Legal Resources

Scale and GavelThe Office of Legal Affairs provides legal counsel to MHA and its board. Staff also provide education and information to MHA members and their attorneys throughout the state, and serve as a resource on a variety of health law issues.

  • In The Courts
  • Legal News

Cole County Circuit Court enters final judgment in Missouri Hospital Association, et al., v. Dept. of Social Services, et al., No. 15AC-CC00300 (Cole Co. Circuit Court, Dec. 30, 2015).

MHA, along with Citizens Memorial Hospital in Bolivar, filed suit in June to block MO HealthNet’s attempt to require that all claims for outpatient drugs submitted on or after July 1 be accompanied by the applicable National Drug Code. The plaintiffs sought an injunction on the grounds that the agency could not impose a regulatory requirement via provider bulletin and that it had not met the statutory requirements for an emergency rule. The court granted a temporary restraining order on June 30 and issued a preliminary injunction on July 10. During subsequent settlement negotiations, the department agreed to extend the deadline for requiring NDC information to April 1, 2016, and to revise the language of its final rule to exempt 340B facilities from the requirement. After submission of the parties’ agreement, the court issued its final judgment on Dec. 30, 2015.

Driving while intoxicated was insufficient cause to revoke nurse’s license, as it is not a crime of moral turpitude or related to her ability to perform her duties as a nurse. Owens v. Missouri State Board of Nursing, No. WD78486 (Mo. App. W.D., Nov. 17, 2015) (2015 WL 7252554).

Owens pled guilty to a class B misdemeanor of driving while intoxicated under Section 577.010, RSMo. She did not report her guilty plea to the State Board of Nursing. The Board subsequently revoked her license pursuant to the authority granted to it by Section 335.066.16, RSMo. The Board stated as grounds for the discipline that Owens had committed an offense involving moral turpitude and which was reasonably related to her duties as a nurse. The circuit court reversed the Board’s decision, and the Board appealed.

Decision: As no Missouri court has determined whether driving while intoxicated is a crime of moral turpitude, the court examined decisions in other states that turned primarily on whether the act was a first offense or classified as a misdemeanor versus a felony. The court concluded that Owens’s misdemeanor first offense was not an act of “baseness, vileness or depravity” sufficient to support license revocation. The court further held that the act of driving while intoxicated is unrelated and unconnected to the functions or duties of a nurse, even though Owens received her DWI on the way to work. The court contended that there may be cause to sanction Owens’s license under other provisions of Section 335.066, RSMo; however, the Board must pursue those remedies through the Administrative Hearing Commission.

All pending motions have been briefed in Missouri’s DSH recoupment litigation, and the parties await a decision with significant financial consequences for hospitals providing uncompensated care. Missouri Department of Social Services v. Burwell, No. 15-01329 (D.C. Circuit).

The Missouri Department of Social Services filed a declaratory judgment action against the U.S. Department of Health & Human Services’ Secretary Burwell in August. The suit seeks to prohibit CMS from applying FAQ #33 in its audits of fiscal year 2011 DSH payments, on the grounds that the FAQ implements a significant change in how uncompensated care is calculated absent the formal rulemaking process. Two children’s hospitals in Texas and Washington obtained a similar order months earlier.

In late September, the department filed a motion for summary judgment, which was opposed by the government, which also sought dismissal of the case. The department responded to that motion in its reply brief. CMS filed its final brief in November, and the parties await a decision by the court.

If CMS prevails in the case, the DSH liabilities determined in the 2011 DSH audits will stand. Those hospitals with DSH liabilities will be expected to return any overpayments, some of which would be redistributed to hospitals that were underpaid during that period. If the department prevails, the court will likely invalidate CMS’ methodology underlying the 2011 audits, and the audits will be redone without application of FAQ #33.

The Missouri Supreme Court leaves the affidavit requirement in medical malpractice actions intact in the face of a constitutional challenge. Lang v. Goldsworthy, 470 S.W.3d 748 (Mo. 2015)

The Missouri Supreme Court declined to reach a constitutional challenge to Section 538.225, RSMo, after the plaintiffs failed to file the required affidavit in a medical negligence action. Plaintiffs satisfied the statutory requirement in their initial action, submitting an affidavit from an appropriate health care professional alleging negligence. They dismissed that case prior to trial and waited nearly a year to refile. They did not resubmit the affidavit in the subsequent action.

