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LAW AND MEDICINE -- HEALTH CARE Fall 1994 1. Please write your Exam/PIN number in the space provided above. 2. This is an open-book exam. You may bring into the exam room the assigned casebook, class handouts, your class notes, and your outline, including any outline that may have been prepared jointly with other members of the class. 3. The exam consists of both essay and short-answer (e.g., multiple-choice/short-answer, fill-in-the-blanks, true/false, and short-answer essay) questions. Mark your answers to the short-answer questions on the exam itself, and turn in the exam at the end of the exam session. Do not answer the short-answer part of this exam in a bluebook. You must turn in this exam to receive any credit on the exam. 4. I will take off points from your total score for failure to follow the directions
provided for each part of the exam. I. Essay -- One Hour 80 points What follows is the beginning of a draft opinion for the Supreme Court for the State of Brindel. Your questions follow this excerpt:
Your judge has asked you to complete this opinion. In particular, she has asked you to focus on the following questions in the following order: 1. Whether the federal alcohol treatment statute and regulations pre-empt the state child abuse reporting and investigation statute. 2. If the answer to issue 1 is no, whether the communications made by the defendant during treatment that are the subject of the state's discovery efforts are subject to the physician-patient or nurse-patient privilege. 3. If the answer to issue 2.a. is yes, whether the child abuse reporting and investigation statute requires the disclosure of possibly privileged communications such as were made in this case. 4. Should the lower court's ruling be affirmed or reversed?
II. True/False -- 30 minutes 40 points For each of the statements below, circle either "T" (for "True") or "F" (for "False"). All general statements are subject to qualification and are, therefore, somewhat incorrect. Still, the following statements are not intended to be "trick" questions and are, I believe, generally recognized as either "true" or "false." This part of the exam has 20 statements. Each correct answer will earn two points. One point is deducted for wrong answers. The maximum score possible for Part II is forty points. If you feel the need to explain your answer, assume a fact not stated, or deal with a latent ambiguity in the question, you may so indicate on the back side of the page. Please indicate the number of the question to which these back-side comments relate, and keep the suggested time limit in mind when deciding whether and how much to annotate your answer to a two-point question. T F 1. Medicare DRGs apply to acute-care and medical-surgical hospitals, but not to rehabilitation hospitals. T F 2. The JCAHO's accreditation of a hospital or a home health agency, but not of a nursing home, would mean that federal regulators would deem those institutions to satisfy most requirements for Medicare certification. T F 3. In the majority of jurisdictions, a physician excluded from a medical staff who sues the hospital and staff under § 1 of the Sherman Act must be able to prove a staff-hospital conspiracy, because a medical staff, as a single corporate entity, cannot conspire with itself. T F 4. Under the EMTALA, a hospital can "dump" a patient in violation of the statute even if the patient never physically arrives at the hospital itself. T F 5. Medicare's "self-referral" ban ("Stark I & II") applies to all Medicare providers, regardless of whether the bill for the item or service for which the referral was made is to be paid by Medicare and regardless of whether the patient for whom the item or service was provided is a Medicare beneficiary. T F 6. Under Texas law, a tax-exempt hospital may satisfy its statutory duty to provide community benefits solely by providing benefits OTHER THAN charity care and government-sponsored indigent health care (i.e., through donations, education, and government-sponsored research). T F 7. Under current Internal Revenue Service regulations and interpretations, an audit of a hospital that is tax-exempt under § 501(c)(3) can be expected to cover not only community benefit, inurement, private benefit, and unrelated business income, but also compliance with the Emergency Medical Treatment and Active Labor Act (EMTALA) and with HHS' fraud and abuse regulations. T F 8. In an antitrust action in which a podiatrist (i.e., non-M.D.) challenged her denial of medical staff privileges, the Health Care Quality Improvement Act would be a likely source of immunity for the defendant hospital. T F 9. Under the Medicare anti-kickback statute, a physician may waive the Part B copayment and deductible, but a