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of American Physicians and Surgeons, Inc.
A Voice for Private Physicians Since 1943
Omnia pro aegroto
Volume 46, No. 10 October 1990
NATIONAL DATA BANK IN OPERATION
The National Practitioner Data Bank, established by the
Health Care Quality Improvement Act of 1986, is scheduled to
begin operation on September 1, 1990. The Data Bank is supposed
to protect the public from incompetent medical practitioners.
Information that must be reported to the Data Bank includes:
medical malpractice payments; any disciplinary actions taken by a
Board of Medical Examiners relating to a physician's professional
competence or professional conduct; professional review actions
that result in suspension, limitation, or reduction of clinical
privileges in a hospital or other health care entity for a period
exceeding 30 days; and adverse membership actions by professional
societies that engage in peer review activities.
Any physician who makes a payment to a patient as a result
of a claim or a judgment is obligated to report to both the Data
Bank and the state medical board. Failure to do so is subject to
a civil monetary penalty of up to $10,000 for each such payment.
The stipulation that a settlement is ``confidential'' does not
obviate the reporting requirement.
Instructions by the Department of Health and Human Services
(HHS) require that reports of adverse actions against privileges
be made in 600 characters or less. (Nine lines of this
newsletter contain approximately 600 characters-spaces count.)
Still, the report should be fair, complete, and comprehensive,
lest a career be ruined on the basis of misinterpretation.
Physicians are supposed to receive a copy of everything that
goes into their files. They have 60 days from the date the Data
Bank processed the report to dispute the accuracy of the
information. The physician must first ``attempt to discuss the
situation with the reporting entity to resolve the dispute.'' If
the reporting entity does not correct or void the disputed
report, the Secretary of HHS will, upon request, review written
information submitted by both the physician and the reporting
entity and will conclude whether or not the information is
accurate. The Secretary will not determine the merits of the
claim or the appropriateness of the professional review action.
Health-care facilities will be required to query the Data
Bank every two years for all staff members with clinical
privileges, including nonphysicians such as podiatrists, clinical
psychologists, dentists, and physicians assistants. (At present,
they are only required to report actions taken against physicians
and dentists.) Failure to query is subject to a $10,000 fine per
instance, whether or not any information was present in the
The Data Bank is to be run by an outside contractor, UNISYS
Corporation, which won a $15.9 million, five-year contract.
Initially, the AMA and the Federation of State Medical Boards
submitted a bid for the contract, as ``an opportunity to prove to
an increasingly wary public that physicians are interested in
policing themselves.'' The AMA's ``master file'' could have been
easily expanded to fill the data-bank function as first
conceived. However, when the concept expanded into a
``bureaucratic nightmare,'' the AMA withdrew its bid.
The UNISYS computers are supposed to be ``tightly secured,''
and there is a $10,000 for each violation of confidentiality. The
bank is not supposed to be a ``fishing ground'' for attorneys,
although information is available to attorneys filing malpractice
suits against hospitals that have failed to request information.
Because all settlements must be reported, it is expected
that more physicians will demand expensive trials. The AMA is
working to establish a ``threshold'' for reporting, say $30,000.
``Consumer advocates'' are not pleased about the Data Bank,
saying that it is ``critically flawed.'' It is ``incomplete''
because it will not apply retroactively, and it is confidential
and closed to the public. Ralph Nader's Public Citizen Health
Research Group wants more consumer oversight over physicians,
stating that the number of serious disciplinary actions taken by
medical licensure boards is ``shockingly low.'' (Between 1984
and 1987, the number of serious sanctions -license revocation,
suspension, and probation-rose 98% nationally and 265% in
Colorado. Public Citizen applauded the increase in Colorado, but
said ``more could be done.'' Dr. Ronald M. Davis, MD, of
Seabrook, TX, cites John Wayne's words to the miscreant in Rio
Bravo: ``We'll remember you said that.'' Dr. Davis notes that
if Public Citizen prevails, and the number of disciplinary
actions increases every year, and the number of applicants to
medical school and family practice residencies continues to
decrease, the doctor ``glut'' will be history by the year 2000.)
