On Tuesday, May 15, 2012, Cardinal Health (“Cardinal”) and the Drug Enforcement Agency (“DEA”) reported that they had reached a settlement related to Cardinal’s Lakeland, Florida distribution center’s (“Lakeland’s”) DEA license.  This settlement resolves the ongoing litigation between Cardinal and the DEA due to the DEA’s Immediate Suspension Order (“ISO”) issued to Lakeland on February 2, 2012.  On February 29, 2012, a federal judge lifted the temporary restraining order against the DEA.  As a result, Lakeland could no longer distribute controlled substances.  Although Cardinal appealed the decision to the United States Court of Appeals for the District of Columbia Circuit, it has since chosen to settle with the DEA.  A summary of the February 2012 actions against Cardinal is available here.

Settlement Details

As a result of the settlement, Lakeland will be prohibited from shipping controlled substances for two years.  Lakeland will remain open and functioning as usual for non-controlled substances that it supplies to area pharmacies.  Additionally, Cardinal signed a Memorandum of Agreement (“MOA”), which pertains to all of Cardinal’s distribution facilities.  The MOA obligates Cardinal to improve certain anti-diversion procedures.  Furthermore, the MOA mandates that Cardinal will conduct site visits of pharmacies that appear to have suspicious orders of controlled substances from any of its facilities.  Also, Cardinal will hire extra field inspectors to investigate Florida pharmacies.  As a result of the settlement, Cardinal will begin reporting suspicious pharmacy orders for controlled substances directly to DEA Headquarters instead of the DEA Field Offices.  Per the MOA, the DEA reserves the right to pursue civil penalties against Cardinal.  Lastly, the DEA confirmed that it is planning no further administrative actions at other Cardinal facilities.  The obligations contained within the MOA are binding for five years. 

Basis for Action against Cardinal

Cardinal previously entered into a settlement with the DEA in 2008 to resolve claims that Lakeland distributed high amounts of hydrocodone, which is the primary ingredient in Vicodin.  It resulted in a $34 million fine, as well as a previous Memorandum of Agreement (“2008 MOA”) that contained similar provisions as those in the current MOA.  Cardinal admitted that its due diligence efforts as a result of the 2008 MOA were inadequate.  This failure to comply with the 2008 MOA served as a partial basis for the February 3, 2012 ISO.

In addition to its actions against Cardinal, the DEA has issued ISOs to two CVS pharmacy stores that were customers of Lakeland.  These actions are still pending, and Hall Render will continue to monitor these actions.

The Government’s Perceived Prescription Drug Epidemic

In actions such as the one taken against Cardinal, the DEA is attempting to combat what it describes as a prescription drug epidemic.  Particularly in Florida, but also throughout the United States, prescription drug abuse is rising drastically according to the DEA.  For example, one of Cardinal’s primary offenses in Lakeland was the supply of over twelve million dosage units of oxycodone to just four area pharmacies during a three year period.  The Centers for Disease Control and Prevention (“CDC”) has stated that prescription drug abuse results in more deaths than any other type of drug (accounting for 75% of all overdoses in the U.S.), and prescription drug overdoses now lead to more deaths than car accidents. 

An estimated seven million Americans abuse prescription drugs; thus, it is likely that the DEA will continue to increase its prescription drug regulation enforcement.  Because it is less tedious to analyze the data of distribution centers and pharmacies than it is to evaluate the prescribing techniques of a particular physician, pharmacies and distribution centers should continue to develop their compliance programs in order to satisfy regulatory obligations. 

If you have any questions or would like additional information about this topic, please contact Susan Bizzell at 317.977.1453 or sbizzell@hallrender.com, Nicholas Gonzales at 414.721.0486 or ngonzales@hallrender.com or your regular Hall Render attorney.

Special thanks to Alyssa James, Law Clerk, for her assistance with the preparation of this Health Law News article.

The changes to Rev. Proc. 97-13 proposed by NABL and the ABA, if adopted, would provide “qualified users” (including hospitals and health care systems) with greater flexibility in negotiating management and service contracts with third parties that include the use of bond-financed space, by allowing more arrangements to meet the Rev. Proc. 97-13 private business use safe harbors.  The AHA request, if implemented, would allow hospitals and health care systems to move forward with ACOs, shared savings programs, bundled payments and similar innovative cost-reduction programs, without jeopardizing the tax-exempt status of the bonds used to finance hospital facilities.

The full text of the suggested clarifications and changes from NABL, the ABA and the AHA can be found here, here and here, respectively. 

A summary of the most significant of these comments for hospitals and health care systems is set forth below.

1. Clarify that participation in an ACO does not give rise to private business use
   
   Current law:  While the IRS has provided guidance that it does not expect that a 501(c)(3) hospital’s participation in the Medicare shared savings program through an ACO will result in private inurement or impermissible private benefit to the private party participants in an ACO, under certain circumstances, no guidance has been provided as to whether or not agreements between an ACO and a 501(c)(3) or governmental hospital need to be considered management contracts under Rev. Proc. 97-13.  If so, the sharing of savings and risk of loss might be considered to result in compensation based on the net profits of the bond-financed facility, or at least would likely be outside the safe harbors of Rev. Proc. 97-13.

   Proposed change:  The AHA requests that Rev. Proc. 97-13 be revised to clarify that participation in an ACO under the Medicare shared savings program, or a similar arrangement that is not part of a government program, does not give rise to private business use, even if it includes the use of facilities financed with tax-exempt bond proceeds.

2. Bundled payments

   Current law:  The Medicare bundled payment initiative includes payment of a single payment for all services received by a patient in a single episode of care.  Under the prospective model, private physicians are paid by the hospital out of the bundled payment, referred to as “shared savings.”  Current IRS guidance could cause such an arrangement to be treated as private business use, or at least be considered outside the safe harbors of Rev. Proc. 97-13.

   Proposed change:  The AHA recommends a modification of the Rev. Proc. 97-13 safe harbors to allow for additional forms of compensation, such as those provided for under the bundled payment initiative.

3. Expand the list of “incidental services”
    
   Current law:  Contracts for services that are “solely incidental to the primary function…of a financed facility” are not treated as management contracts, and therefore do not give rise to private business use, even if their terms do not meet the safe harbors of Rev. Proc. 97-13.  Treasury Regulations list as examples of incidental services “contracts for janitorial, office equipment repair, hospital billing or similar services.” 

   Proposed change:  Both NABL and the ABA request that the IRS expand the list of incidental services to include building maintenance services, lawn and landscaping services, equipment and machinery repair services, billing services, security services, employee or patient laundry services, uniform services, patient or resident nutrition services, patient, student or resident transport services, valet parking services for patients and visitors, call center or help desk services, secretarial services, consulting services and purchasing services.

4. Combine the two-, three- and five-year safe harbors into a single three-year safe harbor

   Current law:  Rev. Proc. 97-13 provides safe harbors for management contracts with stated maximum terms of five, three and two years, each of which has its own permitted compensation formula.  For example, a contract with compensation based on a combination of a periodic fixed fee and a percentage of revenues will meet the five year safe harbor if the periodic fixed fee is at least 50% of the total compensation under the contract, but only the two year safe harbor if the periodic fixed fee is less than 50% of the total compensation.

   Current law also only allows for contracts that include incentive-based compensation to meet one of the Rev. Proc. 97-13 safe harbors when at least 50% of the total compensation under the contract consists of a periodic fixed fee.

   Proposed changes:  Both NABL and the ABA request that the IRS allow any compensation methodology, or any combination of compensation methodologies, for a contract with a term of three years or less, so long as the compensation is not based on net profits.  This would allow for incentive payments to service providers, so long as those incentive payments were not based on net profits.

   The AHA requests that the IRS increase the permitted terms under Rev. Proc. 97-13 to no less than five years.

5. For contracts terminable without penalty or cause, measure the term as the stated notice period for termination

   Current law:  Each safe harbor under Rev. Proc. 97-13 includes a maximum permitted term.  Contracts that do not have a stated term, or that have a longer term than that permitted under the safe harbor but which allow the qualified user to terminate without penalty or cause, may nonetheless be considered outside the safe harbors of Rev. Proc. 97-13.

   Proposed changes:  Both NABL and the ABA suggest that where the qualified user may terminate without penalty or cause at any time, the term of a management contract should be deemed to be the stated notice period.  For example, a contract with a perpetual term, or a 20-year term, but which gives the qualified user the right to terminate at any point, without penalty or cause, upon 180 days notice, would be considered to have a 180-day term.

6. Eliminate the requirement that the qualified user be able to terminate the contract without penalty or cause.
   
   Current law:  Rev. Proc. 97-13 requires that the qualified user be able to terminate the management contract, without penalty or cause, at the end of one, two or three years, during the two-, three- and five-year safe harbors, respectively.

   Proposed changes:  All of NABL, the ABA and the AHA request that the IRS eliminate the requirement that the qualified user be able to terminate the management contract, without penalty or cause, prior to the expiration of its stated term, as this requirement effectively limits the permitted term of the contract.

7. If the requirement that the contract be terminable without penalty or cause is retained, it should be clarified

   Current law:  The two-, three- and five-year safe harbors each require that the qualified user be able to terminate the management contract “without penalty or cause” after one, two or three years, respectively.  Rev. Proc. 97-13 specifies that termination penalties include “a limitation on the qualified user’s right to compete with the service provider; a requirement that the qualified user purchase equipment, goods or services from the service provider; and a requirement that the qualified user pay liquidated damages for cancellation of the contract.”  In practice, service contracts may include the purchase of equipment from the service provider, payment for which is amortized over the term of the contract, and the balance of which is due upon early termination by the qualified user.

   Proposed changes:  Both NABL and the ABA request the IRS to clarify that, if the requirement that a qualified user be able to terminate a management contract without penalty or cause is retained, accelerated repayment to the service provider of a loan, or the conversion of an advance to a loan, may not constitute a termination penalty, based on all the facts and circumstances, such as the ability of the qualified user to make such accelerated repayment or the percentage of the accelerated payment as compared to total payments made under the contract.

8. Permit incentive compensation based on criteria other than financial performance
   
   Current law:  Under Rev. Proc. 97-13, incentive compensation is expressly permitted only in extremely limited circumstances, namely as the non-periodic fixed fee compensation under the five-year, ten-year and fifteen-year safe harbors, or as an annual payment of a fixed fee, based on the service provider achieving pre-established revenue or expense targets (but not both).

   Proposed change:  All of NABL, the ABA and the AHA request that the IRS revise Rev. Proc. 97-13 to allow for greater flexibility in allowing quality and affordability incentives.  NABL and the ABA suggest that the IRS allow compensation equal to a stated dollar amount, or a sliding scale for progressive benchmarks, to be awarded for achieving quality or performance standards, without any limit on the amount or frequency of such compensation.

9. Clarify that certain types of compensation that include both revenue and expense measures are not based on net profits

   Current law:  Rev. Proc. 97-13, as well as Section 1.141-3(b)(4)(i) of the Treasury Regulations, provides that compensation based in whole or in part on net profits results in private business use.  Currently, compensation containing both revenue and expense measures is generally treated as based on net profits, and thus private business use.
    
   Proposed changes:  Both NABL and the ABA suggest that the IRS revise Rev. Proc. 97-13 to provide that: (1) a management contract may contain separate elements of incentive compensation for meeting specific performance targets, some of which are for increasing revenues and others of which are for reducing expenses, without the contract being treated as based on net profits, so long as each element of incentive compensation is a stated dollar amount or a sliding scale of stated amounts; and (2) a management contract containing incentive compensation methods, some of which pay the service provider a portion of increased revenues above a pre-established target and others of which pay the service provider a portion of reduced expenses, will not be treated as being based on net profits so long as the total compensation derived from such incentives constitutes a relatively minor portion of the total compensation to the service provider under such agreement.  (NABL and the ABA suggest 10-20%.)

10. Permit adjustments to a periodic fixed fee based on measurable factors that are not within the control of the service provider or the qualified user

    Current law:  The definition of a “periodic fixed fee” under Rev. Proc. 97-13 provides that the fee may automatically increase by a specified objective external standard that is not linked to the output or efficiency of the bond-financed facility, such as the Consumer Price Index.  However, adjustments based on the volume of services provided, where not controlled by either the service provider or the qualified user, may dramatically impact the economic arrangement with the service provider.
     
    Proposed changes:  NABL recommends that Rev. Proc. 97-13 be revised to permit the adjustment of a periodic fixed fee by a stated formula based on measureable factors that are not within the control of the service provider or qualified user, so long as they are not based on the net profits, output or efficiency of a bond-financed facility.

Hall Render supports these proposed changes and hopes that they will be promptly adopted by the IRS.  Until such time, hospitals and health care systems should continue to comply with existing regulations, with the assistance of bond counsel.

For any questions about these proposed changes, Rev. Proc. 97-13 or private business use of facilities financed with tax-exempt bonds, please contact:

• Kendall A. Schnurpel at (317) 977-1480 or kschnurpel@hallrender.com;
• M. Elizabeth Walker at (317) 977-1498 or ewalker@hallrender.com;
• Jerimi J. Ullom at (317) 977-1488 or jullom@hallrender.com; or
• Your regular Hall Render attorney.

Vermont’s new law can be found here.
Should you have any questions, please contact:

Todd Selby at 317.977.1440 or tselby@hallrender.com;

Brian Jent at 317.977.1402 or bjent@hallrender.com;

David Bufford at 502.568.9368 or dbufford@hallrender.com; or

Sean Fahey at 317.977.1472 or sfahey@hallrender.com,

or your regular Hall Render attorney.

The Final Rule is scheduled to be published in the May 16, 2012 Federal Register and will be effective on or about July 16, 2012.  A copy of the Final Rule can be found here.  A summary of the changes to the hospital CoPs is available here.

