1987 (Anti-Kickback Statute)
42 U.S §1320a-7b(b)
Ethics in Patient Referral Act (Stark Law)
42 U.S.C. § 1395nn
Anti-Kickback Statute
Arose out of congressional concern that remuneration provided to those who can influence healthcare decisions would result in goods and services being provided that are medically unnecessary, of poor quality, or harmful to a vulnerable patient population
Anti-Kickback Statute
Prohibits any person or entity from offering, making, soliciting, or accepting remuneration, in cash or in kind, directly or indirectly, to induce or reward any person for purchasing, ordering, or recommending or arranging for the purchasing or ordering of federally-funded medical goods or services
Stark Law
Prohibits a physician from making referrals for certain designated health services payable by Medicare to an entity with which he or she (or an immediate family member) has a financial relationship (ownership, investment, or compensation), unless an exception applies.
Immediate family members of the physician are defined as spouse, natural or adoptive parents, children, siblings, step- siblings, in-laws, grandparents, and grandchildren.
designated health services include clinical laboratory services, physical/occupational therapy services, radiology services, durable medical equipment, etc
Stark Law
Prohibits a HC entity from presenting or causing to be presented claims to Medicare (or billing another individual or insurer) for those referred services
Establishes a number of specific exceptions for financial relationships between a physician and an entity that do not pose a risk of program or patient abuse.
Ex: permits a group medical practice to make referrals for in-office ancillary services such as laboratory or radiology services
AKS v. Stark Law
AKS: the physician cannot pay, offer, solicit, or receive anything of value aimed at awarding the referral of patients to, or generating business for, a federal healthcare program
Stark: prohibits a physician from referring a patient to a healthcare entity in which he or she has a financial interest, unless he or she falls under one of the exceptions set out in the statute
Examples: AKS
United States v. Kats: A medical service company collected blood and urine samples from clinics and sent them to a specific lab for testing. The lab billed the company who in turn billed the insurer, then the lab kicked back half of its receipts to the medical service company.
United States v. Bay State Ambulance and Hospital Rental Services: A private ambulance company gave cash and two cars to a hospital official for his recommendation that the company be awarded a service contract.
Examples: Stark
United States ex rel. Drakeford v. Tuomey Healthcare System, Inc: Tuomey was illegally billing Medicare for services referred by physicians with whom the hospital had improper financial relationships
Entering into contracts with 19 specialist physicians that required the physicians to refer their outpatient procedures to Tuomey in exchange for bribes
Ignoring and suppressing warnings from attorneys that the physician contracts were risky and raised red flags
Patient Abuse
Patient abuse is the mistreatment or neglect of individuals who are under the care of a healthcare organization.
Forms of abuse
Physical
Psychological
Medical
Financial
Patient Abuse Examples
Abusive Search: A nurse at a geriatric center summoned a security guard to search a resident while physically restraining him when the resident resisted
Repeated Instances of Physical Abuse: Manager’s son at a personal care home punched a resident which resulted in broken bones and hospitalization
Forcible Administration of Medications: Holding down a patient’s chin and forcing medication down her throat
Other criminal acts
Tampering with Drugs: repackaging and forged Labels
Internet Pharmacy and Sale of Drugs: all requests for prescription drugs must be reviewed by physician
Falsification of Records
Theft: illegal taking of another person or organization’s property (drugs, money, etc)
Rape and Sexual Assault: when one person is forced, without giving consent, to have sexual intercourse with another
Other criminal acts
Homicide (Murder)
Manslaughter
Criminal Negligence
Homicide
Unlawful killing of a person
Involves malice of forethought and the premeditated intent to kill another human being
First-degree murder: Involves the of another with deliberate and premeditated killing malice of forethought
Second-degree murder: Is not deliberate and is not premeditated; however, it is the killing of another with malice of forethought
Homicide Examples
Fatal Injection of Lidocaine: A nurse’s aide was convicted of first-degree murder when he was found to have injected an elderly patient with a fatal dose of Lidocaine
Lethal Dose of Anesthesia: An oral surgeon was convicted of second degree murder for the deaths of 3 patients after they received massive doses of anesthesia, which were not tailored to the patient’s individual conditions
Manslaughter
Unlawful killing of another person without malice of forethought
Voluntary or involuntary
Voluntary: Intentional killing of another person (e.g., in “the heat of passion”)
Involuntary: Death occurs as the result of a negligent act
Ex: a surgeon was charged with manslaughter after a war veteran died whose healthy kidney was accidentally removed instead of the diseased one
Criminal Negligence
Criminal negligence
Reckless disregard for the safety of others
Willful indifference to an injury that could follow an act
Residential care facility abuse
State v. Cunningham: Defendant had knowledge of the dangerous conditions in the facility but willfully refused to remedy the situation
Criminal Negligence
Cruelty to the Infirm: the intentional neglect by any person, including a caregiver, causing unjustifiable pain or suffering to an infirm, aged patient
State v. Brenner: nursing home neglected and mistreated residents by failing to ensure:
Facility was maintained in a sanitary manner
Necessary health services were performed
Staff were properly trained
Adequate medical supplies and sufficient staff
Records were maintained properly
Residents were adequately fed and cared for
Exercise 1
Research a real case where a crime was committed in a healthcare context
Summarize the facts for the class and discuss the criminal aspects of the case
Contract
A contract is a special kind of voluntary agreement, either written or oral, that involves legally binding obligations between two or more parties.
