Hospitals and Health Care Facilities

The New York State Department of Labor (the “DOL”) issued an emergency regulation clarifying its minimum-wage rules regarding home care employees. The emergency regulation provides that sleep and meal times for home care aides who work shifts of 24 hours or more are not counted as hours worked. Recently, there has been a ringing dissonance between the DOL and decisions set forth by the New York State Appellate Divisions, First and Second Departments, regarding whether home care workers should be paid for an entire 24-hour shift, including sleep and meal time. In fact, the DOL expressly cited the fact that the emergency regulation is being promulgated in direct reaction to decisions issued by the New York State Appellate Divisions. For reference, the decisions triggering the emergency regulation are: Moreno v. Future Care Health Servs., Inc., 2017 N.Y. App. Div. LEXIS 6462 (2d Dept Sept. 13, 2017); (2d Dep’t Sept. 13, 2017); Andreyeyeva v. New York Health Care, Inc., 2017 N.Y. App. Div. LEXIS 6408 (2d Dep’t Sept. 13, 2017); and Tokhtaman v. Human Care, LLC, 149 A.D.3d 476 (1st Dep’t Apr. 11, 2017).

The above-referenced decisions effectively flipped the New York home care industry on its head, each holding, in sum, that home care workers were entitled to pay for all 24 hours worked, including sleep and meal time. Enter the DOL, on October 5, 2017, who quickly put any remaining ambiguity to rest once and for all stating “that hours worked may exclude meal periods and sleep times for home care aides who work shifts of 24 hours or more”. The DOL reasoned that “[t]his regulation is needed to preserve the status quo, prevent the collapse of the homecare industry, and avoid institutionalizing patients who could be cared for at home, in the face of recent decisions by the State Appellate divisions that treat meal periods and sleep time [as hours worked]”.

The emergency regulation is expected to return the home care industry back to normalcy and prevent home care agencies from ceasing to provide “vital, lifesaving care” to thousands of New Yorkers who depend on it. The DOL explained that this “emergency adoption amends the relevant regulations to codify the Commissioner’s longstanding and consistent interpretations that such meal periods and sleep times do not constitute hours worked for purposes of minimum wage and overtime requirements”. And so, the longstanding rule about sleeping on the job still stands: you won’t get paid for it in New York.

Note:  Special thanks to our law clerk, Nicholas G. Moneta, for his assistance in drafting this blog post.

In our previous post, Medical Marijuana 103: Patient and Practitioner Regulations in New York State, we discussed that patients certified for medical marijuana use can designate up to two caregivers. Caregivers can assist patients who are unable to pick up medical marijuana at a dispensing facility or are unable to administer medical marijuana to themselves properly.

Previously the Medical Marijuana Program only allowed for designated caregivers to be natural persons. On October 5, 2017, however, the New York State Department of Health (“DOH”) issued emergency regulations that expand the definition of caregiver to allow certain facilities to be designated caregivers. By expanding the definition in this way, patients who are located in or reside at certain facilities can designate their facility as their caregiver, thus making it easier for such patients to obtain medical marijuana.

The new regulations define a designated caregiver as either a natural person or a facility. The term “facility” is further defined as, among others, hospitals, adult day care facilities, community mental health residences, and private and public schools. In addition, each division, department, component, floor or other unit of a parent facility may be designated as a “facility” for purposes of being designated a caregiver.

Just like natural persons, facilities will need to register with the DOH in order to be designated a caregiver for purposes of the Medical Marijuana Program. Once registered with the DOH facilities will be authorized to lawfully possess, acquire, deliver, transfer, transport and/or administer medical marijuana to certified patients residing in, or attending, that facility.

The DOH considered alternatives prior to issuing the emergency regulations, stating:

The Department could have chosen to keep the status quo and not allow patients to designate facilities as designated caregivers. The Department could have also allowed certified patients to designate an individual within the facility to be a caregiver. However, these options are not viable since patients in facilities may be cared for by multiple staff members in the course of a day. Certified patients have severe debilitating or life-threatening conditions and the regulatory amendments would help to prevent adverse events associated with abrupt discontinuation of a treatment alternative that may be providing relief for certified patients in these facilities.”

