PA Supreme Court Significantly Narrows Application of State’s Peer Review Protection Act

By Lisa Clark and Samantha Dalmass

On March 27, 2018, the Pennsylvania Supreme Court held in a 4-3 decision that the Pennsylvania Peer Review Protection Act (“PRPA”) would not prevent the disclosure of certain physician performance review files in an ongoing medical malpractice lawsuit despite arguments that the files in question were precisely the kind of peer review documents that the PRPA was intended to protect. This controversial decision limits the protection available to healthcare providers under the narrow PRPA evidentiary privilege and may significantly affect the manner in which Pennsylvania hospitals conduct peer review activities.

The underlying lawsuit was brought in 2012 after plaintiff Eleanor Reginelli suffered a heart attack several days after being treated by Dr. Marcellus Boggs in the emergency room at Monongahela Valley Hospital (“MVH”) for gastric discomfort. The plaintiff alleged that Dr. Boggs failed to diagnose and properly treat an underlying and emergent heart condition before discharging her from MVH. She and her husband filed a four-count complaint in 2012, asserting claims against Dr. Boggs, MVH and UPMC Emergency Medicine, Inc. (“ERMI”), which provides staffing and administrative services for the MVH emergency room.

Dr. Boggs and the other physicians in the MVH emergency department, including Dr. Brenda Walther, were members of the medical staff at MVH and employed by ERMI. Dr. Walther served as the director of the MVH emergency department and supervised the ERMI-employed emergency department physicians working at MVH. When she was deposed during the discovery phase, Dr. Walther revealed that she had prepared and maintained a performance file on Dr. Boggs as part of her regular practice of reviewing randomly selected charts associated with ERMI-employed emergency department physicians. The Reginellis responded by filing discovery requests directed at MVH, seeking production of the complete performance review file for Dr. Boggs.

MVH opposed the motion to compel and argued that the requested items fell squarely under the protection of the PRPA because they had been created and used for the purpose of reviewing the services rendered in the MVH emergency room. This argument was subsequently rejected by the trial court, and the plaintiffs’ motion to compel was granted. At this point, ERMI and Dr. Boggs entered the discovery proceedings and filed a motion for a protective order, asserting entitlement to claim protection under the PRPA for the peer review work performed by an ERMI employee. ERMI argued that the performance file on Dr. Boggs fell outside of the peer review responsibilities that ERMI performed for MVH and that Dr. Walther had created and maintained the file solely on ERMI’s behalf. However, this was not consistent with the motion for reconsideration filed by MVH in which the hospital alleged that Dr. Walther conducted the peer review work on behalf of both ERMI and MVH. Then, before the trial court could rule on the motions filed by MVH and ERMI, both entities appealed the trial court’s decision to compel production to the Superior Court.

The relationship between ERMI and MVH and the inconsistent claims regarding the performance review files were critical on appeal, and the Superior Court upheld the trial court decision that neither ERMI nor MVH were entitled to the evidentiary privilege. The lower court found that ERMI was acting as an independent contractor and, therefore, did not qualify as an entity enumerated in the PRPA as protected by peer review privilege. It also held that MVH could not claim privilege based on the finding that MVH had neither generated nor maintained the performance file for Dr. Boggs.

Both ERMI and MVH appealed the decision, but in the 26-page opinion written by Justice Donahue, the Pennsylvania Supreme Court held that neither entity was in a position to claim the PRPA’s evidentiary privilege.

The Pennsylvania Supreme Court first considered whether ERMI could claim entitlement to protections under the PRPA. The PRPA defines “peer review” as the “procedure for evaluation by professional health care providers of the quality and efficiency of services ordered or performed by other professional health care providers.” The court’s analysis hinged on whether ERMI could hold itself out as a “professional health care provider,” which is defined under the PRPA as “individuals or organizations who are approved, licensed or otherwise regulated to practice or operate in the health care field under the laws of the Commonwealth of Pennsylvania.” There are 12 types of entities enumerated in the statutory definition, including hospitals and physicians. The court said that although it described itself as a “physician organization comprised of hundreds of individual emergency medical physicians… that exists specifically to provide emergency medical services,” ERMI could not claim to be any of the 12 listed entities set forth in the statutory definition. The court said ERMI was not a “professional health care provider” because it was not approved, licensed or otherwise regulated to practice or operate in the healthcare field in Pennsylvania, and it did not become one merely because one of the professional healthcare providers it employed conducted an evaluation of another.