The trial court dismissed the case without prejudice, as required by Section 538.225. Plaintiffs claimed on appeal that the dismissal requirement violated the Missouri constitution’s guarantees to open courts and trial by jury. The Court noted that Plaintiffs had filed a compliant affidavit in the first case but offered no reason for their failure to re-file it in the second action. Moreover, the fact that the plaintiffs were time-barred from filing a third action arose directly from their own delay in instituting the second suit. MHA joined with the Missouri Organization of Defense Lawyers in filing an amicus curiae brief with the Court.

Missouri Hospital Among Others Challenging Two-Midnight Rule

Pemiscot Memorial Health Systems joined with more than 50 other hospitals nationwide in the latest legal challenge to the two-midnight rule. The rule requires that a patient’s hospital stay must span two midnights to be considered an inpatient admission. The Centers for Medicare & Medicaid Services cut Medicare reimbursement rates by .2 percent to offset the costs of an anticipated increase in admissions. The suit asserts that the agency’s assumptions regarding increased inpatient stays were flawed and that CMS violated the Administrative Procedure Act by imposing the rule without the opportunity for notice and comment.

The action is the fourth challenge to the rule, with more to come as hospitals who have contested the rule through federal administrative processes are granted the right to pursue their theories in court. Last fall, in response to a suit filed by the American Hospital Association and others, a federal judge ordered the U.S. Department of Health & Human Services’ Secretary Sylvia Burwell to provide further justification for the rule and an opportunity for hospitals to comment. The present suit will likely be stayed until the outcome of the previous matter.

CMS Publishes CJR Final Rule

CMS made several changes to the Comprehensive Care for Joint Replacement initiative in its final rule, published Nov. 16, 2015. Under the initiative, hospitals in 67 metropolitan statistical areas will be held accountable for both cost and quality of care for hip or knee replacement procedures provided to Medicare fee-for-service beneficiaries. Hospitals are responsible for these performance measures from the date of surgery through 90 days following discharge (commonly known as an episode of care). Four Missouri MSAs have been mandated to participate in the project — Kansas City, St. Louis, Columbia and Cape Girardeau.

The final rule delayed the start date of the performance model from Jan. 1 to April 1. Hospitals that meet the targeted price and quality measures for an episode of care can earn financial rewards. No downside risk occurs in the year one, but thereafter hospitals will be held financially responsible for an episode of care that does not meet established targets. While hospitals may enter into agreements with post-acute providers to manage episodes of care, no gainsharing agreements are permitted, and no waivers will be granted from Stark or Anti-Kickback laws. CMS estimates the model will result in approximately $343 million in savings to Medicare by its conclusion in 2020.

For more information, please review the CJR fact sheet developed by CMS. The texts of the final rule can be found online.

OIG Issues Guidance Regarding Discounts For Medicare Self-Administered Drugs

The OIG announced that, subject to certain conditions, hospitals will not be subject to sanction for discounts or cost waivers provided to Medicare beneficiaries for self-administered drugs dispensed on an outpatient basis that are not covered under Part B. The policy statement is intended to clarify and synthesize information included in various CMS guidance documents. The policy applies only to discounts or waivers of amounts owed for non-covered self-administered drugs received in outpatient settings when the hospital applies its policies regarding discounts or waivers without regard to diagnosis. Further, hospitals may not advertise such discounts or waivers or claim them as bad debt or uncompensated care.

Yates Memo Details Enforcement Policy For Individual Wrongdoers

Deputy Attorney General Sylvia Yates has released a memo detailing the latest initiative by the Department of Justice to target corporate misconduct. The policy emphasizes the department’s efforts to identify and punish individuals responsible for corporate wrongdoing. The memo creates new challenges for trustees, officers and directors of health care organizations, along with compliance officers and corporate counsel.

