Health Law Ticker : California Lawyers & Attorneys for Regulatory, Transactional & Litigation Representation for Healthcare Professionals in the US

In March 2013, the U.S. Department of Justice (“DOJ”) settled the first lawsuit of its kind with a New Jersey medical school over claims that it violated the Americans with Disabilities Act (“ADA”) by excluding two Hepatitis B-positive applicants.  The DOJ settlement was largely based on new guidelines issued by the Centers for Disease Control and Prevention (“CDC”) in 2012, which brought the existing 21-year-old policies in line with current medicine, and affirmed that HBV infection should not be cause for stopping or excluding providers from training or practicing in health care professions.  The new CDC guidelines, in conjunction with the Justice Department settlement, have provided HBV-positive health professionals with a pair of powerful tools to combat discrimination.

"It gives us so much more leverage. We no longer have to wring our hands," said Joan Block, executive director and co-founder of the Hepatitis B Foundation, a nonprofit in Doylestown, Pa.  (See Associated Press, “FEDS: Hepatitis B No Barrier to Health Practice”, May 5, 2013.)

The updated CDC guidelines make clear that “HBV infection alone should not disqualify infected persons from the practice or study of surgery, dentistry, medicine, or allied health field”; eliminates the requirement under the old policy to prenotify patients of a healthcare provider or student’s HBV status; clarifies what constitutes “exposure prone”; and  leaves students off the hook completely.  Practice may only be restricted if the provider has an HBV DNA titer above a safe practice threshold (which is determined by an expert panel) and performs exposure-prone invasive procedures (which includes, but is not limited to, abdominal surgery, orthopedic surgery, obstetrics, neurosurgery, catheter-based interventions, scope-based interventions, and most dentistry). 

Relying heavily on the updated guidelines, the DOJ settlement represents the first case in which the Justice Department made clear that it considered chronic HBV infection a disability and would prosecute allegations of discrimination.  In so doing, the DOJ has provided health care providers who have experienced HBV-related discrimination in the community, school, or the workplace a framework under which to seek recourse.  

In light of these recent developments, there are very limited circumstances that warrant restrictions on HBV infected providers.  In order to avoid potential ADA claims and allegations of discrimination, hospitals, facilities and other employers should develop appropriate policies to evaluate privilege and credential such providers accordingly.

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The post below was authored by Nossaman attorney, George Joseph, who specializes in complex business litigation with emphasis in healthcare and employment law.

Effective January 1, 2012, California Labor Code Section 6403.5 will require that employers operating healthcare facilities adopt various measures designed to reduce injuries incurred by employees who move patients.  Requirements include a safe patient handling policy, increased use of powered patient lifting devices, assignment of employees to "lift teams," and appropriate employee training.  Employers are also prohibited from retaliating against employees who raise concerns about safe patient handling.  A summary of the key provisions of this new law follows.

Background

• California Occupational Safety and Health Act of 1973 created the Division of Occupational Safety and Health ("Cal/OSHA"), which "protects workers and the public from safety hazards."
• Cal/OSHA currently requires that virtually every employer in California create and implement an Injury and Illness Prevention Program ("IIPP") to improve workplace safety and health.  Requirements vary depending on industry.
• Injuries to healthcare workers from patient handling (lifting) have been a persistent problem – 36,130 occupational musculoskeletal disorder cases among healthcare workers in 2008.

The Legislation

• On October 7, 2011, Gov. Brown signed into law AB 1136, "The Hospital Patient and Healthcare Worker Injury Protection Act," which adds Labor Code Section 6403.5.  This new law becomes effective January 1, 2012.
• LC 6403.5 imposes new requirements on employers operating healthcare facilities regarding the safe handling of patients.

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In a previous musing we wondered whether California medical foundations would “hold”, given cited turbulence and possible over-reaches with the form. They seem to be hanging on just fine at mid-summer. Some developments:

1. A proposed piece of legislation (SB 364) would have required an intense investigation by the Attorney General’s Office and the preparation of a “patient impact report” or a “negative declaration” whenever a non-profit hospital proposed to establish a medical foundation.  The review regimen would have required public notices, hearings, comment periods, opportunities for challenges and the like. The measure was sponsored by the medical group that is locked in bitter litigation with the City of Hope Medical Center over the Center’s plans to establish a medical foundation, as referenced in the previous musing. A classical collateral assault maneuver to be sure: sue the ba*tards, regulate ‘em too.

