Tucson Blvd. Suite 9
Tucson, AZ 85716-3450
Phone: (800) 635-1196
Hotline: (800) 419-4777
of American Physicians and Surgeons, Inc.
A Voice for Private Physicians Since 1943
Omnia pro aegroto
Volume 47, No. 5 May 1991
PHYSICIAN SUES PRO
``I decided I'd had enough unjustified harassment by the PRO
so I went ahead and sued them,'' said AAPS Past President Victor
F. Duvall, MD, a family physician in Clarkson, KY. ``I forgave
them repeatedly and asked them to retract their defamatory
statements, but they refused.''
His complaint names as defendants the Indiana Peer Review
Organization, d/b/a Sentinel Medical Review Organization and a
number of individuals employed by Sentinel. It alleges the
Over a period of time, Sentinel reviewers have
repeatedly asked questions the answers to which have been
clearly stated in the medical record. Plaintiff has
objected, repeatedly, to this negligent and careless pattern
of review by Sentinel, its agents and employees.
Occasionally, the reviewer asks pertinent questions.
However, most of the time, the questions appear irrelevant
to the cases or express the reviewer's concern about a
trivial, clinically insignificant matter....
It is an easy matter for Sentinel reviewers to ask
questions. That is what they are paid to do. On the other
hand, it is not so easy for the physician to respond. The
questions usually arrive several months after the fact, and
the events may not reside in the physician's recent
memory...If the answer to the questions is not contained in
the history, physical, or discharge summary, the process
requires a special trip to the hospital's medical records
department. That does not mean much to a Sentinel reviewer,
who takes only two to five minutes to review a record; but
it takes a targeted physician considerably longer. Then, a
response has to be written. The whole process usually takes
the physician from one to two hours.
No response to a PRO inquiry implies agreement with the
PRO, so the physician must make the requisite effort to
review the record or face potential disciplinary ac-
tion....Negligent review by the PRO mandates that the
physician contribute his time to do the PRO's work for it
and receive no benefit therefrom, or face the potential loss
of his livelihood....
Usually, letters to the PRO in support of a targeted
physician will cause the PRO to reconsider and reverse its
adverse determination. But that procedure had no such
effect in [the cases named here]. The plaintiff submitted
these cases to six genuine peers for their review. Each of
these six physicians wrote letters to defendants in support
of plaintiff. [Patients are now also writing letters sup-
porting Dr. Duvall.] Defendants have repeatedly refused to
allow these letters to make any difference in their deter-
minations against the plaintiff....
By reason of the wrongful acts of the defendants, the
plaintiff has suffered damage, both directly and indirectly,
to his professional standing and reputation; has been caused
to lose time from his professional and personal life to
defend himself against false accusations; and has ex-
perienced mental, emotional, and physical pain and
Dr. Duvall is asking for exemplary damages. He believes the
reviewers' acts were malicious in that they were specifically
intended to cause damage and were carried out with a flagrant
indifference to his rights.
Dr. Duvall also asks the court to enjoin the defendants from
harassing, threatening, and intimidating him by singling him out
from all other medical practitioners in the Commonwealth of
Kentucky for more stringent review.
The lawsuit is not prompted by an objection to the concept
of peer review. ``I am a strong supporter of peer review,'' Dr.
Duvall stated. ``I have participated in it pro bono in a number
of states. What I object to is negligent, arbitrary, and
``The PRO is supposed to base its judgment on
`professionally accepted criteria.' But have you ever seen any
of their criteria published?'' he asked.
Originally intended to save money, the PROs drive up the
cost of medical care, in Dr. Duvall's opinion, because physicians
feel compelled to do extra tests and request unnecessary
consultations in anticipation of PRO questions. Also, the $300
million budget for the PROs does not include the cost of wasted
physician time and energy.
The defendants challenged Dr. Duvall's lawsuit in the state
court on jurisdictional grounds and prevailed. An amended com-
plaint will be filed in federal court.
A copy of the complaint and exhibits may be obtained from
AAPS headquarters, 1601 N. Tucson Blvd. Suite 9, Tucson, AZ
Will More Money Help?