The Cost of Regulation
From the National Center for Policy Analysis:
The direct cost of complying with regulations totals $725
per person per year.
Thirty percent of the decline in US productivity during the
1970s can be attributed to OSHA and EPA regulations.
FDA requirements have reduced the number of new drugs by 40%
and have doubled the cost of developing new drugs.
Car fuel-economy standards will cause from 2,200 to 3,900
additional fatalities over the next decade.
Real spending on federal regulation rose 21% between 1981
From Capitol Hill
Medicare Claims Filing. HR 4772, Rep. Kolter's bill to
repeal the requirement that physicians file all Medicare claims,
is gradually accumulating cosponsors, and Sen. Shelby of Alabama
has stated he will introduce a companion bill in the Senate. If
you don't know your Representative's telephone number, you can
call the Capitol switchboard at 202-224-3121.
Medicare beneficiaries are being encouraged by Medicare
carriers to inform on physicians who refuse to file claims. Such
beneficiaries can obtain a copy of HCFA form 1490S and receive
assistance from their Social Security office in filling it out.
The clerk is instructed to ``advise the beneficiary to...attach a
signed statement outlining the failed attempts to get the
physician or carrier to submit a Medicare claim on their
behalf.'' Information sent to beneficiaries emphasizes that
physicians cannot charge extra for doing the paperwork and are to
be fined $2,000 per violation if they ``willfully and repeated-
ly'' do not submit Part B claims.
Physicians are advised to place a stamp on receipts for
Medicare payments cautioning patients not to file for their
benefits themselves, lest they cause trouble for their physician.
Carriers are being told to use 10 patient-submitted claims
per month as a threshold for taking action against the doctor. A
HCFA official warned that the agency ``could change that tomorrow
and never tell them [the doctors] about it.'' He said that
``physicians have no out whatsoever'' for avoiding the require-
ment (Part B News 7/30/90).
Physicians have a year to file the claims. Some may choose
to delay filing in the hope that the requirement will be repealed
and that the law will be retroactive. Claims do not need to be
filed for noncovered services. For some physicians, the
requirement is the final straw causing them to withdraw
altogether from the Medicare program (vide infra).
It is claimed that 90% of claims were filed by physicians
before the requirement was enacted, but Congress has no idea how
many physicians were not filing.
Some Congressmen have indicated in their refusal to
cosponsor HR 4772 that they consider involuntary servitude by
physicians a small price to pay for assuring that elderly persons
collect all the government benefits to which they are entitled.
A National Drug Formulary? Budget Director Richard
Darman has proposed the creation of a national prescription drug
formulary by 1992. HHS would establish a Pharmacy and
Therapeutics Committee to write the formulary. The cheapest drug
in each therapeutic class would be the ``preferred drug'' for
Medicaid. Pharmacists would be required to substitute the
``preferred drug'' in all cases, except when the physician spells
out in writing that a brand-name drug is ``medically necessary.''
Pharmacists, but not physicians, would be granted immunity from
liability for harm resulting from the substitution of any
therapeutic alternative approved by HHS (NAPS Legislative Alert,
Sullivan Denounces National Health Insurance. Louis
Sullivan, MD, Secretary of HHS, has stated that national health
insurance isn't needed and wouldn't be tolerated in the US. He
pointed to serious problems with the Canadian health care system,
including long waits and de facto rationing.
Rep. Fortney (``Pete'') Stark, author of a bill that would
create a $100-plus billion national health care system, has
called Sullivan a ``disgrace to his profession and race'' for
failing to do more to promote health care for the poor.
Seven Conditions Chosen for Treatment Guidelines. HHS
has picked seven medical conditions for which it will develop
treatment guidelines: bedsores, chronic pain, depression in
outpatients, urinary incontinence, cataracts, sickle cell
disease, and benign enlargement of the prostate. Panels of 10 to
15 experts will refine the approaches, which will include methods
of prediction, prevention, diagnosis, and treatment. Three sets
of guidelines should be ready by January, 1991.
