Physician Practices

Physician Practice: Are Physician Non-Compete Agreements Enforceable?

January 16, 2015 | Little Health Law

Hospital employment among doctors is increasing. According to Jackson Health’s 2014 Survey, the trend of physician employment is gaining speed. Rapid changes in health care industry fueled by the Affordable Care Act, more insured patients and increasing demands on doctors, decreasing reimbursement, and the growing cost and headaches of owning and running a medical practice are causing more and more doctors to view employment as a preferred career option.

Atlanta and Augusta, Georgia Business and Health Care Law Firm
Inevitably, the termination of some physician employment relationships will trigger issues and some disputes under non-compete agreements contained in physician employment contracts. Although non-competition agreements are not in every physician employment contract, most have them. Many physicians who decide to accept employment are unable to avoid signing a non-compete agreement.

For a hospital or other health care business that employs a physician, the essential advantage of a non-compete agreement is self-evident. The business can expand its medical practice with less risk that a new doctor seeking to build a patient base will depart employment with a large patient base. For the doctor, the disadvantage of a non-compete agreement is that it can limit, often severely, job or career options when the employment relationship ends.

But is a physician non-compete agreement enforceable?

A question for every non-compete agreement is whether it is legally enforceable. While typically enforceable during employment (“moonlighting”), often the legality of physician non-compete agreements prohibiting activities after employment can be challenged. Whether a physician non-compete is legally enforceable is a matter of state law. Some states have statutes that render physician non-compete agreements illegal or severely curtail them (including, Alabama, California, Colorado, North Dakota, South Dakota, Louisiana and Montana). Most states do not have such statutes; but instead state common law dictates the parameters of a legal non-compete agreement. In those states, answering the question “is it enforceable?” is not really possible with any certainty before a non-compete agreement is reviewed by a court.
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Physician Practice: The 2014 Physicians Compensation Survey

November 29, 2014 | Little Health Law

Physician compensation as a whole has continued to stagnate during 2014, according to Physician Practice’s 2014 Physician Compensation Survey. As compensation models morph and develop with the new emphasis upon value-based care, it remains to be seen how physician compensation will change in the coming years. This very important healthcare industry issue affects all of us. It also involves interesting irony in the enactment and implementation of the Affordable Care Act, touted by proponents as geared to improve patient “access” to health care (or “coverage” under an insurance plan), yet perpetuating (according to the analysis of some opponents) pressures that contribute to the current primary care physician shortage by increasing the administrative frustrations of practicing medicine and creating strong downward pressure on reimbursement.

Atlanta/Augusta Georgia Business and Health Care Law Firm

The challenging business and regulatory environment for doctors continues to drive physician consideration of employment by hospital systems. A recent report by Merritt Hawkins found that over 90% of new physician job openings will “feature employment by hospitals, medical groups, community health centers or other healthcare facilities” which “signal[s] the continued decline of physician private practice. Many physicians, though still preferring independence (see our blog November 25, 2014 post), continue to perceive employment opportunities as a way to reduce financial risks and soften the harsh requirements of a complex, regulatory business environment for the delivery of their services.
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Physician Practices: The Independent Physician Outlook Survey

November 25, 2014 | Little Health Law

The recently released 2015 Independent Physician Outlook Survey, entitled “Threats to Independence,” explores the state of independence in the medical field from the physician perspective. The survey covers an array of topics and was conducted and prepared by ProCare Systems, a medical practice management consultant company. The healthcare industry is the focus of our Atlanta/Augusta, Georgia business law firm.

