The Tuomey decision, a United States Court of Appeals case originating in South Carolina, holds significant implications for medical professionals, particularly concerning (1) hospital compensation agreements, (2) appropriate compensation arising from the provision of designated health services (dhs), and (3) the advice of counsel defense. The federal stark law, which prohibits physicians from owning or referring to providers of health care (such as PT, rehab, diagnostic imaging, home health, dme, clinical laboratory, inpatient and outpatient hospital services), outlines how medical practices can offer dhs to their own patients, and prohibits even physicians within a practice from dividing up health care profits based on who ordered or referred to them, is largely responsible for the emergence of the concept of dhs. A whistleblower lawsuit brought against a nonprofit hospital system is the subject of the Tuomey case. Using evidence and testimony that had been withheld from the jury trial, the appellate court overturned the original jury’s decision that the system had not violated the False Claims Act. The government was awarded more than $237 million, the majority of which came from punitive damages, after it was discovered that the Tuomey Healthcare System had knowingly submitted over 21,000 false claims to Medicare. The government filed a move for a new trial, which the trial court allowed and the appeal court upheld. The government often advances the plaintiff’s—or relator—case in whistleblower cases. The following are at stake in this case: Around the year 2000, doctors in the Tuomey community started performing their surgical cases in surgery centers rather than the Tuomey hospital. Concerned about lost hospital revenues due to doctors seeking surgical services elsewhere, Tuomey negotiated part-time employment agreements with some doctors. The agreements included the following features: the doctor received an annual base salary, which was adjusted annually based on the amount paid for the physician’s services the previous year; the majority of the compensation was in the form of a productivity bonus, which was also determined by the amount collected for the physician’s services in the previous year; and the doctors were not allowed to own any surgery centers in the community. Because he would be paid more than was collected for the services he rendered, one physician rejected the proposed contract on the grounds that it went against morality. He felt that the payment was more than the services he provided had a reasonable market worth. The appellate court discovered, in fact, that physician compensation varied with the value or volume of referrals, a blatant violation of the compensation arrangement, because the more procedures the physicians performed at the hospital, the more facility fees tuomey collected, and the more compensation the physicians received in the form of increased base salaries and productivity bonuses. One of the cornerstones of stark (and anti-kickback legislation) compliance is remuneration that is predetermined, does not change dependent on the amount or value of business created between the parties, and is commensurate with fair market value. The appellate court made insightful remarks on the obvious difficulties, emphasizing how unlawful it is for a doctor to recommend a patient to a hospital or other organization that receives funding from them for dental health services. The stark law forbids a physician from making any referral to a hospital for the provision of designated health services if the physician has a financial relationship with that hospital. The court further emphasized that a claim filed in contravention of rules would entail repayment of any funds received for such unlawful referral. The court held that stark is implicated when a hospital bills a facility fee in connection with the personally performed service (i.e., surgery performed by a compensated physician at the Tuomey Hospital, where the hospital bills the facility fee) because inpatient and outpatient hospital services fall within the definition of the Department of Health Services and because a referral includes the request by a physician for the item or service. A noteworthy issue covered by the Tuomey Court is the advice of counsel defense, which is sometimes used by clients who have received legal assistance. The lower court rejected the defendant hospital system’s effort to rely on the written advice that it had acquired from legal counsel in this matter because it believed that the system had obstructed the counsel’s full and comprehensive opinion. The court upheld the lower court’s conclusions that the client, Tuomey, did not follow the advice offered and that Tuomey’s counsel had not been provided with all relevant material related to the advice. The best way to put it was as stated by the court: If one engages in a course of conduct later found to be illegal, in good faith reliance upon legal advice given him by a lawyer to whom he has made full disclosure of the facts, the trier of fact may in appropriate circumstances conclude that the conduct was innocent because ‘the guilty mind’ was absent. But seeking legal advice does not automatically grant immunity from the legal ramifications of deliberate fraud. Instead, in order to prove the advice-of-counsel defense, the defendant must demonstrate two things: (a) that they fully disclosed to [counsel] all relevant information, and (b) that they relied on [counsel’s] advice in good faith. [Addition of emphasis]. In light of the case, doctors should pay particular attention to the following important problems, even while the Tuomey court judgment provides a great deal of guidance to lawyers seeking guidance on the substantive issues (particularly advice of counsel defenses): 1. To maintain regulatory compliance, each remuneration agreement between a hospital and a physician must be carefully examined and guided; 2. The severe criteria about set in advance and fair market value are quite significant. When reviewing compensation arrangements, physicians should prioritize obtaining independent fair market valuations. Additionally, the set in advance requirement should make practices flexing their DHS profit allocations reconsider compliance. Finally, the value of legal counsel’s written advice is particularly important in an environment full of intent-based laws, but clients must be prepared to: (a) be fully disclosed to their attorneys (or risk wasting money on written advice); and (b) be ready to receive advice they may not like. Please direct all inquiries to Jeffrey L. Cohen, Esq. at fhlf . The