The main result of spending $300 million per year on PROs,
according to Thomas Morford, director of the Health Standards and
Quality Bureau (HSQB), has been to ``catch a few bad guys and
kill a lot of trees.'' The Institute of Medicine has called the
PRO program ``confrontational, arbitrary, and of dubious
The proposed answer: the Uniform Clinical Data Set, an
interactive computer system for storing each review. The start-
up cost: $25-30 million. A problem: lack of peer review for the
(unpublished) algorithms (Med & Health 3/18/91).
The Cost of Regulation: ``Deadly Overcaution''
``If a drug that has just been approved by the Food and Drug
Administration (FDA) will start saving lives tomorrow, then how
many people died yesterday waiting for the agency to act?''
(``Yesterday'' means the two to three years that it generally
takes the FDA to improve a New Drug Application.)
This question is posed by Sam Kazman of the Competitive
Enterprise Institute (J Regulation & Social Costs, 9/90).
In the wake of the thalidomide story in 1962, the Kefauver-
Harris amendments fundamentally changed the nature of the FDA and
the drug approval process. Now, new drugs must be proved to be
effective as well as safe. The default option on NDAs has become
disapproval instead of approval. And centralized regulatory
authority has replaced market mechanisms as the primary decision-
Some of the effects of regulation: (1) FDA requirements
have more than doubled the development costs for new drugs. (2)
The average review time for an NDA rose from 7 months to 30
months between 1962 and 1967. After FDA attempts at
``streamlining,'' the time was 32 months at the end of the 1980s.
(3) From 1975 to 1979, the number of new domestically developed
drugs that entered human testing for the first time dropped to
half the rate for the preceding decade. Many laboratories
virtually ceased research on new drugs and diverted their
resources into auditing their old data.
As Kazman puts it, ``there are times when overcaution can be
deadlier than lack of caution, which is why we do not elaborately
stress-test a rope before throwing it to a drowning man.'' But
even though the FDA's policy may make little medical sense, it
makes perfect political sense.
``From the FDA commissioner...to the individual DNA
reviewers, the message is clear: if you approve a drug with
unanticipated side effects, both you and the agency will face the
heat of newspaper headlines, television coverage, and congres-
sional hearings,'' Kazman writes.
On the other hand, FDA Commissioner Alexander Schmidt once
stated that ``in all of FDA's history, I am unable to find a
single instance where a Congressional committee investigated the
failure of FDA to approve a new drug.''
The longest lag times for the introduction of new drugs have
been in the areas of cardiovascular, respiratory, central nervous
system, and cancer drugs. Kazman cites beta blockers,
thrombolytic agents, levamisole, and misoprostol, arguing that
thousands of premature deaths might have been prevented by
earlier approval of these drugs.
The results of FDA delay are coming to public attention due
to the efforts of AIDS victims, who have far more political clout
than victims of heart disease and cancer. Rep. Tom Campbell (R-
CA) has proposed legislation that would permit physicians to
prescribe nonapproved drugs for life-threatening or severely
debilitating diseases, with the patient's informed consent.
However, Congress and the FDA may be preoccupied with
matters other than the silent (and not-so-silent) victims of
overregulation. Senator Kennedy is focusing on prescription drug
promotion practices. And David Kessler, MD, the new FDA
Commissioner, is promising tougher regulation of the
pharmaceutical industry. He plans to set up a team of 100
criminal investigators and is asking for subpoena powers and
civil monetary penalties.
Kazman suggests changing the FDA's veto power over new
drugs to a system of certification.
``This approach would bring pharmacology in line with the
rest of medical care, where government approval is the exception,
not the rule,'' he states.
Actually, the rest of medical care may be brought into line
with pharmacology if present trends continue. An examination of
the experimental results is thus very timely.
Why Are We Putting Up With This?
What is the difference between the PRO and the PLO?
None, they are both terrorist organizations.
A few years ago, my government wanted me to quit spending so
much money on its citizens....``We will focus on you,'' [it
said]. ``Oh please, I don't have any control over who seeks my
services and I don't have a lot of control over what's wrong with
them. I just try to help them. I am out here in the boondocks
trying to translate your program into health care.''
My charts were sent out to idiots who didn't have enough to
do. They weren't very smart, because all of their criticisms
later had to be retracted. In the meantime, $6 million was spent
in Illinois to prove that doctors like me are incompetent.
Dollars cut from actual medical care and given to PROs to
terrorize our lives. Occasionally they nailed someone and took
him to a hanging court. How much better it would have been to
spend that money on help for us.
