Disability discrimination lawsuits against hospitals have become relatively common in recent years as former hospital employees allege that their former employers discriminated against them on the basis of various disabilities in violation of the Americans with Disabilities Act of 1990. Other ADA lawsuits have been filed against hospitals and other healthcare providers, claiming that their websites or parking lots do not adequately accommodate those with disabilities. Yet others have been filed accusing hospitals of failing to accommodate deaf patients by not providing a live interpreter. But few, if any, major lawsuits had been brought against hospitals and healthcare providers alleging that the facilities themselves fail to accommodate patients with physical disabilities. That may have changed with a putative class action lawsuit filed in the U.S. District Court for the Western District of Pennsylvania in late July, which may be the first of many cases to come.
Government Accountability Office Focuses on Nursing Home Abuse Reporting
On July 23, 2019, the U.S. Senate Finance Committee held a hearing where a representative of the Government Accountability Office testified on elder abuse in nursing homes. At the hearing, reported at GAO-19-671T, the GAO representative discussed the June 2019 GAO report entitled “Improved Oversight Needed to Better Protect Residents from Abuse” (GAO-19-433).
The GAO analysis of CMS data found that, while relatively rare, abuse deficiencies cited in nursing homes more than doubled, increasing from 430 in 2013 to 875 in 2017, with the largest increase in severe cases. In light of the increased number and severity of abuse deficiencies, GAO testified that, while it is imperative that CMS have strong nursing home oversight in place to protect residents from abuse, there are several oversight gaps that may limit the agency’s ability to do so. The gaps include:
- Information on abuse and perpetrator type is not readily available. CMS does not require state survey agencies to record the type of abuse and perpetrator and, when this information is recorded, it cannot be easily analyzed. Without this information, CMS lacks key information and, therefore, cannot take actions—such as tailoring prevention and investigation activities—to address the most prevalent types of abuse or perpetrators.
- Facility-reported incidents lack key information. CMS has not issued guidance on what nursing homes should include when they self-report abuse incidents to state survey agencies. This contributes to delays in state agency investigations and the inability to prioritize investigations for quick response.
- Gaps in CMS processes can result in delayed referrals to law enforcement. CMS requires a state survey agency to make a referral to law enforcement only after abuse is substantiated—a process that can often take weeks or months. As a result, law enforcement investigations can be significantly delayed. GAO reported that delay in receiving referrals limits law enforcement’s ability to collect evidence and prosecute cases—for example, bedding associated with potential sexual abuse may have been washed, and a victim’s wounds may have healed.
The report on which the GAO testimony was based made several recommendations, including that CMS:
- require state survey agencies to submit data on abuse and perpetrator type;
- develop guidance on what abuse information nursing homes should self-report; and
- require state survey agencies to immediately refer to law enforcement any suspicion of a crime.
GAO reported that the Department of Health and Human Services concurred with GAO recommendations.
Some in the health care provider sector have raised concern about confusing definitions of the term “abuse,” pointing out that the CMS definition that applies to various types of providers differs from the definition in the Elder Justice Act of 2010, which requires nursing home reporting of certain types of incidents. As a result, while a nursing home would be obliged to report an incident under the Elder Justice Act, another type of health care provider may not be mandated to do so.
In fall 2019 another GAO report concerning abuse matters is due to be published. It is expected to compare federal abuse reporting requirements for nursing homes and assisted living residences.
Of course, it remains to be seen whether Congress or CMS will act soon to address issues raised by GAO.
Unclaimed Property and Record Management
As healthcare providers and entities merge, consolidate or close their doors, record management and unclaimed property obligations are among the concerns that must be addressed.
In our experience, many healthcare providers engage in a mild to severe form of hoarding, addressing unclaimed property and record management matters on a regular basis will make the merger, consolidation or practice closure process much easier.
Unclaimed Property
Unclaimed or abandoned property refers to money or property held by the healthcare provider or entity that has generated no activity or had no contact with the owner of the money or property for one year or longer. Common forms of unclaimed property for health care providers include uncashed payroll checks, patient refunds and overpayments, and insurance payments or refunds. State laws require businesses to perform due diligence regarding unclaimed property. Businesses must contact the presumed owner of the unclaimed property and if the owner fails to step forward, the business must turn the unclaimed property over to the state each year.
Unclaimed property is often overlooked or deposited in the provider or healthcare entity’s bank accounts and only comes to the forefront when entities merge, are acquired, stop doing business or when the state exercises its unclaimed or abandoned property audit rights. States have audit rights pertaining to unclaimed or abandoned property and there can be stiff penalties for failing to relinquish unclaimed property. As states look for additional revenue, expect unclaimed property to be increasingly on the radar.
