Volume 46, No. 11 November 1990

DO PHYSICIANS HAVE CIVIL RIGHTS?

The guarantees of due process at both state and federal levels are under siege on several fronts. This was the recurring theme of the 47th annual meeting of AAPS in Scottsdale, AZ, September 13-15.

The repeal of the Fourteenth Amendment to the US Constitution, which extends federal protections to the citizens of all states, could effectively be accomplished by the judicial invalidation of the Civil Rights Act of 1871, the grandfather of all civil rights legislation. The ``anti-Ku Klux Klan Act'' provides that a person who, under any statute, ordinance, or custom of any state, subjects another person to a deprivation of rights secured by the Constitution and laws shall be liable to the injured party in an action at law. This means that he can sue for damages, injunctive relief, or other proper redress.

Can a physician who is deprived of his privileges in a public hospital, without being afforded his due process rights, bring a civil rights action? This was the question raised in Caine v. Hardy, Mason, et al. (see AAPS News, Sept 1990). The answer appears to hinge on the interpretation of the Par- ratt/Hudson Doctrine. This doctrine was first enunciated in 1981, in the case of a prisoner named Parratt, whose $25 hobby kit was discarded by a guard. The Supreme Court ruled that Parratt had no cause for a civil rights action because the state could not have afforded him a predeprivation hearing, and the action of the guard was ``random and unauthorized.''

Writing the dissenting opinion in the Fifth Circuit court decision, Edith Jones (the only judge other than David Souter interviewed for the recent Supreme Court vacancy) argued that the Parratt/Hudson doctrine applied because state regulations did not authorize the action taken against Dr. Caine. The state had appropriate regulations; its employees had simply violated them. In other words, it was not the state itself, but persons employed by the state who were responsible for any wrong that might have been done.

In his report of the Limited Legal Consultation Service, AAPS Counsel Kent Masterson Brown stated that the Caine case will reach the Supreme Court. If the decision of the Fifth Circuit is overturned, it essentially means that ``there is no civil rights cause of action against a State.''

The due process problems involved in Medicare-Medicaid fraud investigations were discussed by psychiatrist Carol Brown, MD, of Honolulu and her attorney, R. Steven Geshell. The first problem is the vagueness of the regulations that physicians agree to abide by when they sign the contract with the government (usually without reading it).

``They tell you not to speed, but they won't tell you what the speed limit is,'' she explained.

Then there are the investigative techniques. Once a physi- cian is targeted (perhaps because she has spoken out on politically sensitive issues), the investigators seek evidence. Dr. Brown stated that 127 of her patients, including the sickest ones, were interviewed. In return for their testimony against her, prostitutes and drug dealers were promised reductions in their own sentences. Before Dr. Brown could even find out what the accusations were, investigators threatened to break down the door of her home in order to search for patient records. All records, even those of private patients who could be severely harmed by breaches of confidentiality, were subject to scrutiny. Photographs of Dr. Brown's office were identified as the ``scene of the [still unspecified] crime.''

In a two-week jury trial, Dr. Brown was acquitted of all charges. (Conviction could have carried a sentence of 670 years in prison for ``defrauding'' the government, as by coding visits in a manner not approved by the regulations.) The judge com- mented that the case should have been handled administratively, but that Medicaid had not followed its own rules.

Dr. Brown filed a lawsuit against the State of Hawaii on the 200th anniversary of the ratification of the US Constitution. Although one count is still pending, the allegation of denial of civil rights due process has been thrown out.

In addition to the possibility of investigators' disregard of their agency's own rules, proposed regulations concerning fraud and abuse sanctions may exceed statutory authority and violate the US Constitution, according to Astrid Meghrigian, Legal Counsel to the California Medical Association. Issues include the following: (1) Subjecting physicians to both criminal and civil sanctions for the same activity may violate the double jeopardy clause of the Fifth Amendment to the US Constitution. (2) Definitions of investigators' rights to ``- immediate access'' to records upon ``reasonable request'' seriously undercut Fourth Amendment protections from unreasonable searches and seizures. (3) Physicians proposed for exclusion from Medicare are in many respects presumed guilty until proved innocent. (4) Prohibiting the cross-examination of witnesses and almost all forms of discovery (such as depositions and interrogatories) violates fundamental concepts of fairness and justice.

