health care law section seminar friday, january 20, 2017 · health care law section seminar friday,...

presented by

The South Carolina Bar

Continuing Legal Education Division

2017 South Carolina Bar Convention

Health Care Law Section Seminar

Friday, January 20, 2017

SC Supreme Court Commission on CLE Course No. 170444

Karen Salmon

Charlotte, NC

Sonny Barnes

Florence, SC

Steven T. Moon

Columbia, SC

Health Care Professional Claims

Beth Burke Richardson

Columbia, SC

Deborah B. Barbier

Columbia, SC

Parallel Proceedings—False

Claims Act

PARALLEL PROCEEDINGS

Presented by:

Debbie B. Barbier, Attorney at Law

Beth B. Richardson, Sowell Gray Robinson Stepp & Laffitte, LLC

Ethical Considerations

FALSE CLAIMS CIVIL AND CRIMINAL COUNTERPARTS

Criminal

18 U.S.C. § 287 (false claims)

18 U.S.C. § 1001 (false statements)

18 U.S.C. § 371 (conspiracy)

Civil

31 U.S.C. § 3729 -33 (False Claims Act)

THE YATES MEMO

• Requires individual accountability to combat corporate fraud more effectively.

• Mandates coordination of civil and criminal investigations.

SIX “KEY STEPS”

1. Corporate cooperation credit only if "all relevant facts" relating to responsible individuals provided.

2. Focus on individuals "from the inception of the investigation."

3. “[R]outine communication . . . as early as permissible" regarding individual civil liability between criminal and civil counterparts.

4. “[A]bsent extraordinary circumstances" or approved DOJ policy regarding corporate leniency, no immunity to individuals in corporate resolutions.

5. Corporate cases resolved only with "clear plan" to resolve individual cases.

6. Civil prosecution of individuals determined by factors beyond ability to pay, such as accountability and deterrence.

(Reflected in U.S. Attorneys’ Manual sections 9-28.010 et seq., 4-3.100, and 1-12.000)

PARALLEL PROCEEDINGS AFTER YATES FROM THE DOJ’S AND RELATOR’S PERSPECTIVES

• Increased communication and cooperation regarding individual liability • from earliest investigation stages

• among criminal, civil, and agency attorneys

• to prosecute to fullest extent possible, may further delay or complicate resolution of civil proceedings.

• Less flexibility in settlement discussions between corporations and individuals.

PARALLEL PROCEEDINGS AFTER YATES From a Corporation’s Perspective

• More incentive for large corporations to cooperate early and fully

• Resolution of corporate cases will not involve

releases for individuals absent extraordinary circumstances

PARALLEL PROCEEDINGS AFTER YATES From an Individual Defendant’s Perspective

• Increase in individual cases • Cannot leverage resolution of corporate case

for release of individual liability absent extraordinary circumstances memorialized and approved by Attorney General or DOJ leniency policy

ETHICAL COMPLICATIONS MAY BE MORE LIKELY AFTER YATES

(1) Representation of Corporate and Individual Defendants Dilemmas

(2) The Power to Stay When civil litigation may compromise criminal investigations.

Incriminating Risks for Defendants.

(3) The Subpoena Power Criminal investigations cannot assist civil litigation.

(4) Diverging Interests between Government and Relator in Settlements

Common-Interest Privilege

DILEMMAS DURING INVESTIGATION PERIOD From the defense perspective

• Is the Corporate Miranda Warning Enough?

• Is separate counsel for corporation and individuals necessary?

• Is a Corporate Agreement to indemnify enforceable in all

cases?

• Do joint defense agreements make sense anymore?

• Protecting Corporate Work Product/Attorney-Client Privilege

INTERNAL INVESTIGATION SCENARIO

A medical device company gets sued by the Estate of a Medicare patient for the implantation of a defective defibrillator. The medical device company begins an internal investigation into the issue.

Is a Corporate Miranda warning necessary before interviewing any employee?

TEXT ##### YES TEXT ##### NO

DOJ ISSUES CID LETTER SCENARIO

Consider that the investigation takes place after the DOJ issues a CID letter. After Yates, the company must presume individuals will be under investigation and a parallel criminal investigation is in place.

Does the employee need his or her own counsel?

For researchers who studied the cardiac device?

For corporate officer who represented the device’s safety to the FDA, despite knowing conflicting research results?

For salespeople who marketed the device and its safety to doctors and patients?

TEXT ***** YES

TEXT ***** NO

RULE 1.13(A), (F), AND (G) SC RULES OF PROFESSIONAL CONDUCT

• (a) A lawyer employed or retained by an organization represents the organization acting through its duly authorized constituents.

