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of American Physicians and Surgeons, Inc.
A Voice for Private Physicians Since 1943
Omnia pro aegroto
Volume 47, No. 6 June 1991
FREE CHOICE, EQUAL TAXATION
West Virginia patients and physicians have joined together
to challenge the State government in the Circuit Court of Kanawha
County, WV, over the Omnibus Health Care Cost Containment Act.
In an argument heard in April, plaintiffs contended that the
ban on balance billing and other provisions of the Act (see
AAPS News, Dec 1990) interfere with free choice of
physician. The Act caused a ``drastic change in the physician-
patient relationship in West Virginia-a change which runs the
gamut from merely `chilling' that relationship to terminating it
entirely.'' Patients complained that they were no longer able to
see their previous physician and were forced to accept care of
The concept of liberty protected by the State Constitution
embraces more than the mere freedom from physical restraint,
argued Mark Henry Holzer, Counsel for the plaintiffs. It
includes the right to make fundamental choices concerning
livelihood, residence, friendships, and the like.
In its reply, the State conceded that ``the relationship
between a patient and a physician is special and unique.''
However, it argued that the relationship between a physician's
fee and a third-party payor is not a special relationship. It
denied that the ban on balance billing restricted liberty:
[That prohibition] does not preclude the
beneficiary from voluntarily paying any
additional fees that the beneficiary feels
the physician is entitled to.
In effect, the State is contending that the
constitutionality of the Act is saved because the patient is not
barred from tipping his doctor. As Professor Holzer noted in his
reply to the reply:
Quite apart from the conceded fact that the Act
prohibits balance billing, thus preventing the physi-
cian from sending a bill or, presumably, even telling
the patient that a further sum is due, common sense
compels the recognition that it would never occur to a
patient to tip his doctor, that a patient would never
do so, and that if one did, the physician would be out
of his mind to accept a tip in the light of the serious
penalties attached to violation of the balance billing
prohibition [a fine of from $1,000 to $25,000]. The
``it-was-only-a-tip'' defense would not go far.
The Act further interfered with liberty by requiring a
physician who accepted even one state beneficiary to accept every
other state beneficiary who requested service, or to devote at
least 15% of his practice to Medicaid patients. Objections to
this ``take-one-take-all'' provision were rendered moot because
the State legislature repealed it. (Any connection between the
repeal and the lawsuit was said to be purely coincidental.)
The legislative history of the Act shows that its raison
d'etre was to shift part of the burden of the State's health care
costs to somebody else. There were two candidates: taxpayers
generally, or physicians. It being politically unfeasible to
raise taxes again, physicians were chosen. A report issued by
the State noted that public employees and other beneficiaries-and
the taxpayers of West Virginia-``saved'' nearly $15 million over
15 months as a result of the ban on balance billing. (And
physicians were forced to contribute $15 million worth of
Plaintiffs argue that labor is the purest form of property.
The worth of any form of property, under West Virginia law, is
its market value. Forcing someone to accept less than the fair
market value for his labor constitutes a tax on his property.
The ``Equal and Uniform Taxation'' provision of the West
Virginia constitution ``guarantees that `insular minorities' like
business taxpayers . . . will not be taxed at a high rate because
of limited political influence while those with political clout
pay little.'' Since the Omnibus Health Care Cost Containment Act
is imposed only on ``participating'' providers-exempting the
labor of nonparticipants and all other citizens-it violates the
constitution, plaintiffs contend.
Other constitutional arguments are: (1) the Act illegally
delegates the power to tax and (2) the means do not serve the
stated purpose of the legislation. (Health care costs have in-
creased, not decreased, as a consequence of the Act.)
The State of West Virginia did not make a serious attempt to
confront the constitutional issues, but argued against a motion
for summary judgment on the basis of a need for extensive
discovery and a factual hearing. The strategy, according to
Professor Holzer, appears to be to mire the case in a swamp of
discovery from which it may never emerge.