``Incentives'' to Increase Assignment Rates. The New
York legislature has passed a bill holding MD balance billing to
115% of the Medicare ``reasonable'' charge. If the total number
of claims taken on assignment does not increase by 5% or more by
1993, the balance billing limit would be decreased to 105%;
otherwise, it will only be diminished to 110% of the Medicare
Insurance carriers also have an incentive to increase the
``participation'' rate by whatever means their ingenuity can
suggest. Nationwide Mutual Insurance Company, the Medicare
carrier for Ohio, received a payment of $230,300 because of an 8%
increase in participation rate based on covered charges between
April, 1988, and January, 1989. (Information was obtained by
AAPS Director Nino Camardese, MD, under a Freedom of Information
The End of a Medical Era
As of Sept. 1, 1990, I will no longer see Medicare patients
in my practice....Congress has decreed that doctors will be
required to prepare and submit all Medicare Part B claims for all
Medicare patients. The ethics which I have abided by for all
these years set out my medical responsibilities to my patients,
not the Government, Congress, or insurance companies, and the
patients were responsible to me. I have been, by the
Government's definition, a nonparticipating physician- meaning to
me that I have a physician's relationship only with my patient.
I am not a physician who takes care of a patient and is then
subservient to the Government for payment, and is controlled by
the Government as to the patient's treatment.
Now I find by our congressmen's directive that even though I
have cared for, billed to, and collected from that Medicare
patient, I must now fill out and submit this demanded paperwork
(for which they forbid any charge for the additional paperwork
and time) for each Medicare service,...and they will reprimand
and fine me if I do not carry out this mandate. Congress has
also ``in its wisdom'' set it up so the doctor can take one year
to submit this form...; meanwhile, the patient would have to wait
for his reimbursement.
It has come to pass that we as doctors are now spending more
time responding to Congress' rules...than we are spending with
So a medical era comes to an end in this area. My
grandfather practiced medicine in Minburn, IA, 20 miles from
here, from 1870 until 1918; my father practiced in Jamaica from
1902 until 1952; and I, in Jamaica from 1946 until now.
Thanks to you US Senators and Representatives for the new
medical era in the community.
William A. Seidler, Jr., MD
Health Law Commentary
by Kent Masterson Brown
AAPS Legal Counsel
AAPS Physician Wins Major Civil Rights Victory
in US Court of Appeals
The stunning victory won by AAPS member Curtis Caine,
Jr., MD, in the US Court of Appeals for the Fifth Circuit
(New Orleans, LA), will affect the conduct of medical staff
credentialing and disciplinary procedures in public hospitals for
years to come.
Dr. Caine, a board-certified anesthesiologist, was a
of the medical staff of Hinds General Hospital, a publicly
owned institution in Jackson, MS. In 1987 and 1988, a large
partnership of anesthesiologists sought an exclusive contract to
provide anesthesia at the hospital. Dr. Caine and a number of
private practicing anesthesiologists objected strenuously. Dr.
Caine then ran against the principal partner in the large
anesthesia group for the chairmanship of the department, losing
by one vote.
Within weeks after the election, the department chairman
preferred charges against Dr. Caine, with the result that Dr.
Caine was summarily suspended from the medical staff.
Ultimately, his privileges were revoked.
Dr. Caine filed a lawsuit in the US District Court for
Southern District of Mississippi under the Civil Rights Act of
1871 (the anti-Ku Klux Klan Act), 42 U.S.C. 1983, alleging a
deprivation of his property without due process of law, in
violation of the Civil Rights Act and the Fourteenth
Amendment to the Constitution of the United States. The
District Court dismissed the case, asserting that Dr. Caine did
not state a cause of action under the federal Civil Rights Act
because the State of Mississippi had enacted a statute that
allowed an aggrieved physician to proceed to state chancery
court after his or her privileges were revoked, to determine
whether the hospital had violated its medical staff bylaws. In
the chancery court, Dr. Caine-even if he was
successful-would not have been able to ask for any damages;
would not have been given a jury trial; and would not even
have been given an opportunity to introduce evidence. Yet,
the US District Court asserted that such represented, for
purposes of the Parratt/Hudson Doctrine (twin cases handed
down by the US Supreme Court in 1981 and 1984,
respectively), an adequate post-deprivation remedy so as to
deny Dr. Caine access to a remedy created by Congress.
