Health Care Law Home Page | Syllabus | Old Exams | Web ResourcesPIN/EXAM NO.: LAW AND MEDICINE -- HEALTH CARE December 12, 1998 1. Place your PIN/Exam Number on this page of the examination booklet. 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., true/false and multiple-choice) questions. All answers should be written in the blue books (or typed into your word-processor). 4. The relative worth of each question is indicated by the time suggested for each. Part I consists of 5 essay questions totaling 2.5 hours. Part II consists of true/false and multiple-choice questions; suggested time for this part is 0.5 hours. You may use the extra half-hour as you see fit. I strongly recommend reading the exam all the way through before you start writing. 5. Be explicit about any assumptions, additional facts, and the like that form the basis for your answers. 6. This exam booklet must be returned with your bluebooks at the end of the exam period. Part I
LMRH is one of three hospitals in Ludden, which is the largest city in Allen County, Texas. The other two hospitals -- Ludden Medical Center and Ludden Doctors Hospital -- are both organized as for-profit business corporations and are part of two national, for-profit hospital chains. Until last year, the chief of emergency medicine at LMRH was Dr. Green, who recently retired. In addition to Dr. Green, emergency medical services were provided by members of the medical staff who covered the emergency room on a rotational basis. Because of the concern of some members of the medical staff that their emergency services might not be up to par, upon the retirement of Dr. Green the hospital contracted with EmergenCare, Inc., a for-profit corporation that employed emergency room physicians and provided emergency medicine services for hospitals throughout the state of Texas. LMRH executed an independent-contractor arrangement for professional services with EmergenCare, pursuant to which EmergenCare would provide all emergency room services on a 24-hours-a-day/7-days-a-week basis. The contract provides for a flat fee, payable on the 15th day of the month to EmergenCare. EmergenCare, in turn, is solely responsible for paying the salary and benefits of its physician-employees. Pursuant to a second contract, Dr. Ross -- an individual physician proposed by EmergenCare and acceptable to the medical staff executive committee and the hospital administrator -- serves as the Medical Director of the Department of Emergency Medicine. As director, Dr. Ross has the authority to establish work schedules, propose policies and procedures for emergency care (subject to the usual hospital procedures for adopting medical policies), and supervise and monitor the quality of care delivered in the emergency department. For its part, the hospital is required to post signs in the emergency room that conspicuously announce that emergency physicians are no employees or agents of LMRH. The contract between EmergenCare and LMRH also provides that all physicians assigned to the LMRH emergency department must first become members of the hospital's medical staff. This provision was carried out on an expedited basis, as provided by the medical staff's bylaws. "Expedited basis" means that any physician who held full staff privileges at any "comparable institution" (i.e., hospital) in Allen County would be extended full privileges at LMRH, solely on the basis that the physician, EmergenCare, and the "comparable institution" certified (to the best of their knowledge) (a) that the hospital had taken no action affecting their privileges, (b) that no medical-malpractice claims (whether pending, settled, or tried to judgment) had ever been filed against the physician, and (c) that the Texas State Board of Medical Examiners had not taken any disciplinary action against them. With respect to all of the physicians assigned to the LMRH emergency department, the certifications were completed by the physicians, EmergenCare, and either Ludden Medical Center or Ludden Doctors Hospital (both deemed to be "comparable institutions" by the medical staff Executive Committee and the board of trustees of LMRH). Unknown to the hospitals and EmergenCare, Dr. Ross had previously been found liable in three medical-malpractice actions, a fact that is reflected in the National Practitioner Data Bank. Based on the certifications, and as provided by the medical staff bylaws, full staff privileges were extended to Dr. Ross and ten other EmergenCare physicians by the executive committee of the medical staff, and notice of the expedited procedure and the affirmative votes was sent to the hospital board. The contract between EmergenCare and LMRH also provides for termination of the contract at any time for cause, and upon 90 days' notice without cause. In either event, termination of the contract automatically terminates the medical staff privileges of all EmergenCare physicians. Part I/Question 1 Many managed care entities