• (f) In dealing with an organization’s directors, officers, employees, members, shareholders or other constituents, a lawyer shall explain the identity of the client when the lawyer knows or reasonably should know that the organization’s interests are adverse to those of the constituents with whom the lawyer is dealing.

• (g) A lawyer representing an organization may also represent any of its directors, officers, employees, members, shareholders or other constituents, subject to the provisions of Rule 1.7. If the organization’s consent to the dual representation is required by Rule 1.7, the consent shall be given by an appropriate official of the organization other than the individual who is to be represented, or by the shareholders.

THE UNCOOPERATIVE CLIENT SCENARIO

The internal investigation reveals that the implantable cardiovertor defibrillators (ICDs) were given to Medicare patients who had a heart attack within the past 40 days or heart bypass surgery within past 90 days in violation of Medicare’s National Coverage Decision. The client hospital refuses to self-disclose $3 million in ICD overpayments because NCD waiting periods are medically outdated and ICDs were necessary. Hospital asks attorney to appeal Medicare adjustments to prior year cost report that, if reversed, would result in additional payments of about $4 million.

WHAT IS THE RIGHT THING TO DO?

VOTE ##### Withdraw as Counsel

VOTE ##### Inform the Appropriate Authorities

VOTE ##### Withdraw as Counsel and Publicly Disavow Certain Documents/Affirmations

VOTE ##### Become a Relator

VOTE ##### All of the Above

SC RULES OF PROFESSIONAL CONDUCT

Rule 1.2(d) Scope of Representation and Allocation of Authority Between Client and Lawyer: A lawyer shall not counsel a client to engage, or assist a client in conduct that the lawyer knows is criminal or fraudulent, but a lawyer may discuss the legal consequences of any proposed course of conduct with a client and may counsel or assist a client to make a good faith effort to determine the validity, scope, meaning or application of the law.

Rule 4.1 Truthfulness in Statements to Others: In the course of representing a client a lawyer shall not knowingly: (a) make a false statement of material fact or law to a third person; or (b) fail to disclose a material fact when disclosure is necessary to avoid assisting a criminal or fraudulent act be a client, unless disclosure is prohibited by Rule 1.6.

Rule 8.4 Misconduct: It is professional misconduct for a lawyer to: . . . (d) engage in conduct involving dishonesty, fraud, deceit, or misrepresentation, (e) engage in conduct that is prejudicial to the administration of justice . . . .

TERMINATING REPRESENTATION

Rule 1.16 Declining or Terminating Representation:

(a) . . . . a lawyer shall not represent a client or, where representation has commenced,s hall withdraw from the representation of a client if: (1) the representation will result in violation of the Rules of Professional Conduct or other law . . . .

(b) A lawyer may withdraw from representing a client if: (2) client persists in a course of action involving the lawyer’s services that the lawyer reasonably believes is criminal or fraudulent; (3) the client has used the lawyer’s services to perpetrate a crime or fraud; (4) the client insists upon taking action that the lawyer considers repugnant or with which the lawyer has a fundamental disagreement . . . .

DISCLOSING CONFIDENCES INDIVIDUAL AND CORPORATE CLIENTS

Rule 1.6 Confidentiality of Information

(b) A lawyer may reveal information relating to the representation of a client to the extent the lawyer believes necessary: (1) to prevent the client from committing a criminal act; . . . (3) to prevent the client from committing a crime or fraud that is reasonably certain to result in substantial injury to the financial interest or property of another AND in furtherance of which the client has or is using the lawyer's services; (4) to prevent, mitigate or rectify substantial injury to the financial interests or property of another that is reasonably certain to result or has resulted from the client's commission of a crime or fraud in furtherance of which the client has or is using the lawyer's services.

Rule 1.13 Organization as Client

(c) Except as provided in paragraph (d), if, (1) despite lawyer’s efforts in paragraph (b), the highest authority that can act on behalf of the organization insists upon or fails to address in timely and appropriate manner an action, or a refusal to act, that is clearly in violation of law, AND (2) lawyer reasonably believes that the violation is reasonably certain to result in substantial injury to the organization, then the lawyer may reveal information relating to the representation whether or not Rule 1.6 permits disclosure, but only if and to the extent the lawyer reasonably believes necessary to prevent substantial injury to the organization.

THE POWER TO STAY 31 U.S.C. § 3730(C)(IV)

•Whether or not Government intervenes

•Court may stay discovery for 60 days

• If Government shows relator’s discovery would interfere with other investigation or prosecution arising out of same facts

•The court may extend 60-day period upon further showing that Government pursued criminal or civil investigation or proceedings with reasonable diligence

TO STAY OR NOT TO STAY?

•Attorney and Administrative Law Judge allegedly

conspired to defraud the government in Social Security benefits scheme.