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Purpose of a Contract
To specify, limit, and define agreements that are legally enforceable
A contract forces the participants to be specific in their understandings and expectations of each other
Contracts serve to minimize misunderstanding and offer a means for parties of a contract to resolve any disputes that may arise
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Types of Contracts
Express: parties have an agreement
Oral
Written
Implied: contract is inferred by law
Voidable: one party has the right to escape from legal obligation under the contract (ex: minors, under duress)
Executed: all terms/obligations have been performed
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Types of Contracts
Enforceable: legal remedy available
Unenforceable: no legal remedy
Contracts can be for realty, goods, services
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Elements of a Contract
Offer/Communication: promises
Consideration: give up something in return
Adequacy
Acceptance
Meeting of the minds (mutual assent)
Definite and complete terms
Duration (receipt to acceptance)
Complete and conforming (acceptance mirrors offer)
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Conditions and Performance of Contracts
Conditions
Act(s) or event(s) that must occur or be performed by one party before the second party has any responsibility to perform under the contract
Performance
The act of doing what is required by a contract
Breach of Contract
Occurs when there is a violation of one or more of the terms of the contract
Elements necessary to establish a breach:
A valid contract was executed.
The plaintiff performed as specified in the contract.
The defendant failed to perform as specified in the contract.
The plaintiff suffered an economic loss as a result of the defendant’s breach of contract.
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Nonperformance Defenses: Fraud
At least one party in a contract knowingly misrepresents a material fact contained in the contract
Intends the other party to reply on that misrepresentation
Second party must rely on the misrepresentation and suffer damages
Nonperformance Defenses: Mistakes
Mistake of fact: mistaken belief that certain facts are true
Both parties must have made the mistake for the defense to work
Mistake of law: incorrect judgment of the legal consequences of the known facts
Can result in a nonbinding contract, no remedy
Other Nonperformance Defenses
Duress: unlawful threats or pressure to force an individual to act against his/her will
Illegal contract: a contract whose formation, object, or performance is against the law or public policy
Impossibility to perform the requirements of a contract (ex: natural disaster, law change)
Statute of limitations
Remedies
Specified performance
Monetary damages
General and consequential damages
Test of foreseeability
Duty to mitigate damages
Arbitration
Contracts in Health Administration
Employment contracts
Restrictive Covenants
Exclusive Contracts
Employee Handbook
Medical Staff Bylaws
Transfer agreements
Insurance contracts
Employment Contracts
A written document that sets forth the terms of the employment relationship
Restrictive covenants: contract provisions that prohibit former employees from competing against it, soliciting its customers or using the company's information for their own purposes
Restrictive Covenants
A restrictive covenant is reasonable, and thus, enforceable, if:
(1) its terms are no greater than is required to protect the employer's legitimate business interest;
(2) it does not impose undue hardship on the former employee; and
(3) it is not injurious to the public
Exclusive Contracts
An organization often enters into an exclusive contract with physicians or medical groups for the purpose of providing a specific service to the organization.
Exclusive contracts generally occur within the organization’s ancillary service departments.
Radiology
Anesthesiology
Pathology
Emergency department
Employment Contracts Examples
Tompson v. Nason Hosp: geographic limitations on pediatric practice reasonable (10 miles for 2 years)
Community Hospital Group, Inc v. Jay Moore: neurosurgeon was not to practice within a 30 mile radius of the hospital too restrictive (contra public interest – shortage of neurosurgeons)
Employee Handbook
Elements to establish employee handbook as a contract
A policy statement that clearly sets forth a promise that the employee can construe to be an offer.
Policy statement must be distributed to the employee, making him or her aware of the offer.
After learning about the offer and policy statement, the employee must “begin” or “continue” to work.
Employee Handbook
Weiner v. McGraw-Hill: employment application signed at time of employment stated employees are subject to handbook provisions + instructed to proceed in compliance with handbook during job
Churchill v. Waters: employee handbook was Not a contract due to a disclaimer expressly disavowing any attempt to be bound by it and stated that its contents were not to be considered conditions of employment
Medical Staff Bylaws
Medical staff bylaws can be considered a contract
Applicants for appointment to a medical-dental facility read and agree to the provisions in the bylaws
The physician promises to abide by the bylaws in exchange for privileges
Exchange of promises constitutes consideration to support any contract of this bilateral nature.
Physicians have a right to appeal suspension of privileges
Other Common Contracts in Health Administration
Transfer agreements: a written document that sets forth the terms and conditions under which patient may be transferred form one facility to another for kind of care required
Insurance contract: insurer has an obligation to indemnify the insured for losses caused by specified events, in exchange for premiums
Previous health insurance often didn’t cover pre-existing conditions
Corporate Contracts
Limited by its powers as contained in or inferred from its articles of incorporation
Chief executive officer (CEO) limited in his or her authority to execute contracts.
Boards set limits of expenditures by CEOs
Corporations can act only through agents (e.g., officers)
Ex: physician contracts for hospital employment
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Partnerships
Comprises two or more persons who agree to carry on a business for profit and share profits and losses in some proportions
Ex: A physician general practice or specialty group
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Agent
One who has the power to contract for and bind another person, the principal, to a contract
Apparent or ostensible agent: One who a third person believes is acting on behalf of the principal.
If a hospital undertakes to provide physician services to a community, and the community reasonably believes that a physician is employed by the hospital to deliver services, then the hospital would generally be liable for the physician’s negligent acts
Independent Contractor
An individual who agrees to undertake work without being under the direct control or direction of another
Independent contractors are personally liable for their own negligent acts
Independent Contractor
Mduba v. Benedictine Hospital: Hospital liable for emergency room physician’s negligence despite independent contractual relationship, as this status was not readily known to the injured patient
Maristany v. Patient Support Services: PPS not liable for negligent hiring unless it knew, or in the exercisable care, should have known that the contractor was not properly qualified