The most significant change in the Final Rule affecting CAHs is the elimination of the requirement that a CAH provide certain services directly, that is through the use of personnel employed by the CAH.  The current CAH CoPs, located at 42 CFR §485.601 et. seq., define “direct services” as those services provided by staff employed by the CAH, not through arrangements or agreements.  The CAH CoPs go on to require that the CAH provide the following as direct services: (1) diagnostic and therapeutic services commonly furnished in a physician’s office or at another entry point in the health care delivery system; (2) select basic laboratory services (chemical examination of urine by stick or tablet method, hemoglobin/hematocrit, blood glucose, stool specimen examinations for occult blood, pregnancy tests and primary culturing for transmittal to a certified lab); (3) radiology services; and (4) emergency procedures as a first response to common life-threatening injuries and acute illness.  The current requirements present a number of staffing challenges for rural providers and also restrict CAHs from expanding their services within the community through arrangements with other hospitals or health care service providers. 

In the Final Rule, CMS eliminates the requirement that CAHs provide these services directly and removes the definition of and references to “direct services” from the CAH CoPs entirely.  However, CMS expects CAHs to ensure that any of these services provided under arrangement are done so in a manner that facilitates timely diagnosis and treatment of patients, which in their view means, at a minimum, on-site at the CAH.

Additional changes include the following:

• Modifying the definition of Clinical Nurse Specialist to make it consistent with the Social Security Act and include a reference to compliance with state licensing laws and regulations.
• Clarifying that surgical services are an optional CAH service.

Given the changes in the Final Rule, CAHs should evaluate whether the hospital and surrounding community could be better served through the use of services provided through arrangements and should consider how staffing might be improved with the addition of contract personnel in certain circumstances.

If you have any questions or would like additional information about this topic, please contact:

• Katherine Kuchan at (414) 721-0479 or kkuchan@hallrender.com;
• Christina Severin at (414) 721-0468 or cseverin@hallrender.com; or
• Your regular Hall Render attorney.

CMS has released a final rule (“Final Rule”) revising the hospital and critical access hospital (“CAH”) Medicare conditions of participation (“CoPs”).  This Final Rule implements President Obama’s Executive Order 13563 calling for removal or modification of obsolete or unnecessary regulations on hospitals and CAHs.  Indeed, the Final Rule reduces burdens, provides flexibility and saves a great deal of money estimated to be almost $5,000,000,000 for hospitals and CAHs over the next five years.  The Final Rule finalizes a proposed rule published on October 24, 2011 and summarized in a previous edition of Hall Render’s Health Law News.  This Health Law News article will discuss the hospital CoP revisions.  A companion article found here summarizes the CAH CoP revisions.  The Final Rule will be effective on or about July 16, 2012 and is scheduled to be published in the Federal Register on May 16, 2012.  An advance copy can be found here.

The Final Rule – Hospitals 

The following summarizes the final revisions to the Hospital CoPs found in Part 482 of the Medicare regulations.

Governing Body Requirements (42 C.F.R. §482.12)

Proposed Revision.  CMS proposed to permit a single governing body for hospitals in a multi-hospital system. 

Final Rule.  CMS approved this revision and also added an additional requirement for at least one member of a hospital’s medical staff to serve as a member of the multi-hospital system governing body in order to ensure appropriate communication and coordination between the system governing body and the medical staffs of the individual hospitals comprising  the system.  CMS clarified that it is not requiring a medical staff member from each of the system hospitals to serve.  CMS also notes that a system governing body is free to place as many medical staff members on the governing body as it desires and also that it would expect the governing body to consider each individual hospital’s patient population when it determines the number and composition of medical staff members to serve on a system board.

Patient’s Rights Requirements (42 C.F.R. §482.13)

Proposed Revision.  Under the proposed rule, if the circumstances of a patient’s death only involved the use of soft two-point wrist restraints without seclusion, the hospital would be obligated to report the death within seven days after the date of death via a log or other system and make the log or other system immediately accessible to CMS upon request.  The log would include, at a minimum, patient name, dates of birth and death, attending physician’s name, primary diagnosis and medical record number.  The reporting requirements for all other deaths involving restraints (e.g., hard restraints) and/or seclusion would remain the same as under the current CoP, meaning, next business day notification following knowledge of a patient’s death.  CMS also proposed to permit, in addition to telephone notification, reporting of seclusion and/or other restraint-related deaths by fax or electronic reporting. 

Final Rule.  CMS has finalized the proposed rule as set forth above but clarified that hospitals need only record in an “internal” log or “other system,” soft wrist restraint-related deaths and need not submit the information in the log or other system to CMS (unless specifically requested) or publicly release the information in any way.  Further, CMS clarified that the name of the attending physician “or other licensed independent practitioner” responsible for the care of the patient would be included in the log entry.  CMS added “other licensed independent practitioner” to reflect the fact that non-Medicare patients may be under the care of a licensed independent practitioner if permitted under state law and hospital policy. 

Medical Staff Requirements (42 C.F.R. §482.22)

Proposed Revision.  CMS proposed to clarify that a hospital may privilege physicians as well as non-physician practitioners  within their state-designated scope of practice even if they do not seek medical staff membership.  In other words, formal appointment to the medical staff would not be required to apply for and obtain practice privileges.  Further, all those granted practice privileges, even in the absence of medical staff appointment, would be subject to generally the same medical staff requirements and approval process as that set forth in 42 C.F.R. §482.22.  Finally, CMS proposed to permit doctors of podiatric medicine (“DPM”), as permitted by state law, to assume managerial positions such as president of the medical staff. 

Final Rule.  CMS modified the proposed rule and current requirements under the CoP as follows:  First, in response to multiple commenter concerns regarding the unintended consequences of bifurcating medical staff “membership” from “privileging” (e.g., loss of participation in and protection of the medical staff), CMS removed the proposed concept of physicians and other practitioners being privileged to practice without appointment to the medical staff.  Under the Final Rule, the medical staff may include other categories of non-physician practitioners, determined as eligible, for appointment to the medical staff by the governing body.  The medical staff must examine the credentials of all eligible candidates for the medical staff and make recommendations on appointment in accordance with state scope of practice laws and medical staff bylaws, rules and regulations.  Any candidate recommended by the medical staff and appointed by the governing body would be subject to all medical staff bylaws, rules and regulations.  Finally, as proposed, responsibility for organization and conduct of the medical staff now may be assigned to DPMs if permitted by state law.

Nursing Services Requirements (42 C.F.R. §482.23)

Proposed Revision.  CMS proposed to revise the CoPs to permit the hospital to integrate the nursing care plan into the overall hospital interdisciplinary care plan, thus avoiding the requirement of two care plans for nursing services.  Further, under the proposed revised CoPs, the nursing staff would be permitted to prepare and administer drugs and biologicals ordered by midlevel practitioners, such as APRNs, PAs and Doctors of Pharmacy, subject to state scope of practice laws and appropriately granted hospital privileges or pursuant to pre-printed and electronic standing orders, order sets and protocols.  Additionally, nursing staff no longer would require special training for administration of blood transfusions and IV Meds, and patients or their caregivers would be permitted to self-administer certain home or hospital-issued drugs and biologicals, if the hospital develops policies and procedures covering this practice. 

Final Rule.  CMS finalized the nursing care plan efficiency measures by permitting either a stand-alone nursing care plan or one integrated into an interdisciplinary care plan.  CMS also will allow for drugs and biologicals to be prepared and administered on the orders of non-physician practitioners only if such practitioners are acting pursuant to state law, including scope of practice laws, hospital policies and medical staff bylaws, rules and regulations.  The non-physician practitioners also may document and sign these orders, again, pursuant to state law and hospital policy.  CMS finalized its proposal to permit non-physician personnel to administer blood transfusions and intravenous medications  without “special training” but clarified that administration must be done in accordance with state law and medical staff policies and procedures.  Finally, CMS will allow hospitals to institute an optional program for patient/caregiver administration of patient’s own or hospital-issued medications.  The hospital must institute policies and procedures that:

• Ensure that there is a practitioner-written order permitting self-administration;
• Assess the patient’s or caregiver’s capacity for self-administration;
• Instruct the patient or caregiver on safe and accurate administration;
• Address the security of the medications;
• Document the administration of each medication in the medical record as reported by the patient/caregiver;
• With respect to medications brought from home, provide for identification of the medications and visual evaluation of the medication integrity.

Medical Record Services Requirements  (42 C.F.R. §482.24)

Current CoP.  Currently, all orders, including verbal orders, must be dated, timed and authenticated promptly by the ordering practitioner.  Until January 2012, the orders could also be authenticated by “another practitioner responsible for the patient’s care and authorized by hospital policy to write orders,” but that temporary provision expired (“Sunset Provision”).  Also, verbal orders must be authenticated within the specific time frame specified by state law or, if the state law is silent, within 48 hours.

Proposed Revision.  At the time the proposed rule was published, the Sunset Provision was still in force and CMS proposed to maintain the Sunset Provision permanently so that “another practitioner…” could continue to authenticate patient orders without any time limit on that authority.  CMS also proposed to strike the 48-hour requirement for authentication of verbal orders, opting instead to defer to state law or hospital policy for the required timing on authentication of verbal orders.  Finally, CMS proposed to allow hospitals to use standing orders and protocols for patient orders subject to a number of requirements. 

Final Rule.  CMS has made permanent the previous Sunset Provision, which permitted another practitioner, also responsible for the patient’s care, to authenticate any patient orders.  CMS dropped the 48-hour requirement for authentication of verbal orders deferring instead to state law or hospital policy to establish authentication timeframe requirements.  Finally, CMS is permitting hospitals to use pre-printed or electronic standing orders, order sets and protocols for patient orders subject to the following requirements:

• The orders and protocols must be reviewed and approved by the medical staff and nursing and pharmacy leadership;
• Orders and protocols must be based on nationally recognized and evidence-based guidelines and recommendations;
• The orders and protocols must be reviewed regularly to ensure continued usefulness and safety;
• The orders and protocols must be dated, timed and authenticated promptly in the patient’s record. 

Infectious Control Requirements (42 C.F.R. §482.42)

Proposed Revision.  CMS proposed to rescind the requirement for maintenance of a log of incidents related to infections and communicable diseases. 

Final Rule.  CMS has eliminated the requirement that hospitals maintain an infection control log, noting that hospitals must monitor infections through other surveillance methods.

Outpatient Services Requirements (42 C.F.R. §482.54)

Proposed Revision.  CMS proposed to eliminate the requirement that there be one individual responsible for all outpatient services. 

Final Rule.  CMS has finalized the proposed rule, noting that requiring a single “Director of Outpatient Services”  to oversee all outpatient departments is unnecessarily duplicative, particularly when there exist separate directors for individual outpatient departments.

Transplant Center Process Requirements – Organ Recovery and Receipt (42 C.F.R. §482.92)

Proposed Revision.  To reduce the amount of blood type verification paperwork and the associated costs, CMS proposed to amend the transplant center CoPs to eliminate the requirement that transplant teams verify blood type before organ recovery if the intended transplant recipient is known. 

Final Rule.  The proposed rule was finalized as proposed, with CMS noting that the provision to be removed is redundant with the organ procurement organizations conditions for coverage.

Practical Considerations

The Final Rule should facilitate significant savings in staff time and administrative costs and will create needed flexibility for staffing hospitals and caring for patients.  Hospitals will need to do an extensive review and update of hospital bylaws;  medical staff bylaws and rules and regulations;  as well as hospital and department policies and procedures to implement changes required or permitted by the revised CoPs.  For example, hospitals desiring to establish a medication self-administration program or to use standing orders and protocols will need to craft the required policies and ensure that staff are educated on these new policies.  CMS intends to issue new interpretive guidelines providing guidance on the revised CoPs.  Stay tuned for future updates. 

If you have any questions or would like additional information about this topic, please contact:

• Adele Merenstein at (317) 752-4427 or amerenst@hallrender.com;
• Clifford A. Beyler at (317) 977-1441 or cbeyler@hallrender.com;
• Timothy C. Lawson  at (317) 977-1438 or tlawson@hallrender.com; or
• Your regular Hall Render attorney

The CEO’s resumé and bios, as well as certain filings that were submitted to the SEC, indicated that the CEO had received degrees in both accounting and computer science from his alma mater. (His college as it turns out did not offer a computer science degree during the CEO’s attendance.)  Moreover, the SEC filings that the CEO allegedly signed off on specifically “affirmed” that the filings—which listed his dual degrees—were true and accurate.

After a number of investors became increasingly vocal and called for the CEO’s removal, his company issued a statement confirming the CEO’s departure.

 Lying and resumé fraud - Are they the same thing?

Resumé fraud is an issue that many employers are forced to deal with.  From an employment law perspective, is it okay for employers to turn down job applicants and fire employees who are suspected of engaging in resumé fraud?  Generally, the answer is yes.

The Seventh Circuit, which covers Indiana, Illinois, and Wisconsin, has consistently held that it’s permissible for employers to reject job applicants and fire employees who are suspected of engaging in resumé fraud.  The rationale for the Seventh Circuit’s reasoning is very straightforward:  lying to employers is a legitimate and non-discriminatory basis for turning down an applicant or firing an employee.  The cases of Carter v. Tennant Co., Aubuchon v. Knauf Fiberglass and Gilty v. Village of Oak Park all stand for this proposition.

Discovering resumé fraud after the fact – Too late?

