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 50, No. 9 September 1994
Judge Orders Trial; White House Offers
On July 25, 1994, oral arguments were heard in the case of
AAPS v. Clinton before Judge Royce Lamberth in the US
District Court for the District of Columbia.
As Congressional leaders are engaged in a frantic effort to
pass a ``health-care reform'' bill-almost any bill-before the
August recess, the White House is making desperate attempts to
keep the genesis of ``reform'' hidden from the American public.
AAPS contends that the secret meetings of the President's Task
Force on Health Care Reform violated the Federal Advisory
Committee Act (FACA).
``The purpose of the FACA is to prevent the corruption of
representative government-to prevent the establishment of
government of the people, by special interest
groups, for special interests,'' stated AAPS President
Charles McDowell, Jr., MD.
There are two exceptions to the public disclosure
requirements of the FACA. One applies to committees composed
wholly of federal employees. AAPS presented massive evidence
that the Interdepartmental Working Group (IWG) chaired by Ira
Magaziner, along with its various components, was stacked with
private interests. AAPS Counsel Kent Masterson Brown argued that
the government had conceded the issue.
``They have a curious way of stating it,'' observed Judge
Lamberth. US attorneys never submitted a revision to Magaziner's
1993 sworn affidavit, which declared all Task Force participants
to be federal employees. Instead, they simply failed to contest
the point, citing a ``change in litigation strategy.''
The White House is now resting its entire case on the
allegation that the IWG was a disorganized, chaotic, irrespon-
sible, nonaccountable, ``anonymous, amorphous horde'' that did
not advise the President (although it did spend some $20 million
of the taxpayers' money). For the FACA to apply, the ``whole
must be greater than the sum of its parts.''
Brown argued that the IWG was in fact a tightly structured
group, following the same model as the interagency task forces
developed by the Robert Wood Johnson Foundation and used in state
reform programs. The ``tollgate'' concept is used by
corporations in complex projects that need to be accomplished at
a rapid pace. The May 7 tollgate, for example, was the final
review of legislation ready for submission, and the working group
draft was incorporated in the Health Security Act of 1993.
US Attorney Mark Stern complained that AAPS had ``impugned
the good faith of Ira Magaziner'' in its statement that ``false
swearing is the ultimate contempt of court.'' Such an accusation
against a public servant is a ``very, very, very serious
matter,'' Stern said, that caused government attorneys to ``lose
Magaziner ``spoke nothing but the truth,'' Stern said.
There were simply ``nuances'' and changes in the IWG that
occurred after he made his declaration.
``Not only was there no abuse of good faith, but looked at
closely, there was no problem of any kind,'' Stern said. He
described truth as being a ``moving picture.''
The Judge noted that Magaziner had never filed an amended
declaration to correspond with the alleged changes in the IWG
structure. ``Were the amendments all oral or in someone's mind?''
``Yes,'' Stern agreed. Magaziner was ``too busy to write
Judge Lamberth denied motions for summary judgment because
of material disputes about facts. He ordered a non-jury trial,
tentatively scheduled for the week of September 12 in order that
witnesses could be fully examined and cross-examined. He
reserved ruling on contempt and on attorney's fees. A week was
set aside for the trial.
After the hearing, Congressman Istook (R-OK), who had been
present for the argument, brought his concerns about the Health
Care Task Force to the floor of the House in a special order
(Congressional Record 7/27/94, pp H6342-H6347). He
highlighted the question that Stern asked: ``Why do they still
insist on wanting to know?''
``They want to know because it is the law, Mr. Speaker,
because we have the right to know...what interests were involved
in putting together this plan,'' stated Istook.
``[Mr. Lightfoot (R-IA)] and I have asked today for an
investigation....When highly placed officials come before a
congressional committee and tell us something that is not true,
we have an oversight obligation on behalf of the American people
who elected us.'' Istook referred to testimony by Patsy
Thomasson, Special Assistant to the President, that the Working
Group was made up entirely of federal employees.