The regulations were published in the New York State Register on October 25, 2017. The DOH will accept comments from the public for a minimum of 45 days following the date of publication. After publication in the Register and receipt of public comment, the agency may either adopt, revise or withdraw the proposal. This change is just one of the latest revisions implemented by the DOH in an attempt to strengthen and expand New York’s struggling Medical Marijuana Program.

Few, if any, in the medical industry are unfamiliar with the federal Anti-Kickback Statute (“AKS”).  Under AKS, those giving or receiving compensation for referrals for items or services reimbursed by the federal healthcare programs are subject to criminal prosecution.  The statute is intended to prevent exploitation of the federal healthcare system, avoid unnecessary inflation of program costs and encourage fair competition in the industry.

AKS prohibits, among other things, the knowing and willful payment or receipt of any form of compensation to induce or reward referrals involving any item or service payable by federal healthcare programs.  “Federal healthcare programs” include more than just Medicare and Medicaid – “any plan or program providing health care benefits, whether directly through insurance or otherwise, that is funded directly, in whole or part, by the United States government (other than the Federal Employees Health Benefits Program), or any state health care program” is included.  This means that remuneration for referrals in connection with items and services that are reimbursable under TRICARE, the Veterans Administration, Federal Employees’ Compensation Act, and block grant programs are all subject to prosecution under AKS.

 

Where items or services are not reimbursable by a federal healthcare program, providers and referring parties are not subject to AKS prosecution.  However, due to an emerging trend in prosecution, the absence of reimbursement from federal healthcare programs should no longer leave providers and referral sources with a sense of security that they cannot be prosecuted for kickback arrangements.

 

Prosecutors are increasingly bringing charges against payers and recipients of remuneration for referrals in the medical arena under the Travel Act.  The Travel Act criminalizes the use of the United States mail and interstate or foreign travel for the purpose of engaging in certain specified criminal acts.  The Travel Act typically enforces two categories of state laws – laws prohibiting commercial bribery (i.e. corrupt dealings to secure an advantage over business competitors) and laws addressing illegal remuneration, including specific provisions regarding improper payments in connection with referral for services.

 

In two very recent high profile cases, prosecutors brought charges against those allegedly involved in kickback schemes under the both AKS and the Travel Act – Biodiagnostic Laboratory Services in New Jersey and Forest Park Medical Center in Texas.  Both cases have resulted in several plea bargains, yet both have charges under AKS and the Travel Act that are still pending.  While no court has directly ruled on the merits of prosecuting kickback schemes for medical services and items under the Travel Act, it is noteworthy that, in the Forest Park Medical Center case, the charges under the Travel Act survived a motion to dismiss at the district court level just last month.

 

All parties involved in referral arrangements for medical items or services should be on heightened alert as a result of this development.  Whereas AKS can only be used to prosecute parties to a kickback arrangement where federal healthcare program funds are at issue, the use of the Travel Act may broaden prosecutors’ reach to the private payor sector, even where federal healthcare programs are not involved.

Trypanophobia—the fear of needles—played a significant role in a case brought against Rite Aid Pharmacy under the Americans with Disabilities Act (ADA). In Stevens v. Rite Aid Corp., the Second Circuit overturned a jury verdict awarding substantial damages to a Rite Aid pharmacist who was terminated after he said he could not perform immunization injections because of a needle phobia.

In 2011, Rite Aid and other large pharmacy chains started requiring pharmacists to perform immunizations to fill an unmet need for vaccinations in the healthcare market. Rite Aid revised its pharmacist job description to include immunizations as one of the essential duties and responsibilities for pharmacists and required that each pharmacist hold a valid immunization permit.

Pharmacist Christopher Stevens asserted that his needle phobia was a disability under the ADA and sought a reasonable accommodation so that he would not have to perform immunizations.  Rite Aid responded that the ADA did not apply to trypanophobia, no reasonable accommodation was required, and he would be fired if he did not complete immunization training. When Stevens advised Rite Aid he could not complete the training, he was terminated for refusing to perform customer immunizations, an essential function of his job.