Assume, by way of example, that an employer catches an employee stealing from the company cash register and fires him because of it.  Also assume that the employee later sues the company for age discrimination.    If the employer, as part of its investigation of the allegations in the lawsuit, discovers that the employee engaged in resumé fraud, can the employer use that belated discovery to its advantage?  According to the United States Supreme Court, the answer is yes.  More specifically, in McKennon v. Nashville Banner Publishing Co., the Supreme Court essentially held that an employer’s belated discovery of an independent, alternative basis for firing an employee (e.g., resumé fraud) can be used by the employer to reduce the plaintiff’s potential recovery.  (Think of this as the employer’s “if we knew then what we know now, we wouldn’t have hired you in the first place” defense.)

As a result, if an employer finds itself in the cross-hairs of a former employee’s lawsuit, it’s in the employer’s best interest to try to ferret out any potential resumé fraud (or other misconduct) that the former employee may have engaged in.

What should employers do?

As the commentary above illustrates, resumé fraud is an issue that employers may have to deal with before the employment relationship begins (i.e., during the application process), during employment, as well as after the employment relationship has ended.   Here are a few points to keep in mind:

• Be vigilant.  Resumé fraud can reach the highest echelons of businesses and institutions.  As evidenced by the events surrounding the internet company’s CEO that didn’t have the computer science degree he claimed, all applicants need to be carefully vetted.  Make sure all required degrees, educational credentials and licensures are confirmed by the issuing agency.
• Consider including a statement on the job application (together with a signature line) whereby the applicant “affirms” that all of the information provided on the application is true and accurate.  The statement should also explain that misrepresentations or omissions on the application may be justification for refusal of employment or, if employed, disciplinary action up to and including discharge.
• Don’t accept a resumé in lieu of a standard job application.  It’s too easy for applicants to side-step certain questions when they only provide a copy of their resumé.  (Plus, accepting a resumé by itself means the applicant wouldn’t be signing off on the “affirmation” statement referenced above.)
• Use common sense in dealing with resumé fraud.  Someone that simply misspells the name of their alma mater probably shouldn’t be dealt with in the same manner as the person that lies about their prior conviction for drug trafficking.
• Be consistent. The pitfalls associated with an inconsistent strategy are two-fold:  first, it’s bad for employee morale; and second, it increases employers’ potential exposure under federal discrimination laws.
• Because resumé fraud is akin to lying, disciplinary action is often an option available to employers.

If you have questions regarding this topic, please contact Dana Stutzman at dstutzman@hallrender.com or 317.977.1425 or your regular Hall Render attorney.

According to Woody Allen, eighty percent of life is just showing up. When it comes to satisfying a quorum   requirement, though, showing up is even more important than that. Indeed, it is the only thing that matters – even when the quorum is constituted electronically. In this case, because no quorum ever existed for the pivotal vote in question, the Court must hold that the challenged rule is invalid.

The court traced the history of the NLRB’s rule making process and how in December 2011 there were only three actual members of the NLRB due to the fact that there were two vacant seats on the normally constituted five-member Board.  Congress had set the quorum limit for the NLRB as three members “participating” in final action.  In December 2011 the rule went through numerous internal revisions following input from a series of public meetings held in November, 2011.  Ultimately on December 16 two of the Board members, Becker and Pearce, (both Democrats) voted to issue the rule.  But, Member Hayes (a Republican) was not ever actually asked to cast a vote on the final version of the Rule but the two other Members nevertheless went ahead and issued the Rule without Member Hayes’ participation or vote.  It is this lack of quorum which led the U.S. Chamber of Commerce and the Coalition for a Democratic Workplace to challenge the Rule in this lawsuit.  For now, it is a victory for employers and another loss for the NLRB, having had it Employee Rights Poster struck down by another court decision recently.

The Rule’s effective date was April 30, 2012 but now, as the court said in its conclusion, “representation elections will have to continue under the old procedures.”

Stay tuned, however, because the story is not over.  There are currently five members of the NLRB (although the President’s recess appointment of three of the members has been challenged) and a quorum of three members might be assembled for final action on the “Quickie Election Rule” after all. If that happens, it is almost guaranteed that another challenge will be raised over the lawfulness of the Board’s action without a true quorum of three members.

If you have questions or need further information please contact Steve Lyman at slyman@hallrender.com, Bruce Bagdady at bbagdady@hallrender.com, Travis Meek at tmeek@hallrender.com or your regular Hall Render attorney.

Reference: Chamber of Commerce of the United States, et al v. National Labor Relations Board, (D.C. D.C. No. 1:11-cv-02262, May 14, 2012)

Throughout the existence of the Medicare Part D program, the Office of Inspector General (“OIG”) has issued several reports concerning the vulnerability of the Medicare Part D program in regards to its potential for fraud and abuse.  On May 9, 2012, the OIG released a report identifying eight questionable billing practices of retail pharmacies throughout the country and making six recommendations to the Centers for Medicare & Medicaid Services (“CMS”) in order to strengthen the integrity of the Medicare Part D program (“Report”).  A full copy of the Report is available here.

OIG’s Findings

To detect potential areas of fraud and abuse, the OIG based its most recent study on the analysis of the 73.3 million prescription drug events (“PDE”) records for all Part D drugs billed to Medicare by retail pharmacies in 2009.  The OIG analyzed PDE records to identify questionable billing practices of individual pharmacies.  The eight measures used in its analysis were: (1) average amount billed per beneficiary; (2) average number of prescriptions per beneficiary; (3) average amount billed per prescriber; (4) average number of prescriptions per prescriber; (5) percentage of prescriptions that were for Schedule II drugs; (6) percentage of prescriptions that were for Schedule III drugs; (7) percentage of prescriptions that were for brand name drugs; and (8) percentage of prescriptions that were refills.  For each of these eight measures, the OIG set a threshold.  Pharmacy metrics that measured above the threshold indicated that the pharmacy had billed an extremely high amount.  The OIG acknowledges that there may be legitimate reasons for a pharmacy to bill high amounts in a particular category, but concluded that pharmacies above the threshold should be scrutinized further.

Of the 59,307 retail pharmacies that were studied, 2,637, approximately 4%, were identified as having questionable Part D billing.  For example, nearly 800 pharmacies billed high dollar amounts per beneficiary (each with an average of over $4,050 per beneficiary, which is nearly three times the national average for this same metric).  One particular pharmacy billed an average of $23,145 per beneficiary.  Some of these pharmacies also billed for an extremely high number of prescriptions per beneficiary, each averaging at least 66 prescriptions per beneficiary, while the national average was 28 prescriptions per beneficiary.  The OIG believes that this may indicate that the pharmacies are billing for drugs that were not medically necessary or drugs that were never provided to the beneficiary.

Additionally, over 1,000 pharmacies billed for extremely high percentages of Schedule II and/or Schedule III drugs.  One pharmacy billed 75% of its prescriptions as Schedule II drugs; most of these prescriptions were ordered by one particular physician.  The OIG also identified pharmacies that bill for a high percentage of brand name drugs, which may indicate that such pharmacies are billing for brand names but dispensing generics or that they are billing for prescriptions that were never dispensed.  The OIG found that independent pharmacies were eight times more likely than chain pharmacies to have questionable billing.  Although only 34% of pharmacies are independent, they accounted for 80% of the pharmacies with questionable billing.  In addition to independent pharmacies, the OIG also found that certain geographic regions were more likely to have questionable billing.  These regions included Miami, Los Angeles, Detroit, New York, Baltimore and Tampa.

OIG’s Recommendations to CMS

Due to the perceived vulnerabilities in the oversight of the Part D program, the OIG made several recommendations to CMS in order to combat potential fraud and abuse in this area.  CMS concurred with the following four recommendations by the OIG:

1. CMS should strengthen the Medicare Drug Integrity Contractor’s (“MEDIC’s”) monitoring of pharmacies and ability to identify pharmacies for further review.  This would allow the MEDIC to more readily determine pharmacies with questionable billing.
2. CMS should provide additional guidance to sponsors on monitoring pharmacy billing based upon input from sponsors and the MEDIC.
3. CMS should further strengthen its compliance plan audits.  These audits should include in-depth reviews of how sponsors monitor and oversee pharmacies.
4. CMS should follow up on pharmacies identified as having questionable billing, as referred to them by the OIG.  This additional follow-up will most likely occur through CMS’s use of the MEDIC.

There were two additional OIG recommendations in which CMS partially concurred.

1. The OIG recommended that CMS require sponsors to refer potential fraud and abuse incidents that may warrant further investigation to CMS and other pertinent entities.  CMS responded that its regulations currently do not require self-reporting of potential fraud and abuse incidents; however, it determined that it would explore the option of placing additional burden on plan sponsors.
2. Additionally, the OIG suggested that CMS should develop risk scores for pharmacies.  CMS responded that the MEDIC currently identifies pharmacies that present a fraud risk, although it said it would consider developing a high, medium and low risk assessment for pharmacies and sharing that information with sponsors, as appropriate.

Implications for Pharmacies

In light of this study, pharmacies should be aware of the factors that may be used to “flag” pharmacies as having questionable billing.  To that end, pharmacies must take great care in ensuring compliance with federal and state fraud and abuse laws.  It is evident that the OIG is making efforts to eliminate as much fraud and abuse in retail pharmacies as possible.  While pharmacies should continue to conduct audits pursuant to their compliance programs, pharmacies may wish to add to their current audit the following items to determine whether they exceed the thresholds set out in the Report (or more conservative thresholds, such as 90th percentile): (1) amounts billed per beneficiary; (2) number of prescriptions per beneficiary; (3) amounts billed per prescriber; (4) number of prescriptions per prescriber; (5) percentage of prescriptions for Schedule II drugs; (6) percentage of prescriptions for Schedule III drugs; (7) percentage of prescriptions that are for brand name drugs; and (8) the percentage of prescriptions that are refills.  Any factor determined to be above the OIG threshold (or pharmacy-selected threshold) should be thoroughly scrutinized to evaluate whether there is a legitimate explanation.

For pharmacies that identify a problematic factor that is dependent upon a prescriber’s actions (for example, the amount of Schedule II and III drugs prescribed by a particular prescriber), they will need to consider how to address this through their compliance programs.

As the OIG and CMS continue to develop processes for the agencies, sponsors and MEDICs to identify fraud and abuse by retail pharmacies, pharmacies should be aware of any trends in billing that may seem suspicious and take steps to correct such billing, where appropriate.

If you have any questions or would like additional information about this topic, please contact Susan Bizzell at 317.977.1453 or sbizzell@hallrender.com, Nicholas Gonzales at 414.721.0486 or ngonzales@hallrender.com or your regular Hall Render attorney.

Special thanks to Alyssa James, Law Clerk, for her assistance with the preparation of this Health Law News article.

In turn, the Hospital presented argument that the Hospital has the same right as any other business to give discounts to customers who have demonstrated prompt and routine payment. In addition, the Hospital’s argument is based on the argument that it is difficult if not impossible to disclose the cost of medical services prior to treatment as the plan of care often changes once the patient’s care is commenced.

This decision from the Court will not affect for-profit hospitals or anyone who treated after 2010, as the Patient Protection and Affordable Care Act now requires all non-profit Hospitals to provide an across the board discount.

The Indiana Supreme Court will likely issue an opinion in the next few months.

For more information or questions, please contact Christopher L. Riegler at criegler@hallrender.com or Geoffrey B. Davis at gdavis@hallrender.com

These risks were recently highlighted in a case involving a female gastroenterologist and a hospital in Buffalo, New York.  In this case the physician was not actually employed by the hospital in the traditional sense.  She did, however, have privileges at the hospital and at three others in the area. She claimed to be the victim of sexual harassment and when she complained she lost her privileges at the hospital. She then filed a lawsuit claiming, among many other things, sexual harassment and retaliation.  The hospital defended by arguing that she was not an employee covered by Title VII’s sexual harassment and anti-retaliation provisions.

What the courts will consider

The court said not so fast. Based on a listing of thirteen factors identified by the U.S. Supreme Court back in 1989, known as the “Reid Factors” the New York Court said that factual disputes in this case about some of those factors had to be resolved by a jury.

Here are the factors that the courts will look at in determining if a physician is an employee of a hospital:

1. The hospital’s right to control the manner and means by which the services are accomplished;
2. The skill required;
3. The source of the instrumentalities and tools;
4. The location of the work;
5. The duration of the relationship;
6. Whether the hospital has the right to assign additional duties to the physician;
7. The extent of the physician’s discretion over when and how long to work;
8. The method of payment;
9. The physician’s role in hiring and paying assistants;
10. Whether the work is part of the regular business of the hospital;
11. Whether the hospital is in business;
12. The provision of employee benefits; and
13. The tax treatment of the physician.

The jury will decide

Even though the court found that several of these factors strongly indicated that the physician was an independent contractor – and not an employee - it did find that there was a dispute over the amount of control the hospital exercised over the physician’s practice.  In particular, the hospital’s unique peer review system was found to be distinguishable from other hospital cases where merely being subject to a hospital’s peer review program was not sufficient control to create an employee relationship.

Peer Review

In this case, this hospital’s peer review program dictated “detailed treatment requirements” for the physician’s practice. It not only reviewed the quality of her patient treatment but also mandated performance of certain procedures and the timing of others.  Indeed, based on her performance, the physician was required to undergo re-education, participate in a mentoring program and be re-trained to perform certain services in a particular manner.

For example, the re-education involved controlling specific details of the physician’s work at the hospital including: identifying indications and treatments for EGD’s; appropriate treatments for A/V malformations and the removal of polyps; use of pH monitoring with esophageal manometry; the length of colonoscopy procedures; and the level of sedation administered during colonoscopy.

Hospital Directives and Requirements

Besides the peer review oversight and control the hospital also directed which medications she should prescribe and recommended changes to her practice based on the financial impact on the hospital.  Additionally, the hospital required her to treat patients admitted by the hospital who were referred to her and required her to use its facilities and staff in that treatment.  She was not allowed to refuse to treat any of the patients who were referred to her by the hospital.

