In counseling clients on M&A deals, it is critical to stress transaction nuances that may otherwise serve as an afterthought to a buyer or seller. While both parties reliably demonstrate laser focus on the big picture (i.e., the deal economics), there remain several purchase agreement provisions that can significantly affect a client’s allocation of risk, including representations and warranties, and indemnification provisions. Continue reading “Healthcare M&A Corner – The Materiality Scrape: Buyers Rejoice; Sellers Beware”
Non-Competition Clauses – Make No Assumptions
The enforceability of non-competition clauses depends on a number of factors. Non-competition clauses are viewed in the context of anti-trust laws as a restraint of trade and disfavored. Consequently, the entity seeking to enforce a non-compete must be able to prove a legitimate business reason for the non-compete. A number of states flat out prohibit non-competition agreements, while other states enforce non-competition agreements on a case by case basis. In some states where non-compete provisions that restrict the physician’s right to practice medicine are considered void and not enforceable as a matter of law, employers may be able to sue the departing physician for monetary damages suffered because of the competition. Continue reading “Non-Competition Clauses – Make No Assumptions”
Will increasing regulatory oversight improve quality of care in the nation’s nursing homes?
Last month I wrote about the hearing to be held by the House Committee on Energy and Commerce Subcommittee on Oversight and Investigations regarding federal efforts to ensure quality of care and resident safety in nursing homes.
The Director of Health Care for the GAO focused his opening remarks on the GAO study of nursing homes that concluded in 2015. The next year, CMS instituted sweeping regulatory changes. So it remains to be seen how CMS’ new requirements of participation will impact the issues found in the GAO report. Ruth Ann Dorrill, Regional Inspector General, HHS OIG noted that the OIG previously made two recommendations to CMS to improve quality of care in nursing homes. First, to provide guidance to nursing homes about detecting and reducing harm to be included in facility Quality Assurance and Performance Improvement programs. Second, to instruct State Agencies to review facility practices for identifying and reducing adverse events, and link related deficiencies specifically to resident safety practices. CMS implemented these recommendations on adverse events in nursing homes as of August 2018.
The focus on deficiencies by the State Agencies is disappointing. Deficiencies result in civil money penalties, further reducing the resources available to care for nursing home residents. Ms. Dorrill testified that nursing home residents often have care needs similar to patients in hospitals. However, nursing homes are not reimbursed at the same rate as hospitals and, yet, are expected to provide similar care. It seems as though the residents are getting lost in the ever increasing cycle of regulation and enforcement. Regulatory oversight sounds good on paper, but does it work?
SUPPORT Act Expands Sunshine Act Disclosure Requirements, Covered Recipients
On October 24, 2018, President Donald Trump signed the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act (SUPPORT Act), a combination of a number of previously passed House and Senate bills related to addressing the opioid crisis. One of the provisions of this lengthy bipartisan package of bills includes an expansion of the disclosure requirements initially imposed by the Physician Payments Sunshine Act.
Read the full text of this Alert on the Duane Morris LLP website.
Physician Compensation
Today’s blog addresses compensation and benefits; a complicated subject of upmost interest to our clients. The blog touches on major points to consider regarding compensation and benefits. Physicians and physician groups must consult with compensation experts and legal counsel to insure that they understand the best possible, regulatory compliant compensation model for their needs. There are pros and cons and multiple variations of each model. Continue reading “Physician Compensation”
Documentary Film Expensive for Hospitals
Three teaching hospitals allowed a documentary to be filmed at their hospitals to provide viewers with information regarding the care that academic medical centers deliver. Despite the fact that the hospitals received no patient complaints regarding the filming, and the hospitals took steps to avoid violating HIPAA by having the film producers get written permission from patients to participate in the film and the hospitals required the film crews to have HIPAA training, the hospitals paid nearly $1 million to the federal Health and Human Services Office for Civil Rights (OCR) for alleged HIPAA violations. The hospitals are also required to follow corrective action plans and be monitored by the OCR .
This is the second time that OCR has gone after hospitals for alleged HIPAA violations associated with medical documentary filming.
Apparently, according to the OCR, the hospitals, not the producers, should have gotten the patients’ authorizations before allowing the producers to film on site and that mistake cost the hospitals a total of $999,000.