Before the law, I am a pariah. I don't live under the
Constitution of the United States of America; I live under the
Code of Hammurabi....I once received a Transmittal Five citation.
The crime I committed was a year before the ruling was invented.
No one in government circles seemed to worry about Ex Post Facto.
I am not sure how it got rescinded.
Laws shouldn't abuse us, and we shouldn't accept abuse.
What is the current theory of child abuse? The parent
(substitute government) is overstressed and takes it out on one
of the children. Usually not all of the children, one of them.
The child selected for abuse has a certain personality. The
child feels he deserves it. Like so many country doctors who
feel very humble and accept so much criticism. The other
children do not feel unworthy and do not accept the abuse,
therefore they do not get abused. The parent gets some kind of
libidinous satisfaction out of abusing the child. The
governmental employees who were basically worthless people with
no careers of their own got satisfaction out of pushing doctors
around. The abused child is a scapegoat, and in everyone's mind
becomes responsible for the uproar.
Just writing to Congressmen doesn't work. They are like
Saddam; all they understand is sheer power.
Do you remember the movie Network when everyone leaned out
the windows and said, ``I'm mad as hell and I won't take it
anymore''? That is what doctors need to do.
Elizabeth B. Korte, MD, Family Doctor of the Year
excerpted from a speech in Iowa City, March 5, 1991
[Some of the younger doctors in the audience who either accept
the situation as it is or have not experienced what I am talking
about were negative or hostile. I fired up the language and
maybe I went too far. ``Dr. Korte,'' some said, ``could you tone
it down for the students; we don't want to scare them out of
family practice.'' But their sweet little idealistic faces made
me feel like a rat, not telling them how they are going to be
treated. Others said, ``The young doctors don't relate to what
you are saying because they have never known the freedom''!]
HCFA to Test ``Bundled'' Fees for Cataract
The Health Care Financing Administration (HCFA) recently
announced that three geographic areas have been selected to test
``bundled'' or ``global'' fees for cataract surgery:
Albany/Troy, NY; Cleveland, OH, and Dallas/Ft. Worth, TX. The
test payment system, called the Medicare Cataract Surgery
Alternate Payment Demonstration Project, will be tried for three
The Limited Legal Consultation Service has received a number
of telephone calls from AAPS physicians throughout the country
who are concerned about the implications of this project.
Under the new system, HCFA will pay a single fee for
intraocular lens implant surgery instead of individual costs
incurred by the surgical facility and the surgeon. HCFA's hope
is that the ``bundled'' fee will be less than the total fee it
Surgical centers and hospitals in the three areas would act
as the lead organizations on behalf of the ophthalmologists on
their staff who agree to participate. The facility must submit a
flat fee. Medicare is to pay this fee to the facility, which
will then pay physicians.
``We must offer proper incentives to providers if we are to
receive better value to our health care dollars,'' stated HCFA
Administrator Gail Wilensky. ``One good way to achieve this is
to pay a negotiated price for a variety of services. In this
way, providers themselves can decide where to economize and still
offer competitive prices'' (BNA's Medicare Report).
A spokesman for Abt Associates of Cambridge, MA, the company
providing the technical support for the design and implementation
of the project, assured the Legal Service that the new fee
program is voluntary. HCFA is to select ``providers'' to be in
the fee program on the basis of the physician's record of quality
assurance, number of surgeries performed, complication rate, and
medical ``appropriateness,'' as well as price.
Obviously, if HCFA determines that cataract surgery can be
obtained from hospitals and patients for a single fee, this fee
arrangement will be implemented across the country for cataract
surgery and other medical procedures as well.
The Legal Service is concerned that hospitals and surgical
facilities will attempt to coerce ophthalmologists to participate
in this program. There are concerns about retribution or
intimidation for one group, and economic or credentialling
problems for the other group. The Legal Service will follow
closely the implementation of this program.
Physician Wins on Appeal to ALJ
Two years after appealing claims denials related to
percutaneous transluminal coronary angioplasties (PTCA), Ralph
Millsaps, MD, was awarded the ``full amount in controversy''
(about $1500) by an Administrative Law Judge.