require that their insureds call for prior approval before they obtain emergency care, unless their emergency condition is life-threatening and, in the reasonable medical judgment of the emergency room physician, prior approval cannot be obtained without adding to the risk of death. Failure to obtain "preapproval" would result in the denial of the claim for emergency services by the hospital and the physician. One of Dr. Ross' first new policies for the LMRH emergency department was to establish a protocol for determining whether it would be safe to postpone treatment of an emergency room patient until the necessary preapproval had been obtained. Pursuant to that protocol, an emergency room nurse would inquire as to insurance coverage; if relevant, find out whether that particular managed care company required preapproval for emergency treatment; and (if the managed care company requires preapproval for emergency care) make an initial determination whether the patient's condition was one that was life-threatening. If the nurse determined that emergency care could wait until preapproval was obtained, the physician in charge of the emergency room had to be notified and given a chance to concur (in which case the call for preapproval would be made before emergency services were provided) or to overrule the nurse (in which case treatment would be started without waiting for preapproval). Jeanie Boulet is a 55-year-old woman who had a one-car accident driving home from a Third Eye Blind concert. When her car came to a stop, it was upside-down and she was pinned by the steering wheel and dashboard, which were in her lap. She dialed "911" from her cell-phone and the "911" operator dispatched an ambulance from the Red & Blue Ambulance Co. to the scene of the accident. The Red & Blue attendants, with the help of a local fire department rescue team, extracted Ms. Boulet from her car and determined that she was in shock, was bleeding from numerous lacerations, had probable neck and possible spinal cord damage, and had numerous broken bones. Fluids and other medications were initiated in the ambulance, and she was transported to the emergency room at the closest hospital: LMRH. Texas Department of Health rules require ambulance attendants to take their patients to the hospital designated by the patient or the patient's physician, unless the attendant deems it necessary to go to a different hospital in order to save life or limb, or pursuant to a diversion or triage situation declared pursuant to the county-wide emergency medical services plan. In the emergency room, Nurse Hathaway spoke with Ms. Boulet, who was conscious and reasonably lucid, and determined that Ms. Boulet was a member of SafeCare "PPO+Plus," pursuant to a self-insured employee benefit plan provided by her employer. The plan documentation on file in the emergency room indicated that SafeCare "PPO+Plus" requires preapproval for emergency room treatment. Nurse Hathaway determined that Ms. Boulet's injuries, while serious, were not immediately life-threatening, asked the ER clerk to call SafeCare's "1-800" number for preapproval, and paged Dr. Carter, the physician-in-charge at that time, to get his concurrence. Dr. Carter did not return the page, and 45 minutes later, the clerk reported to Nurse Hathaway that SafeCare wanted Ms. Boulet transported to the emergency room at Ludden Medical Center, with which SafeCare had negotiated a discounted-fee arrangement. Nurse Hathaway again paged Dr. Carter, who had been treating patients elsewhere in the emergency room for the past hour. Dr. Carter immediately examined Ms. Boulet, overruled Nurse Hathaway's determination, and began treating Ms. Boulet's various emergency medical conditions. Ms. Boulet survived her injuries, and her visit to LMRH, but she has lost the feeling in her fingers, has a limited range of motion in her arms, and requires a cane to walk without falling. These are permanent conditions, which she believes were avoidable if she had received prompt emergency medical care in the LMRH emergency room. Ms. Boulet has consulted you to advise her as to her rights against any possible defendants. Identify potential defendants and evaluate the strengths and weaknesses of her claims in light of the issues we have studied in this course.
Part II/Question 2
The Red & Blue Ambulance Co. has an understanding with LMRH that, after Red & Blue has delivered a patient to LMRH's emergency room, the hospital would restock the ambulance -- without charge to Red & Blue -- with the supplies and medications that were used on the patient during transport. The hospital does not bill for the cost of these supplies to Medicare or any other federal health program, nor is reimbursement sought or received from any other payor. Advise the hospital on the lawfulness of its restocking program with Red & Blue. If you see any problems, suggest ways in which the hospital could design a lawful ambulance restocking program.