Thomasson also stated that the reason for not immediately
revealing the names of Task Force members was that ``they were
working very hard on this problem and we did not want them to be
harassed by lobbyists and special interest groups.''
Istook accused the White House of trying to conceal the
special interests who wanted to profit from the cash flow of a
trillion dollars by changing the system to their own benefit.
Rep. Tom DeLay (R-TX) also commented that Congress should be
asking the same question as the plaintiffs in the lawsuit.
``Should not this House...be having hearings on this very issue
or are they going to use the same excuse that they have always
used in the Whitewater affair, that you have to let the legal
system run to the end of the rope...before Congress ever
exercises its responsibility and authority?''
In meetings with Judge Lamberth after the hearing,
Department of Justice attorneys asked for a settlement
conference, which is now in progress.
AAPS Testifies on ``Gephardt-Clinton''
On August 2, the Republican members of the Joint Economic
Committee held the first and possibly the only public hearing on
the House Majority Leader's bill, dubbed ``Gephardt-Clinton.''
Medicine was represented by AAPS Executive Director, Jane M.
Orient, MD. Also testifying were two small business owners and a
``This is an interesting challenge,'' Dr. Orient stated,
``to testify about a bill that I have not been able to read.''
Congressman Christopher Cox (R-CA), who chaired the hearing,
immediately placed a telephone call to Gephardt's office, asking
if he could have a copy of the bill.
``No,'' was the reply. The bill is ``not available.''
Secrecy has now expanded from the genesis of legislation to
the legislation itself. Actually, the content of the bill is a
moving picture that will be determined by what is required (along
with threats and promises) to get 218 votes. According to news
clippings, it will establish a Medicare Part C, which would make
the majority of Americans dependent on government insurance.
Precedent for the secret procedure was established in
Washington State, which enacted ``Clinton Heavy'' three hours
after the legislators received the final draft. The bill came by
FAX from the headquarters of the President's Task Force on Health
Care Reform in the Old Executive Office Building in Washington,
D.C. (Apparently, the Task Force advised the state legislature in
Washington State, even if it did not advise the President.)
Behind closed doors, with the press and above all radio
commentators excluded, legislators' arms were twisted until they
voted to pass the bill (see AAPS News April, 1994).
With implementation scheduled for July, 1995, citizens of
Washington still do not know exactly what the bill means. For
example, staff in the state house do not even know for certain
whether the bill has outlawed private medicine. (It might just
have made it economically impossible.) If the Gephardt bill
includes the Clinton provision placing a one-year statute of
limitations on constitutional challenges, citizens will be shut
out of court before they can even determine what the law
``Congress should pay close attention to the reception
received by the Health Security Express buses (a.k.a. the Phony
Express),'' Dr. Orient told the committee. ``Even in the
Democratic stronghold of Seattle, thousands of citizens turned
out in opposition to the Clinton campaign, despite short notice
and minimal organizational effort.''
(A number of physicians from Washington State AAPS protested
at the event, along with throngs of citizens organized by a
fledgling group called the Coalition for Health Care Choice,
Quality, and Privacy.)
``In Boise, the bus failed to show up for the media event,
disappointing its own supporters rather than allowing the cameras
to see the opposition. Across the country, the intended media
blitz turned into a game of hide and seek,'' Dr. Orient stated.
Schedules were frequently changed on short notice.
``Congressmen who vote for ill-advised `reform' may have no
place to hide in November.''
Dr. Orient outlined the causes for the medical cost spiral
and called for true reform, starting with the tax code that
causes the perverse incentives inherent in the employment-linked,
low-deductible prepaid consumption that is erroneously called
Is It D-Day?
The usual legislative insert is suspended for the month
because the shelf life of information from Capitol Hill is about
The key strategy is that of Senate Majority Leader George
Mitchell: ``Pass anything, and we'll fix it in conference,''
according to the analysis of the American Legislative Exchange
Council at its annual meeting August 4-6 in Tampa, Florida.
There is no reasonable ``compromise'' because there is no
reasoned debate and no good faith.