The Medicare carrier denied payment (sometimes) for patient
visits, arguing that they should be covered by HCFA's ``global
surgery'' reimbursement. The ALJ ruled that PCTAs are not
At the same time that he appealed to the ALJ, Dr. Millsaps
had filed suit in federal district court. The court denied him a
hearing because he had not first exhausted his administrative
remedies (Part B News, 4/1/91).
Dr. Millsaps, who is a member of AAPS, practices cardiology
in Evansville, IN.
State May Revoke License Based on PRO Findings
On Feb. 8, 1991, the West Virginia Supreme Court of Appeals
ruled that a state licensure board need not make an independent
finding of fact in order to revoke the license of a physician who
has been excluded from the Medicare program.
It would be ``unreasonable and a waste of resources to
require the board of medicine to reexamine, individually, every
case discussed in detail by the PRO, an agency comprised of
doctors whose sole duty is to review such cases,'' ruled the
court. The court rejected the doctor's ``after-the-fact''
complaint that the PRO assessment was not adequately detailed
because it was made only after the board had revoked his license
(BNA's Medicare Report 3/8/91).
Physician Awarded Attorney's Fees
Because the case brought against him by HHS Inspector
General Richard Kusserow was not ``substantially justified,''
Ruben Thorbus, MD, was awarded attorney's fees by Administrative
Law Judge Allan P. Ramsay, Jr.
This decision was considered to be another reverberation
from the discovery of the bounty system used to reward
investigators for meeting quotas in the prosecution of physicians
``Arbitrary and capricious'' conduct seems to pervade the
entire sanctions process, in Judge Ramsay's opinion. The
official responsible for issuing the preliminary and final
sanctions in Dr. Thorbus' case (James Patton of the Office of
Administration Sanctions) ``admitted that he never saw the
evidence,'' Ramsay wrote (CMA Medical Executives Memo 3/22/91).
Yes, Regulation Can Be Turned Back
During World War II, all important consumer goods were price
controlled. After the war ended, the bureaucrats (who liked
their jobs) and most economists and intellectuals (with the
exception of Ludwig von Mises) wanted the price controls to
continue. Only the common people disagreed.
On Nov. 5, 1946, the voters told many sitting Congressmen to
go home. The Republicans took control of both houses, picking up
57 seats in the House and 13 in the Senate. The new Congressmen
were overwhelmingly committed to ridding the economy of price
controls and other lingering wartime regulations.
Former President Hoover commented: ``The whole world,
including the United States, has for years been driving to the
left on the totalitarian road of `planned economy.' America is
by this election the first country to repudiate this road''
(Gary M. Anderson, ``The 1946 Voter Revolt Against Government
Regulation,'' The Freeman Feb 1991).
AAPS welcomes Drs. Frederick Alexander of Joliet, IL; Vishnu
Amin of Emerson, NJ; Jeffrey P. Barasch of Ridgewood, NJ; Richard
Basuk of Montvale, NJ; Jeffrey Berdini of Woodcliff Lake, NJ;
Alex Biener of Emerson, NJ; Mary Blome of Cresskill, NJ; William
K Boss, Jr. of Hackensack, NJ; Steve Brenner of Emerson, NJ;
Joseph Buder of Sandusky, OH; Ann and Robert Bullington, Jr. of
Phoenix, AZ; Don Buswell-Charkow of Ocoee, FL; Robert Callahan of
Tampa, FL; Frank Candido of Emerson, NJ; Trent Carroll of
Springfield, OH; Michael Cooney of Columbus, OH; D.C. Dantini of
Ormond Beach, FL; Steven H. Davis of Whittier, CA; Robert del
Junco of Orange, CA; Tirso del Junco, Jr. of Los Angeles, CA; Ira
Esformes of Emerson, NJ; Zev Fainsilber of Westwood, NJ; Mario
Fatigati of Pittsburgh, PA; M.A. Fermaglich of Teaneck, NJ;
Herbert Fine of Westwood, NJ; William Frank of Sanford, ME;
Stefan Fromm of Dalton, GA; MR Grate of Tallahassee, FL; Nathan
L. Graves of Grapevine, TX; Michael Gross of Emerson, NJ; James
S. Hanner of Tampa, FL; Mark Helbraun of Emerson, NJ; George
Jacobs of Oregon, OH; Mark Jenkins of Surgoinsville, TN; Paul B.
