The Medical Staff and Fraud?

Vol. 10 No. 11

AuthorAuthorIn a series of events that read somewhat like a tabloid article gone bad, in March 2011, Excela Health Westmoreland Hospital (“Hospital”) in Pennsylvania sent letters to 141 of its patients informing them that they “may have received” coronary stents that were medically unnecessary.1 The letters were followed by a press release the Hospital issued that disclosed the results of peer review audits and identified the two physicians involved and by a press conference during which the Hospital’s chief executive officer (“CEO”) and chief medical officer (“CMO”) publicly apologized for the reportedly excessive procedures. Several months later, the Hospital sent letters to 51 additional patients informing them that their stent procedures performed by the two physicians in 2009 were potentially medically unnecessary.2

The Background

The Hospital’s actions were based on an external peer review of all of the coronary stent procedures performed in 2010 by two of its medical staff members, Ehab F. Morcos, M.D., and George M. Bou Samra, M.D., following complaints that the two physicians were performing too many stent procedures.3 The physicians voluntarily resigned their medical staff privileges at the Hospital on January 12, 2011 rather than submit to a voluntary thirty day suspension of privileges.4 In addition to the external peer review, the Hospital further justified its actions based on data from the Pennsylvania Healthcare Cost Containment Council that showed that the number of multi-stent procedures at the Hospital was significantly higher than other providers in the area.5  The Hospital’s CEO has touted the institution’s commitment to transparency in its handling of this situation, stating, “Excela Health is committed to being transparent with our patients, even when the information is less than favorable.”6

The Fallout

The complete consequences of the Hospital’s public candor is not yet known. However, the Hospital’s decision to “name names” in the press release and press conference to “protect the reputations of the physicians who were not implicated” predictably drew lawsuits by the two physicians, which are currently pending in Pennsylvania state court.7 Drs. Morcos and Bou Samra filed lawsuits against the Hospital, its CMO and CEO, the two external auditors, and a competing cardiology practice owned by the Hospital’s parent company and one of its physicians.8 In the litigation, the doctors have asserted claims for defamation, breach of contract, negligence, and interference with contractual relations.9 More specifically, Dr. Bou Samra alleged that the Hospital experienced the increase in cardiac stent procedures and associated revenues because of the two physicians’ skills, reputation, patient outcomes, and work ethic – not because the doctors performed medically unnecessary procedures.10 Dr. Morcos further asserted that the external peer reviews of their cases were conducted quickly and without the benefit of all of the information necessary for fair and accurate results.11 The lawsuits between the physicians and the hospital have been consolidated into one suit that is currently in the discovery phase of litigation.  The Hospital has responded to the litigation by denying liability and filing counterclaims for unjust enrichment and indemnification.12

Moreover, at least 115 patients have filed medical malpractice actions against the physicians, their private practice, and the Hospital.13 The patients additionally have claimed corporate negligence, lack of informed consent, fraud, and violations of Pennsylvania’s Unfair Trade Practices and Consumer Protection Law.14  Reportedly, no settlement discussions have taken place in any of those cases and they remain pending.15

Further, the Hospital executed a settlement agreement with the U.S. Attorney’s Office in Pittsburgh in which the Hospital agreed to repay the Medicare program nearly $2 million for unnecessary cardiac stent procedures performed at its facility between 2009 and 2011.16 The settlement followed the Hospital’s voluntary self-disclosure of the reportedly medically unnecessary procedures to the U.S. Department of Health and Human Services.17

Response from Pennsylvania Medical Society and American Medical Association 

In light of the significant implications of the Hospital’s actions for physicians and medical staffs, the Organized Medical Staff Section (“OMSS”) Assembly of the American Medical Association, upon recommendation by the Pennsylvania Medical Society, adopted a resolution at its 2012 Annual Meeting that instructs the OMSS Governing Council to “study the process by which hospital billing compliance audits are conducted and recommend appropriate policy on key matters of concerns to physicians….”  The resolution, Resolution 6-A-12, further instructs the Governing Council to consider the involvement of the hospital medical staff in the audit process and the application of due process protections for affected physicians before the hospital discloses audit results to any patient, payor, or the public. The resolution also tasks the Governing Council with developing model medical staff bylaw language to implement the recommended policy that the group develops.  That model staff bylaw language is expected in 2014.