The only answer is to stand firm on stopping the Phony
Express. Who will do it?
The message from ALEC is: ``It all depends on YOU. There
is nobody else there.''
At Omaha Beach in Normandy, the fascists had the impregnable
fortifications, the seasoned troops, the high ground, the big
guns, the ammunition, the brilliant generals, the communications,
and overwhelming numerical superiority. Even the weather was on
What won the battle at Omaha Beach was desperate human
endeavor by men: ``individual men-a succession of individual
men, on their own, or leading small groups of ten or twenty, not
under orders or according to some master plan, but out of a sense
of desperation, or responsibility to their comrades, or honor, or
pride, or all of them mixed together'' (Yale Kramer, ``Day at the
Beach,'' The American Spectator, August, 1994).
Kramer asks, ``At the next Battle of Omaha, where will we
find the Sgt. Streczyks and Lt. Spauldings to lead us off the
Americans at Omaha didn't know they would be facing Rommel's
352nd Infantry Division. Some Americans today think there is no
serious threat, so there is no need to stand up. Others think
the situation is hopeless.
American liberty was won by individuals. It will be
preserved through the efforts of individuals, if at all.
Are we on the beach? If so, what will you do?
Do We Have Your FAX Number?
The AAPS FAX network is up and running. If you sent us your
number and you have not yet received at least one FAX (three were
sent as of Aug. 8), something is wrong. It may be that your FAX
machine doesn't automatically answer the phone; in that case,
your number has been deleted. Please give us a call if you want
to be included and have the needed equipment.
To Expedite Your Calls to Congress...
Eagle Forum has set up a toll-free line (800)876-2299 to
give the name and telephone number of your Congressman and
Senators or to connect you connected to their offices.
Senators who most need your input are: Heflin and Shelby
(AL); Lieberman (CT); Nunn (GA); Breaux and Johnston (LA);
Durenberger (MN); Danforth (MO); Exon and Kerrey (NE); Bryan
(NV); Chafee (RI); and Jeffords (VT). They have no strong
commitment in either direction.
Rep. Jim McDermott on strategy and his colleagues: ``You
can't move a herd with mixed messages.''
Don't Rely on Your Attorney for Full Disclosure: A
physician who pleaded guilty to one count of Medicare fraud
received a three-year suspended sentence, then found himself
excluded from Medicare. He appealed on the basis that his lawyer
had not informed him of the possibility of exclusion. The ALJ
ruled that the attorney's failings were irrelevant. Court
decisions say a defendant in a criminal case does not have to be
informed of all the consequences of a guilty plea.
HCFA Says Retainers Are Illegal: Contracts under which
a patient agrees to pay a annual ``retainer'' to cover Medicare
deductibles and copayments, as well as to receive preventive
services not covered under Medicare, are opposed by HCFA. If the
patient uses more services than the premium covers, it might be
construed as a kickback; if he uses less service, the physician
could be in violation of assignment requirements. Dr. Russ
Salton of Primary Physician Care of North Carolina views the
agreement as a substitute for a more expensive Medigap supplement
(BNA's Health Law Reporter 6/23/94).
Beware of New HCFA Survey Form. Physicians may soon be
nudged into signing a form stating that they understand Stark II
and promising not to make any prohibited referrals. The form
asks for disclosure of any physicians having a financial
relationship with a provider. Failure to sign the form could
mean having claims rejected. Signing the form could lead to
criminal penalties under the false statements or false claims
act, if the OIG later finds any problems with your practice.
Regulations under Stark II have not yet even been released.
A leaked draft ``survey'' form contains only a cursory review of
the extremely complex law that physicians will have to claim to
understand (Medicare Compliance Alert 7/18/94).
New Civil Penalties: A final rule published July 15
(59 FR 36072) grants the OIG of HHS the authority to
levy increased penalties on prepaid plans contracting with
Medicare and Medicaid beneficiaries: e.g. $25,000 for each
instance of failing to provide ``medically necessary services'';
$100,000 for actions that might discourage enrollment of high-
risk individuals or for furnishing false information (BNA's
Health Care Policy Report 7/25/94). For further
information, contact Zeno W. St. Cyr, (202)619-3270 or Marty
Abeln of HCFA's Office of Managed Care (202)205-9582.