The Yates Memo includes six policy pronouncements regarding future enforcement actions. First, to receive any cooperation credit, an organization must disclose “all relevant facts” about the individual involved in the activities at issue. The intent of the policy is to ensure swift and vigorous internal investigations of corporate wrongdoing. The memo also announces that civil and criminal investigators will focus on individuals from the inception of an investigation, and that suits against individuals will be based on factors other than his or her ability to pay. Further, the DOJ’s civil and criminal attorneys are to coordinate investigative efforts to ensure that individuals are held both civilly and criminally liable, where appropriate.

Going forward, settlements will immunize individuals from liability only in extraordinary circumstances, and cases may not be resolved without a clear and documented plan for addressing individual wrongdoing within the applicable limitations period.

The policies outlined in the memo create significant conflict of interest issues for corporate counsel and companies under investigation by the DOJ. Additionally, since most internal investigations are conducted by counsel, the department’s insistence on full disclosure of all information known to the company could threaten the attorney/client privilege. Lastly, the approach also may have a chilling effect on employees who may wish to report wrongdoing but fear they will be implicated in disclosures made by the employer to DOJ.

The Yates memo reflects the DOJ’s belief that corporate fines have been insufficient to stem corporate misconduct and a new mindset of punishing the individuals responsible for such activities. In light of the new guidelines, companies should assess their compliance program and ensure that all senior executives are aware of their compliances roles and responsibilities.

DOL Interprets Standard For Identifying Independent Contractors Through The FLSA

In its recently issued Administrator’s Interpretation 2015-1, the Department of Labor rejected the common law control test for identifying independent contractors under the Fair Labor Standards Act. Instead, the department relied on the broader “suffer or permit to work” language found in the statute, coupled with the economic realities test.

The latter turns on whether an individual is economically dependent on the putative employer or in business for him or herself. Factors include whether the work is an integral part of the employer’s business; whether the individual has the ability to earn a profit and suffer a loss; the relative investments of the individual and employer; whether the work requires special skill or initiative; whether the relationship is permanent or indefinite and the level to which the employer exercises control. As in most multi-pronged tests, no one factor is determinative. Examples provided within the guidance document suggest the DOL views the definition of employee to cover employment categories traditionally viewed as independent contractors.

IRS Clarifies 501(r) Rule Regarding Financial Assistance Policies

The IRS recently issued a notice to clarify the requirements for maintaining physician lists in conjunction with a facility’s financial assistance policy. The final 501(r) Treasury Regulation required charitable hospitals to maintain financial assistance policies meeting certain criteria in order to maintain the facility’s 501(c)(3) status. One controversial provision of the rule required that the facility’s FAP include a list of non-employed providers, delivering emergency or other medically necessary care in the facility, and to identify whether such providers were covered by the hospital’s FAP or not.

In light of expressed concerns regarding the feasibility of compliance with the rule, the IRS provided the following clarifications. A hospital’s FAP may identify providers by the name used either to contract with the hospital or to bill patients for care. In other words, a hospital may identify physicians by practice group if all doctors within the group provide such care within the facility. Alternatively, the hospital may identify providers by clear reference to a department or the type of service provider. If a provider is partially covered by the hospital’s FAP, the policy must explain the circumstances in which the physician’s services are covered and when they are not. Hospitals need not state whether a provider is covered under another facility’s FAP. The provider list may be maintained separately from the FAP if the policy so states and provides patients information needed to obtain the list. Updates to the provider list need not be approved by the hospital’s governing body. The provisions of the notice are effective for tax years beginning Dec. 30.

The Health Insurance Portability and Accountability Act, better known as HIPAA, protects individuals’ health information from inappropriate uses or disclosures. The law establishes standards for the release of protected health information by covered entities, which include health care providers, health plans and health care clearinghouses (such as medical billing services). Protected health information includes medical information in both printed and electronic form. In addition to the privacy rule, which governs the disclosure of protected health information, HIPAA security regulations require covered entities to maintain certain physical plant and electronic standards to guard against inappropriate access to PHI. For a summary of the HIPAA Privacy Rule, please visit the U.S. Department of Health & Human Services' website.