The West Virginia case offers important insight into the
nature of the threat of ``license servitude'' now faced by
American physicians, according to a forthcoming article by
Professor Holzer (``The Physician's License: an Achilles Heel?''
J Legal Med 11:201-220 [reprints available from AAPS for $2.00]).
Originally intended to assure fitness to practice medicine,
medical licensure is increasingly being used as a means to force
physicians to serve state-dictated goals: cost containment today,
Litigation in the West Virginia case is being supported by
L.I.F.E. for West Virginians, PO Box 1667, Elkins, WV 26241.
A Way Out?
...The law does not provide a way for a provider to volun-
tarily disassociate himself completely from the Medicare program.
As long as a provider furnishes services to a Medicare patient,
he is required to abide by all the rules, regulations, and
restrictions applicable to those services.
The law cannot be avoided by having the patient sign a
disclaimer to the effect that he/she has no right to bill Medi-
care for the provider's services. He can avoid them only by
refusing provide services to Medicare patients. Only those
providers who have been found guilty of fraud and/or abuse to the
Medicare/Medicaid programs and who are excluded from these
programs are exempt from all of the rules....
Darlene R. Taylor, Claim Representative, Aetna
Dear Miss Taylor,
In your letter of April 16, you advise me that the only way
a physician can ... disassociate from Medicare is to be found
guilty of ``fraud or abuse'' to the Medicare system.
And in a letter of the same date from Mary Widener in your
office it is demanded that I refund a patient $15 for a
urinalysis I did and for which the patient paid me.
I hereby refuse to pay the refund, and for this ``abuse'' I
respectfully request and demand that I be excluded from Medicare
by my own volition.
I note that in West Virginia a physician has been deprived
of his license to practice medicine because he was disciplined by
the PRO for that state. I fear that other states will also adopt
this as a policy. It may even be mandated by new federal law.
Thus, it is too risky to have anything to do with Medicare
as any physician's license to practice medicine is or may soon be
at risk....I recognize that it may cost me $2000...to effect the
exclusion but this is the price for freedom I may have to pay.
John H. DeTar, MD, Reno, NV
A Way Out of CLIA?
It is possible that there is no way out of CLIA. All
physicians may be defined as laboratories. On the other hand, if
all physicians are laboratories, why would anyone have to ask?
A Maryland physician's office was called by a state employee
to ask whether laboratory work was done there.
``This is a physician's office, not a laboratory.''
``Do you do urine dipsticks?''
``Sometimes we do.''
``Then you're a laboratory.''
Many states are implementing their own regulations, in
imitation of CLIA. And the federal government may have to rely
on state agencies in order to find all the labs. Thus, if you
cannot afford to pay the registration fees, or if you may not
have the resources to comply with the as-yet-unspecified
regulations, or if you do not wish to take the risk of having to
prove to an inspector that you don't do a test that requires an
on-site pathologist, the time to decide to stop doing all lab
tests is before you are listed as a laboratory.
If someone calls to ask whether your office does lab work,
it might be a person selling equipment. Or it might be a state
or federal enforcer. Regardless of what question a person asks
your receptionist, it is always a good idea to determine the
caller's name, address, telephone number, and position, as well
as the purpose of the call.
Additional CLIA regulations concerning intermediate
sanctions have been published in the Federal Register of April 2,
1991. Under the Administrative Procedure Act, federal agencies
are obligated to consider all public comments before finalizing
the regulations. The need to respond to the 60,000 comments
already submitted has delayed implementation of the act for more
than two years, to the consternation of Rep. John Dingell (D-MI),
one of CLIA's authors.
Conceivably, CLIA might face another hurdle: a 1981
executive order (EO 12291) that requires agencies to submit
regulations to the Office of Management and Budget for a
determination that benefits outweigh the costs. President Bush
has expressed his support for the order, and Vice President
Quayle recently issued a memorandum that expands its scope.
In lauding Quayle's memorandum, Robert Coakley, executive
director of the Business Council on the Reduction of Paperwork
stated: ``You are seeing ... new and innovative ways that
agencies ... are ignoring their responsibilities under the ...