Based on these factual disputes the court denied summary judgment to the hospital and ordered the case to proceed to trial where the jury would decide how much control the hospital actually exercised over the physician’s practice.  If the jury finds sufficient control by the hospital then the physician would likely be deemed an “employee” for purposes of her sexual harassment and retaliation claims and would be entitled to a significant recovery if she can prove that the harassment and retaliation occurred.

Amount of Control – Weigh the Risks

Although this case arose in the state of New York, it is instructive to note that non-employed physicians can, in some circumstances, be seen as protected employees for purposes of antidiscrimination statutes. Hospital administration will need to carefully look at the amount of control expressed in their peer review documents and physician agreements with an eye to the striking the right balance  and amount of control necessary to meet its obligations to its patients.

For further information or if you have questions contact Steve Lyman at 317-977-1422 or slyman@hallrender.com  or your regular Hall Render attorney.

Reference: Salamon v. Our Lady of Victory Hospital, (W.D. N.Y. April 3, 2012).

The House of Representatives voted along party lines Thursday to pass a bill that makes major cuts in Medicaid spending while allowing across-the-board Medicare cuts to take effect as scheduled. The budget reconciliation bill introduced earlier in the week by House Budget Committee Chairman Paul Ryan and adopted by the House without amendment blocks automatic cuts to the Pentagon budget that are part of last year’s debt-ceiling agreement and the looming sequestration. The legislation also repeals the Prevention and Public Health fund in the Affordable Care Act (ACA) and allows states to cut Medicaid enrollment. House Democrats refused to support the measure because it failed to seek additional tax revenue from those earning higher incomes. In the Senate, Republicans intend to offer a similar measure as an amendment to a military spending bill up for consideration next week. However, Senate Majority Leader Harry Reid has made clear that such a measure will not receive a vote by the full Senate without the addition of revenue generating provisions, and President Obama has pledged a veto.

CMS Proposes Temporary Medicaid Pay Increase for Primary Care

This week CMS released a proposed rule to increase Medicaid reimbursement rates. CMS applies the proposal to various subspecialties in pediatrics, family medicine and general internal medicine, such as pediatric cardiologists and neonatologists, when they perform certain primary care services.  However, CMS chose not to apply these higher rates to other specialties that routinely provide primary care services, like emergency medicine. Click here to read the proposed rule. The agency also proposed higher rates for some evaluation and management (E&M) services that are common in primary care but not currently billable under Medicare. This is in addition to the specific E&M reimbursement outlined in the ACA.  The rates only apply to services provided under the physician fee schedule. Under the ACA, states must increase their respective Medicaid physician rates for certain primary care services during 2013 and 2014 to no less than either Medicare rates or those that would be in place through the 2009 Medicare physician base rate.  The federal government will fund 100% of the difference for these two years, after which reimbursement levels are left up to the states. The proposal was met with criticism from Senate Finance Committee ranking member Orin Hatch (R-UT), who said the temporary increase is unlikely to attract and retain more doctors and that Congress would likely have to step in to prevent a rate reduction when the two-year period expires in a similar fashion to the way it annually addresses the Sustainable Growth Rate (SGR) or “doc fix.”

Senators Introduce Rural Hospital Access Act

Senators Charles Schumer (D-NY) and Charles Grassley (R-IA) introduced the Rural Hospital Access Act to reauthorize the Medicare-Dependent Hospital (MDH) Program and the enhanced low-volume Medicare adjustment for prospective payment system (PPS) hospitals through September 30, 2013.  The MDH Program pays 211 eligible hospitals for inpatient services the sum of their PPS rate plus three-quarters of the amount by which their cost per discharge exceeds the PPS rate. A hospital qualifies for the MDH program if it is located in a rural area, has no more than 100 beds, is not classified as a Sole Community Hospital and has at least 60% of inpatient days or discharges covered by Medicare. A copy of the bill can be found here.

FDA User Fees Pass House Committee

In a rare display of bipartisanship, the House Energy and Commerce (E&C) Committee unanimously approved the “Food and Drug Administration Reform Act” by a vote of 46 to 0. The legislation ensures continuation of various FDA programs, including the Prescription Drug User Fee Act and Medical Device User Fee Act. It also authorizes new user fee programs, the Generic Drug User Fee Act and Biosimilars User Fee Act to facilitate the review and approval of life-saving and life-improving drugs and medical devices. Read the legislative summary here. The Senate passed a similar measure last week. The two bills will be reconciled by a House/Senate conference committee before being sent to President Obama who is expected to sign the measure into law.

SGR Bill Gets Republican Sponsor

Rep. Joe Heck (R-NV), an osteopathic physician, joined Rep. Allyson Schwartz (D-PA) this week to introduced a bill that changes how Medicare pays physicians. The bill would repeal the current reimbursement formula (the Sustainable Growth Rate) and replace it with a new system of payment models. It also would increase in-physician payment rates for four years. Click here to read the bill. The measure uses savings from troop withdrawals in Iraq and Afghanistan to pay for the reforms and rate increase. While the bill’s sponsors realize its future is uncertain, they view it as a way to start looking at long-term Medicare reform measures. In a conversation with reporters, Rep. Heck called the current reimbursement the “single greatest threat to Medicare.” The bill instructs CMS to create new payment model options that give providers more flexibility based on specialty, region or type of practice. Physicians who treat Medicare patients face a 30% reimbursement cut under sequestration if Congress fails to act before January 1, 2013.

Next Week

The Senate Labor, Health and Human Services, Education and Related Agencies Subcommittee will hold a hearing on proposed FY 2013 appropriations for departments, programs and agencies under its jurisdiction.

The Senate Health, Education, Labor and Pensions Committee will hold a hearing titled “Identifying Opportunities for Health Care Delivery System Reform: Lessons from the Front Line.”

The House Veterans’ Affairs Health Subcommittee will hold a hearing titled “Optimizing Care for Veterans with Prosthetics.”

For more information, please contact John F. Williams, III at 317.977.1462 or jwilliams@hallrender.com.

WPS is reaching out to Indiana and Michigan providers and/or suppliers with the following announcement:

Urgent – CMS-588 EFT Agreements – Part A Indiana and Michigan providers and Part B Indiana suppliers who currently receive their Medicare payments electronically from National Government Services (NGS) must submit a new CMS-588 Electronic Funds Transfer (EFT) Authorization Agreement form to WPS. Please do so as soon as possible but no later than June 30, 2012.

Providers can download a blank form from the CMS website.

Part A Indiana and Michigan providers should submit their completed CMS-588 form and the voided check or bank letter of verification to the address below:

WPS Medicare Part A
Financial Unit
P.O. Box 1602
Omaha, NE 68101

Overnight address
WPS Medicare Part A
Financial Unit
3333 Farnam Street
Omaha, NE 68131

Part B Indiana suppliers should submit their completed CMS-588 form and the voided check or bank letter of verification to the address below:

WPS Medicare Part B
Medicare EFT Unit
P.O. Box 8680
Madison, WI 53708-8680

Overnight address
WPS Medicare Part B
Medicare EFT Unit
1717 West Broadway
Madison, WI 53713

If you have any questions regarding the EFT agreements or the contractor transition please contact Brian Jent at bjent@hallrender.com or Regan Tankersley at rtankersley@hallrender.com.

In September 2007, John Pittas’ mother entered a nursing home after a car accident.  In March 2008, she left the nursing home and moved to Greece. She left a large unpaid bill at the nursing home.  In May 2008, the nursing home sued the son for nearly $92,943, asserting he was liable for the debt under Pennsylvania’s filial responsibility law, which requires a child to provide support for a parent who is indigent.  She applied for Medicaid coverage of the amount due, but in May 2008 that application has not been resolved.  Pennsylvania’s appeals court held that Mr. Pittas was liable for his mother’s nursing home debt and the nursing home had shown he had the financial ability to support her and pay the bill.

Over two dozen states have some form of filial responsibility laws that make adult children responsible for their parents’ costs of care if their parents are indigent.

http://www.pacourts.us/OpPosting/Superior/out/A36025_11.pdf

Should you have any questions, please contact:
Todd Selby at 317.977.1440 or tselby@hallrender.com;
Brian Jent at 317.977.1402 or bjent@hallrender.com;
David Bufford at 502.568.9368 or dbufford@hallrender.com; or
Sean Fahey at 317.977.1472 or sfahey@hallrender.com,
or your regular Hall Render attorney.

On May 7, 2012, the Centers for Medicare and Medicaid Services (“CMS”) published a final rule (“Final Rule”) implementing Section 2401 of the Affordable Care Act, which established a new Medicaid state plan option to provide home and community-based attendant services and supports.  The program is known as Community First Choice Option (“CFC”), and each state, at its discretion,  may amend its state plan to include a CFC program.  CFC does not replace other existing Medicaid programs that provide for home and community-based services such as the Social Security Act Section 1915(c) HCBS “waiver programs” and Section 1115 demonstration programs.  The CFC program merely provides states with an additional opportunity to furnish a “broad service package,” which includes attendant services and subsidies for the costs of transitioning from an institutional to a community setting.  Individuals receiving services through CFC also may receive services from other home and community-based long-term care services and supports through other Medicaid state plan, waiver, grant or demonstration authorities.  The Final Rule implementing this health reform program is effective on July 6, 2012 and may be found at: http://www.gpo.gov/fdsys/pkg/FR-2012-05-07/pdf/2012-10294.pdf.

A detailed summary of the CFC program follows:

Who Is Eligible to Receive Services from CFC?

Medicaid beneficiaries who would require the level of care provided in an institutional setting, absent the provision of community support services, are eligible to receive services from CFC.   Individuals must choose to receive the services provided by CFC.  While the regulations provide for annual recertification of the individual’s status as requiring institutional care, states may provide for a permanent waiver of the recertification requirement if there is no reasonable expectation of improvement or significant change in the individual’s condition such that the person would no longer require  the level of care provided in an institutional setting.

Home and Community Support Services Furnished by the CFC Program

• Mandatory services include home and community-based attendant services and supports to assist in completing activities of daily living (e.g., eating, toileting, grooming, dressing, bathing and transferring); instrumental activities of daily living (e.g., meal planning and preparation, managing finances, shopping for essential items, traveling around and participating in the community, as well as other  activities related to living independently in the community); and health-related tasks (e.g., tasks that can be delegated by a licensed health care professional to an attendant) through hands-on assistance, supervision and/or cueing.
• Optional services include transition costs such as rent and utility deposits, first month’s rent and utilities and the cost of bedding, basic kitchen supplies and other necessities required for transition to the community from an institution.  The state also could amend its Medicaid plan to provide for additional services/supports that increase independence or substitute for human assistance such as non-medical transportation or a subsidy to cover the cost of a microwave oven.

Of note, CFC does not cover the cost of room and board (other than the allowable transition costs described above); special education provided under the Individuals with Disabilities Education Act or vocational rehabilitation services under the Rehabilitation Act of 1973; assistive devices and assistive technology services (other than backup systems to ensure continuity of services and supports); most medical supplies and medical equipment; or home modifications.  However, many of these items and services may be covered by other Medicaid programs. 

How Does the State Determine the Need for Services?

The state must conduct an assessment of the individual’s functional needs, as well as his/her strengths, preferences and goals for the CFC program.  Based upon this assessment, a “person-centered service plan” is developed, and the service planning process must be driven by the individual to the maximum extent possible.  This means the “plan process” includes people chosen by the individual, occurs at a location convenient to the individual, reflects cultural sensitivities and offers choices to the individual regarding the services and supports and the provider of such services.  The plan itself must reflect the individual’s preferences, must be understandable to the individual and his/her supports and be finalized and agreed to in writing by the individual. 

Mechanics of Delivery

The services are provided under the direction of the individual receiving services under one of three service models:

• Agency-Provider Model.  The services and supports are provided by “entities” under a contract or provider agreement with the state Medicaid agency or delegated entity to provide services.  This model allows individuals to have a significant role in selection and dismissal of the providers of their choice.
• Self-Directed Model with Budget.  Here, the individual has a person-centered service plan and a service budget with which to hire attendants.  States may provide cash or vouchers to those who self-direct their services and supports.  Of note, states must provide to individuals with a service budget “financial management activities”  to perform such tasks as collecting and processing timesheets of attendants, processing payroll and processing and paying invoices for services.
• Other.  States may propose other service delivery models subject to approval by CMS.

States may offer more than one service delivery model as part of the state plan amendment.  For all the service delivery models, states must provide or arrange for the provision of a support system that assesses and counsels an individual before enrollment and provides information and guidance so that the individual is able to successfully manage the services and budget.

Benefits and Burdens for States

States that amend their Medicaid plans to include a CFC program will receive an additional six percentage points in Federal Medical Assistance Percentage (“FMAP”) for the provision of CFC services and supports.  (FMAP determines the amount of federal matching funds for state Medicaid programs.)  However, for the first full 12-month period in which a CFC state plan amendment is implemented, the state must maintain or exceed the level of expenditures for home and community based attendant services provided under the state plan, waiver programs or demonstrations for the preceding 12 months.  Further, states must implement necessary safeguards to protect the health and welfare of beneficiaries.

Unfinished Business

CMS has delayed finalization of one provision of the proposed rule, which defined the attributes of a “home and community-based setting,” because this provision caused confusion and disagreement among stakeholders.  Accordingly, CMS has redefined what it means to be a “home and community-based setting,” for purposes of implementing the CFC program, and seeks additional comments.  The new proposed definition is set forth in a new proposed rule published on May 3, 2012 and can be found at: http://www.gpo.gov/fdsys/pkg/FR-2012-05-03/pdf/2012-10385.pdf.