Implications for Medical Staffs

In the interim, medical staffs and physicians alike should consider the implications of the Hospital’s somewhat unusual candor and the consequences in this Pennsylvania case for their own practice and their role (and role of their legal counsel) in compliance audits. This case is an important example of one of the many manifestations of current tension surrounding clinical issues remaining within the purview of the medical staff. Specifically, although every hospital is required to maintain a compliance plan to ensure that, among other things, its coding and billing for services provided at the hospital are correct,  medical staff bylaws should ultimately require that medical staffs have input and authority over clinical care aspects of compliance (such as medical necessity).  

The medical staff bylaws should secure this input and authority. For example, while the hospital’s compliance plan may identify a compliance committee to implement and monitor its compliance program, membership on that committee should include at least one physician member of the medical staff who is not employed by the hospital. The medical staff bylaws and the compliance program may also mandate that if a compliance issue arises, any issues regarding the necessity, quality, or safety of medical care provided should involve the medical staff peer review and the medical staff bylaws’ due process procedures and protections – no matter when those issues come to light. The medical staff bylaws may identify an existing or ad hoc review committee with component representation for conducting compliance-related audits assigned to the medical staff. Ultimately, no corrective action should be taken against any member of the organized medical staff without following the due process procedures outlined in the medical staff bylaws. Hospital administrators should not be able to bypass the safeguards and due process protections within the medical staff bylaws in the name of transparency, and medical staffs should be proactive to ensure that no corrective action or disclosure pertaining to the quality or appropriateness of a physician’s medical treatment occurs without due process afforded by the medical staff bylaws. Likewise, hospitals should not disclose the results of billing compliance audits with patients or the public until the due process measures contained in the medical staff bylaws have been completely followed – if ever, particularly in light of the fact that the U.S. Attorney’s Office already has in place measures for patient notification. These considerations are just a few of those that must be contemplated for the medical staff bylaws.

Role of legal counsel

This case also highlights the importance and role of independent counsel for the medical staff to be retained by the medical staff. (As funding is almost always an issue, keep in mind the resources created by medical staff dues and other reserves.) Typically, either in-house or external hospital counsel will be involved in the activities of the hospital’s compliance committee. However, the medical staff may be well-served to utilize its own counsel to protect otherwise confidential communications or information from unwanted disclosure.

As a matter of law, special legal rights or “privileges” protect some communications and materials from unwanted disclosure. The attorney-client privilege protects the confidentiality of communications between an attorney and his or her client for the purpose of giving legal advice provided that the communications are not overheard or shared with someone outside of the attorney-client relationship.18 

To the extent the medical staff or its committees involve their independent counsel during the audit process, the attorney-client privilege may be utilized to protect internal confidential communications between the attorney and the medical staff or medical staff committee(s).

Also, if the medical staff needs to involve independent clinical review, that reviewer may be hired through the medical staff’s counsel to preserve the privilege of the client’s confidential conversations with the agents.

Similarly, to the extent the outside reviewer may generate any written review in anticipation of litigation – such as a government prosecution or disputed demand for repayment – the work-product privilege may be used to protect this material (and all written materials that an attorney collects and prepares in anticipation of litigation).

Finally, the joint defense or common interest privilege protects confidential communications made between two parties’ respective attorneys when the communications pertain to the defense of both parties or if the parties have a common interest. For example, confidential communications between a physician or the medical staff and hospital’s counsel may be privileged if the interests of the parties are aligned. Any materials that may be protected by any of these privileges clearly should be labeled “confidential” and treated as such.

Conclusion

Healthcare fraud and abuse detection is a well-funded priority for the Department of Health and Human Services and related agencies with significant civil and criminal risks for the parties involved. With compliance activities at an all-time high due to increased enforcement, as the Excela Health matter demonstrates, medical staff involvement should be anticipated and appropriately structured. Protections afforded by medical staff bylaws and independent counsel are extremely important in this process.

This article is intended for informational purposes and should not be utilized as legal advice. For more information, contact Ms. Welch or Mr. Burnette with the Healthcare, Life Sciences & Technology Practice at Kilpatrick Townsend & Stockton LLP at swelch@kilpatricktownsend.com and jburnette@kilpatricktownsend.com.