The Second Circuit first noted that, under the ADA, an employee must be qualified to perform the essential functions of his job, with or without reasonable accommodation. Even viewing all evidence in the light most favorable to Stevens, the Court held that immunization injections were an essential job requirement for Rite Aid pharmacists. The company made a business decision to require pharmacists to perform immunizations, revised its job description to require immunization certification and licensure, and included immunizations in the list of “essential duties and responsibilities” for Rite Aid pharmacists. The Court found jury sympathy for Stevens’s phobia to be understandable, but held that “his inability to perform an essential function of his job as a pharmacist is the only conclusion that could be drawn from the evidence.”

The Court next determined that Stevens had not established that Rite Aid could have provided a reasonable accommodation, emphasizing that the issue was whether a reasonable accommodation would have allowed Stevens to perform the essential function of immunization, not whether he could perform his other non-immunization duties as a pharmacist.

The Second Circuit reversed the judgment in favor of Stevens, holding that performing immunization injections was an essential job requirement, and Stevens presented no evidence of a reasonable accommodation that would have allowed him to do them.

The Stevens case highlights two important points under the ADA. An employer’s written job description including the essential duties and responsibilities of a position can be strong evidence to support an ADA argument concerning the essential functions of the job. Moreover, a reasonable accommodation is directed to allowing the employee to perform the essential functions of the job, not simply finding other things that the employee can do.

On August 15, 2017, the Secretary of Health and Human Services, Tom Price, issued a press release reporting that almost $105 million dollars will be bestowed upon 1,333 health centers across the United States, including its territories; and Washington D.C. Secretary Price stated “Americans deserve a healthcare system that’s affordable, accessible, of the highest quality, with ample choices, driven by world-leading innovations, and responsive to the needs of the individual patient. Supporting health centers across the country helps achieve that mission.”

According to the Health Resources & Services Administration, also known as HRSA, federally qualified health centers (FQHC) “are community-based and patient-directed organizations that deliver comprehensive, culturally competent, high-quality primary health care services.”  The main function of a health center is to provide health services to underprivileged patients where affordable healthcare is either lacking or nonexistent. Services include, but are not limited to, mental health support, substance abuse aid, dental health and many other services. While there are numerous requirements for an organization to qualify as a FQHC, one interesting qualification is that the organization must elect members of the community to serve on its governing board—ensuring that the community has a role when it comes to its own healthcare.

Even though the concept of a health center may be foreign to many in the United States, health centers play an important role in our society.  HRSA has concluded that, based on data from its Uniform Data System, almost 26 million individuals (which equals 1 in every 12 people living in the United States) depended on a health center for health services in 2016, including more than 330,000 veterans. The study also found that 1 in every 3 people living in poverty relied on a health center in 2016.

Living in a politically toxic climate on the topic of healthcare and its reforms, as we currently do today, brings in a breath of fresh air to see our tax dollars being put to good use. Health centers have served as a unique and beneficial service for the underserved and underprivileged for the last 50 years, and the federal government’s continued support appears to be unwavering.

In follow-up to our prior blog post, Concierge Medicine – Is it for you?, we recognize that while a concierge or direct-pay practice might be a good choice for a physician or physician practice group, patients do not necessarily feel the same way.  When patients hear that a medical practice is a “concierge” or “direct-pay” practice, they often think of prohibitively high out of pocket costs.  One way for a concierge or direct-pay practice to be more enticing to patients is to structure its billing methods so patients may be able to obtain reimbursement from their health savings account (HSA) or flexible spending account (FSA) for some of the associated costs.  Generally, access fees will not be reimbursable through either a HSA or FSA.  But costs incurred for qualified medical services actually rendered to the patient may be.  Here are some quick rules of thumb for when HSA and/or FSA reimbursement may be applicable to cover such costs:

 

Fees for Qualified Medical Services:  Any fees charged for qualified medical care (generally defined under the Internal Revenue Code to include the diagnosis, cure, mitigation, treatment or prevention of disease) are generally reimbursable under a HSA or FSA, to the extent not reimbursed by the patient’s insurance.