Formerly, civil rights ``entailed a limitation of government power.'' The meaning of the term may now be actually reversed, implying an expansion of government power (Tom Bethell, The American Spectator 10/90). While quotas are effectively imposed for the supposed benefit of ``certified victims,'' another type of quota exists for certified villains, such as physicians (see p. 2). And if one class of citizens can be attainted, who shall be safe?

Kusserow Named Bureaucrat of the Year; Resignation Called For

HHS Inspector General Richard Kusserow, recipient of the AAPS Bureaucrat of the Year Award, was hanged in effigy at the 47th Annual Meeting. The awards ceremony was based on a tradition begun in 1764 by the Sons of Liberty, who hanged an effigy of Andrew Oliver from the Liberty Tree. (Oliver was the bureaucrat responsible for enforcing the Stamp Act.)

Kusserow received all the due process rights that his office accords to physicians in Medicare sanctions proceedings, including representation by counsel. His attorney, Vickie Yates Brown, was gagged after her first motion was denied by the judge. The jury, unbiased despite previously facing sanctions threats from HHS, deliberated for several microseconds before returning the verdict of ``Guilty.''

At the trial, Kusserow was indicted for initiating the bounty system that awarded merit pay increases to his agents based on the number of sanctions imposed, as was documented in the case of Melashenko v. Bowen. According to Carol Brown, MD, fraud was indeed found in the first few years of investigations. After that, she stated, agents had to ``find'' fraud where none existed in order to keep their jobs and justify the annual budget of $800 million. The 1984-85 performance review for James Patton (who made initial determinations of physicians' fates) showed that he needed to assess 10% more sanctions than in the preceding year in order to gain Level II merit pay-that is 390 sanctions with dollar penalties amounting to $9 million.

The OIG confirmed that the performance appraisals did say something like ``must complete X number of sanctions,'' but ``that's not a quota. It's a measure of a person's effectiveness'' (Psychiatric Times 9/90).

The procedure for meeting these ``targets'' has been described as ``legalized extortion'':

One high-ranking official in the OIG stated that if a doctor said he didn't have that kind of money, investigators might reply ``We're willing to accept your mortgage and if you die, we'll also take your estate'' (ibid.)

In an interview with Psychiatric Times, Donald Zerendow, former chief of the Medicaid Fraud Control Unit, stated that Medicaid providers are ``held responsible for protecting the program from its own confusions, complexities, and ambiguities. The provider is expected to unravel the mysteries, and then bill accordingly.'' Vague code descriptions allow them to prosecute ``essentially anyone they want to prosecute.'' ``If providers really understood all of this, I suspect that many would be hesitant ever to submit another bill to Medicare or Medicaid,'' Zerendow concluded (Psych Times 10/90).

Abuses by Kusserow and his agents were shown by ABC on Prime Time Live, September 20. The program was followed by demands for Kusserow's resignation from several medical organizations, including AAPS, the AMA, and the Massachusetts Medical Society.

AAPS Endorses NCPA Task Force Report, Declares Patients' Freedoms

``An Agenda for Solving America's Health Care Crisis,'' a task force report released by the National Center for Policy Analysis, has been endorsed by AAPS. This positive program, backed by careful economic analysis, offers free-enterprise solutions instead of more of the same. The program was summarized in the August issue of AAPS News. Copies of the report for yourself and other community leaders are available; call headquarters at 1-800-635-1196.

The Assembly approved the statement of patients' freedoms published in the September issue of AAPS News, with minor changes.

In other business, the Assembly voted the first dues increase in five years. Regular dues will be $250; introductory membership $125.

The slate of officers proposed by the Nominating Committee was elected by acclamation. Claud A. Boyd, Jr., MD, who practices dermatology in Augusta, GA, assumes the office of President. John H. Boyles, Jr., MD, ENT specialist from Centerville, OH, is the new President-Elect. V.L. Goltry, MD, of Boise, ID; James F. Coy, MD, of DeLand, FL; Nino Camardese, MD, of Norwalk, OH; and John Dwyer, MD, of Chicago, IL, were elected to the Board of Directors.

AAPS long-range plans include development of a set of model rules for binding arbitration in medical staff disputes, which could be incorporated into medical staff bylaws.