Administrative Procedure Act'' (BNA's Medicare Report 5/3/91).
One federal agency's view of CLIA's cost:benefit ratio is on
the record: Veterans Administration Medical Chief James
Holsinger, MD, has requested an exemption for the VA. He states
that compliance with the inspection and staffing standards would
cost $82 million the first year and $75 million per year
thereafter. Dr. Holsinger favors a bill that would give him
exclusive authority to set standards for VA labs. He told Sen.
Barbara Mikulski (D-MD), one of the bill's authors, that the VA
doesn't perform very many Pap smears. ``Don't get cute with
me,'' she said (Health Legislation 4/24/91).
To have your comments considered, they must be received
by 5 p.m., June 3, 1991 at the Health Care Financing Administra-
tion, Dept. of Health and Human Services, Attn: HSQ-179-PPO Box
26676, Baltimore, MD 21207. Be sure to refer to file code HSQ-
179-P. (FAX copies are not accepted.)
To obtain a copy of the regulations, you may place a credit-
card order at 202-783-3238. The cost is $1.50. Specify that
they were published in 56 FR 13430, April 2, 1991, pp. 1137-1152.
The order desk operator can also tell you the location of the
nearest Government Depository Library that receives the Federal
A summary of the regulations will be sent to AAPS members
under separate cover.
Update on AAPS v. Bowen
From a March 5, 1991, memorandum by Eileen T. Boyd,
Assistant Inspector General, to regional IGs:
There are questions as to whether the OIG can successfully
sustain sanctions against physicians who violated, before Nov. 5,
1990, the mandatory assignment requirement for lab tests....
Almost immediately after the statute was amended, the same
plaintiffs filed a new complaint challenging Congress's
constitutional authority to make the statute retroactive.
Because of the legislative fix, the Solicitor General declined to
ask the Supreme Court to overturn the Sixth Circuit decision.
....[Even if the decision were overturned], our ability to
meet the ... standard of proof ... would have been compromised by
the fact that it was issued. How could I have knowingly violated
a statute that three judges didn't think ``necessarily'' applied
AAPS to File Amicus Brief in Support of Dr.
In an age of increasing bureaucratic interference with the
practice of medicine, the case of Robert Carlen, MD, v. David
Harris raises the critical ethical question: Is the doctor's
first obligation to his patient, or to a political authority or
other third party?
Dr. Carlen is an internist who was employed by the Suffolk
County Health Dept. to care for inmates at the correctional
facility at Yaphank, NY. During the course of his treatment of
inmates, disputes arose between Dr. Carlen and two physicians who
were his administrative supervisors. The Commissioner of the
Health Dept. attempted to direct Dr. Carlen's treatment
decisions. For example, Dr. Carlen was prohibited from
distributing information about AIDS to the inmates or from
informing an inmate of his diagnosis of AIDS before he was
released from the jail.
In response to this interference with his medical judgment,
Dr. Carlen brought suit seeking to enjoin the Health Dept. from
interfering with his treatment. The New York trial court
dismissed the suit on the ground that Dr. Carlen had not
exhausted administrative remedies. Dr. Carlen appealed to the
Appellate Division of the Supreme Court, which affirmed the trial
court's decision. The New York Court of Appeals, that state's
highest court, declined to review the case.
Almost immediately after the first case was concluded, David
Harris, Commissioner of the Suffolk County Health Dept., charged
Dr. Carlen with 46 counts of insubordination and incompetence,
including failure to observe ``standard'' charting technique (the
Weed problem-oriented medical record), disobedience to directives
to ``participate in the team approach,'' deviation from
``accepted medical practice,'' refusal to accept ``medical
supervision,'' and refusal to provide care. Dr. Carlen denied
all of these allegations. Harris then appointed a hearing
officer pursuant to the New York Civil Service Law. On January
23, 1990, the hearing officer found Dr. Carlen guilty of all the
charges, and Dr. Carlen was discharged from his position. Dr.
