Children's Hospitals and Pediatric Providers

Read the press about Judge James Gwin’s decision in United States ex rel. Barko v. Halliburton Co., No. 1:05-cv-1276 (D.D.C. Mar. 6, 2014), and you might see it as the beginning of the end for the attorney-client privilege in internal investigations. While the ultimate implications of the decision remain to be seen, that’s not how we see it.

The attorney-client privilege and the work product doctrine are alive and well, as is their application to internal investigations. The FAR clause implementing the requirement for a Code of Business Ethics and Conduct preserves the contractor’s right to conduct an internal investigation subject to the protections of the attorney-client privilege and the work product doctrine. See FAR 52.203-13 (Dec. 2008). The Justice Department’s Principles of Federal Prosecution of Business Organizations explicitly states that a company is not required to waive privilege in order to get credit for cooperating with a government investigation. “[W]aiving the attorney-client and work product protections has never been a prerequisite under the Department’s prosecution guidelines for a corporation to be viewed as cooperative.”

On March 6, 2014, the District Court for the District of Columbia issued an opinion in United States ex rel. Barko v. Halliburton Company et al. requiring Kellogg, Brown & Root Engineering Corporation (“KBR”) to produce documents originally withheld on the basis of attorney-client privilege and the work product doctrine. The Court found that the documents, which related to internal investigations of possible violations of KBR’s code of conduct, were ordinary business records created to satisfy regulatory requirements and were not created for purposes of obtaining or receiving legal advice. The Court’s decision was based on the fact that KBR’s internal investigation was required under the Federal Acquisition Regulation and internal KBR policy, and that the investigation was conducted by non-lawyers. The Court’s holding raises significant questions about existing corporate compliance and investigation programs in regulated industries, including healthcare.

In Barko, the plaintiff brought a qui tam complaint alleging that KBR employees subcontracted to certain third parties who inflated invoices for substandard work, resulting in overcharges to the government. Barko sought, in the course of discovery, documentation from the internal review performed by KBR’s Office of Business Conduct into these allegations. After an in camera review of the documents at issue, the Court determined that the documents were not protected.

New guidelines from the United States Patent and Trademark Office were issued to address recent changes in the law regarding subject matter eligibility. The guidance applies to all claims “reciting or involving laws of nature/natural principles, natural phenomena, and/or natural products.” There is no change to claims reciting abstract ideas.

This step-by-step analysis of patent…

On March 10, 2014, the parties to U.S. ex rel. Baklid-Kunz v. Halifax Hospital Medical Center et al. entered into a Settlement Agreement to the resolve the claims in the United States’ Complaint in Intervention in this matter. Under the terms of the Settlement Agreement, Halifax must pay the settlement amount of $85 million by…

A study published in the February 2014 issue of Health Affairs concludes that the use of telemedicine by nursing homes can reduce hospitalizations and generate savings for Medicare. However, there are several barriers to successful implementation, including the cost of the technology, the willingness of staff to utilize the service and traditional Medicare and Medicaid payment methodologies.

The researchers noted previous studies suggesting that the lack of on-site physicians in many nursing homes during off-hours (evenings, weekends and holidays) may be one cause of inappropriate hospitalizations. Typically, if a medical issue arises off-hours, an on-call physician is phoned by nursing home staff. The physician can then either travel to the nursing home or, more likely, recommend that the resident be transferred to a hospital emergency room. Could the availability of telemedicine prevent some of these transfers?

Eleven for-profit Massachusetts nursing homes, owned by a single company, and all dually certified to accept both Medicare and Medicaid, were studied. All were very similar in terms of resident characteristics, staffing and quality scores. The nursing home residents received their primary care through physician group practices; prior to the study, most after-hours medical services involved the nursing home staff phoning the residents’ on-call physicians. Telemedicine services were introduced in six of the eleven nursing homes, with five serving as a control group. The six nursing homes utilizing telemedicine services each received a cart with equipment for two-way videoconferencing and a high-resolution camera for wound care. A remote medical call center staffed by an RN, a nurse practitioner and a physician provided the telemedicine services (most of the nursing home residents’ treating physicians had signed over their off-hours coverage to this remote center). Before the telemedicine service was introduced in the six nursing homes, separate training sessions were held for the direct care staff and the residents’ physicians. The annual cost of the telemedicine service was $30,000.00 per facility.

Law360 recently quoted Husch Blackwell attorney Don Mizerk in an article about the FDA’s new request for comments.  In the announcement, the FDA established a public docket to receive suggestions for ways to improve the quality of abbreviated new drug applications (ANDAs) and for the FDA to learn about difficulties sponsors are having with…

On November 13 and November 18, the federal district court handed down separate rulings on summary judgment motions in a Florida Stark Law case that many consider the new Tuomey–U.S. ex rel. Baklid-Kunz v. Halifax Medical Center. In the first decision, the Court granted the U.S. partial summary judgment on the Stark violation with respect to compensation paid to certain medical oncologists employed by the hospital. In the second decision, the Court denied the hospital’s motion for summary judgment with respect to certain neurosurgeons employed by the hospital. Both decisions tee up important hospital/physician employment issues for trial.

The case stems from a qui tam False Claims Act lawsuit filed in 2009 in which Elin Baklid-Kunz, the former compliance officer, made allegations regarding Halifax Hospital Medical Center (“Halifax Hospital”) and Halifax Staffing, Inc. (“Halifax Staffing”) (collectively, “Halifax”). The compliance officer alleged that Halifax:

  1. Had financial relationships with physicians that did not meet a Stark exception, and as a result the physicians inappropriately referred Medicare services to Halifax; and
  2. Inappropriately billed other services to Medicare.

The Department of Justice chose to intervene in the lawsuit in 2011 with respect to the Stark Law issues. Halifax filed a Motion for Summary Judgment and the U.S. filed a Motion for Partial Summary Judgment with respect to the Stark Law issues.

Ruling on the Government’s Motion for Partial Summary Judgment

Two different compensation arrangements were the subject of these decisions. In the first decision, the Court considered the Government’s motion for partial summary judgment with respect to compensation paid to the medical oncologist employed by Halifax and the resulting designated health service referrals from those physicians. The alleged Stark violations were the result of employment agreements entered into with six medical oncologists in 2005 that provided for an incentive bonus pool equal to 15% of the “operating margin for the Medial Oncology program” of the Hospital. Even though the physicians were permitted to divide that pool among themselves as they determined, which they did based on individual production, the Hospital admitted that the pool included revenue from services that were not personally performed by the medical oncologists, such as fees related to the administration of chemotherapy.

New research shows that hospitals with higher nursing levels have fewer readmissions and lower penalties for excessive readmission rates.  A new study, which appeared in the October issue of Health Affairs, found that hospitals with higher staffing levels had a 25 percent lower chance of being penalized for readmission rates when compared to hospitals with lower staffing levels.…

Pursuant to the Affordable Care Act, the Centers for Medicare and Medicaid Services recently adopted a final rule implementing $1.1 billion in cuts to the Medicaid disproportionate share hospital (DSH) program in 2014 and 2015.  The new rule reduces Medicaid DSH payments by $500 million in 2014 and $600 million in 2015.　

There are several…