 

Access Fees or Subscription Fees:  Fees related solely to having access to a physician will not be reimbursable under either a HSA or FSA.  This is because they are not fees for qualified medical services, but rather are more akin to insurance premiums (which are also not reimbursable under a HSA or FSA).  Such non-reimbursable fees would include fees for admission as a patient, monthly retainer fees, fees for a reduced wait time, fees for 24 hour access to a physician, or any other fees not directly related to the rendering of medical services.

 

Prepaid Fees for Qualified Medical Services:  If an access fee or subscription fee includes a prepaid fee for a qualified medical service (for example, the annual fee includes the cost of a comprehensive physical examination), any costs attributable to that medical service that are not reimbursed by insurance may be reimbursable under a HSA or FSA, but not until such time as the service is actually rendered to the patient.

 

In order for patients to be able to take advantage of reimbursement from their HSA or FSA, they must have appropriate supporting documentation for the qualified medical service.  Documentation should include the patient’s name, the date of service, the type of service, and the fair market value charge attributable to just the medical service portion of the patient’s bill.

 

In sum, concierge and direct-pay practices can work for physicians on account of the upfront fees paid by patients.  However, if such fees include prepayment for medical services, it will not only encourage patients to take advantage of preventative care but may also enable them to recoup part of their upfront costs from their HSA or FSA once such services have been rendered.

 

Next week, look for the release of Medical Marijuana 102, a follow-up blog post to Veronique Urban’s Medical Marijuana 101:  The State of the Law in NY.  This will be the second blog post in a series of articles discussing the current state of the law in New York regarding medical marijuana.

Last week, the Second Circuit held that a False Claims Act relator does not have to plead details of specific alleged false billings or invoices to the government, as long as he can allege facts leading to a strong inference that specific claims were submitted and that information about them are peculiarly within the defendant’s knowledge.

In United States ex rel. Chorches v. American Medical Response, Inc., Paul Fabula was an emergency medical technician for AMR, the largest ambulance company in the United States. He alleged that AMR falsely certified ambulance transports as being medically necessary and submitted claims it knew were not medically reimbursable under Medicaid. He alleged that AMR routinely made EMTs and paramedics revise or re-create reports to include false statements demonstrating medical necessity in order to qualify for Medicaid reimbursement. Fabula subsequently declared bankruptcy, and the bankruptcy trustee became the relator.

Qui tam complaints, which allege fraud, are subject to Fed. R. Civ. P. 9(b)’s particularity requirement. The Second Circuit determined that relator had adequately alleged a scheme to defraud. Relator, however, admittedly did not have personal knowledge of exact billing numbers, dates, or amounts for claims submitted to the government.

The focus of the Second Circuit’s inquiry, therefore, was whether every qui tam complaint must allege specific identified false billings or invoices. The Court answered in the negative, holding that “a complaint can satisfy Rule 9(b)’s particularity requirement by making plausible allegations creating a strong inference that specific false claims were submitted to the government and that the information that would permit further identification of those claims is peculiarly within the opposing party’s knowledge.”

In Chorches, the Court found that the relator had met this standard by pleading sufficient facts, on personal knowledge, to demonstrate that billing information was peculiarly within the knowledge of AMR and that he was unable, without the benefit of discovery, to provide billing details for claims submitted by AMR to the government. Relator had also sufficiently alleged facts on personal knowledge supporting a scheme to defraud and a strong inference that false claims were actually submitted to the government.

This issue had been addressed by several other circuits, and in 2016, the Second Circuit noted a seeming circuit split on whether an FCA relator must allege the details of specific examples of actual false claims. In Chorches, however, the Court concluded that “reports of a circuit split are, like those prematurely reporting Mark Twain’s death, ‘greatly exaggerated.’” The Court then engaged in an extensive analysis of cases in other circuits, concluding that its pleading standard is fully consistent with both the emerging consensus in other circuits and its own precedents.