If you have any questions or would like additional information about this topic, please contact Adele Merenstein at (317) 752-4427 or amerenst@hallrender.com, Rene Remek Savarise at (502) 568-9365 or rsavarise@hallrender.com or your regular Hall Render attorney.

Please visit our Health Care Reform site at www.hallrender.com/hcr for current information and resources regarding health care reform issues and regulations.

Who gets to fill the vacancy?

For twelve years, the law in the Seventh Circuit, which covers Indiana, Illinois, and Wisconsin, has been clear ever since the court said in the case of EEOC v. Humiston-Keeling, Inc., “the ADA does not require an employer to reassign a disabled employee to a job for which there is a better applicant, provided it’s the employer’s consistent and honest policy to hire the best applicant for the particular job in question rather than the first qualified applicant.”  But that may now change.  In March of this year, in EEOC v. United Airlines, Inc., a three-judge panel on the Seventh Circuit questioned this interpretation of the ADA.  While the Court reluctantly followed its earlier decision, it invited the EEOC to petition the Court for a rehearing before all eleven Seventh Circuit judges.  In doing so it suggested that it is “likely” that the “EEOC’s interpretation may in fact be a more supportable interpretation of the ADA.”  According to the EEOC, an employer’s policy of hiring the most qualified candidate for a position would not shield it from liability under the ADA.  Instead, the employer would be required to transfer a minimally qualified disabled employee to a vacant provision as a reasonable accommodation unless the employer could establish that doing so would result in an undue hardship.

Heads up for employers

For now, in those situations where a disabled employee seeks assignment to a vacant position as a reasonable accommodation – and when there are multiple qualified candidates – the employer should carefully look at all the facts and circumstances, determine if the disabled employee is qualified and then determine if the law has changed to require the assignment of that employee to the vacancy ahead of more qualified applicants.

Briefing with respect to the rehearing is ongoing and no date for oral argument has been set.  We will continue to monitor this matter and provide further updates as necessary.  Regardless of how the Seventh Circuit rules on the rehearing of this matter, this issue is likely heading for the Supreme Court.  Stay tuned.

If you have questions regarding this topic, please contact Craig Williams at 317.977.1457 or cwilliams@hallrender.com Steve Lyman at slyman@hallrender.com  or your regular Hall Render attorney

In June, ONC researchers and the ONC State Health Information Exchange Program will publish an electronic health record (EHR) and health information exchange (HIE) dashboard including more state-level maps, charts, and data sets that describe trends in physician and hospital utilization of health IT.

To view the Health IT Dashboard, click here.

The hospital responded to the request by arguing the requested records were not discoverable under Florida’s peer review privilege. The magistrate denied the hospital’s motion for privilege, citing that the state medical peer review privilege does not apply in discrimination actions brought under federal law.

While the magistrate denied the hospital’s motion, Awwad’s request was found to be overly broad. The magistrate did find that the peer review and credentialing files for the plaintiff were discoverable, as well as the files of the two other named physicians so far as they relate to behavioral and quality of care issues.

The request of all other physicians accused of disruptive behavior was determined to be “onerous and unduly burdensome” by the magistrate.

Should you have any questions, please contact:
Kimberly Emil at 317.977.1484 or kemil@hallrender.com,
David Bufford at 502.568.9368 or dbufford@hallrender.com,
or your regular Hall Render attorney.

The DSH DUA form is available on the CMS website.  Providers should complete, print, sign and scan in the DUA and send it to DataUseAgreement@cms.hhs.gov.  The signed and scanned document should be attached to the email as a .pdf, .jpg, .tif or bitmap image.  CMS will no longer require a cover letter for these purposes.  Notification of the DUA creation will be sent to the Requestor within 3-5 business days of receipt of the request.  The data will be shipped to the Custodian in approximately 6-8 weeks.

Providers that submitted a request when CMS was not accepting requests because this data was not available must submit a new request.  All other DSH related requests, such as changes to the Requestor/Custodian(s), updates to the files included in the DUA and DUA extension and closure requests, should also be attached to an email and submitted to the same DUA email address listed above.

CMS no longer requires Hospitals to have a properly pending appeal relating to DSH payments in order to process a Hospital’s request for the data used to compute the Medicare fraction of the Hospital’s DSH patient percentage.  However, a DUA must be submitted, per the instructions above.

CMS has also developed a limited view of the HIPAA Eligibility Transaction System (HETS) to allow hospitals that receive Medicare DSH payments to view Medicare enrollment information.  This will allow hospitals to verify that patients eligible for Medicaid are not also entitled to Medicare and therefore can be included in the Medicaid proxy.  Hospitals can also determine whether a patient is entitled to Medicare Part A benefits, enrolled in a Medicare managed care plan or has Medicare as a secondary insurance.  More information on this can be found here. 

 If you have any questions regarding this article, please contact:

• Maureen O’Brien Griffin at 317-977-1429 or mgriffin@hallrender.com;
• Lauren G. Hulls at 317-977-1467 or lhulls@hallrender.com; or
• Your regular Hall Render attorney.

• Program Integrity Reforms to Protect Beneficiaries and Prevent Fraud and Abuse
• Payment Integrity Reforms to Ensure Accuracy, Efficiency and Value
• Fraud and Abuse Enforcement Reforms to Ensure Tougher Penalties Against Those Whose Commit Fraud

If you have questions regarding the open letter or are interested in filing a whitepaper with the Committee, please contact John Williams at (317) 977-1462 or jwilliams@hallrender.com.

“Solicitation/ Distribution.  Employees are forbidden from soliciting for any purpose in immediate patient care areas, such as patients’ rooms, and places where patients receive treatment, such as therapy areas, or in other areas that that would  cause disruption of health care operations or disturbance of patients, such as corridors inpatient treatment areas and rooms used by patients for consultations with physicians or meetings with families or friends.  Employees are also forbidden to distribute literature at any time, for any purpose in working areas.  Working areas are all areas in the hospital, except employee lounges and parking areas” 

The policy was lawful and the NLRB had no problem with it.  But the hospital got into trouble when a supervisor told one employee that she had heard that the employee had been “talking to co-workers” about the union and that she (the supervisor) preferred that the employee talk about the union while on break and in the break room.  The NLRB found this statement to be unlawful interference with the employee’s rights and violated the NLRA.  According to the NLRB, the policy didn’t prohibit “talk” - –  only “solicitation” was prohibited by the policy.  Because there was no evidence that the employee was actually “soliciting“ the hospital was ordered to rescind any discipline issued for mere union ”talk“.

A different supervisor was found to have committed a similar sin when she told an employee who was distributing union literature to another nurse in the hallway of the postpartum department to “stop all union activities.”  While it was true that the employee was in violation of the no-distribution policy, the NLRB said that it didn’t matter because the supervisor’s warning to cease “all union activity” was overbroad in any event and unlawfully interfered with the employee’s rights.

The lesson here is that even though you might have a perfectly fine policy – - it’s what the supervisors actually say that really counts.  Employers need to make sure that your supervisors know the subtle legal rules when it comes to dealing with employee rights to “talk” about unions.

Fremont-Health Group, (357 NLRB No. 158)

If you have questions regarding this topic, please contact Steve Lyman at 317.977.1422 or slyman@hallrender.com Bruce Bagdady bbagdady@hallrender.com Travis Meek at tmeek@hallrender.com  or your regular Hall Render attorney.

If it survives the current legal challenge in the U.S. Supreme Court, the mandatory coverage aspect of the Affordable Care Act (“ACA”) will not take effect until 2014.  This timing has the effect of making hospitals tentative about capital deployment in general and for real estate in particular.

Besides timing and uncertainty, there are other aspects of the ACA and the general economic environment that diminish current and short-term spending by hospitals for new real estate development:

• there will likely be a trend towards migration of care to patients’ homes and community-based (off campus) outpatient locations
• there will likely be an increase in employer-based clinics
• health care reform’s emphasis on reporting and record keeping is placing a higher priority on health information technology and electronic medical records than on new construction
• the projected shortage of physicians over the next decade
• focus on increased utilization of existing space through process improvement and re-design
• consolidation of hospitals and health systems
• no expansion of physician-owned hospitals (due to new limitations included in the ACA)
• continued unavailability of credit for speculative medical office construction
• absorption — medical office average vacancy rates nationally remain around 11.5%
• retail vacancies have and will likely continue to drive an increase of retail absorption as these are suitable sites for wellness, prevention, urgent care and health education
  new construction in the skilled nursing, independent and assisted living facilities has been strong and will increase (not so much due to health care reform as demographic shift)
• capital constraints on hospitals will increase, not decrease, with health care reform

Even though the shift in demographics and the probability of more insureds create a need and demand for more medical and hospital space, there are several factors that foster uncertainty and competing claims on scarce capital.  All of these factors are causing delay in the timing of new real estate development projects.

The NLRB then got involved and ruled that the banning of the union ribbons was unlawful.  It found that the hospital failed to provide any evidence that patients were or would likely be disturbed by the union ribbons; that patients were even aware of the union campaign; and that there was no real difference between the messages that were approved by the hospital and the message on the union’s ribbons.

Bottom line, a hospital’s restrictions on buttons and insignia must be limited to direct patient care areas and must be clearly established to avoid patient disturbance.  Most of all, hospitals need to make sure that whatever restrictions are in place that they are uniformly enforced.

Saint John’s Health Center, (NLRB, December 30, 2011)

If you have questions regarding this topic, please contact Steve Lyman at317.977.1422 or slyman@hallrender.com Bruce Bagdady bbagdady@hallrender.com Travis Meek at tmeek@hallrender.com  or your regular Hall Render attorney.

            Sometimes, as a matter of convenience, an employee may request that a portion of his or her paycheck be deducted and applied toward a debt or other obligation.  For example, the employee might ask that insurance premiums be deducted  – or charitable contributions – or the cost of purchases from the employer.  To accommodate the employee’s request, an employer will often oblige and make the deduction as requested. 

Everyone is happy – - but is the deduction legally valid?  Maybe not.

In order to be valid, an employee wage deduction in Indiana must meet several very important and technical requirements.  Any deduction that fails to meet one of these legal requirements can be void.  A void wage deduction could mean that the employer failed to pay the full amount of an employee’s wages when they were due.  An employer’s failure to pay wages when due can run afoul of another Indiana law – the Wage Payment Statute (I.C. 22-2-5-1).  A violation of this statute can result in liability for three times the amount of wages improperly deducted, plus attorney’s fees and the costs of collection.

Make sure your employee wage deductions are valid and avoid being surprised.  Here is what you need to remember.

Employee Wage Assignments in Indiana 

            Under Indiana law, an employer may withhold portions of employee paychecks only under limited conditions, and only for certain statutorily prescribed purposes.  Such a withholding by an employer is known as a wage assignment, and is governed by the Indiana Wage Assignment Statute (I.C. 22-2-6-2).

Meeting the Legal Requirements

To be valid, an employee’s wage assignment must satisfy all of the requirements listed in the statute.  They are:

• Writing.  The assignment must be in writing.
• Personally Signed.  The employee must personally sign the assignment document.
• Revocable.  The assignment must state by its terms that it is revocable at any time by the employee by giving written notice to the employer.
• Employer Consent.  The employer must agree to make the deduction.
• Delivery.  An executed copy of the assignment document must be delivered to the employer within ten days of its execution.
• Thirteen Specific Purposes.  Valid deductions can only be made for the purpose of paying any one of the following:

1. Premium on an insurance policy obtained by the employer for the employee;
2. Pledge or contribution of the employee to a charitable or nonprofit organization;
3. Purchase of bonds or securities, issued or guaranteed by the United States;
4. Purchase of stock of the employer;
5. Dues owed to a labor organization of which the employee is a member;
6. Merchandise sold by the employer to the employee, at the written request of the employee;
7. Payment of a loan made to the employee by the employer, as evidenced by a written instrument executed by the employee, and subject to a specific weekly limit;
8. Contributions of the employee to a hospital service or medical expense plan, or to an employee’s association, trust, or plan existing for the purpose of paying pensions or other benefits to the employee or others designated by the employee;
9. Payment to any credit union, nonprofit organization, or association of employees;
10. Payment to an employee’s direct deposit account;
11. Premiums on policies of insurance and annuities purchased by the employee on the employee’s life;
12. Purchase of shares or fractional interests in shares in one or more mutual funds;
13.  A court judgment owed by the employee made in accordance with an agreement between the employee and the creditor, but is not a   legal garnishment.

There’s More – Recovering Overpayment of Wages 

            Suppose you find out that the employee has been overpaid by mistake.  How can the employer recover the amount of the overpayment when recovery of overpayments is not among the listed purposes?  Indiana law addresses this issue.

If an employer has overpaid an employee, the employer may deduct the amount of the overpayment, but only if:

• The employer gives the employee two weeks advance notice;
• The amount of overpayment is not in dispute; and
• The deduction is not more than the lesser of: (a) 25% of the employee’s disposable earnings (essentially take home pay) for the pay period, or (b) the amount of disposable earnings for the period that exceeds thirty times the federal minimum wage (i.e. 30 x $7.25 = $217.50).

Not an Assignment of Wages.  The employer does not need to comply with the formalities of a written wage assignment because the law specifically states that recovery of overpayment of wages is not a wage assignment.  

The Misplaced Decimal Point.  The employer does not even need to meet these restrictions if there has been a single gross overpayment of wages equal to ten times the employee’s gross wages earned due to the inadvertent misplacement of a decimal point.  In that case, the law allows the entire amount of the overpayment to be deducted immediately.

Thing to Remember . . . 