Carlen is in the process of appealing the hearing officer's
In a brief amicus curiae in support of Dr. Carlen, AAPS
maintains that the case is essentially one involving retaliation
against a physician for adhering to high ethical standards of
[T]his case raises legal, ethical, and moral
issues which lie at the core of the future of health
care in the United States....The traditional patient-
centered model of health care is under increasing
attack from the forces of bureaucratic medicine. This
trend threatens to transform the professional from a
person who uses advanced knowledge and skilled
individual judgment to solve human problems into a
person who, like a mechanic, must perform acts in a
ministerial fashion, always ``by the book,'' without
regard to the needs of the individual patient. AAPS
believes that when a physician is punished for
resisting official pressures which directly clash with
his or her professional judgment, the courts must
intervene to ensure that the long-established public
policies embodied in medical codes of ethics are
protected and furthered.
AAPS argues that the overarching principle of medical
beneficence mandates that a physician do all that he can for the
benefit of the individual patient without assuming responsibility
for the equitable disbursement of society's health resources. As
bioethicist Hans Jonas states:
[T]he physician is bound not to let any other interest
interfere with that of the patient in being cured. But
manifestly more sublime norms than contractual ones are
involved. We may speak of a sacred trust; strictly by
its terms, the doctor is, as it were, alone with his
patient and God.
AAPS maintains that Dr. Carlen saw his ethical duty and
carried it out by actively resisting bureaucratic pressures that
compromised patient care and by actively seeking to change such
policies through lawful means.
Further, AAPS believes that physicians and administrators
can and do retaliate against their fellow physicians through the
use of ``peer review'' and discharge proceedings, attempting to
shroud the true motivations of their actions by accusing the
subject physician of malpractice or unprofessional behavior.
AAPS contends that there is a clear trend in the law to protect
employees, professional or otherwise, from such retaliation. The
courts' failure to provide such protection signals to physicians
that professional ethical standards will not be given effect in
[For further details, see AAPS News Jan. 1988 and
Patient Freedom of Choice Fund Established
The American Health Legal Foundation has designated a
special fund for financing a legal challenge to Medicare's
assertion that Medicare-eligible patients may not contract with a
physician outside the Medicare system.
Patients who value the option of consulting a personal
physician might wish to make a small contribution. Checks should
be written to ``Freedom of Choice Fund/AHLF.''
Massachusetts Physicians Win Procedural Victory
Early in April, the Massachusetts Supreme Judicial Court
unanimously handed Liability Investigation Fund Effort, Inc.
(LIFE) an important procedural victory. LIFE challenged the
State-created Joint Underwriting Association's power to
retroactively assess medical liability insurance premiums back as
far as 1975. The decision overturned a lower court's
determination that the challenge belonged in an administrative
proceeding, not in court, because it concerned only the setting
of medical liability insurance rates. It affirmed LIFE's
contention that constitutionality is at issue.
At stake are retroactive premiums amounting to half a
billion dollars. Interestingly, the litigation is being
conducted solely by the LIFE organization. The Massachusetts
Medical Society is remaining on the sidelines.
According to Professor Mark Henry Holzer of Brooklyn Law
School, Counsel for the plaintiffs, the decision shows that
physicians acting together can force the courts to rule on
AAPS welcomes Thomas Ahlborn of Ridgewood, NJ; Ibad Ansari
of Leitchfield, KY; Mathis Becker of Plantation, FL; Thomas P.
Berg of Canton, OH; Robert Birns of Englewood, NJ; Churchill L.