Several district courts in the Second Circuit have required a strict pleading of specific facts concerning individual billings or invoices to the government. Those decisions will now have to be re-examined in light of the pleading standard set by the Second Circuit in Chorches: “Rule 9(b) does not require that every qui tam complaint provide details of actual bills or invoices submitted to the government, so long as the relator makes plausible allegations . . . that lead to a strong inference that specific claims were indeed submitted and that information about the claims submitted are peculiarly within the opposing party’s knowledge.”

The Second Circuit also held in Chorches that the FCA’s public disclosure bar is not jurisdictional, and that an alleged refusal to falsify a patient report is sufficient at the pleading stage to qualify as protected activity for an FCA retaliation claim.

On June 14, 2017, the Sixth Circuit Court of Appeals in Breckinridge Health, Inc., et al. v. Price affirmed the district court’s finding that HHS could offset the amount of a hospital’s Medicare reimbursement by the Medicaid Disproportionate Share Hospital (DSH) payments received by such hospital.  In its decision, the Sixth Circuit followed the holding of the Seventh Circuit Court of Appeals in its 2012 decision in Abraham Lincoln Memorial Hospital v. Sebelius, where the Seventh Circuit, under similar facts, came to the same conclusion.

 

Breckinridge Health involved various Kentucky Critical Access Hospitals that, as part of Kentucky’s contribution to the DSH program, must pay a 2.5% tax on their gross revenue (the KP-Tax).  The revenue from the KP-Tax is then deposited into the Medical Assistance Revolving Trust under Kentucky law.  Funds from the revolving trust are then used to fund, in part, the DSH payments made to Kentucky hospitals.

 

The hospitals in this case had historically sought and received reimbursement under the Medicare Act’s reasonable cost statute for the full amount of their 2.5% tax payment.  However, for 2009 and 2010, full reimbursement was denied by the Medicare Administrative Contractor.  Instead, each hospital’s tax costs were offset against the amount of Medicaid DSH payments such hospital actually received.  This decision was upheld by the Provider Reimbursement Review Board and later the Administrator of the Centers for Medicare and Medicaid Services and, finally, the district court.

 

In affirming the district court’s decision, the Sixth Circuit relied on the Seventh Circuit’s rationale in Abraham Lincoln Memorial Hospital.  There, Illinois hospitals paid a tax assessment to the state as a condition of participation in Medicaid “access payments.”  The Seventh Circuit found that the tax assessment was a reasonable cost eligible for Medicare reimbursement.  However, because the payments the Illinois hospitals received from the fund were meant to reduce expenses associated with participation in the program, including the expense of paying the mandatory tax assessment that is a condition to participation, the set off was appropriate because the net economic impact of the access payments must be considered in calculating the reimbursement.

 

Applying the Seventh Circuit’s rationale, the Breckinridge court reasoned that “[b]ecause the DSH payment [the hospitals] received derived from the fund into which the [hospitals’] KP-Tax expenditures were placed, the net effect of the DSH payment is to reduce, at least in part, the costs [the hospitals] incurred in paying the KP-Tax.  Therefore, it constituted a refund notwithstanding the fact that it was not labeled as such.”  In other words, by receiving a return of the economic value of their KP-Tax payments through the disbursement of revolving trust funds, the hospitals essentially had already been reimbursed for their KP-Tax payments and such costs were not eligible to be reimbursed again under the reasonable cost statute.

 

In affirming the district court’s judgment, the Sixth Circuit made clear that the standard of review is to give the judgment of HHS controlling weight unless it is “arbitrary, capricious, or manifestly contrary to the statute.”  However, through its detailed review of HHS’s decision, the Breckinridge court bolsters the rationale arguably justifying the expanding view that DSH payments can properly be set off against the reasonable costs of participation.

The Medicaid Fraud Control Unit (MCFU) of the New York State Office of the Attorney General has recently issued restitution demand letters to providers for allegedly entering into percentage-based contracts with their billing agents. The MCFU letters cite the Medicaid Update March 2001, titled “A Message for Providers Using Service Agents as follows:

Billing agents are prohibited from charging Medicaid providers a percentage of the amount claimed or collected. In addition, such payment arraignments, when entered into by a physician, may violate the Education Law and State Education Department’s regulations on unlawful fee-splitting.