OCR Guidance on Reasonable Charges for Patient Access to PHI

The Office of Civil Rights recently issued guidance regarding a patient’s ability to access his or her PHI, which may limit the fees providers can charge for supplying patients with copies of their medical records. The Privacy Rule authorizes covered entities to charge a reasonable, cost-based fee to individuals requesting access to their own PHI. According the rule, the fee may only include the cost of labor for copying the records (whether in paper or electronic form), supplies for creating the records (paper or electronic media) and postage if the individual has requested that the records be mailed. 45 C.F.R. § 164.524(c)(4).

The guidance goes on to state that charges associated with searching for and retrieving PHI, or maintaining systems or infrastructure to store PHI, are prohibited, even if such charges are authorized by state law. Section 191.227.2(1)(a), RSMo currently authorizes search and retrieval fees of $24.57, and additional labor costs of $23.00 if the materials are stored offsite. The statute permits a $0.56 per page charge for the cost of “supplies and labor.”

OCR would likely view Missouri’s search and retrieval fees as prohibited by the Privacy Rule. And, while HIPAA authorizes a “reasonable, cost-based fee” for the labor and supplies necessary to copy records, the Missouri statute would arguably limit those charges to $0.56 per page. OCR limits those fees to actual costs incurred.

OCR released FAQs with its new guidance, in which it states that the limits also apply when an individual directs that his or her PHI be sent directly to a third party. However, when a third party directly requests PHI from a provider on the basis of a written HIPAA authorization from the individual, the fee limitations would not apply.

Change in HIPAA Privacy Rule to Allow Disclosures to Criminal Background Check System

On Jan. 6, the U.S. Department of Health & Human Services filed its final rule implementing the latest changes to the HIPAA privacy rule. The rule authorizes certain covered entities to disclose to the National Instant Criminal Background Check System PHI of individuals subject to a federal “mental health prohibitor” disqualifying them from possessing, receiving, shipping or transporting a firearm. Under the Gun Control Act of 1968, mental health prohibitors apply to an individual who has been involuntarily committed to a mental health facility, lawfully found to be a danger to his/herself or others, incompetent to stand trial or manage his/her own affairs or the subject of a not guilty verdict by reason of insanity.

The new rule applies to only two types of covered entities — those with legal authority to adjudicate or make commitment decisions that render individuals subject to the federal mental health prohibitor and those that are repositories of NICS reporting information. Such entities would generally include state agencies, such as mental and public health departments. The narrow scope of the rule came in response to comments expressing concern that the rule would discourage individuals from seeking mental health treatment. The rule also limits the disclosures to information needed for NCIS purposes and prohibits disclosure of clinical or diagnostic information. Finally, while the rule allows for such disclosures, it does not mandate that covered entities report to the NCIS. Covered entities are not authorized to report individuals subject to a state mental health prohibitor.

The Missouri Society of Health Care Attorneys is a personal membership group of the Missouri Hospital Association. MSHCA was formed in 1981 and remains a robust network of approximately 150 health care attorneys across the state. Its members practice in every facet of health care, as in-house counsel, state regulatory officials and in law firms large and small. MHA’s General Counsel and Vice President of Legal Affairs serves as a permanent member of the board, and the office provides ongoing operational support for the group.

MSHCA is governed by a board of directors and supported by various committees. The group holds a day-long, health-law seminar each November in conjunction with the MHA Convention and Trade Show. The keynote session, known as the Holderle Lecture, attracts dynamic national speakers on emerging issues in health law. The remaining sessions cover topics applicable to various aspects of health care practice. MSCHA also partners with the MoBar Health and Hospital Law Committee to provide joint programming at the spring and fall committee meetings.

MSHCA members have access to various MHA publications, including MHA Today, a daily publication of health care news. MHA Today includes links to relevant documents and additional educational materials. MHA, with MSHCA support, publishes other documents focusing on Missouri health law.

Membership in MSHCA is a cost effective way to receive health care education and information from MHA. If you are interested in joining or would like additional information, please contact MHA’s General Counsel Jane Drummond or her assistant Marilyn Keilholz.