In many business industries, the choice to be big versus small involves consideration of competing pros and cons. The healthcare industry is no exception. Physicians, as highly educated professionals, tend to be independent by nature and prefer to call their own shots. Yet the current regulatory and business environment for physicians makes independence more challenging than ever for many doctors. For some time, the healthcare industry has seen a trend toward value- and outcomes-based healthcare delivery models with many new administrative challenges and continuing downward pressures on reimbursement, necessarily involving many changes for physicians. The economic and regulatory pressures of healthcare reform are perpetuating frustration and financial strain for physician practices, pushing many doctors toward employment by larger health care systems. However, the ProCare report also shows that most doctors nonetheless continue to prefer independence and that many opportunities to reclaim independence will exist for smaller physician practices with agility and a greater ability to be innovative and efficient in the evolving regulatory environment.
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Health Care Fraud Report: DOJ Obtains $389M From DaVita Healthcare to Settle Medical Fraud Allegations

October 28, 2014 | Little Health Law

The Department of Justice (DOJ) announced on October 22, 2014 a resolution of claims that DaVita Healthcare Partners, Inc., a provider of dialysis services, engaged in a referral and kickback scheme that violated the False Claims Act (FCA). The DOJ announced that DaVita has agreed to pay $350 million to settle the government’s case. The Government’s case was not proven and was only alleged. Liability was not determined prior to the settlement and DaVita has not been shown to have engaged in wrong doing. Our Atlanta and Augusta, Georgia business and health care law firm represents health care providers and businesses and helps them avoid legal pitfalls.
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Blowing the Whistle in Court

October 21, 2014 | Little Health Law

The vast majority of physicians and other health care providers endeavor to provide services and bill for them in an ethical, legal manner. Trust is at the core of the federal government’s provider reimbursement scheme under Medicare and other federal health programs. The federal government relies upon health care providers submitting accurate and truthful claims. The fact that some health care providers have exploited federal health programs for illegal economic gain has resulted in laws intended to combat fraud and abuse, improve patient care and protect tax payer money. Currently, there is a strong push in federal law enforcement to aggressively enforce federal fraud and abuse laws.¹

The Federal False Claims Act (FCA)² makes it illegal for health care providers to submit claims for payment to Medicare that the provider knows, or should know, are false or fraudulent. The FCA contains a whistleblower provision that authorizes a private citizen or “relator” to file a lawsuit on behalf of the federal government, and entitles relators to a percentage of any recovery. FCA whistleblower cases often assert violations of other federal fraud and abuse laws, such as the Anti-Kickback Statute (AKS),³ the Physician Self-Referral Law (Stark Law),⁴ the Exclusion Authorities,⁵ and the Civil Monetary Penalties Law (CMPL).⁶

For relators, “blowing the whistle” becomes more than an abstract notion when it comes time to “plead,” or state, the claim in court. Assuming a claim has legal merit, getting it right in court is what determines success or failure. Following the law in reporting alleged wrongdoing is essential, including procedural law dictating how to properly plead a case. Rule 9(b) of the Federal Rules of Civil Procedure requires that “[t]he whistle must be blown not only loudly, but with Rule 9(b) particularity in the Complaint before the courts will listen.”⁷ The concept of “particularity” is important to a federal whistleblower’s opportunity for success. This means is that a whistleblower complaint must state “facts as to time, place, and substance” of the alleged wrongdoing, and that “an actual false claim for payment [was] made to the Government.”⁸
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Michigan Bill Would Benefit Direct Primary Care Doctors

September 30, 2014 | Little Health Law

A Michigan legislator’s bill, SB 1033, sponsored by Senator Patrick Colbeck, would benefit direct primary care doctors in that State, and the idea may warrant consideration in other States. The purpose of the bill is to provide physicians who convert their practice to a direct primary care model with the assurance that their medical practice will not be treated as an insurer regulated under state insurance regulations.

Atlanta and Augusta, Georgia Physician Practice Law Firm

Among other legal hurdles some physicians may face in developing a direct primary (or concierge) care practice model is avoiding the creation of an insurance product. This can be a central legal issue for such practices. A distinguishing feature of the direct primary care model is that the patient, sometimes referred to as a “member” or “enrollee,” receives medical care without paying anything other than a predetermined periodic fee, sometimes referred to as a “medical retainer.” The theory behind the insurance issue is that by accepting a set, predetermined fee in advance of the medical services, the physician or medical practice is, in effect, underwriting an insurance risk. The consequences of a state insurance regulator determining that a medical practice is operating as an insurance company can be severe.