Healthcare providers should routinely examine their books and records and identify unclaimed or abandoned property. Once the unclaimed or abandoned property is identified, the provider should consult legal counsel and follow the state law requirements with regard to the unclaimed or abandoned property. Unclaimed or abandoned property does not belong to the healthcare provider or business and must be returned to the rightful owner or relinquished to the state.
Record Management
Every business needs a records management process. At a minimum, the process should: identify the records to be maintained; specify who is responsible for management of the records; clarify the record retention schedule; address record storage; and address records disposal. Record management should be part of everyday life for healthcare providers and entities. When providers and entities, merge, consolidate or close, record management becomes a front and center concern, particularly if records have not been consistently managed previously.
An interesting related question was recently posted on the American Association of Healthcare Lawyers list serve regarding the liability and responsibility of a business associate (BA) to a patient and/or other third parties as it relates to access to electronic patient records when a covered entity is no longer in existence. The post queried 1) whether the BA was required to keep the records in accordance with the state statute of limitations; 2) whether the BA agreement controlled; and 3) what would happen if the BA was the only entity still in existence with access to the PHI.
My initial thought is that the business associated agreement (BAA) contract terminates when the BA is no longer performing services for or on behalf of the covered entity, so when the covered entity closes, the BA automatically terminates. Standard BAA language generally states, “Upon termination of this Agreement for any reason, business associate shall return to covered entity [or, if agreed to by covered entity, destroy] all protected health information received from covered entity, or created, maintained, or received by business associate on behalf of covered entity, that the business associate still maintains in any form. Business associate shall retain no copies of the protected health information.”
Make sure if you are a BA that the covered entity agrees in the BAA to the destruction of all protected health information received by the covered entity if the covered entity ceases to do business for any reason.
Healthcare M&A Corner – The Escrow Holdback: Another Buyer Security Blanket
In my last post, I discussed the dynamics behind materiality scrapes with respect to purchase agreement representations and warranties, and indemnification provisions. Another tool utilized by buyer and seller parties to an M&A deal that affects allocation of risk is a concept known as the escrow holdback, normally effectuated through a separate escrow agreement. While sellers want the entirety of their sale proceeds yesterday, that mindset is not always practical considering the parties’ negotiating positions and resulting leverage.
Continue reading “Healthcare M&A Corner – The Escrow Holdback: Another Buyer Security Blanket”
Effort to Legalize Adult Use of Marijuana Fails in New York State
By Jerome T. Levy and Lauren G. Perry
On June 17, 2019, the New York Legislative session adjourned without passing a bill that would have legalized adult use cannabis in the state. The sponsor of the leading bill in the assembly and Manhattan Democratic Senator, Liz Krueger, announced that there was not sufficient time to gain the support necessary for passage of a bill. Although there appears to be broad popular support for legalization of marijuana in New York, a number of “safety” issues arose, particularly among suburban constituencies relating to concerns such as operation of motor vehicles under the influence of marijuana. Sentiment in suburban areas caused lawmakers from those districts to withhold the support needed, particularly in the state senate. In addition, many blamed the failure on Governor’s Cuomo’s reluctance to give the measure full support. Although the governor had endorsed adult use legalization earlier in the session, and had attempted to include it within the budget bill passed at the end of March, at the critical time before adjournment he appeared to take a hands‑off approach, becoming oddly passive, a pose this activist governor rarely adopts. Continue reading “Effort to Legalize Adult Use of Marijuana Fails in New York State”
The Looming Crisis – Illegal Administration of Schedule II Controlled Substances in Nursing Homes
Not a week goes by without some mention of the opioid crisis and opioid litigation, including the recent settlement proposal by Purdue Pharma to pay $270 million to resolve a case pending with the State of Oklahoma. Purdue Pharma, the maker of OxyContin®, has had over 1,000 lawsuits filed against it by State and local governments alleging that it caused the opioid crisis. On April 5, 2019, the Illinois Attorney General filed a lawsuit against Purdue Pharma LP and Purdue Pharma Inc. over their alleged roles in the opioid crisis. According to the lawsuit, more than 2,000 Illinois residents died in 2017 alone due to opioid overdoses.
Drug Enforcement Administration (“DEA”) representatives recently advised State regulators that it is turning up the heat to aggressively crack down on a common practice among physicians or practitioners, nurses, and pharmacists who provide Schedule II controlled substances to residents of long-term care facilities (“LTCFs”). The practice involves the admission of a resident to a LTCF after hours and the administration of a Schedule II controlled substance without a valid prescription.