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1

Gamble, Molly, Excela Health Hasn’t Discussed Settlements for 115 Overstenting Lawsuits, Lawyers Say (March 19, 2013), http://www.beckershospitalreview.com/legal-regulatory-issues/excela-health-hasnt-discussed-settlements-for-115-overstenting-lawsuits-lawyers-say.html.

2

Cholodofsky, Rich, No Talks Held to Settle Excela Health Stent Lawsuits Lawyer Says (March 19, 2013), http://triblive.com/news/westmoreland/3682980-74/excela-patients-health#axzz2n5isWUpd.  A similar case arose in Maryland in 2010 when St. Joseph Medical Center informed hundreds of patients that their heart stent procedures may not have been necessary.  A medical practice suit against the doctor at the center of the Maryland controversy, Dr. Mark. G. Midei, ended in a mistrial when the jury could not agree on damages.  In May 2013 a settlement was reached on behalf of 247 patients, and in April 2014 it was announced that 273 plaintiffs in a class action lawsuit against St. Joseph have the opportunity to share $37 million in settlement funds.  Dozens of lawsuits remain pending.  Duncan, Inan, $37 Million Settlement Deal Reached in Midei Stent Case (Apr. 7, 2014), http://articles.baltimoresun.com/2014-04-07/news/bs-md-stent-settlement-20140407_1_midei-glenn-weinberg-unnecessary-heart-stent-procedures.

3

Mamula, Kris B., How Excela Health Handled the Heart Stent Crisis (March 18, 2011), http://www.bizjournals.com/pittsburgh/print-edition/2011/03/18/excela-health-handled-heart-stent-crisis.html.

4

Id.

5Fabrigas, Luis, Westmoreland Hospital Fourth in Stent Volume, (May 1, 2011), http://triblive.com/x/pittsburghtrib/news/health/s_734869.html?printerfriendly=true#axzz2nHHEVq7h.  The Pennsylvania Healthcare Cost Containment Council is an independent state agency that focuses on the problem of increasing healthcare costs, safeguarding the quality of healthcare, and improving access to care for all citizens independent of their ability to pay.  See http://www.phc4.org/. 
6

Westmoreland Judge to Review Status of Stent Suits, Tribune-Review (March 5, 2013), http://triblive.com/news/westmoreland/3579446-74/excela-health-patients#axzz2nHHEVq7h.

7

Id.

8

Bou Samra v. Excela Health et al., No. GD-12-3929 (Ct. Comm. Pl., Allegheny County March 1, 2012); Morcos v. Excela Health et al., No. GD-12-003941 ((Ct. Comm. Pl., Allegheny County March 1, 2012).

9

Id.

10

Bou Samra, No. GD-12-003929 at ¶45.

11

Morcos, No. GD-12-003941 at ¶117.

12

Bou Samra v. Excela Health et al., No. GD-12-3929 (Ct. Comm. Pl., Allegheny County March 1, 2012); Morcos v. Excela Health et al., No. GD-12-003941 ((Ct. Comm. Pl., Allegheny County March 1, 2012), Answer filed on behalf of Excela Health, et al., Dkt. 23, pp. 22-29.

13

Supra note 1.

14

Brittain, Chuck, 2 Doctors Sue Excela, Claim Defamation (March 2, 2012), http://triblive.com/x/pittsburghtrib/news/westmoreland/s_784464.html#axzz2nHHEVq7h.

15

Supra note 1.

16

U.S. Attorney’s Office in Pittsburgh Press Release, U.S. Attorney’s Office Collects $13.1 Million in Civil and Criminal Actions in FY 2012 (Dec. 6, 2012), http://www.justice.gov/usao/paw/news/2012/2012_december/2012_12_06_01.html.

17

Caramenico, Alicia, Health System Pays $2M to Settle Unnecessary Stenting Claims (Dec. 10, 2012), http://www.fiercehealthcare.com/story/excela-health-system-paid-2m-settle-unnecessary-stenting-claims/2012-12-10.

18

Upjohn Co. v. United States, 449 U. S. 383, 389 (1981).

 

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