•Government granted five extensions of time (429 days)

and then declined. 60 days later, the Government moved ex parte to stay the case. The court denied the motion under 3730(c)(4).

•Three years later, Government intervened and indicted

attorney and judge in parallel proceeding. Government and Defendants moved to stay the qui tam case.

IS THE CART BEFORE THE HORSE? YOU DECIDE.

Vote #####

Stay

Vote #####

No Stay

U.S. EX REL. GRIFFITH & CARVER V. CONN., ET AL., NO. 7:11-CV-00157, 2016 WL 4803970 (E.D. KY. 2016)

•Holdings • FCA does not circumscribe court’s inherent stay power for reasons

other than that discovery may harmfully interfere with other proceedings.

• Requests to stay for reasons outside section 3730(c)(4) are weighed by

a six-factor test: (1) overlap of civil and criminal cases; (2) status of civil case; (3) defendant’s interest; (4) plaintiff’s interest; (5) court’s interest; and (6) the public’s interests.

• Rejects significance of Defendant’s Fifth Amendment decision in

parallel proceedings.

WATCH OUT FOR THE SUBPOENA POWER

When does a criminal investigation go too far? In re Grand Jury Subpoena, 175 F.3d 332 (4th Cir. 1999) (quashing government subpoena

in criminal investigation as “thinly-veiled effort to circumvent” the civil discovery stay).

Civil and Criminal attorneys conferring when civil discovery subject to stay.

Criminal investigator not “walled off” from civil case.

Records sought in criminal investigation exceeded scope of criminal liability and pursued areas of liability only at issue in civil case.

Taken together, the Fourth Circuit precluded application of the general rule which permits the issuance of a subpoena shown to be relevant to a grand jury investigation even when there is also a possibility that the prosecutor will use it for some other purpose.

THE COMMON-INTEREST PRIVILEGE

• 31 U.S.C. § 3730(b)(2) (serving copy of the Complaint filed under seal and all material evidence and information on Government)

• In re Grand Jury Subpoenas, 902 F.2d 244, 249 (4th Cir. 1990) (holding divested subsidiary could not waive common-interest privilege without previous parent corporation’s consent).

WHAT HAPPENS WHEN THE MARRIAGE ENDS?

• Relator physician brings qui tam action against medical group for overbilling services performed by nurse practitioners, and a retaliation claim for wrongful termination.

• Government intervenes and settles suit with Defendant, doubling damages and declining to impose civil penalties.

• Relator objects to settlement, insisting that damages should be trebled and civil penalties imposed, and sought discovery to prove Relator’s claim. Over Relator’s objections, the court approves the settlement.

• The Government then turns over all its documents, including Relator’s section 3730(b)(2) materials, research, and attorney work product marked privileged and confidential, to Defendant without notice to or permission from Relator.

• Relator also requested these documents in discovery and Defendant did not produce them. Defendant then uses some of these documents during Relator’s deposition.

CONSIDER . . .

Did the Government violate the common-interest privilege?

VOTE ##### Yes

VOTE ##### No

CONSIDER . . .

Did the Defendant wrongfully take and use privileged information?

VOTE ##### Yes

VOTE ##### N0

CONSIDER . . .

What is Relator’s remedy? Vote ##### Monetary Sanctions

Vote ##### Default Judgment/Adverse Inference/Admission of Pleadings

Vote ##### Removal of Counsel

Vote ##### All of the Above

CONSIDER. . . .

Did Relator act ethically by opposing settlement in the first

place?

VOTE ##### YES

VOTE ##### NO

CONCLUSION

Parallel Proceedings after Yates Memo are more likely to raise ethical issues for lawyers on all sides.

Corporations and individuals alike will be investigated and prosecuted from both the civil and criminal perspectives. Issues that will typically arise in this context:

(1) Representation of Corporate and Individual Defendants Dilemmas

(2) The Power to Stay When civil litigation may compromise criminal investigations.

Incriminating Risks for Defendants.

(3) The Subpoena Power Criminal investigations cannot assist civil litigation.

(4) Diverging Interests between Government and Relator in Settlements Common-Interest Privilege

OTHER ETHICS SPOTS IN FCA LITIGATION

Relator Evidence Attorney as Relator

FCA Fee Agreements

COMMENCEMENT OF ACTION

ATTORNEY TURNED RELATOR SCENARIO

Attorney represented reinsurance carrier in arbitration, defending against a government flood relief contractor on basis that government had already covered the losses. Subject to protective order related to subpoena and confidentiality order in arbitration, attorney obtained documents related to payment for contractor’s losses from government. Attorney thereafter brought qui tam suit based on those documents, alleging that government overpaid government contractor for alleged losses, who used such funds for other purposes.

CONSIDER . . . .