After holding that EMRI could not claim the evidentiary privilege because it did not qualify as a “professional health care provider,” the court addressed whether the PRPA was available to MVH. Although MVH clearly met the statutory definition of “professional health care provider,” the court declined to afford it protection under the PRPA on the grounds that Dr. Walther had not been established as member of the hospital’s peer review committee and the PRPA’s evidentiary privilege is reserved only for the proceedings and documents of a review committee. MVH had previously stated that Dr. Walther acted as a “separate” peer review committee for the ERMI-supplied emergency department physicians, which led the court to conclude that Dr. Walther had conducted peer review activities as an individual. Based on the majority’s interpretation of the PRPA, individuals conducting peer review may qualify as a “review organization” but not as a “review committee” engaging in peer review.

Notably, the court further explained that the PRPA does not extend its grant of the evidentiary privilege to the category of review organization enumerated in the second sentence of the statutory definition of “review organization.” This category includes “any hospital board, committee or individual reviewing the professional qualifications or activities of its medical staff or applicants for admission hereto.” The court expressly identified credentials review as falling outside the scope of peer review privilege under the PRPA.

The court then addressed the argument that the performance files were entitled to peer review protection because the hospital had contracted with ERMI to perform its peer review activities. MVH pointed out that this type of relationship was very common, and hospitals would struggle to survive if they were not able to contract with outside entities like ERMI to fulfill peer review responsibilities. MVH argued that ERMI was contractually bound to perform peer review activities on its behalf. However, the court found this argument lacked merit because it was inconsistent with earlier arguments made by ERMI and unverifiable since neither MVH nor ERMI had thought to include the emergency services contract in the record. Although the Court recognized that no statutory provision exists to preclude a hospital from entering into a contact with a staffing and administrative services entity to conduct peer review services for the hospital’s peer review committee, it refused to consider the issue without conclusive documentary evidence.

In a dissenting opinion, Justice Wecht found the conclusions made by the lower courts and the majority to be at odds with the intent of the legislature in creating the peer review privilege. The dissent found that ERMI did, in fact, qualify as a professional healthcare provider and went on to say that “the majority’s contrary interpretation guts the privilege, given that such contractual staffing and administrative agreements are commonplace.” Justice Wecht also expresses concern about the destabilizing effect of the majority’s reliance on “less than clear” statutory definitions.

This decision has significant implications for healthcare providers in Pennsylvania, especially hospitals and physician groups that contract with outside entities to perform peer review activities. The Supreme Court left the question open as to whether such relationships are permitted and whether the PRPA would apply to peer review documents produced by an outside peer review entity on a provider’s behalf. Therefore, hospitals should carefully evaluate any contracts related to peer review services to make sure that the provisions clearly spell out that such services are performed on the hospital’s behalf. Hospitals may also want to evaluate policies and procedures relating to credentials review as the majority opinion seems to have eliminated the evidentiary privilege for such review activities, finding them to be outside of the scope of peer review protection.

Lisa Clark is a partner in Duane Morris’ Healthcare Law practice with specific focuses in health information technology, regulatory compliance and reimbursement matters for hospitals, physicians and other healthcare providers; software developers and investors in HIT and healthcare products and services; and subcontractors and vendors providing services to the healthcare industry. 

Samantha Dalmass is a law clerk at Duane Morris, currently pursuing her J.D. and a Master of Public Health at Drexel University.    

Courts Continue to Erode Peer Review Privilege

The Pennsylvania Supreme Court recently ruled that a state law, establishing confidentiality for medical provider peer review proceedings, did not apply to a contractor staffing a hospital’s emergency department.   The hospital, the contractor and the physician face a lawsuit from the patient and her husband, alleging that the physician failed to diagnose an emergent, underlying heart problem during an emergency room visit and that the patient suffered a heart attack just days after she was discharged without treatment. In the course of litigation discovery the patient was seeking the physician’s performance review, which the contractor and the hospital argued was protected from discovery under the Pennsylvania Peer Review Protection Act (the “Act”). In a 4-3 decision, the Supreme Court affirmed a finding by the state’s Superior Court that the Act did not shield the hospital or the contractor staffing the hospital’s emergency department from discovery of the physician’s performance reviews.

The Supreme Court confirmed the Superior Court’s conclusion that the document was not entitled to protection under the Act because the performance review had been drafted by the physician’s supervisor, and not by an employee of the hospital itself. The Court also found that a business entity, like the contractor emergency medicine group, was not contemplated under the peer review protection statutes and therefore could not claim the privilege itself.