Dr. Caine appealed the decision to the US Court of
Appeals for the Fifth Circuit. The case was argued by AAPS
Counsel Kent Masterson Brown on January 8, 1990.
On June 27, 1990, the Fifth Circuit handed down its
opinion, reversing the US District Court and remanded the
case back to that Court, holding that, even if the State of
Mississippi had provided a statutory means allowing a physician
to proceed to a chancery court upon dismissal from a medical
staff, the Court doubted that such a remedy was ``adequate.''
More importantly, the Court of Appeals stated that the
Parratt/Hudson cases (which created immunity for the State
from civil rights liability for ``random and unauthorized'' acts
of state agents) cannot be used to deny a physician a remedy
guaranteed by the Civil Rights Act of 1871 in a US court
where the government-as in a publicly owned hospital-had
ample opportunity to provide the physician with due process
of law before and after his suspension from the medical staff.
Medical staff privileges, stated the Court, ``embody such a
valuable property interest that notice and hearing should be
held prior to termination or withdrawal.'' Also, Dr. Caine
alleged that the members of the medical staff and hospital
officials were biased and predisposed to his elimination for
reasons other than the quality of care he had rendered to his
patients and that he was systematically denied his rights to due
process. In cases in which the State, by statute, requires
medical staff bylaws to govern medical staff dismissals, none of
the acts performed by those sitting on medical staff and
hospital committees determining medical staff privileges can be
deemed ``random and unauthorized'' as a matter of law.
Since handing down the decision, the Court has agreed to
rehear the case en banc.
The American Health Legal Foundation has voted to
support Dr. Caine's case.
Are There Limits to the State's Power to Tax?
In ruling against AAPS physicians in their challenge to
the constitutionality of the Florida Birth-Related Neurological
Injury Compensation Plan, the Circuit Court of the Second
Judicial Circuit in and for Leon County, FL, cited Eastern
Airlines, Inc. v. Department of Revenue:
When the state Legislature...undertakes to exert the
taxing power, every presumption in favor of the
validity of its action is indulged....The burden is on
the one attacking the legislative enactment to negate
every conceivable basis which might support it....
The Court further stated that ``a tax may even be
as to restrict or even possibly destroy particular occupations
without violating the due process or equal protection clauses.''
In State ex rel. Bonsteel v. Allen, the court held:
While it is within the power of the courts to declare
Laws levying license taxes void because of the
unreasonable and arbitrary exercise of the state's
power either in the classification or in fixing the
amount of the license, such power will not be
exercised unless the amount of the license tax is so
great...as to...tend to prevent a great number, if not
all persons, from pursuing otherwise lawful
occupations which do not impair public safety,
public health, or destroy property.
Furthermore, the end apparently justifies the means.
long as a classificatory scheme chosen by the Legislature
rationally advances a legitimate governmental objective, the
courts will disregard the method used in achieving the
AAPS Counsel Kent Masterson Brown has filed a brief
appealing the decision in Coy et al. v. Florida Birth-Related
Injury Compensation Plan in the Supreme Court of Florida,
arguing that the Court has never squarely addressed the
constitutionality of a statutory scheme such as this one, which
requires over 40,000 Florida-licensed physicians to underwrite
the malpractice premiums of the select group of 535 physicians
who are eligible and choose to participate in the plan.
``The Act at issue here...takes property from one private
party and transfers it to the exclusive benefit of another
party without legitimate reason or justification.''
Soviets Lead in ``Right to Health''
As noted by the US founders of the USSR-USA Health Policy
Exchange Initiative, ``the Soviet Union was the first country in
the world to guarantee free medical care as a constitutional
right to all its citizens'' (JAMA 1990;264:1097-1098). Lenin
signed the decree establishing the right to free medical care in
1917. The present Soviet constitution, adopted in 1977, contains
the right to ``health,'' not just medical care (The Free Market,
August, 1990). To provide for this right, the Soviet Union has
more physicians per capita than any other nation in the world,
and twice as many hospital beds as the US.
