Physician Law : Pennsylvania Health Law Lawyer & Attorney : Fox Rothschild LLP : serving Philadelphia, Pittsburgh, Allentown, Erie, Upper Darby Twp

The 7^th Circuit Court of Appeals recently issued a decision of interest to physicians and teaching hospitals. It concerns the method of rotating teaching physicians between multiple surgeries and billing Medicare for those services.  

The case involves so-called "qui tam" claims (essentially, a whistleblower case) against a teaching hospital, by which a successful claimant gets to keep a portion of the penalties recovered.  Basically, the Medicare program pays teaching hospitals for work by residents that is supervised by teaching physicians.  Here, however, a hospital was alleged to have made its teaching physicians simultaneously supervise multiple surgeries -- and then submit fee-for-service bills to the Medicare program for certain unsupervised work.  

 

After addressing legal issues concerning claimants' right to sue when the facts were generally in the public domain by way of government reports (those reports were not specific to this hospital), the suit was allowed to continue for now.  

Note to physicians: The Court emphasized that a teaching hospital does nothing wrong if the teaching physicians are "immediately available" during all parts of the surgeries even if making a circuit between multiple operating theaters.  The breadth of that holding, and whether it would apply to other circumstances, is not clear.  Nevertheless, hospitals who bill Medicare for activities supervised by teaching physicians, and the physicians themselves, must pay special attention to these activities to stay within the law.

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A recent whistleblower case out of the federal 3rd Circuit in Pennsylvania highlights some of the dangers in not properly documenting financial relationships between physicians and hospitals. Specifically, in US ex. rel. Kosenske v. Carlisle HMA, Inc., a Qui Tam lawsuit brought by the former member of an anesthesia group, the 3rd Circuit Court of Appeals reversed a US District Court’s summary judgment in favor of the defendant hospital and anesthesia group.

The anesthesia group in question had a written exclusive contract with the hospital for anesthesia services but, subsequent to entering into the exclusive agreement, began providing pain management services at the hospital’s freestanding pain center. The hospital did not charge the anesthesia group rent for use of the space in the pain center and the qui tam relator claimed that the arrangements failed to meet the Stark exception for personal service arrangements (and therefore that claims for services referred by the anesthesia group’s physicians to the hospital were in violation of the federal False Claim Act).

 

The Appeals Court found that the arrangement between the hospital and the anesthesia group implicated the Stark prohibitions because the anesthesia group received remuneration from the hospital in the form of, among other things, free rent and administrative services, and because the pain physicians referred patients to the hospital for diagnostic testing and other Stark services. The Court further found that the arrangement did not satisfy the Stark personal service exception because, among other things, the exclusive contract did not contemplate the pain management services when it was originally signed and it was not subsequently amended to address the pain management services. The case was remanded to the District Court for further proceedings.

What should physicians take away from this case?

(1) If you have a financial relationship of any kind with your hospital, it should be reflected in a signed written agreement;

(2) Make sure your agreements with your hospital meet an applicable Stark exception; and

(3) Regularly review and update your agreements to be sure they are in effect and accurately reflect the terms of the relationship.
 

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The federal government was apparently not kidding when it said it planned to take a closer look at physician/hospital arrangements.  According to a recent Department of Justice Press Release, the DOJ has elected to intervene in a whistle-blower lawsuit against Christ Hospital and the Ohio Heart Health Center, a large cardiology group in Ohio. The lawsuit alleges that the hospital and the cardiology group entered into an arrangement that provided the cardiologists improper financial incentives in exchange for generating revenue for the hospital through the hospital’s outpatient cardiology testing center. This suit was originally filed by a cardiologist who had provided services to Christ Hospital and Ohio Heart. The lawsuit alleges that cardiologists were allocated time at the Hospital’s heart station based on the number of cardiac services they generated for the Hospital in the prior year.

This is only one of what can expected to be a slew of these types of cases as enforcement authorities tune in to the creative ways in which hospitals and physicians have been teaming up over the last few years.  Physicians who have financial arrangements with their hospitals should take a close look at those arrangements for compliance with current regulatory requirements.

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