In another recent case eroding peer review privilege, an Illinois hospital claimed that certain of its documents were confidential and that the court should not have ordered the hospital to produce the records during discovery in a civil case. The hospital argued that the Illinois Medical Studies Act protects those documents from disclosure. Specifically, the hospital contended that its peer-review policy provides that, if certain indicators are met (such as the death of a patient and a concern raised about that death), then an investigation begins. The hospital insisted that because the peer-review policy authorized the investigation, everything that was discovered through that investigation is privileged under the Medical Studies Act. However, the appellate court agreed with the trial court and said that all of the documents at issue should be produced stating that the Medical Studies Act does not protect against disclosure of information generated before the peer-review process began and that the hospital’s argument was contrary to over 20 years of precedent establishing that the Medical Studies Act cannot be used to conceal relevant evidence that was created before a quality-assurance committee or its designee authorized an investigation into a specific incident.

The takeaway here is that courts are strictly construing peer review protection statutes. Providers cannot be assured that their peer review records are protected unless the peer review records are created in full compliance with legal and regulatory requirements.

New Jersey Continues to Improve Access to Medicinal Marijuana

In response to Executive Order No. 6, issued by New Jersey Governor Phil Murphy, the New Jersey Department of Health (the “Department”) reviewed certain elements of New Jersey’s Compassionate Use Medical Marijuana Act and the implementation of the Medical Marijuana Program (“MMP”) (Executive Order 6 Report).

The Department’s review focused on improving and expanding patient access to medicinal marijuana, and included, but was not limited to, (i) a review of the current list of debilitating medical conditions for which medical marijuana may be authorized; (ii) physician flexibility to make determinations about qualifying conditions; (iii) rules of operation and siting for dispensaries; and (iv) methods by which patients and caregivers obtain product.

The Department’s analysis resulted in the recommendation and approval of an immediate expansion to the MMP. The first stage of the expansion includes the addition of five conditions to the existing list of diagnoses for which medicinal marijuana can be prescribed. Patients with chronic pain related to Musculoskeletal Disorders, Migraines, Anxiety, chronic pain of Visceral Origin, and Tourette’s Syndrome are now eligible to participate in the MMP.

The Department will also be revising New Jersey regulations to permit Alternative Treatment Centers (“ATC”) to operate and dispense at multiple satellite locations. In advance of formal revisions to MMP, providers can apply to the Department for waivers from the ATC-dispensary restrictions.

Additional formal revisions to existing MMP regulations will allow patients to designate two care-takers instead of one, will eliminate the 10% TCH limit currently in place, and will repeal the requirement for psychiatric evaluation prior to prescribing to a minor.

The Department is continuing to evaluate recommendations for further expansion of the MMP, evidencing the State’s continued efforts to improve and increase accessibility to alternative treatment.

Private Equity Beware!

According to a Department of Justice press release, the United States has filed a complaint against a compounding pharmacy, alleging that the pharmacy paid illegal kickbacks to induce prescriptions for compounded drugs reimbursed by TRICARE. The government’s  claim also charges two pharmacy executives, and a private equity firm which manages both the pharmacy and the private equity fund that owns the pharmacy, for their involvement in the alleged kickback scheme.

The private equity firm allegedly invested in the pharmacy company in 2012 with the goal of increasing the company’s value and then selling it for a profit in 5 years. The private equity firm allegedly “managed and controlled” the pharmacy company through two of its partners who served as “officers and/or directors” of the company. During its investment, the private equity firm was allegedly actively involved in developing and implementing the company’s business strategy around maximizing reimbursement so as to enhance the value of the company, prior to selling its interest.

The complaint describes statements in e-mails sent by the private equity firm principals, about opportunities to capitalize on ‘the extraordinarily high profitability’ which could result in a ‘quick and dramatic payback’ on its investment.” According to the U.S. Attorney, the private equity firm acknowledged in emails that “‘overcharging the product’ in its ‘pain management business’ risked ‘cross[ing] the line from an ethics standpoint.’”

The take away from this complaint is that private equity investors are not immune from prosecution for health care fraud. Private equity investors need to consider the risks associated with managing and controlling their health care investments.

 

 

Telemedicine/Telehealth What is the Difference?