Often, due to the after-hours admission and without a valid prescription, the nurse removes the Schedule II controlled substance from the facility’s emergency box or narcotics box and administers it to the resident. Although convenient for the nurse administering the drug, this practice violates federal law and State law, and can result in any number of legal actions against the physician or practitioner, nurse, administrator, facility, or pharmacist by the DEA, Department of Justice, federal Office of Inspector General, State Department of Professional Regulation, State Medicaid department, and State Department of Public Health, among other federal and State agencies. All health care providers and practitioners should ensure that they are following the law when prescribing, dispensing, or administering controlled substances.
Recent Federal Legislative Activity to Address Surprise Billing
States increasingly pass laws to protect patients from surprise billing, varying widely in scoop. Surprise bills occur when a patient is treated by an out-of-network provider and receives a bill from the provider for the difference between the payment made by the health plan and the patient’s cost-sharing amount. Typical scenarios are when a patient accesses emergency services outside the health plan’s network or receives services at an in-network hospital from an out-of-network physician (e.g., anesthesiologist, radiologist, pathologist). Despite state legislative activity, state protections are limited by the Employee Retirement Income Security Act of 1974 and do not apply to self-funded employee welfare benefit plans. According to the Kaiser Family Foundation, approximately 60 percent of workers get coverage through a self-funded health plan. Because these state-level protections vary widely in scope and do not apply to patients in self-funded health plans, federal legislation may provide an opportunity to more comprehensively address surprise billing. Continue reading “Recent Federal Legislative Activity to Address Surprise Billing”
Governance Board Terms
Recently, I have been asked by clients and boards that I am a member of about term limits for board members. While there are no legal requirements for term limits organizations, many governance experts believe that term limits for board members are best practice. Term limits create space for new members and facilitate diversification efforts; bring new members with fresh perspectives; offer a democratic way to refresh the board; make it easier to transition unproductive or disruptive members off the board; allow board members to step down gracefully; facilitate succession planning with a mix of board veterans and newcomers; and deter stagnation and procrastination.
Term limits have value, but so do former board members. When considering term limits, organizations need to consider: (1) the length of terms; (2) the number of consecutive terms permitted; and (3) options for board members to stay involved, such as advisory boards and committee work. In order to ensure that former board members stay engaged, some organizations form advisory boards to address the negative aspects of term limits. Advisory board membership allows former board members to continue to contribute to the organization. The purpose and function of an advisory board depends on the needs of the organization and should be set forth in an advisory board charter. Typically, advisory board members assist with fundraising and share their experience, knowledge and expertise with the board and provide advice and counsel, when requested to assist the board.
Each organization must determine what is best for the organization based on the organization’s current needs, taking into consideration recommendations for best practices. Because an organization’s needs can change over time, boards should periodically review the organization’s bylaws and term limits to ensure that the bylaws and term limits continue to meet the organization’s needs.
Certificate of Need Laws: Desirable or Destructive
The Federal Trade Commission (FTC) is making headlines in Alaska, supporting a move to repeal that state’s certificate of need (CON) law. CON laws require health care providers to establish that a need exists for the services the provider seeks to provide. If there is no need, the provider is not allowed to establish its business.
The goals of CON laws are to reduce health care costs, reduce redundancy, and to improve access to care. CON laws are designed to ensure that health care is available in poor or rural communities, not just cities and wealthy areas. A 1974 federal law (repealed in 1987) required all states to enact CON laws.
The FTC argues that CON laws hurt competition and do not live up to the goals of protecting consumers from unexpected health care costs. The FTC says that CON laws create barriers to entry into the market which limits consumer choice and may stifle innovation.
With the weight of the FTC behind the repeal movement, is Alaska’s law doomed? Maybe not. The FTC criticized Illinois’ CON law in 2008, and the law is still in force, going strong.
Collecting and maintaining fingerprints or other biometric data can lead to huge liability if not handled correctly
Recently, the Illinois Supreme Court considered the consequences of violating the Biometric Information Privacy Act (“Act”). The Act has been on the books for ten years, and during that time, the use of biometric data, such as finger prints, voice prints, or facial recognition, has grown by leaps and bounds. It is possible to unlock an iPhone merely by looking at it—using facial geometry.
As health care facilities move to biometric methods of identifying staff or clients, they will need to consider the ramifications of doing so. The Act requires entities that collect biometric data to first obtain informed consent, in writing, by the individual or their representative. In addition, the entity must have a policy and procedure for destroying the biometric data in accordance with the Act.
According to the Supreme Court, failure to abide by these procedures causes damage to the person whose biometric data was gathered. As a result, the entity can face liability in the amount of $1,000 to $5,000 per violation, or actual damages, plus attorneys’ fees. Considering the real risk of identity theft in this digital age, actual damages could easily exceed the statutory amounts.