Blue Cross ``Deselects'' 4,000 Physicians
The Medical Society of the District of Columbia told a House
panel that a Blue Cross/Blue Shield managed care plan keeps the
poorest and sickest patients from receiving care by excluding
physicians who treat them from the network. A computer program
designed to select ``high-caliber, cost-effective'' physicians
excluded almost 4,000 previously in the insurers' indemnity
program and/or Capital Care provider group, reducing the number
of available physicians by about 50% (BNA's HCPR
AMA Joins with AARP, AFL-CIO
The AMA is sponsoring full-page newspaper ads calling for
``comprehensive health benefits for every American by building on
our current employment based system.''
``For workers and their families, coverage can be achieved
through shared employer/individual responsibility, with a
required level of employer contributions.''
Though many AMA members have strongly opposed employer
mandates, the association leaders support AFL-CIO President Lane
Kirkland, who stated that any reform without employer mandates
``would betray the hopes of working Americans and their
Congressman Jim Kolbe (R-AZ) told AAPS President Charles
McDowell and Executive Director Jane Orient, in a meeting in his
office, that the AMA is now supporting ``single-payer.'' (We do
not know what message the AMA meant to transmit; only the message
that the Congressman received.)
Politics of Meaning
Community rating: (1) a ``hidden tax on the young''
(Rep. Tim Penny, D-MN, and Rep. Harris Falwell (R-IL), who noted
it would mean a ``staggering intergenerational wealth transfer''
of roughly $1 billion); (2) the ``right thing to do'' (Rep. Pete
Stark, D-CA, who calls intergenerational transfers a ``well-
established principle'' in American society).
Comprehensive health care: the end of freedom of
religion. (``The idea that certain health care benefits should
not be covered if some people find them politically, morally, or
religiously unacceptable, defeats the whole idea of comprehensive
health care,'' stated Rep. Peter DeFazio, D-OR.)
D-Day: ``This is our own D-Day....Soon it will be
time to choose where to place our support, and `to take the
current' when it is right'' (James Todd, who also cautioned that
support of any single plan would ``close the doors'' to
Guaranteed Access: a government promise, cf. the
promise in the Federal Advisory Committee Act of guaranteed
public access to whatever documents the federal government sees
fit to release.
Right-Wing Ideologue: anyone who opposes her plan
(HRC in message carried on KVI Seattle).
Universal coverage: (1) universal payment; (2)
insurance coverage of whatever percentage of Americans is
required to prevent Bill Clinton from vetoing a bill.
5,000 Medical Devices Kept Off Market by FDA
FDA's Center for Devices and Radiological Health has an
enormous backlog of applications awaiting review: about 5,000 as
of June 30. The agency expects to receive 12,000 applications in
To help clear the backlog, the FDA has proposed a new tax in
the form of ``user fees'' of up to $52,000. If the backlog is
not cleared, American manufacturers threaten to move their
businesses to Europe, ``where the regulatory process is more -
timely and predictable,'' stated William George of Medtronic
(BNA's HCPR 7/18/94).
For updates on the American Conservative Union Health Care
Truth Tour call (800)228-7345. The bus tour begins August 22 in
New Jersey and ends in Senator Dole's state on Aug. 27. For
information on the petition drive called ``Halt the Health Care
Hoax-Just Vote NO,'' call the Patriot Line (513)777-8120.
A managed care complaint hotline, 800-800-5154, has been set
up by Physicians Who Care.