Message from the President

Current trends in medicine reflect the spiritual malaise of our society. We have embraced what Hayek called the fatal conceit: the idea that mankind has the ability to shape the world according to his wishes. At the same time, we still wish to turn our lives over to someone more powerful, despite confusion about who that someone might be. When we fail to obtain what we think is ours, we call for the state to intervene at the expense of others. This has led to a tremendous proliferation in governmental power, and marked decrease in our freedom to contract with one another for mutual benefit....

AAPS continues to teach the same philosophy as it has for nearly 50 years. The best medical care in this imperfect world occurs when the physician and patient together decide on a course of action, without third-party coercion or interference.

excerpted from Dr. Gregory Polito's welcoming remarks

Semmelweis Society Electronic Bulletin Board

Physicians who experience difficulty in obtaining due process are not alone. The Semmelweis Society is developing an electronic bulletin board to disseminate information and advice that may be helpful. Call AAPS headquarters for details, 1-800- 635-1196.

Independent Doctors of America Joins with AAPS

Members of Independent Doctors of America, an organization that has promoted the same ideals as AAPS, are being welcomed into our Association as IDA disbands. Frank Rogers, MD, founder and president of IDA, has long been a front-line defender of private medicine.

Blue Cross/Blue Shield of Kentucky Recalculates Fee Screens

In April, 1990, AAPS Director Sidney Steinberg, MD, filed suit asking the US District court to order the Secretary of HHS and the Medicare carrier to calculate 1990 fee screens in accordance with the requirements of the law. The carrier had previously released fee screens amounting to a 30 to 40% cut across the board for surgical services, basing them on a 1984 Court decision that had been ignored for years and effectively overruled by the Omnibus Budget Reconciliation Act of 1989 (see AAPS News, May, 1990).

In a surprise move on September 7, 1990, the federal Medicare carrier forwarded amended fee screens to all physicians in Kentucky. The cover letter stated:

The new September fee screens are substantially higher than the April fee screens; some have been increased by $400 to $500.

Dr. Steinberg regards the letter and the new fee screens as a complete admission by the Secretary of HHS and the federal Medicare carrier of the facts as plead in his case. Still, he does not agree that all the new fee screens actually represent the proper amounts based upon the OBRA of 1989. It is his intention to move the federal court to order the Medicare carrier in Kentucky to apply the proper methodology in the computation of all fee screens and to make retroactive adjustments on all claims filed since April 1, 1990.

The hearing in this case, originally scheduled for October 5, has been postponed until November 2.

Laboratory Regulations a Threat to Due Process

HCFA has received 43,000 comments on the proposed rules for implementing the Clinical Laboratory Improvement Act of 1988 (CLIA). Many have dealt with the cost of compliance, estimated to be $4 billion, and the effects on access to care. As many as 95% of physician office laboratories performing Level II tests may be shut down. An even more serious concern is the threat to physicians' due process rights.

The California Medical Association (CMA) in its comments states that the rules impermissibly burden physicians' and laboratories' rights by assessing fees to cover

the costs of follow-up visits, complaint inspections, sanctions, and administrative hearings if a laboratory appeals a sanction:

Laws that penalize the exercise of a constitutional right, as through the assessment of fees to cover the government's costs of adjudication, are probably unconstitutional. For example, an Oklahoma requirement that tenured teachers pay half the cost of a due process hearing was held impermissible by the 10th Circuit Court in Ranken v. Independent School District 876 F.2d 838 (1989).

In actuality, a certificate may be essential not only for the pursuit of a laboratory owner's livelihood but for the practice of medicine. According to Christopher Shaughnessy of the AAPS legal consultation service, the Act effectively institutes federal licensure for physicians. The definition of a ``laboratory'' is all-inclusive:

Does ``other examination'' include visual inspection of a discharge of bodily fluids during a physical examination?

Further, the Act states: No person may solicit or accept materials derived from the human body for laboratory examination or other procedures unless there is in effect for the laboratory a certificate issued by the Secretary under this section.

A venipuncture and catheterization for specimen are defined to be clinical laboratory services by Aetna, the Arizona Medicare carrier, even if the physician sends the material to the laboratory for analysis. Does a physician become a laboratory by drawing blood or even by ordering a blood test?