Blakey of Wenonah, NJ; Dexter W. Blome of Los Angeles, CA; James
Boehner of Aiken, SC; Jonah Botknecht of Hallandale, FL; Stan
Broome of New York, NY; J.C. Burns of West Columbia, TX; Alan
Chastanet of East Andover, ME; Paula L. Coleman of Majopac, NY;
R. Evan Crandall of Chesterfield, MO; Larimore Cummins of Santa
Cruz, CA; Steven H. Dennis of Henderson, NC; James L. Fletcher,
Jr. of Augusta, GA; Walter H. Judd of Mitchellville, MD; Constan-
tine A. Kotsanis of Grapevine, TX; Allan Lazar of Teaneck, NJ;
David A. Libert of Maitland, FL; Gregory Magee of Englewood, NJ;
Gerald H. Mandell of Detroit, MI; Ralph Mills of Johnson City,
TN; George A. Murr, III of Coatesville, PA; Henry Nachamie of
Brooklyn, NY; Robert E. Nichols of Crossville, TN; Richard Payne
of Brockton, MA; Samuel William Polen of Florence, SC; A.G.
Portfolio, Jr. of Paramus, NJ; Avtar K. Razdan of Bourbonnais,
IL; Roger G. Rosenstein of Paramus, NJ; Robert Jay Rowen of
Anchorage, AK; Christopher S. Ryckman of Lancaster, OH; Robert A.
Schultz of Fair Lawn, NJ; Sam Suttle of Louisville, MS; and
Robert T. Williams of Sanford, FL.
AAPS is especially pleased to welcome the following new
student members: Suzanne D. Clark, Rafael F. Cruz, Timothy
Joseph Donovan, Michelle A. Douglass, Thomas W. Englehart, Aaron
L. Gunn, Peter Kanistros, Daniel A. Keenan, Jr., Danielle Raber,
Brenton D. Warren, and Sanjay Yathiraj, all from Ohio.
The National Alliance of Physicians and Surgeons has decided
to join forces with AAPS in the battle for private medicine.
Under the leadership of President Richard Neubauer, MD, of
Florida and Executive Director Robert Moffit, PhD, of Maryland,
NAPS has taken a principled stand against the concept of the
relative value scale.
``The RVS is truly a revolutionary change in medicine,'' Dr.
Moffit said. ``In essence, it is a rerun of the [Marxist] labor
theory of value.''
Despite the profound implications of the RVS, Dr. Moffit was
the only person to present formal testimony against it to
Congress. ``Congress enacted this legislation without serious
debate,'' he said.
Curtis Caine, Jr., RIP
We are saddened to announce that long-time AAPS member
Curtis Caine, Jr., MD, the eldest son of one of our Past
Presidents, was called to be with his Savior and Lord on April
16, 1991. He is survived by his father, Curtis Caine, Sr., MD,
and mother, Lynn Caine.
Students Are the Future
If you don't tell the next generation about freedom, who
will? The enclosed pamphlet by Richard Villareal, President of
the Student Section of the Ohio State Medical Association House
of Delegates, may help you. Make as many copies as you like. If
you live near a medical school, ask whether you may distribute a
copy to each medical student, preferably with a cover letter by
you, possibly with an invitation to an informal get-together to
discuss private medicine. Call 1-800-635-1196 if you'd like
additional membership recruitment material.
Letter to the Editor
AAPS rightly points out the heavy cost of government
interference in the practice of medicine. But physicians are not
the only targets for oppressive regulation. All productive
sectors of the economy are under attack.
There is always a pretext. CLIA was the result of horror
stories about a few inaccurate Pap smears.
The pretext for adding as much as a trillion dollars to the
costs of American industry is global warming, ozone holes,
nuclear waste, acid rain, and other environmental alarms.
Because economic well-being is highly correlated with health,
physicians need to assess the potential side effects of well-
intentioned, draconian environmentalist measures. Should we rush
to cut off the patient's leg because it might harbor a cancer?
Or should we establish the diagnosis first?
Dixy Lee Ray and other noted scientists will lead a
discussion of these public health issues at the annual meeting of
Doctors for Disaster Preparedness in Las Vegas, Sept. 21-22. I'd
like to invite our members to attend.
Howard Maccabee, MD, PhD
Radiation Oncology Center, 115 La Casa Via
Walnut Creek, CA 94598
Oct. 17-19, 1991. Annual meeting, Lexington, KY, Griffin Gate