hospital may not waive the Part A deductible. T F 10. RBRVS is a prospective payment methodology for physicians that takes into account average practice costs, training costs, and medical malpractice premiums for various types of diagnoses and procedures. T F 11. Unlike Medicare, the Medicaid program is a federal program in which each state's participation is voluntary; accordingly, eligibility requirements vary widely from state to state. T F 12. The percentage of gross domestic product devoted to total health care expenditures in the United States currently exceeds that for education and defense combined. T F 13. Under Medicare law, a physician who accepts assignment may balance bill, but a participating physician may not. T F 14. State Medicaid programs may by regulation refuse to reimburse for any physician's unlabeled use of an FDA-approved drug. T F 15. Outliers are taken into account when HCFA calculates DRG weights and are included in the standard reimbursement rate for each procedure; no additional reimbursement for outliers is provided under Medicare PPS. T F 16. A nonprofit corporation certified under § 5.01(a) of Texas' Medical Practice Act generally may employ physicians without violating the corporate practice prohibition and may accept capitation without registering with the Insurance Commission as an HMO. T F 17. Texas state law, but not federal Medicare law, requires physicians who lawfully receive remuneration to secure or solicit patients or patronage in a manner that falls within the protective embrace of a federal safe harbor to disclose the referral relationship and the remuneration to the patient. T F 18. A patient who has suffered an iatrogenic injury because of her surgeon's negligence and who alleges that the hospital failed to remove her surgeon from the medical staff despite the physician's long record of negligence has a vicarious liability claim based on an ostensible agency theory. T F 19. State certificate-of-need programs are no longer regulated by federal law. T F 20. A PPO may not qualify for tax-exempt status under § 501(c)(3). III. Fill-in-the-Blanks -- 30 minutes 40 points With these fill-in-the-blanks questions, you are asked to identify and briefly
discuss five terms we have read about during the semester. You will receive up to 8
points for each of your responses, for a total of 40 points in Part III. Where
appropriate, you should include a definition of the term and compare and contrast the term
to related concepts covered in this course. Your discussion of terms that are not
inherently legal in nature should include the legal significance of those terms.
Terms that are generic legal concepts should be discussed in the specific context of
health care law. 1. Managed competition: 2. Negligent nondisclosure: 3. Private accreditation: 4. Preferred Provider Organization: 5. Practice parameter: IV. Multiple-Choice/Short-Answer - 30 minutes 40 points Multiple-choice questions are graded as follows: Each correct
choice on the multiple-choice questions will earn three points. No points are
deducted for wrong answers, unless it is apparent from your explanation that your
reasoning was seriously (or entirely) flawed. Similarly, partial or whole credit may
be awarded for incorrect choices if it is apparent from your explanation that your
reasoning was partially (or totally) correct. Explanations can earn up to five
points. Thus, the best possible score on each of the five questions is eight points,
for a total of forty points in Part IV. Please limit your explanations to the space
provided. Drug Co. is a large, national, publicly-traded pharmaceutical firm. Among the products it manufactures and markets is a new memory-enhancing drug that Drug Co. plans to sell under the trade name, Reagain. The marketing department at Drug Co. has developed the following marketing strategy for Reagain. Physicians will be able to earn frequent-flier mileage points every time they fill out a questionnaire for a new patient placed on Reagain. In addition, Drug Co. will sponsor a "product conversion" program under which cash payments will be made to pharmacists each time a pharmacist persuades a physician to change a prescription order from a competitor's memory-enhancing drug to Reagain. The vice-president for marketing has submitted the plan to you, as general counsel, for a legal review. 