Or is he responsible for ascertaining that the laboratory has a valid certificate from the DHHS?

The definition of laboratory is crucial-an issue that also figures in the decision in AAPS v. Bowen, and one on which the Sixth Circuit Court declined to comment. (Physicians may decline Medicare assignment; laboratories may not.)

The penalty for intentional violation of any requirement of this section or any regulation promulgated thereunder is a year's imprisonment or a fine or both.

Christopher Shaughnessy of LLCS states that under the Federal Administrative Procedure Act, federal agencies are required to respond to every comment that is submitted. If they fail to do so, regulations are invalid.

A copy of comments submitted by AAPS is available on request.

From Capitol Hill

Anti-Hassle Bill Gains Strength, Faces Hassles. The Medicare Physician Regulation Relief Amendments bill (HR 4475), introduced by Rep. Roy Rowland, MD, (D-GA) has gathered at least 238 cosponsors. The main provisions are: (1) to require HCFA to release its medical review screening parameters; (2) to allow ``covering'' physicians to bill under the provider number of the patient's usual physician; (3) to prevent carriers from charging physicians for information necessary to fill out Medicare claims; (4) to allow medical societies to represent a class of physicians in appealing denials; and (5) to establish a physician advisory group to review Part B policy. Most medical groups have supported the bill, although it does less to eliminate hassles than to make information available so that doctors can comply with the law.

Despite having enough cosponsors to assure passage, the bill is not expected to reach the floor for a vote because this would require approval of both the Energy and Commerce and the Ways and Means Committees. Pete Stark, Chairman of the Ways and Means Health Subcommittee, has questioned whether he can support the bill. Proponents hope to add the bill to the Budget Reconcilia- tion Act.

Kolter Bill Gutted. The bill to repeal the requirement that physicians file all Medicare claims (HR 4772) will be amended to provide that patients may file their own claims if they wish. Rep. Kolter's constituents thought he was ``looking out more for the doctors than for the patients'' (Part B News 10/8/90).

Code-Checker Testing ICD-9 Codes. Carriers are looking for codes that are unlisted, truncated, or inappropriate for the patient's age or sex. They are required to give 60 days advance notice before denying assigned claims because of coding errors.

Georgia Physicians Expect Repayment Demands from Medi- care. Georgia Medicare carrier Aetna failed to reduce payments for ``overvalued'' procedures between April and August, 1990, due to a programming error. Physicians will have to pay back about $2.1 million.

PROs Innocent Until Proved Guilty. Despite employee allegations that California Medical Review Inc (CMRI) had ``auto- certed'' 51,094 inpatient claims instead of reviewing them, CMRI's contract was automatically renewed for the three-year period beginning April 1, 1989. It was awarded $83 million, the largest amount ever given a PRO. HCFA apparently would prefer to settle the case for $1.2 million, with a stipulation that ``mistakes'' were made that did not constitute fraud, as the ``best outcome for both parties'' (Physicians Financial News 9/15/90).

New Members

AAPS welcomes Drs. Frank J. Bonello of West St. Paul, MN; J. Hilton Brooks of Middlesboro, KY; Edward W. Davis of West Covina, CA; Frank A. English of Roswell, NM; Stephen D. Ertischek of Oxford, NC; R. J. Fisette of Bridge City, TX; Larry B. Fishbaugh of Paulding, OH; Kenneth Frankel of Pasadena, CA; James Guenther of Lancaster, OH; Samuel S. Kaplan of Scottsdale, AZ; Keith McCoy Kimbrell of Crossville, TN; Madhu Mehta of Cleveland, OH; John G. Morrison of Richmond, VA; Gordon D. Peters of Phoenix, AZ; Michael Schlitt of Renton, WA; Don K. Snyder of Paulding, OH; and David V. Young of Washington, DC.

These are the legal actions in which AAPS has been involved:

AAPS vs. Weinberger

AAPS challenged the constitutionality of the act amending the Social Security Act to create the Professional Standards Review Organizations (PSRO) in 1972. A three judge panel in the US District Court for the Northern District of Illinois upheld the act's constitutionality. Petition for Writ of Certiori was denied by the US Supreme Court.