Telemedicine generally refers to the use of information technologies and electronic communications to provide remote clinical services to patients. Examples of telemedicine are the transmission of medical imaging and video consultations with patients and specialists. Telemedicine is the first generation description of the clinical application of technology to medicine.

As the application of technology to health care has evolved, the term “telehealth” has become the second generation of terminology and describes the evolution of health care technology beyond the delivery of clinical services using remote means. Telehealth encompasses a broader collection of means or methods to enhance care delivery and education. While the terms are often used interchangeably, telemedicine and telehealth are not precisely the same thing.

In 2014, the Department of Health & Human Services Department sought to clarify the two terms in a post on HealthIT.gov:

“Telehealth is different from telemedicine because it refers to a broader scope of remote healthcare services than telemedicine. While telemedicine refers specifically to remote clinical services, telehealth can refer to remote non-clinical services, such as provider training, administrative meetings, and continuing medical education, in addition to clinical services.”

The Health Resources and Services Administration (HRSA) of the U.S. Department of Health and Human Services defines telehealth as the use of electronic information and telecommunications technologies to support and promote long-distance clinical health care, patient and professional health-related education, public health and health administration. Technologies include videoconferencing, the internet, store-and-forward imaging, streaming media, and terrestrial and wireless communications.

According to The Center for Connected Health Policy, “telemedicine” often refers to traditional clinical diagnosis and monitoring that is delivered by technology, while “telehealth” describes the wide range of diagnosis and management, education and other related fields of healthcare.

In 2014, the journal Telemedicine and e-Health published a study that found seven different definitions of telehealth in use in federal agencies alone.

“Although many definitions are similar, there are nuanced differences that reflect each organization’s legislative intent and the population they serve,” the study concluded. “These definitions affect how telemedicine has been or is being applied across the healthcare landscape, reflecting the U.S. government’s widespread and influential role in healthcare access and service delivery. The evidence base suggests that a common nomenclature for defining telemedicine may benefit efforts to advance the use of this technology to address the changing nature of healthcare and new demands for services expected as a result of health reform.”

Telemedicine is a component part of telehealth, but telehealth goes beyond traditional telemedicine. For now, in most cases, the context in which the terms “telehealth” and “telemedicine” are used will be the key to understanding the intent of the word. Usage of the terms will continue to evolve and I predict that the broadest possible term defining the application of technology to health care will survive the test of time.

 

 

 

 

 

Practice Departures and Breakups: Costly, Painful and Tumultuous

Physician practices break up in one form or another as often as physician marriages breakup and the breakup of a physician practice can be as costly, tumultuous and painful as the breakup of a marriage. The best advice is to plan ahead and develop a “pre-nuptial” type arrangement or exit plan, when the practice is set up and when new providers are brought into the practice. Unfortunately, many physician practices have no exit plan for practice departures or breakups and suffer unnecessarily as a result.

Even those practices with an exit plan, often encounter rough waters as they work through issues. The biggest disputes seem to be over competition and post termination compensation. The practice may or may not have a non-compete provision in its physician contracts, if there is a contractual non-compete, it may or may not be enforceable. Even with an enforceable non-compete, the departing provider may choose to ignore the non-compete and poach patients and referral sources.

With respect to post-termination compensation, practices may need to hold back some money to account for payer audits,  recoupments, fines,  penalties, practice debt,  contractual obligations, limited liquidity and other miscellaneous costs. It is important to protect the remaining providers and make sure they are not saddled with the departing provider’s expenses and debt.

In addition to the big picture issues, there are a myriad of other issues associated with practice breakups. Patient notification can be a sticky issue. For instance, an academic medical center practice was forced to pay a penalty for violating HIPAA, when the medical center provided protected health information to a departing provider without first obtaining authorization from patients. Conversely, practices have also been penalized for not notifying patients about departing providers.

With respect to practice departures and breakups, the best defense is a good offense. Plan ahead working with experienced health care counsel.

 

Can a Physician Be Too Old to Practice Medicine?

We know that the Americans with Disabilities Act (ADA) restricts the ability to make age-related decisions, unless it can be established that age is a “bona fide occupational qualification”. A bona fide occupational qualification generally means that the individual has a trait that precludes safe and efficient job performance. Under certain circumstances, the courts have allowed some industries to force the retirement of a class of individuals (pilots for example) at a certain age, based on the belief that it is too complicated to deal with such individuals on an individualized bases.