Tuomey decision, a United States Court of Appeals case originating in South Carolina, holds significant implications for medical professionals, particularly concerning (1) hospital compensation agreements, (2) appropriate compensation arising from the provision of designated health services (dhs), and (3) the advice of counsel defense. The federal stark law, which prohibits physicians from owning or referring to providers of health care (such as PT, rehab, diagnostic imaging, home health, dme, clinical laboratory, inpatient and outpatient hospital services), outlines how medical practices can offer dhs to their own patients, and prohibits even physicians within a practice from dividing up health care profits based on who ordered or referred to them, is largely responsible for the emergence of the concept of dhs. A whistleblower lawsuit brought against a nonprofit hospital system is the subject of the Tuomey case. Using evidence and testimony that had been withheld from the jury trial, the appellate court overturned the original jury’s decision that the system had not violated the False Claims Act. The government was awarded more than $237 million, the majority of which came from punitive damages, after it was discovered that the Tuomey Healthcare System had knowingly submitted over 21,000 false claims to Medicare. The government filed a move for a new trial, which the trial court allowed and the appeal court upheld. The government often advances the plaintiff’s—or relator—case in whistleblower cases. The following are at stake in this case: Around the year 2000, doctors in the Tuomey community started performing their surgical cases in surgery centers rather than the Tuomey hospital. Concerned about lost hospital revenues due to doctors seeking surgical services elsewhere, Tuomey negotiated part-time employment agreements with some doctors. The agreements included the following features: the doctor received an annual base salary, which was adjusted annually based on the amount paid for the physician’s services the previous year; the majority of the compensation was in the form of a productivity bonus, which was also determined by the amount collected for the physician’s services in the previous year; and the doctors were not allowed to own any surgery centers in the community. Because he would be paid more than was collected for the services he rendered, one physician rejected the proposed contract on the grounds that it went against morality. He felt that the payment was more than the services he provided had a reasonable market worth. The appellate court discovered, in fact, that physician compensation varied with the value or volume of referrals, a blatant violation of the compensation arrangement, because the more procedures the physicians performed at the hospital, the more facility fees tuomey collected, and the more compensation the physicians received in the form of increased base salaries and productivity bonuses. One of the cornerstones of stark (and anti-kickback legislation) compliance is remuneration that is predetermined, does not change dependent on the amount or value of business created between the parties, and is commensurate with fair market value. The appellate court made insightful remarks on the obvious difficulties, emphasizing how unlawful it is for a doctor to recommend a patient to a hospital or other organization that receives funding from them for dental health services. The stark law forbids a physician from making any referral to a hospital for the provision of designated health services if the physician has a financial relationship with that hospital. The court further emphasized that a claim filed in contravention of rules would entail repayment of any funds received for such unlawful referral. The court held that stark is implicated when a hospital bills a facility fee in connection with the personally performed service (i.e., surgery performed by a compensated physician at the Tuomey Hospital, where the hospital bills the facility fee) because inpatient and outpatient hospital services fall within the definition of the Department of Health Services and because a referral includes the request by a physician for the item or service. A noteworthy issue covered by the Tuomey Court is the advice of counsel defense, which is sometimes used by clients who have received legal assistance. The lower court rejected the defendant hospital system’s effort to rely on the written advice that it had acquired from legal counsel in this matter because it believed that the system had obstructed the counsel’s full and comprehensive opinion. The court upheld the lower court’s conclusions that the client, Tuomey, did not follow the advice offered and that Tuomey’s counsel had not been provided with all relevant material related to the advice. The best way to put it was as stated by the court: If one engages in a course of conduct later found to be illegal, in good faith reliance upon legal advice given him by a lawyer to whom he has made full disclosure of the facts, the trier of fact may in appropriate circumstances conclude that the conduct was innocent because ‘the guilty mind’ was absent. But seeking legal advice does not automatically grant immunity from the legal ramifications of deliberate fraud. Instead, in order to prove the advice-of-counsel defense, the defendant must demonstrate two things: (a) that they fully disclosed to [counsel] all relevant information, and (b) that they relied on [counsel’s] advice in good faith. [Addition of emphasis]. In light of the case, doctors should pay particular attention to the following important problems, even while the Tuomey court judgment provides a great deal of guidance to lawyers seeking guidance on the substantive issues (particularly advice of counsel defenses): 1. To maintain regulatory compliance, each remuneration agreement between a hospital and a physician must be carefully examined and guided; 2. The severe criteria about set in advance and fair market value are quite significant. When reviewing compensation arrangements, physicians should prioritize obtaining independent fair market valuations. Additionally, the set in advance requirement should make practices flexing their DHS profit allocations reconsider compliance. Finally, the value of legal counsel’s written advice is particularly important in an environment full of intent-based laws, but clients must be prepared to: (a) be fully disclosed to their attorneys (or risk wasting money on written advice); and (b) be ready to receive advice they may not like. Please direct all inquiries to Jeffrey L. Cohen, Esq. at fhlf .
I love myBlogd