Contractual Indemnification – DANGER
Indemnity provisions are used to shift risk from one party to another. The intent of an indemnification provision in an agreement is to impose on one party the responsibility to pay the liability, damages, costs, expenses, and attorney fees for the other party to the agreement, under the circumstances set forth in the agreement. An indemnification clause obligates one party to compensate the other party for losses or damages. This compensation is separate and apart from other contractual obligations and damages. Continue reading “Contractual Indemnification – DANGER”
Tolerating Bad Behavior by Medical Staff Members Proves Costly
On September 7, 2018, a jury awarded more than $10 million to seven healthcare professionals based on allegations that the hospital failed to protect the women from two male doctors with troubling histories. According to the news reports, neither of the physicians were employed by the hospital, although both doctors were members of the medical staff and had clinical privileges at the hospital.
The bulk of the award, more than $7 million in punitive damages, went to a female anesthesiologist who was allegedly choked and pushed up against the wall in a locker room by a surgeon. The attack was witnessed by other hospital staff and patients, according to the complaint. The anesthesiologist reported the incident to hospital leadership and was asked to consider dropping the matter. The surgeon was reported as having a long history of workplace violence that was known to the hospital and the chief of the surgery department. While the chief met with the surgeon after each incident, according to the anesthesiologist’s attorney, no formal disciplinary action was ever taken.
Shortly after the alleged choking incident in the locker room, six female nurses and technicians who used the locker room were unlawfully recorded by a different doctor, as they used the restroom and changed their clothes. Criminal charges were brought against the doctor for the secret videotaping, but according to the complaint, the hospital delayed in suspending the doctor’s medical staff privileges. The remainder of the jury award went to the six nurses and technicians who were secretly videotaped.
The take away – juries are willing to find hospitals responsible for the acts of their non-employed medical staff members. Hospitals need to take prompt and appropriate action at the first sign of inappropriate behavior. While this case involved medical staff members, prompt and appropriate action is also required at the first sign of inappropriate behavior by anyone on the hospital’s premises.
What’s on the federal regulatory horizon for nursing homes?
The federal government cannot agree on whether to increase or decrease regulatory burdens on nursing facilities. Yesterday, the United States House Committee on Ways and Means and the Subcommittee on Health wrote to the Centers for Medicare and Medicaid Services urging further reduction of regulatory burdens on health systems, hospitals, and nursing homes. Tomorrow, the House Committee on Energy and Commerce Subcommittee on Oversight and Investigations will hold a hearing examining federal efforts to ensure quality of care and resident safety in nursing homes.
The Ways and Means Committee’s letter noted that providers with post-acute care beds devote 8.1 full-time employees to compliance with regulatory requirements. Over half of those employees are clinical staff who could otherwise be caring for residents. The letter applauded recent efforts to reduce the regulatory burden and urged further reductions.
In contrast, the Committee on Energy and Commerce suggests that CMS isn’t doing enough to ensure quality care in the nation’s nursing homes. The Committee’s background report recites a number of news reports in which seniors died or were abused in nursing homes. Three witnesses have been invited to testify: Kate Goodrich, M.D., Chief Medical Officer of CMS; Ruth Ann Dorrill, Regional Inspector General, HHS OIG; and John Dicken, Director, Health Care GAO. Topics to be addressed include efforts made to ensure that nursing homes are meeting the federal regulatory standards and CMS’ oversight of state agencies that work with CMS to inspect nursing homes. The undertone of the Committee’s background report is that CMS needs to increase enforcement, including higher civil money penalties and exclusion from participation in federal health care programs.
It is hard to see how higher monetary penalties will improve quality care as it further reduces the resources available to care for residents.
Settlement of the Osteopathic Physicians Class Action Against the American Osteopathic Association
Duane Morris is very pleased to announce the settlement of the Osteopathic Physicians Class Action against the American Osteopathic Association, Talone, et. al v. American Osteopathic Association. The Court has granted preliminary approval of the settlement, and members of the class and sub-classes will be receiving notice of the settlement in the coming weeks.
The settlement is a resolution of the claims the class representatives asserted against the AOA that was negotiated over a period of approximately four months, and that provides a range of benefits to tens of thousands of DOs. Those benefits are estimated in value to be worth significantly more than $35,000,000.
Please see our announcement for more information.