McGuffy vs. Hall

AAPS physicians brought a constitutional challenge to the 1976 Kentucky Medical Malpractice Act, which made the purchase of a minimum amount of malpractice insurance compulsory in the Commonwealth of Kentucky. Failure to purchase such insurance would result in loss of licensure. The act also caused the state to lend its credit for the payment of judgments and settlements. As a result of the challenge, the 1976 Medical Malpractice Act was ruled unconstitutional in its entirety by the Supreme Court of Kentucky. Following this opinion, compulsory malpractice requirements have also been struck down in Pennsylvania, Missouri, North Dakota, Alaska, and Hawaii.

Patrick vs. McClure

AAPS physicians intervened in the Franklin Circuit Court to recover, on behalf of all Kentucky physicians, the monies collected by the Patient's Compensation Fund created by the Kentucky Medical Malpractice Act, which had been declared unconstitutional and void ab initio. As a result, $2.2 million was recovered and distributed to physicians.

State of North Carolina vs. Califano

AAPS filed a brief amicus curiae in the US Supreme Court supporting the State of North Carolina in its unsuccessful challenge to the constitutionality of the National Health Planning and Resources Development Act, the act that created Health Systems Agencies (HSA), which served to pass upon the appropriateness of capital expenditures by health care providers. That act has since expired.

People of the State of New York vs. Roth

AAPS filed a brief amicus curiae and argued orally in the Nassau County Court in defense of eight physicians, known as the ``Long Island Eight,'' who had been indicted by the State of New York for criminal violation of New York State Antitrust laws. The physicians had been accused of forming a boycott by encouraging other physicians not to perform nonemergency services for patients covered under the Worker's Compensation and No Fault Insurance laws as said reimbursement was unremunerative. AAPS argued that the New York State Antitrust laws did not apply to the practice of medicine and that the indictments were unlawful. The Nassau County Court agreed with AAPS, and the indictments were dismissed. This decision was upheld on appeal before the New York Court of Appeals, the highest court in the State.

Liggett vs. Kansas

AAPS filed a brief amicus curiae in the US Supreme Court supporting the jurisdictional statement of a Kansas physician who sought to challenge the constitutionality of the Kansas Medical Malpractice Act.

Union Labor Life vs. Pireno

AAPS filed a brief amicus curiae in the US Supreme Court in support of a chiropractor who challenged the peer review of insurance claims as being violative of the Sherman Antitrust Act. The question was whether insurance claims peer review was protected under the ``business of insurance'' exemption in the McCarran-Ferguson Act. The Supreme Court agreed with the AAPS position and found that insurance peer review was not the ``business of insurance,'' and that Dr. Pireno could proceed with his claim.

Jefferson Parish Hospital District #2 vs. Hyde

AAPS filed a brief amicus curiae in the US Supreme Court supporting Dr. Hyde in his challenge, under the Sherman Antitrust Act, to an exclusive anesthesiology contract awarded to his competitor by the Jefferson Parish Hospital District 2 in New Orleans, LA. The US Supreme Court upheld the exclusive contract, but made significant -- and generally beneficial -- law with respect to the determination of market power under the Sherman Act.

Cullum vs. Appalachian Regional Hospitals

AAPS is supporting a challenge by past AAPS President Cullum to the validity of a hospital requirement to purchase $1 million in liability insurance as a condition of staff privileging. A restraining order was obtained, and the case is presently pending in the Kentucky Court of Appeals on the issue of whether such a requirement is affordable and reasonable. Whitney vs. Heckler

An action brought by about 200 Atlanta, GA, area physicians, most of whom were AAPS members, challenged the constitutionality of the physicians' fee freeze enacted through the Deficit Reduction Act of 1984. Published opinions were filed by the US District Court for the Northern District of Georgia and the US Court of Appeals for the Eleventh Circuit. Though the constitutionality of the Act was upheld, the large number of opinions created the most sweeping law to date on Fifth Amendment challenges to temporary freeze measures enacted by Congress. The opinion of the Court of Appeals may well stand as a barrier to a future permanent freeze unless certain measures are taken by Congress to provide for a reasonable rate of return for the industry whose fees are in any way restricted. The US Supreme Court denied a Petition for Writ of Certiori.