1. Assuming that some of the patients involved will be Medicare beneficiaries, which of the following statements is the most correct? a. If both of the marketing strategies conform to industry standards for new-product marketing, they should be lawful under Medicare law. b. The product-conversion program probably violates Medicare law, but not the frequent-flier program. c. The frequent-flier program probably violates Medicare law, but not the product-conversion program. d. Both marketing programs probably violate Medicare law. Explain: 2. Assume that some of the pharmacies, physicians, and patients will be Texas citizens. Which of the following statements is most correct? a. Neither marketing program would violate Texas illegal remuneration law because the "payor" is not licensed, certified, or registered by a state health care agency. b. Both marketing programs would violate Texas illegal remuneration law. c. The frequent-flier program would violate Texas illegal remuneration law, but the product-conversion program would not. d. If the patients involved are Medicare beneficiaries, neither marketing program would violate Texas illegal remuneration law. Explain: Questions 3-4 Plaintiff Danny R. Smith has been employed since 1984 by Hamlet Hospital in Hamlet, North Carolina. His daughter, Nikki, born in 1980, is totally disabled due to lissencephaly, a brain disorder. Health Management Associates, Inc. (HMA) purchased Hamlet Hospital in August
1987. The previous owner, Hamlet Hospital, Inc., had provided medical benefits to
its employees through a self-insured plan administered by Blue Cross-Blue Shield
(BCBS). Nikki was covered by the BCBS plan. However, because HMA maintains its
own employee benefit plan -- Health Management Associates, Inc., Employee Benefit
Plan (HMA Plan) -- for employees of its hospitals, HMA decided to replace the
BCBS-administered plan with its own plan. The BCBS plan terminated on September 30,
1987, and the HMA Plan went into effect on October 1, 1987. Danny Smith attended one of the September meetings. Upon Cohen's invitation, Smith remained after the meeting to inquire about the eligibility of his severely handicapped daughter for benefits under the HMA Plan. Cohen is alleged to have answered Smith's questions by saying that if Nikki was covered under the BCBS-administered plan, she would be covered under the HMA Plan, "No questions asked." Smith alleges that, in reliance upon Cohen's representation, he did not convert coverage under the BCBS-administered plan into a private policy within the time he was eligible to do so, but enrolled himself and his family in the HMA Plan unaware that the HMA Plan contained an exclusion for preexisting conditions. The Summary Plan Description, which reveals this exclusion, was distributed to Plan participants in a timely fashion in December 1987. Nikki became ill frequently, and Plaintiffs submitted claims under the HMA Plan for her subsequent medical expenses. CBG paid $ 26,351.47 toward Nikki's claims. Prompted by notification of an unusually long hospital stay, the HMA Plan's case management company investigated and determined that Nikki's bills were the consequence of a preexisting condition that should have precluded coverage. Saying Nikki's coverage had been a mistake from the beginning, CBG canceled her coverage in October 1988. This suit resulted. CBG has reimbursed HMA the $ 26,351.47 paid toward Nikki's claims. Plaintiffs' complaint names CBG and the HMA Plan as defendants. It asserts one claim under ERISA and four claims under state law as against both defendants. Plaintiffs assert state common law claims for (a) breach of contract, (b) estoppel, (c) fraud, and (d) negligent misrepresentation. Defendants have removed the case to federal court and now move for summary judgment on all state-law claims. 3. With respect to the state-law claims against HMA Plan, which of the following statements is the most correct? a. All of the state-law claims are pre-empted by ERISA and the motion for summary judgement should be granted. b. Only the breach of contract and estoppel claims are pre-empted. c. Only the fraud and negligent misrepresentation claims are pre-empted. d. None of the state-law claims are pre-empted. Explain:
4. With respect to the state-law claims against the agent, CBG, which of the following statements is the most correct? a. All of the state-law claims are pre-empted by ERISA and the motion for summary judgement should be granted. b. Only the breach of contract and estoppel claims are pre-empted. c. Only the fraud and negligent misrepresentation claims are pre-empted. d. None of the state-law claims are pre-empted. Explain: Question 5 Plaintiff Diane Flynn was injured in a rear-end collision caused by William Broadus. About one hour before the accident, Broadus had been treated by Dr. Ron Kremer, who was employed by Houston Emergicare, Inc., at the Houston Northwest Medical Center. According to Dr. Kremer, he examined Broadus at approximately 7 a.m. in the emergency room of the hospital. Broadus told Dr. Kremer that, off and on between 11:00 p.m. and 3:00 a.m., he had snorted cocaine provided by a woman with whom he had sex. He awoke about 5:30 a.m. the next morning feeling "kind of sluggish." When