Corrupt Philosophy. Medicine is being assaulted today
by the corrupt philosophy of collectivism, i.e., the individual
and his needs are superseded by society's need and as such man
has become programmed to sacrifice himself for the good of
society....This philosophy [was] enacted when government created
Medicare and Medicaid-two entitlement programs in which the
``providee'' obtains services using someone else's money....The
physician, like all productive people, is feeling the financial
drain...required to maintain this philosophy and at the same time
he is being attacked...as greedy and dishonest. These arrogant
bureaucrats provide no service (save for harassment) and produce
no goods; yet they...are telling you how to practice medicine
through the shifting arrays of the paper chase syndrome. Trying
to approach [them] in a logical manner will only lead to
frustration. They exist as a mercenary branch of the tyranny
required to maintain these collectivist programs....What can be
done to change our plight? We must reject collectivism for its
James P. Fogarty, MD, Barron, WI
Attack from the Rear. ``Managed care'' is the
politically correct term for controlled care. While we were
warding off government at the front door, we have been run over
by a managed-care train through the back door. Reform needs a
level playing field so private fee-for-service can compete. Only
fee-for-service puts quality first. No reform is progressive if
it takes a step backwards in quality.
N. Scott Craven, MD, Lexington, NC
Human Costs. To date, the frenzy over the issue of
``cost'' has primarily centered on the monetary definition of
``cost,'' divert[ing] attention from the...political and human
dimensions....Many regions, such as Boston, Dallas, and New York
have flourished in part because of the presence of an active
biotechnology industrial base....They will soon see their
unemployment rates increase and their tax base shrink....The loss
of researchers, scientists, technicians, engineers, physicians,
and the potential contributions that they could have made in the
future cannot be easily plugged into equations which depend
purely on dollar amounts and current economic theories...We are
already seeing large pharmaceutical companies diverting billions
of dollars to expansion into the baby food distribution business
and pharmaceutical purchasing plans rather than basic
pharmaceutical research...In the frenzy to reduce immediate costs
of medical care, we are clearly in a short-sighted way short-
circuiting any future research which could have led to tomorrow's
miracles and true cost savings.
Walter L. Nieves, MD, Suffern, NY
Insurers and Privacy. I have recently been requested
by some patients to join the Super Blue network....They sent a
list of names of [subscribers], requesting that they be able to
come into my office and review those charts. I called them to ask
if patients really want to buy a policy that requires such
scrutiny,...and informed them that patients should give specific
written consent before anyone reviews their medical records. For
years, people have signed away that right by becoming clients of
an insurance company. This is the first experience I have had
wherein the insurance company is exercising that ability. I have
refused the insurance company access to my records until I
receive written permission from the patients. I have also
suggested that patients lobby the insurance company to change
their policy,...[which] I believe is a serious infringement on
the physician-patient relationship....
R.E. Dwight, DO, Sandusky, OH
The Arizona Board of Medical Examiners is attempting to
investigate the medical director of Blue Cross/Blue Shield of
Arizona, who failed to approve a needed gall bladder surgery.
The Board requested records on the past 20 cases in which Blue
Cross denied a procedure in an attempt to determine whether there
is a pattern of poor medical judgment by its medical director.
The insurer refused to provide the records.
The Board issued a formal letter of concern about what it
called an ``inappropriate medical decision which could have
caused harm to a patient'' and has subpoenaed the additional
records. Blue Cross intends not to comply with the subpoena and
to challenge the Board's authority to discipline the physician,
on the basis that his action was purely administrative and did
not constitute the practice of medicine. The issue will go to
Arizona Republic, 7/2/94 and 7/16/94
New PRO Criteria. Why has there been no physician
outcry about new criteria for admission of patients: e.g. a Hgb <
5 (rather than <7); a fever >104 (rather than >103)?
David Fulghum, MD, Bradenton, FL
Sept. 24, the Pointe at Squaw Peak. First Annual Arizona
State AAPS Convention: The Politics of Health Care Reform.
Speakers include Merrill Matthews of NCPA, Prof. Richard Epstein
of the University of Chicago School of Law, Michael Tanner of
Cato, and the Honorable Jon Kyl. Call (602)996-4747 for
Oct. 12. Board of Directors meeting
Oct. 13-15. Ritz-Carlton Hotel, Atlanta: 51st annual meeting
of AAPS. For information, call (800)635-1196.