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Department of Justice kickback settlement: How will it affect you?
Here is a test to help define legal and illegal practices when dealing with industry representatives in your personal/professional life.
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by Lawrence H. Brenner, JD and B. Sonny Bal, MD, MBAIntroduction
I am pleased to announce our new monthly column, Orthopedic Medical Legal Advisor, Orthopedics Today’s latest effort to track all the practical aspects of our profession.
Written and edited by B. Sonny Bal, MD, MBA, an orthopedic surgeon, and Lawrence H. Brenner, JD, a health care attorney and member of the clinical/adjunct faculty at Yale University, the column will answer crucial legal questions confronting orthopedic surgeons in today’s litigious world.
The column will take a pragmatic look at how the legal profession directly affects our practices and patient care from a surgeon’s point of view. It will offer clear and educational examples that analyze real-world cases illustrating how our colleagues have handled key legal challenges. The editors previously introduced this concept of orthopedic-related legal analysis, and it has appeared in various venues.
As it becomes part of Orthopedics Today, Dr. Bal notes that this column is committed “To examining and probing this critical intersection where law and medicine meet, with the goal of educating orthopedic surgeons.”
Some of the concepts covered here, such as the nature of informed consent and the definition of standard of care, are rarely addressed in residency training programs; instead, we are expected to learn as we go through our careers.
This column will encourage physician behaviors that reduce exposure to negligence claims and provide practical legal insights that foster the safe practice of orthopedic surgery.
We welcome the new Orthopedics Today regular contributors. Thank you for sharing an ongoing area of your expertise with us.
Douglas W. Jackson, MD
Chief Medical Editor
OMLA Co-Editors
The orthopedic world changed when the U.S. Department of Justice (DOJ) recently announced unprecedented fines, monitoring and deferred prosecution against five leading orthopedic implant manufacturers. To some, these actions represent the final chapter in the government’s investigation of the industry. Others believe that many unanswered question remain. What will the new compliance standards comprise? How will orthopedic implant companies compete in the future? Will the monitors apply uniform standards to all market players? Will civil suits by patients follow shortly, including class action suits alleging fraud and, if so, could these have a devastating impact on the orthopedic industry?
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The actions taken by the DOJ are not surprising. The federal government has aggressively prosecuted health care fraud and abuse for more than a decade. These prosecutions were initiated under the Clinton administration DOJ, where health fraud prosecutions became a top priority in the same category as violent crime. The National Law Journal described the enforcement numbers as “staggering.” Most recently, the emphasis shifted to include medical device manufacturers. In 2004, the Office of Inspector General chief counsel declared, “Executives in the medical device industry can expect even more actions within a year to 18 months as the workload from pharmaceutical investigations winds down.”
The increase in prosecutions for health care business practices reflects an inherent tension that is inevitable when health care is paid by the government and delivered in a free market economy. The fraud and abuse laws, including the anti-kickback laws, are designed to curb health care costs by discouraging conflicts of interest and illicit profit motives. These laws have targeted certain business practices in medicine, making them unlawful and exposing practitioners and corporations to criminal liability.
Ethical conflicts
The ethical conflicts inherent in nearly every level of medical decision making are well recognized. For example, surgeons have an inherent conflict of interest when recommending elective surgery, since it is a revenue-producing activity in most cases. Commentators such as Lynn Payor in her book Disease Mongers, and Norton Hadler, MD, in The Last Well Patient, focus on the many opportunities in medicine to manipulate information as a means to increase profit. The decision to criminalize a limited number of business activities in medicine probably reflects the fact that some practices are perceived as conspicuously distasteful and have repeatedly shown to lead to overutilization and to compromise clinical decisions. Thus, referral fees and lavish entertainment may be acceptable in other industries, but in medicine, these same practices may seem unsavory.
Medicine and profit can, of course, coexist. As the Vanderbilt Law Review noted: “The anti-kickback law is fundamentally opposed to the idea of medicine as a for-profit industry. It simply does not recognize the possibility that health care providers can be financially motivated and still provide quality care.” Similar views were expressed by Thomas Stossel in Free the Scientist!: Conflict-Of-Interest Rules Purport to Cure a Problem That Doesn’t Exist – And Stifling Medical Progress, as well as the Washington Post article titled; “What’s wrong with money in science?” On the other hand, many articles have condemned the practice of providing elaborate gifts or consulting fees in medicine. These include “Physicians and the pharmaceutical industry: Is a gift ever just a gift?” “Health industry practices that create conflicts of interest” and “A social science perspective on gifts to physicians from industry” that appeared in The Journal of the American Medical Association.
No division
Unfortunately, there is no clear dividing line between the medical business activities that should be treated as civil disputes and the business practices that escalate to criminal prosecutions. As a Vanderbilt Law Review article stated: “The anti-kickback statues have the undesirable effect of blurring the line between tort (civil) law and criminal law ... seek(ing) to punish behavior that society recognizes as fundamentally wrong. Tort law, in contrast, strives to ‘price’ behavior by weighing its social value against the harm it produces. Criminalization of conduct that should be priced ... will ultimately dilute the power to effect social control.”
The authors suggested that the anti-kickback statues only be applied to behavior that society recognizes as fundamentally corrupt. In analyzing the limited number of appellate cases that attempted to define the core behavior that should be punished, the authors concluded, “The anti-kickback statutes should require intent beyond the mere intent to give and receive remuneration in exchange for receiving or providing patient referrals. Neither of these exchanges is in itself evidence of a guilty mind.”
The Vanderbilt Law Review article may be a meaningful starting point in defining legal vs. illegal business practices in the orthopedic industry. The authors concluded that the standard should be: Did the health care provider act with a corrupt purpose? In the Journal of Law and Policy, Jeffrey Schwartz applied similar criteria when he stated that illegal health care business conduct should be based upon examining the business transaction to determine whether or not it was a “sham transaction.” He noted, “An old proverb states: ‘Truth stands the test of time, but lies are soon exposed.’ The fraudulent actions of health care professionals are largely responsible for increases in health care costs ... although governmental efforts prevent some abuses; many lawbreakers have circumvented existing controls by creating transactions capable of disguising Medicare fraud.”
Orthopedic Medical Legal Advisor’s regulatory compliance editor Neil B. Caeser, JD, has suggested two other criteria for criminal liability. These are: Will the remuneration influence surgical behavior, and would you tell your patients about the transaction or remuneration.
Next month in Orthopedic Medical Legal Advisor: What constitutes fair market value?
For more information:
- B. Sonny Bal, MD, MBA, is associate professor of hip and knee replacement at the Department of Orthopaedic Surgery, University of Missouri School of Medicine.
- Lawrence H. Brenner, JD, is on the faculties of orthopedics at Yale University and the University of Southern California and practices in Chapel Hill, N.C. Address all correspondence to Brenner at lb@lawrencebrennerlaw.com.