Senator Colbeck’s bill is intended to avoid such problems in Michigan. The bill provides, in part, as follows:

(1) A medical retainer agreement is not insurance and is not subject to this act. Entering into a medical retainer agreement is not the business of insurance and is not subject to this act.
(2) A health care provider or agent of a health care provider is not required to obtain a certificate of authority or license under this act to market, sell, or offer to sell a medical retainer agreement.
(3) To be considered a medical retainer agreement for the purposes of this section, the agreement must meet all of the following requirements:

(a) Be in writing.
(b) Be signed by the health care provider or agent of the health care provider and the individual patient or his or her legal representative.
(c) Allow either party to terminate the agreement on written notice to the other party.
(d) Describe the specific routine health care services that are included in the agreement.
(e) Specify the fee for the agreement.
(f) Specify the period of time under the agreement.
(g) Prominently state in writing that the agreement is not health insurance.
(h) Prohibit the health care provider, but not the patient, from billing an insurer or other third party payer for the services provided under the agreement.

Physician Practices: Recent Survey Reviews the Effects of Expanded Patient Access

September 24, 2014 | Little Health Law

A well-intended objective of the Affordable Care Act (ACA) is to improve patient access to doctors. Sometimes this objective is artfully stated as “better” access to care, rather than “increased” access to care, perhaps to acknowledge the reality that as more patients become insured via the ACA, there may actually be less access to physicians. “Better” access may therefore be an argument that, even as an existing physician shortage worsens, new alternatives under the ACA nonetheless improve access to care for the population as a whole. For sure, millions of Americans have enrolled in new insurance coverage via the ACA health insurance exchanges. In any event, whether it will be easier for most Americans to actually see a doctor remains to be seen according to a recent national survey.

The survey, by The Physicians Foundation, concluded that patients are likely to face increased difficulties in finding true access to care if current health care reform trends continue. More than 20,000 doctors nationwide were surveyed by the Foundation, and its findings are detailed and compelling. Among other things, the survey indicates that: 81 percent of doctors believe they are over-extended or at full capacity; only 19 percent of doctors think they have time to see additional patients; and 44 percent of doctors are now planning steps that would reduce patient access to their services (e.g., cutting back on patients seen, retiring, going part-time, closing their practice).
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Health Care Fraud Report: OIG Alert Regarding Laboratory Payments to Referring Physicians

September 16, 2014 | Little Health Law

Clinical laboratory payments to physicians in excess of the fair market value of services provided or that correlate to the volume or value of referrals can constitute health care fraud and trigger very serious civil and criminal penalties. The Department of Health and Human Services’ Office of Inspector General (OIG) recently issued a Special Fraud Alert (the “Alert”) addressing lab compensation to referring doctors and medical practices for blood specimen collection, processing and packaging, and for submitting patient data to a registry or database. Our Georgia health care law firm endeavors to follow updates in health care laws and regulations that impact providers, particularly Stark law and the federal Anti-Kickback Statute (AKS). This OIG Alert warrants caution and careful evaluation of any applicable financial arrangements by affected physicians and medical practices to ensure compliance with federal law.

Labs and physicians: BEWARE of Stark Law and the Anti-Kickback Statute
At the heart of Stark Law and the AKS is the notion that (unlike most other industries) health care business referrals may, under some circumstances, be a bad thing. Kickbacks that corrupt medical judgment about the medical necessity of services, result in the overutilization of medical products and services, increase the cost of federal programs, or that cause unfair competition, are of great interest to the Federal Government and are the intended targets of Stark Law and the AKS.