So, is a physician’s age a factor that precludes safe and efficient job performance? To my knowledge, no court has approved a mandatory retirement age for physicians and no credentialing or licensing body has set a firm mandatory retirement date for physicians. However, some credentialing bodies have established age related policies, mandating an evaluation process for physicians of a certain age.

Because physicians’ duties vary widely by practice area, a one size fits all policy doesn’t work. For example, the physical and other skills required to practice orthopaedic surgery are vastly different than the physical and other skills required to practice psychiatry. Even within orthopaedics, the physical and other skills required for joint replacement are vastly different than the skills required for sports medicine. Credentialing and licensing entities need to focus on the individual physician and his or her fitness to safely provide patient care, not age.

Every medical staff should have a medical staff health committee to receive and investigate reports relating to a physician’s fitness for clinical privileges, health, physical and mental disorders, chemical dependency and well-being, etc. Age alone should not be the basis for reviewing and evaluating a physician’s fitness to safely provide patient care. And, it should never be assumed that youth assures that a physician is able to safely provide patient care.

GAO Report: Assisted Living Providers & Federal Regulation

Neville M. Bilimoria
Neville M. Bilimoria
GAO Report: Assisted Living Providers & Federal Regulation
On February 5, 2018, the Government Accountability Office, a nonpartisan investigative arm of Congress, found that there are huge gaps in regulation of assisted living facilities. The report, entitled “Medicaid Assisted Living Services: Improved Federal Oversight of Beneficiary Health and Welfare is Needed,” comes on the heels of years of discussion as to whether assisted living facilities are sufficiently regulated by individual states, or whether further federal oversight is warranted.

The suggestion of the need for federal regulation of assisted living came from GAO’s finding that more than $10 billion a year is spent from federal and state funds for assisted living services for more than 330,000 Medicaid beneficiaries. With demand for additional Medicaid assisted living funding, and the potential increase in demands of the senior population in the next 5 years, these numbers will continue to rise significantly as noted by the GAO: “Medicaid spending on long-term care is significant, representing about one quarter of Medicaid spending annually and is expected to grow with an aging population.” Continue reading GAO Report: Assisted Living Providers & Federal Regulation

Illinois Posts Medicaid Managed Care Performance Report

In January 2018, The Office of the Auditor General for the State of Illinois published its Performance Audit (“Audit Report”) of Medicaid Managed Care Organizations (“Medicaid MCOs”) for Fiscal Year 2016. What was unleashed was a startling review of the Medicaid MCOs’ performance over FY 2016 in administering the Medicaid Program for what was then called the Integrated Care Program (“ICP”) or Medicare/Medicaid Alignment Initiative (“MMAI”) Programs. You may recall these ICP and MMAI Medicaid MCO programs in Illinois involved almost a dozen Medicaid MCOs that covered about 70% of the State of Illinois Medicaid recipients.

The Audit Report played into health care providers’ deepest fears in Illinois: showing that Medicaid Managed Care may not be working as it was intended; namely, to reduce costs and improve quality of care in the Medicaid Program in Illinois. For example, long term care providers in Illinois had to fight tooth and nail with Medicaid MCOs under the ICP and MMAI programs, experiencing cumbersome Medicaid contracts, denied claims, delayed claims, and worse yet, a prior authorization administration problem (administrative MCO delay) which in some instances prevented residents from receiving care timely. Most, but not all, of those issues are still being resolved, but providers had hoped that there was a good reason for this madness involving Medicaid MCOs: better and lower cost care for Medicaid beneficiaries. Continue reading Illinois Posts Medicaid Managed Care Performance Report

NEW LIMITS ON REGULATORY GUIDANCE FROM FEDERAL AGENCIES

A new policy recently issued by the Justice Department states that the Department will not use its enforcement authority to effectively convert agency guidance documents into binding rules. The new policy has broad ramifications and applies to government enforcement actions as well as civil lawsuits. The policy prohibits Department components from issuing guidance documents that effectively bind the public without undergoing formal rulemaking.

The term “guidance documents” includes any agency statement of general applicability and future effect, such as Medicare billing manuals, special fraud alerts, and frequently asked questions. The Department may continue to use guidance documents to simply explain or paraphrase legal mandates from existing statutes or regulations, but guidance documents cannot create binding requirements that do not already exist by statute or formal regulation.

While the new policy is viewed favorably by most in the health care industry and gives health care providers a new tool to fend off allegations of wrong doing, it may lead to confusion as providers try to interpret complex and confusing statutes and rules.