But at a recent legislative hearing the bill was drastically reduced to a “study” bill on, inter alia, the governance structures of medical foundations – but the Task Force that would be set up must find the funds to carry out the study. The California Hospital Association suggests that the focus of the Task Force be shifted to studying options for clinical integration of care delivery, in light of the recent federal reforms.  Seasoned legislative veterans caution that counter-attack gambits by the City of Hope Medical Group may crop up in the waning days of the session.

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For some time, the law regarding what a provider was required to do in the event of a Medicare or Medicaid overpayment was unclear. The government took the position a provider was required to disclose the overpayment to the Program and refund it. But there was no statute saying precisely that.

Now, as part of the new Patient Protection and Affordable Care Act (PPACA), i.e., the recent national healthcare reform legislation, Congress has indeed created the statute to say precisely that and to require providers to refund the overpayment within 60 days of the overpayment being identified.

There are many theoretical "angels dancing on top of pins" questions that could be asked about exactly when an overpayment is "identified" and many factual situations may become complicated, but the new law makes it crystal clear that a provider may not keep a known overpayment with the intent of "settling up later," nor may a provider "turn a blind eye" and decline to investigate the facts of a potential overpayment situation.

One dilemma providers face is whether to investigate a potential overpayment through its own staff or by bringing in outside experts such as attorneys and billing and coding experts. The advantage of using a provider's own staff typically is lower investigative costs and a faster completion of the investigation. Bringing in outside experts, although more expensive, generally offers a strong statement of objectivity that may convince the government to accept the refund without further investigation. Also, an outside investigation conducted at the direction of an attorney will be protected against disclosure by the attorney-client privilege and work product doctrine. There is no easy solution. As always, "it all depends on the specific facts."

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Nearly two decades ago, the plucky Palo Alto Medical Clinic won legislation in California that enabled it to align more closely its interests and those of its practicing doctors.   It midwived the creation of  “medical foundations”, through the passage of what became Health & Safety Code Section 1206(l).    It is a terse, tightly packed one-sentence provision that exempts from state licensure as a “clinic”:

A clinic operated by a nonprofit corporation exempt from federal income taxation under paragraph (3) of subsection (c) of Section 501 of the Internal Revenue Code of 1954 ……that conducts medical research and health education and provides health care to its patients through a group of 40 or more physicians and surgeons, who are independent contractors representing not less than 10 board-certified specialties, and not less than two-thirds of whom practice on a full-time basis at the clinic.

Pretty pithy stuff, but it has been the font of that distinctly California phenomenon, the medical foundation.  Foundations have gradually emerged over the ensuing years as a robust alternative for some hospitals, health systems and medical groups seeking a closer and more interdependent modus vivendi in the environment of California’s prohibition on the “corporate practice of medicine” (Business & Professions Code Sections 2052, 2400).  Simplistically put, in a typical structure a hospital or medical center is the sole corporate “member” of the foundation, which in turn contracts with one or more medical groups to provide services at the hospital, sometimes even acquiring the assets of the medical group(s).   Operationalizing this construct is of course enormously challenging, but it can be an effective mechanism for the delivery of quality, cost-contained care.

Such prestigious non-profit entities as the Sutter Health System, Cedars Sinai Medical Center, Catholic Healthcare West, Children’s Hospital Oakland, Scripps Health and others have established or collaborated with foundations as their approach to the integrated “delivery” of healthcare.  The foundation movement has generally been institution-specific or geographically limited.   

The California Medical Association (CMA), focused on individual doctors, has long groused from the sidelines that foundations are merely a gimmick to evade the California prohibition on the corporate practice of medicine, a charge it has leveled for years also against HMO’s.   The California Association of Practice Groups (CAPG), representing doctors in groups, has been more benign towards foundations.

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