Patrick vs. Burget

AAPS filed a brief amicus curiae in the US Supreme Court supporting a physician's challenge, under the Sherman Act, to a medical staff peer review decision that restricted his privileges to practice in an Oregon hospital. The physician won a nearly $2 million jury verdict against the peer review committee, but that verdict and judgment were reversed by the US Court of Appeals for the Ninth Circuit on the ground that the State of Oregon, by simply enacting a peer review statute, made the act taken against the physician an exempted state activity. The US Supreme Court agreed with the AAPS position and reversed the Ninth Circuit on the ground that the state had not intervened to a sufficient extent to exempt peer review from antitrust action. The case has vast implications for physicians seeking recourse for actions by their peers that injure their property rights and deny them the opportunity to compete. The decision has led to the reversal of at least two other federal circuit court holdings.

State of New York vs. Bowen

AAPS filed a brief amicus curiae in support of the Secretary of HHS in the US Court of Appeals for the Second Circuit (in New York City), arguing that the court should affirm the judgment of the US District Court for the Southern District of New York and uphold the constitutionality of federal regulations under Title X of the Public Health Service Act. These regulations prohibit the expenditure of public funds for ``counseling concerning the use of abortion as a method of family planning,'' and require the ``dissemination of information'' to patients that would be ``necessary to protect the health of the mother and unborn child'' until referred for purposes of appropriate prenatal and/or social services. The case is pending in the Second Circuit.

Planned Parenthood Federation of America vs. Bowen

AAPS filed a brief amicus curiae in support of the Secretary of HHS in the US Court of Appeals for the Tenth Circuit (in Denver, CO) arguing that the Court should reverse the judgment of the US District Court for the District of Colorado, and thus uphold the constitutionality of the same regulations at issue in State of New York vs. Bowen. The case is pending in the Tenth Circuit.

West Virginia Association of Community Health Centers, Inc. vs. Sullivan

AAPS filed a brief amicus curiae in support of the Secretary of HHS in the US District Court for the Southern District of West Virginia (in Charleston, WV) arguing that the court should uphold regulations restricting the use of public funds for abortions (vide supra). The case is pending.

Association of American Physicians and Surgeons, Inc. vs. Sullivan

AAPS and its Ohio members filed a lawsuit challenging the authority of the Secretary of HHS to require``nonparticipating'' physicians to bill for clinical diagnostic laboratory tests only on an ``assigned'' basis, as such requirement is contrary to the explicit language of the Medicare Act as most recently amended. The lawsuit was filed by AAPS in the US District Court for the Northern District of Ohio (in Toledo, OH). The district court upheld the position taken by the Secretary. That decision was appealed to the US Court of Appeals for the Sixth Circuit (in Cincinnati, OH). The district court's appeal is notable because, on the basis of Whitney vs. Heckler (vide supra), the court found that AAPS and its members had standing to bring the action. The case is now pending.

Coy vs. Florida Birth-Related Neurological Injury Compensation Association

AAPS filed a lawsuit in the Circuit Court in and for Leon County, Florida (in Tallahassee, FL) challenging the constitutionality of the Florida Birth-Related Neurological Injury Compensation Act of 1988. In this act, the Florida legislature created a scheme whereby actions arising from birth- related neurological injuries would be heard only by a claims panel and would relieve physicians practicing obstetrics -- who chose to be included in the program -- from paying for medical malpractice insurance. The scheme, however, mandated that every physician licensed by the State of Florida be required to pay an annual fee -- which could be raised by the Commissioner of Insurance to any extent he determines necessary -- or suffer the potential loss of his or her license to practice medicine. The case was tried on June 13, 1989, and stands submitted for a decision.

Morand vs. St. Paul Fire & Marine Insurance Co.

AAPS has moved to file a brief amicus curiae in support of Charles Morand, MD, in the Fifth District Court of Appeals of Florida (in Daytona Beach, FL) arguing that the appellate court should reverse a Florida Circuit Court that found a malpractice insurer did not breach its fiduciary obligation by settling a case without the policyholder's permission. Discovery revealed that the physician was not negligent. The decision to settle such cases, given the reporting of settlements to licensure boards, government agencies, and hospitals, is of critical importance to the physician involved. The case is pending.

In Summary

AAPS legal actions have covered a wide range of issues. Significant successes have been achieved in advancing the law in favor of private medicine and in protecting the rights of physicians.