•  Because all wage assignments must be in writing, signed by the employee, and be revocable by its terms – Consider developing a standard “Wage Deduction Authorization” form to be used every time an employee wage deduction will be made.
• Deducting for damaged or lost employer property is not specifically permitted.  Consider developing a form that would convert the obligation to pay for lost or damaged property into an “Employee Request for Purchase of Merchandise.”
• The deduction for a “fine” from an employee’s paycheck is not permitted.
• Deductions for the payment for “services” of the employer are not specifically permitted.  Consider converting the employee’s obligation to pay for the purchase of services into a loan to the employee (which is specifically permitted, see purpose #7) by having the employee execute a promissory note – and then deducting the loan payments from the employee paycheck.
• The payment to “nonprofit organizations” is permitted.  This may allow for the deduction for the payment of services directly to the employer if the employer is a “nonprofit organization.”
• There are specific limitations on the amount of an employee’s paycheck that can be taken through a deduction for the repayment of a loan.  Those limitations are the same as the limitations set out for the recovery of an overpayment of wages.
• The employee can revoke the deduction authorization at any time, in writing.  Don’t deduct after the employee gives the revocation notice.

If you have questions regarding this topic, please contact Steve Lyman at 317.977.1422 or slyman@hallrender.com or your regular Hall Render attorney.

Reasonable accommodations and vaccination requirements

The EEOC points to its technical assistance document entitled, Pandemic Preparedness in the Workplace and the Americans with Disabilities Act (2009), when providing guidance on an employer’s duty to accommodate employees who may not be able to receive the flu vaccine.  It states that an employer cannot compel all of its employees to take the flu vaccine and ignore employees’ medical conditions or religious beliefs.  Rather, employees may be entitled to an accommodation (such as an exemption from taking the flu vaccine) due to a disability or sincerely held religious belief, practice, or observance preventing the employee from taking the vaccine.  An employer may not have to provide the accommodation, however, if it can demonstrate that providing an accommodation creates an undue hardship.  The EEOC explains that facts relevant to determining whether an undue hardship exists include:

• the assessment of the public risk posed at a particular time;
• the availability of effective alternative means of infection control; and,
• the number of employees who actually request an accommodation.

Scope of covered “religious beliefs”

The EEOC reminds employers that both it and courts have “consistently found that Title VII defines religion very broadly to include not only traditional, organized religions . . . but also religious beliefs that are new, uncommon, not part of a formal church or sect, only subscribed to by a small number of people, or that seem illogical or unreasonably to others.”  The EEOC notes, however, that social, political, or economic philosophies and mere personal beliefs are not considered “religious,” and thus not protected by Title VII.

The letter confirms that hospitals and health care employers are entitled to scrutinize a health care worker’s beliefs to determine whether it is a sincerely held religious belief entitling that worker to an exemption from a mandatory flu vaccine program.  While the EEOC states that employers should “ordinarily assume that an employee’s request for religious accommodation is based on a sincerely-held religious belief,” if an employer has “an objective basis for questioning the religious nature or the sincerity of a particular belief or practice, the employer would be justified in seeking additional supporting information.”

Employers should take note that the EEOC maintains that such “additional supporting information” need not come from a church official or member, but rather could be provided by others aware of the employee’s religious practice or belief.  This is particularly true when such religious beliefs may be non-traditional, uncommon, or new.

Employers have defenses

The EEOC also discussed whether hospitals could refuse to accommodate an employee’s religious objection if the employee had received vaccines in the past.  The EEOC essentially said that it depends on the facts, referring to prior guidance that lists several factors that, either alone or in combination, may “undermine an employee’s assertion that he sincerely holds the religious belief at issue.”  Those factors include:

•  whether the employee has behaved in a manner markedly inconsistent with the professed belief;
• whether the accommodation sought is a particularly desirable benefit that is likely to be sought for secular reasons;
• whether the timing of the request renders it suspect (e.g. it follows an earlier request by the employee for the same benefit for secular reasons); and,
• whether the employer otherwise has reason to believe the accommodation is not sought for religious reasons.

The EEOC reminds employers, too, that an employee’s beliefs may change over time, and therefore an employee’s newly adopted or inconsistently observed religious practice may nevertheless be sincerely held.

Pregnancy and mandatory flu vaccine programs

 The Pregnancy Discrimination Act could be implicated by an employer’s mandatory flu vaccine policy.  According to the EEOC, a pregnant employee denied an exemption from taking a required vaccine could bring a claim under Title VII if the employer granted non-pregnant or male employees an exemption, such as if they had a medical condition that prevented them from getting the vaccine.  The EEOC says that such a claim “would obviously turn on the facts of the particular case.”

Alternative infection control practices

Finally, the EEOC suggested that if an employer grants a health care worker an exemption from receiving the flu vaccine under a mandatory vaccination program, it may still impose upon that employee alternative infection control practices, including requiring the individual to wear a mask.  However, such a requirement in lieu of taking the vaccine may only be done for legitimate, non-discriminatory and non-retaliatory reasons.  Requiring an employee exempted from the vaccine due to a medical condition, religious belief, or pregnancy to wear a mask, but not requiring other exempted employees to wear one, would likely be an unlawful practice.

What does this mean for employers of health care workers?

If a hospital or other health care entity has a mandatory flu vaccine program, or is considering implementing a program, it must carefully consider all of the legal implications.  This includes complying with Title VII protections in administering the program.  Employers must consider an employee’s request for an exemption, particularly if it is based on the employee’s religious beliefs, medical conditions, or even due to a pregnancy.  In light of the EEOC’s position on this issue employers should develop a process that will carefully and consistently evaluate each request in order to properly meet their obligations to the public as well as to the employees who serve the public.

If you have questions regarding this topic, please contact Kevin Stella at 317.977.1426 or kstella@hallrender.com  or your regular Hall Render attorney.

The General Counsel’s office also issued a set of Frequently Asked Questions explaining the Board’s revised rules and the procedures that will be followed by regions in implementing those rules in an effort to provide guidance in this area to the regional staffs, practitioners and all members of the general public.

The NLRB’s new election rules are still being contested in federal court.  It is possible that the NLRB’s rule may be enjoined by the court prior to the effective date.  We will keep you updated as the news develops.

Should you have questions or require further information, please contact Stephen W. Lyman at 317.977.1422 or slyman@hallrender.com  or your regular Hall Render attorney.

Differences Between Arrest and Conviction Records

The fact of an arrest does not establish that criminal conduct has occurred, and an exclusion based on an arrest, in itself, is not job related and consistent with business necessity.  However, an employer may make an employment decision based on the conduct underlying an arrest if the conduct makes the individual unfit for the position in question.

In contrast, a conviction record will usually serve as sufficient evidence that a person engaged in particular conduct.

Disparate Treatment and Disparate Impact Analysis Under Title VII and Defenses Available to Employers

Disparate Treatment.  A violation may occur when an employer treats criminal history information differently for different applicants or employees, based on their race or national origin.

Disparate Impact.  An employer’s neutral policy, such as excluding applicants from employment based on certain criminal conduct, may disproportionately impact some individuals protected under Title VII and may violate the law if not job related and consistent with business necessity.

Employer Defenses:

• Empirical Validation.  The employer may validate the criminal conduct exclusion for the position in question in light of the EEOC’s Uniform Guidelines on Employee Selection Procedures.  The use of these Guidelines, however, is quite expensive and is often of little value.
• Targeted Screen with Individualized Assessment.  The employer may develop a targeted screen, considering at least the nature of the crime, the time elapsed and the nature of the job.  The employer’s policy should then provide an opportunity for an individualized assessment for those people identified by the screen to determine if the policy, as applied, is job related and consistent with business necessity.
• Compliance with Federal Laws.  Compliance with other federal laws and/or regulations that conflict with Title VII is a defense to a charge of discrimination under Title VII.  But it is important to note that state and local laws or regulations are preempted by Title VII if they require or permit acts that would be an unlawful employment practice under Title VII.

What This Means for Employers

Although the EEOC’s enforcement guidance does not have the force of law, employers should heed the Guidance and consider:

• Reviewing employment applications for questions about arrest and conviction records;
• Reviewing policies relating to arrests and convictions;
• Training management on the proper use of criminal history information;
• Ensuring that third parties conducting background checks are complying with the Guidance;
• Justifying any exclusion based on criminal history in light of nature of the crime, the time elapsed and the nature of the job; and
• Allowing for individualized assessments rather than applying blanket exclusions.

Should you have questions or require further information, please contact Stephen W. Lyman at 317.977.1422 or slyman@hallrender.com or your regular Hall Render attorney.

National Government Services, Inc. received notification of this issue from CGI along with a request to adjust all impacted claims. Such corrections require a manual process and are typically worked, based on the “first in; first out” rule. Unfortunately, due to the current large volume of such requests, along with additional unrelated workload, this manual process is taking longer than expect[ed] to complete and issue refunds when applicable. Until the adjustments are complete, providers may experience recoupments taken in error.

National Government Services assures you that the adjustments and refunds, with interest when applicable, will be completed as quickly as possible. Please understand that since this is a known issue that is in the process of being corrected, you do not need to call the Provider Contact Center to request that a ticket be opened. National Government Services, Inc. thanks you for your patience and understanding.”  The announcement from CGI Federal can be found at this link: https://racb.cgi.com/default.aspx

If you have questions related to this announcement or the RAC process in general please contact Regan E. Tankersley at rtankersley@hallrender.com or Elizabeth A. Elias at eelias@hallrender.com.

Background

For several years, the IRS has stated publicly its belief that a well-governed exempt organization is more likely to be compliant with the tax law.  In accordance with this belief, the IRS published on its website various educational pieces touting the importance of good governance to nonprofit managers and implemented Part VI, Governance, Management and Disclosure, of the revised Form 990, which solicits governance information from organizations filing the form.  In addition, the IRS publicly released the training materials it used to train its staff on the governance issue and announced its intention to develop an examination check sheet regarding governance practices (see: http://www.hallrender.com/health_care_law/library/articles/498/RS%20RELEASES%20CPE%20TRAINING%20.pdf).

Governance Check Sheet

In undertaking the governance check sheet initiative, which was the primary subject of Ms. Lerner’s remarks, the IRS sought to provide statistical support for its proposition that good governance leads to tax compliance.  The results of this check sheet initiative came from an analysis of organizations selected for IRS exam and not from a statistically representative survey of the exempt organization population.  The IRS focused the check sheet on a few key questions related to governance, including whether an organization used comparability data in making compensation decisions, whether it had adopted a written conflicts of interest policy and whether the IRS Form 990 was reviewed by the organization’s full board of directors or a designated committee of the board.

Overall, the preliminary results of the check sheet analysis support the IRS position that good governance enhances tax compliance.  The IRS found a statistically significant correlation between tax compliance and the following familiar governance practices:

• An organization with a written mission statement is more likely to be compliant;
• An organization that always uses comparability data when making compensation decisions is more likely to be compliant;
• An organization that has its Form 990 reviewed by the organization’s Board of Directors prior to filing is more likely to be compliant; and
• An organization effectively controlled by one individual or a small, select group of individuals is less likely to be compliant.

The IRS study did not support a correlation between tax compliance and the existence of conflict of interest policies or having one or more board members that were not independent.  However, it should be noted that, despite these preliminary results, an organization must nevertheless disclose on its Form 990 whether it has a written conflict of interest policy and must disclose the number of independent board members.  More importantly, perhaps, a strong conflict of interest policy and independent board support independent decision making and help fulfill the board members’ fiduciary duties of care to make decisions in the best interest of the organization, rather than any one individual.

In general, the data supports the IRS’ long-standing assertion that effective corporate governance practices enhance tax compliance.  Based on these preliminary results, the IRS has decided to expand the check sheet initiative to a statistically representative sample of the general exempt organization population.

Significant Diversion of Assets

Part VI of the redesigned Form 990 asks whether the organization became aware during the year of a “significant diversion of the organization’s assets” (defined in the form instructions to include embezzlement or theft).  In her recent remarks, Lerner explained that the IRS has reviewed the tax filings and other publicly available information on those organizations that reported significant diversions and now intends to conduct an examination program in the area.  The goal of the program will be to pursue excess benefit transaction actions against the persons committing them.

Recommendations

It is apparent from these recent comments that the IRS continues to focus on issues of nonprofit governance and is motivated to demonstrate, with data, that those organizations that practice “good governance” will be more successful in their tax compliance efforts.  We recommend that tax-exempt organizations continue to review their governance practices, paying particular attention to those elements identified by the IRS as having a direct relationship to tax law compliance.  In addition, the preliminary results notwithstanding, we encourage the continued use of a strong conflict of interest policy and an emphasis on maintaining board independence to the extent possible.

A transcript of Ms. Lerner’s remarks is available here: http://www.irs.gov/pub/irs-tege/georgetown_04192011.pdf.

If you need additional information about this topic, please contact:

• Rex Killian, Hall Render’s Governance Consultant, at (317) 977-1540 or rkillian@hallrender.com;
• Kendall Schnurpel at (317) 977-1480 or kschnurpel@hallrender.com;
• Calvin Chambers at (317) 977-1459 or cchambers@hallrender.com; or
• Your regular Hall Render attorney.

The General Counsel’s office also issued a set of Frequently Asked Questions explaining the Board’s revised rules and the procedures that will be followed by regions in implementing those rules in an effort to provide guidance in this area to the regional staffs, practitioners and all members of the general public.

The NLRB’s new election rules are still being contested in federal court.  It is possible that the NLRB’s rule may be enjoined by the court prior to the effective date.  We will keep you updated as the news develops.

Should you have questions or require further information, please contact Stephen W. Lyman at 317.977.1422 or slyman@hallrender.com  or your regular Hall Render attorney.