Nevertheless, the ``quality and accessibility of that care
are now in question,'' the health care system having been
``starved and progress in improving health status...slowed''
during the ``last 30 years of the arms race'' (JAMA, ibid.)
B. Iskakov of the Moscow Institute of National Economy
described the situation as ``worse than critical.'' Less than
half the Soviet people are considered to be in normal health, and
75% of Soviet children have been officially classified as
unhealthy. Life expectancy is about 10 years shorter in the
Soviet Union than in the US. Hepatitis is 30 times more
prevalent than in the US. Still, hospital mortality stays within
the planned rate; if the patient dies on the front steps, it
doesn't count in the statistics (Free Market, ibid.)
The Soviets do excel in cost containment. The plan states
that the average cost of medical treatment must not exceed 11
cents per day. Physicians' pay is about one-third that of bus
drivers (not counting under-the-table payments), to enable
physicians to pay back society for all the resources they used
during their free schooling (Free Market, ibid.) Total health
spending is estimated to be less than 3% of the GNP.
When asked how to apply market principles to the Soviet
system, US representatives offered ``respectful cautions'':
Emphasizing the dangers inherent in a market
system, we urged the Soviets not to retreat from the
principles of universal coverage and access. Mal-
distribution of resources, inability to control
expenditures, overemphasis on technology and medical
specialization at the expense of primary care, a strong
bias toward curative medicine rather than preventive
practice...were undesirable elements in the US
experience we tried to describe to our Soviet
colleagues (JAMA, ibid.)
These US experts suggested that the Canadian system would be
preferable to US insurance as a model for the Soviets to emulate.
They also urged an emphasis on the needs of defined populations,
not just individuals.
The Plain Dealer of Cleveland carried two contrasting front
page stories on Mar 7, 1990: ``Soviets break with ideology,
allow private business role'' and ``600 rally for Ohio universal
The Supreme Soviet passed a law that would allow some
limited ownership rights, as long as no ``exploitation''
At the Ohio rally, Gerald McEntee of the American Federation
of State, County and Municipal Employees proclaimed that ``health
care is not a private product to be sold for profit. It's a
right.'' Citizens (mostly elderly) attending the event supported
House Bill 425, which would abolish health insurance companies
and institute Canadian-style medicine.
AAPS welcomes Drs. Robert Alexander, Jr., of Pineville, KY;
Charles Astrin of Great Falls, MT; Mark Baldree of Phoenix, AZ;
Donald Behr of Ennis, TX; John Bennett of Sequim, WA; Salvatore
Durante of Brooklyn, NY; Emile El-Shammaa of Durham, NC; James
Guenther of Lancaster, OH; Martin Guerrero of San Antonio, TX;
John Hughes of Augusta, GA; David Humphrey of Seattle, WA; Craig
Miller of San Mateo, CA; Robert Molinet of Ft. Lauderdale, FL;
Robert Neville of Bowling Green, OH; Joseph Noreika of Medina,
OH; Thomas Pidduck of Ontario, Canada; Robert Rosser of
Birmingham, AL; Daniel F. Royal of Las Vegas, NV; Robert Schaefer
of Nampa, ID; Thomas Simonsen of Ft. Wayne, IN; James Weaver of
Durham, NC; and Robert Wood of Crossville, IN.
From the Virginia Birth-Related Neurological Injury
Having an enacted a law similar to the one being challenged
by AAPS physicians in Florida (see p. 3), Virginia is serious
about enforcement. One physician who hadn't paid up received a
certified letter from the program, with carbon copy to the
Assistant Attorney General:
If your $250 payment or claim of an appropriate
exemption has not been received [in 30 days], the
Bureau of Insurance of the State Corporation Commission
will be notified of your failure to respond. The
Commission is authorized by Section 38.2-218 of the
Code of Virginia to impose a penalty up to $5,000 for a
knowing or willful violation of any provision of Title