Jones of Grand Junction, CO; Edmond Jordan of Greenwood, SC;
Thomas Kaminski of Warren, OH; Theodore Kanellakes of Joliet, IL;
Gary Karpf of Princeton, NJ; Charles Kordula of Westwood, NJ;
Timothy Lefevre of Tarzana, CA; William Martin of W. Kennebunk,
ME; William Matthews of Concord, CA; William McHenry of
Corsicana, TX; Daniel J. Morris of Tampa, FL; Ralph Myrow of
Westwood, NJ; Mary Newburger of Concord, CA; Milne J. Ongley of
Newport Beach, CA; Paul Parker of Montvale, NJ; Martin Phee of
Hinsdale, IL; Samuel Pietrandrea of Westwood, NJ; Harry Preble of
Houston, TX; Anthony Proske of Joliet, IL; Jeffrey Rapaport of
Fort Lee, NJ; David Ritter of Boca Raton, FL; Stanley Rossen of
Park Ridge, NJ; Laurence Rubin of Bethpage, NY; Lalantha
Samarsinghe of Westwood, NJ; Lee Schlosstein of Anchorage, AK;
Avery Seifert of Boise, ID; Michael Silverman of River Vale, NJ;
Frederick Small of Englewood, NJ; Michael Sternschein of
Ridgewood, NJ; Steven Stoller of Ridgewood, NJ; Robert Tague of
Ste. Genevieve, MO; Robert Walsky of Emerson, NJ; Robert Walsky
of Emerson, NJ; David Westbrock of Dayton, OH; Rudolph J. Wolf of
Skiatook, OK; Ignatius Zairis of Ridgewood, NJ; Stephen Zoretic
of Montvale, NJ; and the Women's Specialty Medical Group of
AAPS is especially pleased to welcome the following new
student members: Anthony T. Bernens, Dyatra Bursey, Merry Ann De
Leon-Sorrell, Nancy Flynn, Raoul B. Joubran, Nancy Morgan, Angela
M. Porter, Stephen Ross, John R. Shockley, John U. Siegrist, Jane
Uva, and Ben K. Weeman.
From Capitol Hill
Medicare ``Privileges''. The President's 1992 budget
request of only $1.56 billion for Medicare contractors falls
about $300 million short of what they need, according to the
Health Insurance Association of America. For the ``privilege''
of being paid on time (within 17 days for participating and 24
days for nonparticipating physicians), ``physicians and patients
would have to put up with greatly reduced carrier service.'' At
a time when major changes are expected to generate thousands (or
millions) of inquiries and appeals, the budget for handling them
would be cut in half.
Pay Now, Learn Regulations Later. An unprecedented
number of comments has delayed final regulations implementing the
Clinical Laboratory Improvement Act (CLIA), but not the billing
mechanism. In a ``few weeks,'' HCFA expects to send bills for
$261 plus an application for a ``provisional certificate'' to
550,000 ``entities'' believed to do testing on human specimens.
The form takes about 2.5 hours to complete; HCFA expects to
receive 320,000 of them. The $261 will be the first of many fees
that will be used to finance regulatory costs. HCFA expects to
contract with more than 10,000 people from state health
departments to inspect labs (Part B News 4/1/91).
Paying Dermatologists for EKG Readings. Ordinarily,
dermatologists do not read EKGs. However, the only way that HCFA
can think of to respond to the furor over the termination of
Medicare payment for ``routine'' interpretation of EKGs is to
slightly increase the fee for office visits. Under the RBRVS,
there are no specialty differentials for office visits.
Acknowledging the problem, Bernard Patashnik of HCFA said, ``the
reality is that [the payment] does not always go to the right
person.'' Anyway, ``it's just an idea'' (Part B News, ibid.)
Fascist Medicine Coming. ``We don't have to have a
health policy... we are stumbling in the right direction,'' said
Princeton economist Uwe Reinhardt. ``At the end of the 90s, [we
will have] 40% of healthcare paid for by the government and 60%
paid by the private sector through an insurance industry that is
private in name only'' (Med Tribune 3/2/91, emphasis added).
Apr. 26, 1991. Medicolegal seminar, cosponsored by St. Louis
Metropolitan Medical Society, St. Louis Airport Marriott,
St. Louis, MO. Call 314-371-5225 to register.
Apr. 27, 1991. Board of Directors meeting, St. Louis, MO.
Oct. 17-19, 1991. Annual meeting, Lexington, KY.