This rule is designed to maintain program integrity and ensure quality by allowing CMS to verify that only qualified providers and suppliers participate in the programs and that they bill accurately for their services.  CMS estimates the implantation of this rule will save Medicare $1.6 billion over 10 years. The NPI, which also is required in HIPAA transactions, is used to verify certification as a means of curbing Medicare and Medicaid fraud and abuse.

The final rule with comments will be published this Friday in the Federal Register, however, an advanced preview is available now.

Should you have any questions, please contact:
Todd Selby at 317.977.1440 or tselby@hallrender.com;
Brian Jent at 317.977.1402 or bjent@hallrender.com; or
David Bufford at 502.568.9368 or dbufford@hallrender.com,
or your regular Hall Render attorney.

Should you have any questions, please contact:
Todd Selby at 317.977.1440 or tselby@hallrender.com;
Kendra Conover at 317.977.1456 or kconover@hallrender.com; or
or your regular Hall Render attorney.

This action arose out of a report to HHS that the Practice was posting clinical appointments for its patients on a publicly accessible Internet-based calendar.  The HHS Office for Civil Rights (“OCR”) investigated the report and found that the Practice had failed to adequately implement several requirements under the HIPAA Privacy and Security Rules.  In particular, OCR found that the Practice failed in its HIPAA compliance in the following ways:

• The Practice did not implement adequate policies and procedures to appropriately safeguard protected health information (“PHI”).

• The Practice did not provide and document training of each workforce member on required HIPAA policies and procedures.
• The Practice did not implement required administrative and technical safeguards under the HIPAA Security Rule by designating a security official or conducting a risk analysis.
• The Practice did not enter into business associate agreements in all required instances.

As a result, HHS, OCR and the Practice entered into a Resolution Agreement whereby the Practice agreed to pay HHS a $100,000 settlement payment and to perform several obligations in a variety of areas, as follows:

• Policies and Procedures.  The Practice is required to develop, maintain and revise, as necessary, written policies and procedures with respect to administrative safeguards, technical safeguards and workforce training. 
  • Administrative safeguards.  The Practice must have policies that address the performance of risk assessments, particularly when PHI is utilized in Internet-based systems, accessed remotely or accessible on a portable device.  The Practice must then implement a risk management plan to address risks identified in the risk assessment.  The Practice also must have policies pertaining to the appointment of a security official, as well as obtaining satisfactory written assurances from business associates. 
  • Technical safeguards.  The Practice must have access control and management policies that allow access to only those persons and programs that require access to PHI to perform their job functions and policies requiring encryption or other technical means of safeguarding electronic PHI on portable electronic devices.  Notably, HHS made special mention that such policies should address safeguarding all portable devices that are used to access PHI, including devices not owned or issued by the Practice. 
  • Workforce training.  The Practice is required to have policies detailing the training of all workforce members who use or disclose PHI, including management.  Specific areas that must be covered by the policies include:  security awareness, security reminders, guarding against malicious software, log-in monitoring and safeguarding passwords.
• Training.  The Practice must train each workforce member who uses or discloses PHI on the HIPAA policies and procedures, obtain certification from each workforce member that the training was received and review and update such training at least annually and more often as needed.
• Reports.  The Practice is required to submit an implementation report to HHS documenting compliance with the terms of the Resolution Agreement.

In the press release announcing this enforcement action, OCR Director Leon Rodriguez noted the significance of the multi-year, continuing failure of the Practice to comply with the Privacy and Security Rules.  He also cautioned covered entities to pay careful attention to this Resolution Agreement and understand that since the Privacy and Security Rules have been in place for many years, “OCR expects full compliance no matter the size of a covered entity.”  In light of this development, covered entities, regardless of size or type, should take the necessary steps to ensure that their HIPAA compliance programs are effective, including:

• Conducting a risk assessment to determine where vulnerabilities exist in current practices and systems;
• Reviewing policies and procedures affecting privacy and security to ensure that they are thorough and complete;
• Training workforce members who have access to PHI on the details of HIPAA policies and procedures;
• Ensuring that business associate agreements are in place with all third parties who have access to PHI in the course of providing services on behalf of the covered entity;
• Actively monitoring compliance, particularly when there is a material change in processes, personnel or functions; and
• Considering the use of encryption or other appropriate technical safeguards for all media and devices that store, transmit or maintain PHI, even if those devices are not owned or issued by the covered entity.

More information on this enforcement action, including the Resolution Agreement and the HHS press release, is available here.

Hall Render’s HIPAA Impact Series has provided in-depth analysis of HIPAA issues and developments since the passage of HITECH.  Our HIPAA Impact Series may be accessed at www.hallrender.com/impact.

If you need additional information about HIPAA/HITECH, please contact Mark Swearingen at (317) 977-1458 or mswearingen@hallrender.com or your regular Hall Render attorney.

The Home Health Care Consumer Assessment of Healthcare Providers and Systems (HHCAHPS) Survey, which will be updated every four months with new survey data, will complement the clinical measures already available on the agency’s Home Health Compare website.

The HHCAHPS is a survey that collects feedback on topics that patients have identified as important to them in determining which home health agencies provide high-quality care. For example, the survey asks patients about the care they received from their home health agency, including such topics as overall care; provider communication skills; whether care was provided in a courteous and respectful way; and whether the agency discussed medicines, pain, and home safety.

A prospective patient or caregiver will be able to review and compare feedback from other patients about Medicare-certified home health agencies’ care of patients, communication between providers and patients, as well as the specific care issues identified on the survey. Ratings include an overall rating of home health care and a patient’s willingness to recommend the agency to someone else.

Should you have any questions, please contact:
Todd Selby at 317.977.1440 or tselby@hallrender.com;
Brian Jent at 317.977.1402 or bjent@hallrender.com; or
David Bufford at 502.568.9368 or dbufford@hallrender.com,
or your regular Hall Render attorney.

Employers should ask themselves the following questions:

• Are you providing education scholarships to non-employees in exchange for the students committing to come work for you?
• Are you providing scholarships or tuition assistance to employees for education that qualifies the employee for a different job (e.g. a LPN is taking courses to become a RN)?
• Do you have a formal education assistance plan which outlines the eligibility parameters for employees to receive a scholarship or tuition assistance, and are you providing employees scholarships or tuition assistance that exceeds $5,250 in a calendar year?

If you answered yes to any of these questions, there is a good chance that your “scholarship” (or a portion of the scholarship) need to be treated as taxable income to the employee or prospective employee.  The timing of this taxation and the implications for employers (e.g. withholding of taxes and payment of FICA taxes for employees  v. issuance of Form 1099’s for non-employees) will depend on the structure of the education benefit being provided.

Needless to say, employers who provide educational scholarships or tuition assistance should consult with legal counsel to ensure that the benefit is structured in the most advantageous way and that it is being taxed appropriately.  Otherwise, employers could find themselves being assessed a hefty tax penalty by the Internal Revenue Service.

Should you have questions or require further information, please contact Jennifer Richter at 317.977.1477 or jrichter@hallrender.com or Stephen W. Lyman at317.977.1422 or slyman@hallrender.com  or your regular Hall Render attorney.

In the present case, the parties agreed that the nurse member of the Medical Review Panel would not be allowed to opine as to causation in the Panel’s written Opinion. The Medical Review Panel chair agreed to abide by the parties’ agreement and no preliminary determination of law was sought on the issue before the Medical Review Panel meeting. However, when the written Opinion was issued by the Panel, the nurse member opined as to causation despite the agreement amongst the parties that they would not offer such an opinion.

Subsequently, Defendant Doe Corp. moved for a preliminary determination of law pursuant to the Indiana Medical Malpractice Act I.C. 34-18-1-1 et seq. before the trial court challenging the Panel Chair’s act of reneging on the agreement and the findings of the Panel Opinion. The estate claimed that Doe Corp. was foreclosed by statute from seeking a preliminary determination of law on this issue because the written Opinion of the Medical Review Panel had already been issued.

The trial court agreed with plaintiff and did not consider the petition filed by Doe Corp.; however, the Court of Appeals reversed the trial court’s decision and determined that the trial court had equitable power to consider a request for preliminary determination of law by a party after the Panel had issued its written Opinion. Therefore, the case was remanded back to the trial court for further deliberation on the issues set forth in Doe Corp.’s petition for preliminary determination of law.

This is an important opinion for the defense as it appropriately permits a Defendant to seek relief and pursue a petition for preliminary determination of law on various legal issues that may arise following the issuance of the Medical Review Panel Opinion. The Court’s ruling establishes the trial court is an appropriate venue for such disputes after the Panel has rendered its written decision.

If you have any questions, or for more information, please contact Jarrod A. Malone at 317-977-1494 or jmalone@hallrender.com or your regular Hall Render attorney.

It seems like yesterday, but we are two years into the “health care reform” era.  The Affordable Care Act (“ACA”) became law in March of 2010.  The primary goals of the ACA are three-fold:  increase coverage, reduce the cost of care and improve the quality of care.  Few argue the importance of the objectives.  When Congress passed the ACA:

• 45 million Americans lacked coverage;
• Health care constituted a full 16% of GNP (compared to Britain’s 8.4% and France’s 11%);
• The per capita annual cost of care was $7,290 (about double that of most industrialized countries); and
• Quality was comparatively poor (as measured by preventable deaths in the US vs. other developed nations).

Clearly, more Americans will be covered under the ACA, but probably not as many as could be.  Only time will tell whether the ACA will result in permanent cost containment and quality improvements.

One of the main factors that ultimately drove hospitals to support (or at least not vehemently oppose) the ACA was the expected trade off:  while there will be significant cuts in hospital reimbursement from Medicare and Medicaid, this will be offset, so the logic goes, by more insurance payments and less charity care that will naturally follow from the mandate that essentially all Americans be covered.  The problem with this assumption is that there is growing speculation that despite the mandate, many people will nevertheless choose not to obtain insurance.

The other factor at play is uncertainty.  A few weeks ago the U.S. Supreme Court heard oral arguments in the cases that seek to declare the ACA unconstitutional as an impermissible use by Congress of the Commerce Clause.  There is a fair probability that even if the Court finds the mandate to be unconstitutional, it will save the ACA from repeal by “severing” the mandate component from the Act.  If that happens, the great trade off will not materialize for hospitals.  Instead, hospitals will be faced with cuts in reimbursement without the hoped for revenue influx.  This uncertainty causes a degree of paralysis by hospitals that might otherwise deploy capital for new real estate developments.

The Court is expected to issue a decision by the end of June.

The list of allegations raised in these reports reflects a long-term pattern of problematic and inappropriate physician behavior, a situation not uncommon in many hospitals.  Like many hospitals, the organization and the medical staff did not immediately confront the issues.  Finally, Dr. Freilich was suspended at one System hospital.  Dr. Freilich then made incorrect and misleading statements about this suspension in her reapplication for privileges at the other System facility.  As a result, the MEC recommended her reapplication be denied.  Dr. Freilich requested and was granted a hearing.  The hearing committee modified the MEC recommendation, recommending a conditional one year reappointment.  On appeal, the Board disagreed, finding that Dr. Freilich’s behavior was not correctable because she “…lacked personal insight or understanding of the fact that she has caused multiple problems, which is a prerequisite to their remediability.”

In her lawsuit, Dr. Freilich alleged the System did not qualify for peer review immunity because the peer review action was based on “sham complaints,” which were made in retaliation for raising valid quality and patient care concerns.  To qualify for immunity under the federal Health Care Quality Improvement Act (“HCQIA”), a peer review action must be taken:

1. In the reasonable belief that it is in the furtherance of quality health care;
2. After a reasonable effort to obtain the facts;
3. After adequate notice and hearing procedures or after such other procedures as are fair under the circumstances; and
4. In the reasonable belief the action is warranted by the facts known after a reasonable effort to obtain facts and after meeting the process requirements of paragraph #3.²

Under HCQIA, peer review actions are presumed to satisfy the standards for immunity unless this presumption is rebutted by the subject practitioner by a preponderance of the evidence.  In alleging the complaints were unfounded and retaliatory, Dr. Freilich was attempting to rebut the presumption of HCQIA immunity by arguing the System failed to meet the first, second and fourth elements required for HCQIA immunity.

The Hospital argued that the subjective motivations underlying a peer review action are irrelevant, as HCQIA immunity is determined by an objective reasonableness standard.  The Court disagreed, holding that in assessing objective reasonableness, they look to the totality of the circumstances to assess whether a hospital has met the standards for HCQIA immunity.  Any evidence is relevant if it could lead a rational person to conclude the immunity standards were not met, including evidence suggestive of retaliatory motive or that the peer review action was not based on physician competence or professional conduct.

However, the Court also ruled Dr. Freilich failed to establish a connection between the allegations of retaliation and the peer review action.  “Evidence of retaliation is simply one of several factors to be considered when determining whether, in the totality of the circumstances, the professional review action satisfied the standards for immunity set forth in HCQIA.”³  While some physicians and nurses may have filed sham reports against the physician, there was no evidence such reports served as the basis for the peer review action.  Finally, the Court commented, “The picture emerges that, although each incident may not have happened exactly as the complainant portrayed it, Dr. Freilich conducts herself in a manner that causes offense to patient, nurses, other doctors, and other hospital personnel.”⁴

The lessons from Freilich include:

• Evidence of retaliation or other improper motives will be considered by a court in assessing qualification for federal peer review immunity;
• Failing to address disruptive behavior leads to staff animosity towards the physician, which may undermine the credibility of legitimate allegations;
• A strong documented record of behavioral issues is essential in disruptive physician cases.  The reports should be accurate and complete but need not be perfect;
• A Board should send a peer review decision with indications of improper motive back to an MEC or hearing panel to reconsider the issue without inclusion of such evidence; and
• Effective risk management of peer review matters begins at the investigative phase.