The AKS, unlike Stark, is a criminal statute, a violation of which requires evidence of criminal intent. However, the OIG may find evidence of such intent even by mere characteristics of a particular financial arrangement, including legal structure, the absence of safeguards, and, of course, actual conduct of the parties regarding the arrangement.
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Health Care Fraud Report: Recent Federal Indictment of Cardiologist for Alleged Overbilling of Medicare

August 23, 2014 | Little Health Law

On August 21, 2014, the United States Attorney for the Northern District of Ohio, Stephen D. Dettelbach, together with representatives of the FBI and OIG, announced the indictment of a Westlake, Ohio Cardiologist for alleged health care fraud. The cardiologist is alleged to have overbilled Medicare and private insurers by approximately $7.2 million. About $1.5 million of the alleged overbillings was actually paid.

Alleged Medicare Fraud

The indictment alleges that Dr. Harold Persaud, board certified in internal medicine and cardiovascular disease, maintained a private medical practice in Westlake and had hospital privileges at St. John’s Medical Center, Fairview Hospital, and Southwest General Hospital, and used inaccurate coding to obtain reimbursement for services more costly than what was actually performed, performed medical tests that were not medically necessary, falsely recorded the existence and extent of blockage shown by cardiac catheterizations, recorded false symptoms to justify tests and procedures, and inserted stents on patients who did not have 70% or more blockage. An indictment is a charge, not evidence, and a defendant is entitled to defend himself and require the government to prove its case.

The indictment further alleges that Dr. Persaud ordered or performed other procedures that were not medically necessary, including aortograms and renal angiograms and placing a stent in an artery of one patient who had a functioning bypass, endangering the patient’s life.

In 2012, during a federal investigation relating to the subject matter of the indictment, the FBI seized numerous financial, patient and medical records and documents from Dr. Persaud’s office, according to reporting by Cleveland.com. On August 30, 2012, St. John Medical Center reported that it sent letters of apology to 23 patients, informing them that stents placed in their hearts by Dr. Persaud may not have been medically necessary, and that the hospital would pay for follow-up visits with a cardiologist of their choice. Dr. Persaud was an independent cardiologist not employed by the hospital. The hospital’s internal investigation, which led to the federal investigation, began when staff members in its cardiac catheterization lab informed the hospital’s cardiology department that Dr. Persaud’s methodology respecting stent procedures varied from protocol followed by other doctors.
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Medicare Issues for Direct Pay and Concierge Practices

August 14, 2014 | Little Health Law

The strain of health care reform and third-party-payer bureaucracy will likely continue to push physicians towards non-traditional business models for practicing medicine. This is especially true for non-specialists. As the trend of physicians to find viable practice model alternatives grows, it is widely expected that the number of direct pay and concierge physician practices will increase significantly.

Atlanta Medical Practice and Health Care Law Firm

Our health care law practice is particularly interested in direct pay and concierge medicine legal issues. While the particulars may vary, the typical concepts upon which such medical practices are built are fixed, affordable fees for patient “membership” in the direct pay/concierge program, 24/7 access to a physician, much more time and involvement in the physician-patient relationship, better preventive care and planning, and a more rewarding professional life for the physician without (or with reduced) headaches of a third party payer medical practice.

The legal and business issues raised by setting up such a practice, however, are important and must be carefully evaluated. For example, one such issue is whether the details of a particular direct pay or concierge model violate Medicare billing rules. The federal laws that govern Medicare patients and federal reimbursement can make it very risky for concierge practices to charge Medicare beneficiaries retainer fees for certain medical services. Medicare billing rules have heavy consequences for double billing of a Medicare covered procedure. The setup of the concierge practice model has the potential to trigger this issue, and some practitioners may be better off opting out of Medicare entirely. However, physicians also have the option of accepting or not accepting assignment, with their choice affecting who they bill for their services. Physicians accepting assignment will bill Medicare directly, while those not accepting assignment bill the patient, who in turn seeks reimbursement from Medicare.
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