Part I/Question 3
The Boulet episode was extensively discussed and reviewed by EmergenCare's physicians, for whom SafeCare's behavior was the (managed care) straw that broke the camel's back. The physicians agreed that SafeCare's policy of preapproval was a dangerous one, was typical of other anti-patient policies promoted by managed care entities, and forced physicians like them to choose between potential liability and not getting paid for their services. They agreed that in union there is strength, and voted to join forces with other emergency room doctors on a statewide basis by joining the Federation of Emergency Physicians, a Tallahassee-based labor organization. The Federation has historically acted in employment contract negotiations as a collective bargaining agent for physicians who are employees of public hospitals or other health care facilities. It has recently expanded its collective bargaining activity to include negotiating terms of contracts with health insurers for doctors in private practice. Under the banner of unionization, the Federation has signed up 275 emergency physicians (50 percent of the board-certified emergency physicians in Texas), including (with the vote of the EmergenCare physicians) 100 percent of the emergency physicians in Allen County. By joining the union, the physicians formally designated the Federation as its bargaining agent with all managed care plans. Specifically, the physicians instructed the Federation to get the best financial deal from the managed care companies and to refuse to sign any contract for emergency services that included a preapproval requirement. You have been asked by one of the EmergenCare physicians to examine this arrangement and to advise her as to its lawfulness.
In the aftermath of the Boulet episode, and in light of numerous other dissatisfactions with Dr. Ross and EmergenCare, LMRH's administrator decided to terminate both contracts on the basis of the "for cause" termination provisions in each. After getting notice of the termination, the Executive Committee of the LMRH medical staff notified the eleven EmergenCare physicians that their medical staff privileges were revoked, effective immediately, on the basis of the clean-sweep provision in the EmergenCare contract. At the time of the contract terminations, the hospital owed EmergenCare one month's payment and, since the contract termination occurred on the 16th day of the month, EmergenCare has submitted a claim for two months' payment. The administrator has said "it will be a cold day in Dallas" before he will pay EmergenCare one more dime. The physicians have contacted the hospital and demanded that they be provided with the full measure of due-process notice and hearing rights provided for in the medical staff bylaws of LMRH. They threaten to sue for wrongful revocation of their medical staff privileges unless they are reinstated to the staff and afforded the same rights as every other member of the medical staff before their privileges are terminated. Meanwhile, EmergenCare's attorney has sent a demand letter for the two months' payments that are due to his client. You are the hospital's counsel. The administrator wants to know if the terminated physicians are entitled to the usual revocation procedures. He also wants to know what defenses may be available to EmergenCare's claim for payment.
Part I/Question 5
After terminating EmergenCare, the LMRH administrator reinstituted the on-call system that preceded EmergenCare and named the chair of the Department of Medicine as Acting Medical Director of the Department of Emergency Medicine. He also started the search process for recruiting a new permanent Medical Director. The leading (and only) candidate for the job is an emergency physician currently on the medical staff of Ludden Doctors Hospital, Dr. Kerry Weaver. The administrator has told you (the hospital's counsel) that he is willing to pay "whatever it takes" to recruit Dr. Weaver to LMRH. Dr. Weaver's salary demand is 50 percent higher than the fee paid to Dr. Ross. The administrator has asked you specifically to advise him with respect to (i) the impact of the proposed contract on the hospital's tax-exempt status and (ii) the exposure of the hospital's officers and trustees if the administrator accepts Dr. Weaver's offer.
Part II Question 1
I. II. III. Choose the most accurate option (a, b, c, or d) and explain your choice.
Question 2 Annandale Hospital Corporation is a nonprofit corporation organized under the laws of Texas. Its only assets are a hospital, the fixtures and equipment in the hospital, and the real estate upon which the hospital is located (all in Texas). Annandale is exempt from local property taxes, and is calculating its community-benefits obligation for next year (Year A). Choose the most accurate statement and explain.
Question 3 a. As a condition of participation in Medicare, hospitals must ask the family or legal representative of every potential organ donor whether they would consent to organ donation. b. A psychiatric social-worker in Houston has her own counseling practice, which includes Medicare and Medicaid patients. She also has a 20 percent investment interest in an out-patient drug rehabilitation center. Under the Stark law, she may not refer patients to the center or bill Medicare or Medicaid. c. A 501(c)(3) hospital operates an in-house clinical laboratory. It may market its excess capacity in the laboratory (estimated to be about 20 percent of total capacity) by performing lab services for physicians' offices and other health care providers without losing its tax-exempt status. End of Examination |