Should you have any questions about the information contained in this article, please contact James B. Hogan at (317) 977-1439 or jhogan@hallrender.com or your regular Hall Render attorney.

¹ 16 A.3d 977 (Md. 2011).
² 42 U.S.C. §11112(a).
³ 33 A.3d 932, 942.
⁴ 33 A.3d 932, 946.

The Final Rule modified some of the more restrictive DMEPOS supplier safeguards originally implemented on September 27, 2010 and, in so doing, eased the burden on DMEPOS suppliers while preserving standards protective of beneficiaries.  The revisions are as follows:

1.  The Final Rule Removes the Definition of “Direct Solicitation.”  Under the regulations in place before April 13, 2012, DMEPOS suppliers were prohibited from directly soliciting Medicare beneficiaries in any way, whether by telephone, computer, e-mail, instant messaging or in person, unless:

• The beneficiary has given written permission allowing the supplier to contact him/her concerning the furnishing of a covered item;
• The supplier has furnished a covered item and is contacting the beneficiary to coordinate delivery of the item; or
• The contact concerns a covered item other than one already furnished and the supplier has furnished at least one covered item to the beneficiary within the previous 15 months.

Under the Final Rule, the supplier still is prohibited from soliciting the beneficiary by telephone unless any of the above conditions apply; however, the prohibition against other types of contact, such as e-mail, has been removed.  This change reflects CMS’s acknowledgement of the difficulties faced by DMEPOS suppliers under the more restrictive regulations.

2.  DMEPOS Suppliers, Including DMEPOS Competitive Bidding Program Contract Suppliers, May Contract with Licensed Agents to Provide DMEPOS Services Unless Prohibited by State Law.   The former regulations provided an extra layer of oversight, via state law, concerning the circumstances under which DMEPOS suppliers could subcontract out the provision of DMEPOS licensed services.  The absence of specific state laws governing certain areas of DMEPOS supplier oversight created confusion as to whether and under what circumstances a DMEPOS supplier could contract with licensed agents for the provision of certain services.  The Final Rule clarifies that if a state requires licensure to furnish certain items or services, the DMEPOS supplier must be licensed to provide the items or services and may contract with a licensed individual or other entity to provide the licensed services unless expressly prohibited by state law.

3.  CMS Will Not Enforce Compliance with Local Zoning Requirements.   Prior to April 13, 2012, the DMEPOS supplier regulations required suppliers to operate their businesses and  furnish covered supplies in compliance with all local zoning requirements.  This regulation originally was promulgated to help protect against suppliers operating DMEPOS businesses out of their homes.  Upon further review, CMS has determined that, due to the wide variance in state and local laws and the resultant difficulty of enforcement of such laws by CMS contractors, the task of ensuring compliance with local zoning requirements is best left to the states.  CMS also notes that suppliers’ compliance with state and local laws is in part accomplished by the state’s verification of the supplier’s licensure status, which the National Supplier Clearinghouse validates.

4.  Facility Minimum Square Footage Exception Applies to Non-licensed Prosthetists/Orthotists if No Licensure Under State Law.  The DMEPOS supplier standards require suppliers to maintain a physical facility of at least 200 square feet on an appropriate site.  The former regulations articulated an exception to the minimum square footage requirement for state-licensed orthotic and prosthetic personnel providing custom fabricated orthotics or prosthetics in private practice (“Exception”).  The Final Rule extends the Exception to unlicensed orthotic and prosthetic professionals if the state in which they practice does not offer licensure.  However, CMS reiterates that the Exception applies only to licensed orthotic and prosthetic professionals if the state (in which they practice) does offer licensure.

5.  Physical Therapist and Occupational Therapist Suppliers Need Not Comply with Minimum Open Hours Rule.  The DMEPOS supplier standards require suppliers to be open to the public a minimum of 30 hours per week with certain exceptions.  The former regulations stated one of the exceptions to this “minimum hours” requirement was for certain “licensed non-physician practitioners” furnishing items to their own patients as part of the provision of professional services.  The Final Rule clarifies that the “minimum hours” requirement for this particular exception specifically applies only to physical and occupational therapists.  The exceptions for physicians and the DMEPOS supplier working in custom orthotics and prosthetics remain otherwise unchanged.

Practical Takeaways

In light of the published final rule, DMEPOS suppliers may now want to:

• Revisit their current policies and procedures regarding patient solicitation to ensure compliance with the newly revised standards.  Suppliers should consider the implementation of a process to obtain written consent for the patient to be contacted by a DMEPOS supplier, if one is not already in place.
• Review all licensed agent arrangements and opportunities to contract with licensed agents for the provision of certain permissible services.
• Stay abreast of local zoning laws to ensure continued compliance.
• For orthotic and prosthetic suppliers, verify they are in compliance with the newly revised minimum square footage requirement.
• Revisit hours of operation to ensure compliance with the newly revised “minimum hours” requirement.

The Final Rule can be found here and became effective April 13, 2012.

If you have any questions or would like additional information about this topic, please contact:

• Adele Merenstein at 317.752.4427 or amerenst@hallrender.com;
• Kendra Conover at 317.977.1456 or kconover@hallrender.com; or
• Your regular Hall Render attorney.

“In view of the DC Circuit’s order, and in light of the strong interest in the uniform implementation and administration of agency rules, regional offices will not implement the rule pending the resolution of the issues before the court.”

Now private employers can feel confident that they face no legal jeopardy by not posting the NLRB’s poster – at least until the court battles are over.  And that could be many months if not years in the future.

The NLRB’s full statement can be found here.

Should you have questions or require further information, please contact Stephen W. Lyman at 317.977.1422 or slyman@hallrender.com or your regular Hall Render attorney.

No Need to Post the NLRB Poster on April 30

In the meantime, since a federal appeals court has now issued an injunction, the NLRB’s rule can no longer be enforced.  That means that private employers need not post the NLRB Notice on April 30.

Reference:  National Association of Manufacturers, et al., v. NLRB, (No. 12-5068, DC Cir., April 17, 2012)

Should you have questions or require further information, please contact Stephen W. Lyman at 317.977.1422 or slyman@hallrender.com or your regular Hall Render attorney.

Question:  Is regular and dependable attendance an essential job function for a nurse?   

Answer:  Yes, it is! 

This legal answer was recently provided by the often employee-friendly 9^th Circuit Court of Appeals and is welcome good news for all employers, especially health care employers.  The Court, in answering that question, framed the issue nicely:

“Just how essential is showing up for work on a predictable basis?”

“In this case of a Neo-natal Intensive Care Unit nurse, we conclude that attendance really is essential.”

In reaching its conclusion, the Court relied heavily on past opinions of the 7^th Circuit, which is often employer-friendly.  That in itself is significant and may signal a welcome trend.  The facts of this case seem to occur all too often in health care.  Here is how the Court dealt with those facts:

A Nurse Requests to Be Exempt from Hospital’s Attendance Policy

The nurse had worked in the NICU for 11 years and, after having years of attendance problems, was finally diagnosed with fibromyalgia.  She requested an accommodation to be completely relieved from having to comply with the Hospital’s attendance policy.  That policy called for discipline after having more than five unplanned absences in a rolling 12-month period.  (The attendance policy, by the way, didn’t count FMLA, jury duty, bereavement and other approved leaves.)  For several years, the Hospital bent over backwards trying to accommodate the nurse by allowing her to call in when she was “having a bad day” and moving her shifts to avoid having to work two days in a row.  Yet when she was told her part-time job was being eliminated and that she would need to find another position in the Hospital, she made inappropriate comments to patients and then accumulated seven unplanned absences.  For that, she was fired.  She sued under the ADA and lost at the District Court and on appeal.

The Court Says That’s Not Reasonable

Here are some examples of what the 9^th Circuit had to say about her claim that the Hospital had failed to reasonably accommodate her:

• “It is a rather common sense idea…that if one is not able to be at work, one cannot be a qualified individual.”
• “Sometimes it [regular attendance] is required simply because the employee must work as a part of a team.”
• “[The employee's] job unites the trinity of requirements that make regular on-site presence necessary for regular performance: teamwork, face-to-face interaction with patients and their families, and working with medical equipment.”
• “[The employee's] regular predictable presence to perform specialized life-saving work in a hospital context was even more essential than in cases like a dock worker where workers are basically fungible with one another so that it did not matter who was doing the job on a particular day.”
• “Medical needs and emergencies – many life-threatening – do not mind the clock, let alone staff-nurse convenience.  The 24-hour hospital unit setting thus affords a particularly compelling context in which to defer to rational staffing judgments by hospital employers based on genuine necessities of hospital business.”
• “An accommodation that would allow the employee to simply miss work whenever she felt she needed to and apparently for as long as she felt she needed to as a matter of law is not reasonable.”
• “The Hospital was under no obligation to give the employee a free pass for every unplanned absence.”
• “An employer need not provide accommodations that compromise performance quality – to require a hospital to do so could, quite literally, be fatal.”

The Good Faith Interactive Process Is Still Prudent

The health care employer still needs to be careful.  Not all nurses are as crucial as an NICU nurse.  This hospital in this case did offer many accommodations through the years.  The hospital’s job descriptions specifically required strict adherence to the attendance policy and listed “attendance” and “punctuality” as essential job functions.  The bottom line is that it is always a good idea to engage in a good faith interactive process to find a reasonable accommodation if one exists.  In this case, the employee’s insistence on a complete exemption from compliance with the hospital’s attendance policy was unreasonable and her insistence on it caused a breakdown in the process and ultimately sank her case.

Reference: Samper v. Providence St. Vincent Medical Center, (No. 10-35811, 9^th Cir., April 11, 2012)

Should you have questions or require further information, please contact Stephen W. Lyman at 317.977.1422 or slyman@hallrender.com or your regular Hall Render attorney.

In nursing homes and residential facilities, PAs can now perform the following actions:

• Limit residents from engaging in certain activities when medically contraindicated and documented in the patient record, such as:
  • Participating in private and unrestricted communications with others;
  • Participating in social, religious and community groups; and
  • Sharing a room at the facility with a spouse or domestic partner.
• Authorize the initial and continuing use of chemical and physical restraints for residents.

PAs may now document disability or illness by:

• Providing a letter confirming the illness or disability of an individual to allow the individual to appear via telephone to object to a property tax valuation.
• Providing documentation certifying health information for an individual applying for state subsidies for health insurance.

PAs may provide medical opinions regarding an individual’s risk to public health and safety by:

• Reporting a patient to the Department of Transportation without the informed consent of the individual if the patient’s condition impairs his/her control over a motor vehicle (PA will not be held civilly liable for reporting in good faith or not reporting in good faith);
• Reporting on the health of an individual obtaining or renewing an operator’s license;
• Providing examinations, care and treatment for patients required to seek an examination for infectious or communicable diseases by a health officer;
• Providing an opinion as to whether an individual has an infectious disease and whether that disease is communicable at the time of examination;
• Reporting cases of sexually transmitted diseases to the Department of Health Services and, if necessary, testify to those facts before a court; and
• Provide specimens for diagnosis of STDs to the state laboratory of hygiene.

PAs’ scope of practice is expanded to allow:

• PAs to establish and review plans for furnishing home health services to patients; and
• To provide a written referral for physical therapy services.

Finally, the Bill codifies existing practices such as the requirement for PAs to bill separately and the ability of PAs to make therapeutic alternative drug selections for their patients. The bill is available at: http://docs.legis.wisconsin.gov/2011/proposals/sb421.

If you would like further guidance, please contact:

• Robin M. Sheridan at 414.721.0469 or rsheridan@hallrender.com;
• Rachel S. Delaney at 414.721.0448 or rdelaney@hallrender.com;
• Anne M. Ruff at 414.721.0489 or aruff@hallrender.com; or
• Your regular Hall Render attorney.

What Should Employers Do Now?

With two inconsistent court decisions, the question now becomes, “What should an employer do?”  About the only thing that is clear at this time is that private employers in South Carolina need not post the NLRB poster.  For other employers, the court’s ruling will not have a direct bearing on your posting obligation – so long as a Federal Appeals Court has not ruled or issued an injunction preventing the NLRB from enforcing the rule.  At this time, an appeal is, of course, likely, and there may still be some court action prior to the April 30 posting deadline.  In the meantime, private employers should consider the risks in not posting the poster and continue to monitor legal developments as the April 30 deadline approaches.

We will continue to monitor this development and will keep you informed.

Reference:   Chamber of Commerce of the United States and South Carolina Chamber of Commerce v. NLRB, (No. 2:11-co-02516-DCN, DC SC, April 13, 2012).

Click here for a copy of the court’s decision.

Should you have questions or require further information, please contact Stephen W. Lyman at 317.977.1422 or slyman@hallrender.com or your regular Hall Render attorney.

If you have questions following the webinar or are unable to attend, please feel free to contact Jon Bumgarner at 317.977.1474 or jbumgarner@hallrender.com and/or keep an eye out for our summary, which will be published shortly after the webinar’s conclusion.

Studies indicate that most Americans have not executed documents that name a health care decision-maker or a living will declaration to express their wishes for end-of-life care. As a result, families and health care providers regularly struggle when forced to make difficult health care decisions in a crisis in the absence of guidance from the patient. These stressful moments can be eased if individuals execute advance health care directives.

National health care Decisions Day is a collaborative effort and many national organizations are participating, including AARP, American Health Lawyers Association and the American Hospital Association. Additional information about the event is available at www.nhdd.org.

If you have any questions about the event or want to discuss how Hall Render can help your organization build awareness of these important decisions, please contact Sean J. Fahey at 317.977.1472 or sfahey@hallrender.com or your regular Hall Render attorney.