he got into the shower, he felt a "heavy pressure in his chest" as if he were having a heart attack. He drove himself to the emergency room. In the ER, Dr. Kremer took an electrocardiogram and a chest X-ray and placed Broadus on a cardiac monitor. There were no signs of a heart attack. Concluding that Broadus was experiencing a "hyperadrenergenic excess sympathetic state of stimulation secondary to cocaine use" (i.e., he was hopped up on coke), Kremer injected Broadus with 10 mg. of Inderol, a "beta blocker," to slow the heart rate and lower the blood pressure. There are no known side effects of Inderol at this low dosage. Based upon reasonable medical probability, the drug would not incapacitate the patient, cause drowsiness, or impair his ability to drive. Ms. Flynn's principal claim against Dr. Kremer is that he failed to warn Broadus of the "crash" phenomenon associated with cocaine use even after the symptoms of cocaine intoxication had abated and that he failed to warn Broadus not to drive. The plaintiff and Dr. Kremer have cross-moved for summary judgment. 5. Assume that there are no differences of material fact in the record of discovery, and that summary judgment as a matter of law is appropriate for one of the parties. Which of the following statements is the most correct? a. Plaintiff is entitled to prevail, because of the doctor's failure to warn
Broadus or public safety authorities. c. Plaintiff is entitled to prevail, because Dr. Kremer's failure to admit Broadus for 24-hour observation violated EMTALA; therefore, his failure to warn was per se negligence. d. Defendant is entitled to prevail, because there was no privity between him and Ms. Flynn, with whom he did not have a physician-patient relationship. Explain:
Caring Cross Hospital is a 520-bed, private, nonprofit, tax-exempt hospital located in the downtown area of a major Texas city. Caring Cross provides the full range of hospital services at the tertiary care level. Caring Cross' location subjects it to increasing demands for indigent services, as its emergency room is used by the indigent and the not-so-indigent for general care. Real emergency cases usually lead to an admission and many involve prolonged hospitalizations; these cases also involve a high percentage of indigent patients. Caring Cross is located in a city with a number of high-quality, tertiary-care hospitals, both nonprofits and for-profits. Caring Cross' medical staff is shrinking, especially internists, ob/gyns, pediatricians, and family practitioners, many of whom find it easier and more lucrative to maintain their practice in the wealthier suburbs that surround the city. The relatively small number of primary care physicians is reducing the number of referrals to specialists on the medical staff and the number of admissions to the hospital. It also makes Caring Cross less attractive to managed care entities and large employers seeking managed-care contracts with large providers who can offer large numbers of physicians to enter into provider contracts. Accordingly, Caring Cross has decided to embark upon an aggressive physician-recruitment campaign. Consider and comment upon the legality (or implications for the legality) of each of the following features of the campaign. Include suggestions for making these features more legal or less objectionable. Please limit your comments to the space provided. 1. Targeted physicians will be in those primary-care specialties listed above in which
the hospital has experienced the greatest losses. The highest priority will be to
attract back those physicians who have left Caring Cross' medical staff in the past 18
months and joined the medical staff of a hospital across town. Next down the list in
priority will be new physicians just finishing their residencies. Last in priority
will be physicians from outside the metroplex who will have to relocate. 2. Recruited physicians will be expected to relocate their offices within Caring Cross'
service area and to join the medical staff of the hospital (and to resign from all other
medical staffs). They will also be signed up for administrative duties within the
hospital -- unit directors, associate unit directors, community relations consultants,
etc., for which the recruitment package provides compensation. 3. A typical recruitment package will consist of a practice guaranty of a fixed-dollar
amount of assured income per month for two years, with the accumulated advances treated as
a loan. Repayment begins on the last day of the 25th month of the agreement and is
spread out over five years. The loan principle and accumulated interest are forgiven
over a five-year period provided the physician maintains his or her practice in Caring
Cross' service area.
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