A physician will be guilty of misconduct if he or she permits:

any person to share in the fees for professional services, other than: a partner, employee, associate in a professional firm or corporation, professional subcontractor or consultant authorized to practice medicine, or a legally authorized trainee practicing under the supervision of a licensee. This prohibition shall include any arrangement or agreement whereby the amount received in payment for furnishing space, facilities, equipment or personnel services used by a licensee constitutes a percentage of, or is otherwise dependent upon, the income or receipts of the licensee from such practice, except as otherwise provided by law with respect to a facility licensed pursuant to article twenty-eight of the public health law or article thirteen of the mental hygiene law.

See Educ. Law §6530(19)*.

A physician is subject to professional misconduct charges if he or she has

directly or indirectly requested, received or participated in the division, transference, assignment, rebate, splitting, or refunding of a fee for, or has directly requested, received or profited by means of a credit or other valuable consideration as a commission, discount or gratuity, in connection with the furnishing of professional care or service . . .

See Educ. Law §6531.

The prohibition against fee-splitting is related to the state anti-kickback law which prohibits physicians from

[d]irectly or indirectly offering, giving, soliciting, or receiving or agreeing to receive, any fee or other consideration to or from a third party for the referral of a patient or in connection with the performance of professional services . . .

See Educ. Law §6530 (18).

Licensed professionals in New York State must review their contracts to verify that the compensation paid to their agents is not based on a percentage of fees for professional services.

*A similar rule applies to other licensed professionals. See N.Y. Rules of the Board of Regents §29.1(b)(4).

**In addition to the Federal Anti-Kickback Statute at 42 U.S.C. §1320a-7b(b), New York has enacted its own wide-reaching anti-kickback and anti-referral laws and regulations seeking to eliminate fraud and abuse in healthcare on a statewide basis. The state anti-kickback statue is set forth in the Social Services Law (See N.Y. Social Services Law § 366-d). The N.Y. Education Law addresses matters of professional misconduct rather than violations of fraud and abuse laws and regulations.

imagesPA8ET6EQIn our previous post [found here], we explained that, under the Privacy Rule, HIPAA covered entities (health care providers and health plans) must provide individuals and their “personal representatives” with access to the individual’s protected health information. An individual’s personal representative is determined under State law. In this post, we will define who is a “personal representative” under New York law.

Section 18(2) of the New York Public Health Law (PHL) states that, upon written request, a health care provider shall provide an opportunity, within ten days, for a patient to inspect the patient’s information concerning or relating to the examination or treatment of the patient. Upon the written request of any qualified person, a health care provider shall furnish to the qualified person, within a reasonable time, a copy of any patient information requested which the authorized person may inspect. The law provides no specific time period by which copies of medical records must be provided. However, the New York State Department of Health considers 10 to 14 days to be a reasonable time in which a practitioner should respond to such a request.

A “qualified person” under PHL§ 18(1)(g) includes:

  1. the properly identified patient;
  2. a guardian for an incapacitated person appointed under article eighty-one of the mental hygiene law;
  3. a parent of an infant or a guardian of an infant appointed under article seventeen of the Surrogate’s Court Procedure Act or other legally appointed guardian of an infant who may request access to a clinical record;
  4. a distributee of any deceased subject for whom no personal representative, as defined in the Estates, Powers and Trusts Law, has been appointed; or
  5. an attorney representing a qualified person or the subject’s estate who holds a power of attorney from the qualified person or the subject’s estate explicitly authorizing the holder to execute a written request for patient information.

PHL§ 18(1)(g) states that a qualified person shall be deemed a “personal representative of the individual” for purposes of HIPAA and its implementing regulations. Although not a “qualified person,” an agent appointed under a patient’s Health Care Proxy may also receive medical information and medical and clinical records necessary to make informed decisions regarding the patient’s health care (See PHL § 2982(3)). Presumably, the holder of a Health Care Proxy would also be a “personal representative of the individual” for purposes of HIPAA, although there is no explicit statement to that effect in PHL § 2982.

There are circumstances where a qualified person may be denied access to inspect or obtain a copy of the patient’s records. In the next post, we will explain those circumstances.