Has the Attorney violated Rule 1.7 Conflict of Interest: Current Clients?

Has Attorney violated Rule 1.6 Confidentiality of Information?

Has the Attorney violated Rule 3.3 Candor Toward The Tribunal?

Has the Attorney violated Rule 3.4 Fairness to Opposing Party and Counsel?

ATTORNEY AS RELATOR CASES

Courts hold FCA does not preclude attorneys as relators but attorney still subject to state ethics law and often thereby precluded from serving as relators. Courts must interpret and apply state ethics rules in a manner that balances the federal interests at stake.

U.S. ex rel. Doe v. X Corp., 862 F. Supp. 1502 (E.D. Va. 1994) (precluding former in-house attorney from seeking statutory share of settlement as a relator where complaint and information in it were subject to attorney-client privilege).

U.S. ex rel. Fair Labor Practices Assoc. v. Quest Diagnostics, Inc., 734 F.3d 154 (2d Cir. 2013) (dismissing action and disqualifying association of relators including former in-house counsel and attorney representing them as necessary to remove potential taint where in-house counsel’s participation and disclosure of confidential information was not necessary to prevent company’s commission of ongoing crime).

U.S. ex rel. Holmes v. Northrop Grumman Corp., 642 Fed. Appx. 373 (5th Cir. 2016) (affirming grant of motion to dismiss complaint with prejudice as to attorney relator, but without prejudice to government).

U.S. ex rel. Repko v. Guthrie Clinic, P.C., 557 F. Supp. 2d 522 (M.D. Pa. 2008) (recognizing discretion of former general counsel relator to disclose confidences to rectify fraud for which the client used the attorney’s services).

Scott E. Hultstrand

Greenville, SC

Stephen Gardner M.D.

Greenville, SC

Steven T. Moon

Columbia, SC

Telemedicine

Telemedicine in SC – The New Law

Scott Hultstrand

Vista Law Firm, LLC

The New Telemedicine Law

• 2016 Act No. 210 (S.1035), June 3, 2016

• Bi-Partisan Legislation

• Wide-Ranging Stakeholder Involvement

SOUTH CAROLINA CODE SECTION 40-47-20(52).

(52) "Telemedicine" means the practice of medicine using electronic communications, information technology, or other means between a licensee in one location and a patient in another location with or without an intervening practitioner.

SOUTH CAROLINA CODE SECTION 40-47-37. Practice of telemedicine, requirements.

(A) A licensee who establishes a physician-patient relationship solely via telemedicine as defined in Section 40-47-20(52) shall adhere to the same standard of care as a licensee employing more traditional in-person medical care and be evaluated according to the standard of care applicable to the licensee's area of specialty. A licensee shall not establish a physician-patient relationship by telemedicine pursuant to Section 40-47-113(B) for the purpose of prescribing medication when an in-person physical examination is necessary for diagnosis. The failure to conform to the appropriate standard of care is considered unprofessional conduct under Section 40-47-110(B)(9).

SOUTH CAROLINA CODE SECTION 40-47-113(B)

SECTION 40-47-113. Establishment of physician-patient relationship as prerequisite to prescribing drugs; unprofessional conduct. (A) It is unprofessional conduct for a licensee initially to prescribe drugs to an individual without first establishing a proper physician-patient relationship. A proper relationship, at a minimum, requires that the licensee make an informed medical judgment based on the circumstances of the situation and on the licensee's training and experience and that the licensee: (1) personally perform and document an appropriate history and physical examination, make a diagnosis, and formulate a therapeutic plan; (2) discuss with the patient the diagnosis and the evidence for it, and the risks and benefits of various treatment options; and (3) ensure the availability of the licensee or coverage for the patient for appropriate follow-up care. (B) Notwithstanding subsection (A), a licensee may prescribe for a patient whom the licensee has not personally examined under certain circumstances including, but not limited to, writing admission orders for a newly hospitalized patient, prescribing for a patient of another licensee for whom the prescriber is taking call, prescribing for a patient examined by a licensed advanced practice registered nurse, a physician assistant, or other physician extender authorized by law and supervised by the physician, continuing medication on a short-term basis for a new patient before the patient's first appointment, or prescribing for a patient for whom the licensee has established a physician-patient relationship solely via telemedicine so long as the licensee complies with Section 40-47-37 of this act. (C) Prescribing drugs to individuals the licensee has never personally examined based solely on answers to a set of questions is unprofessional.


(B) A licensee who establishes a physician-patient relationship solely via telemedicine as defined in Section 40-47-20(52) shall generate and maintain medical records for each patient using such telemedicine services in compliance with any applicable state and federal laws, rules, and regulations, including this chapter, the Health Insurance Portability and Accountability Act (HIPAA), and the Health Information Technology for Economic and Clinical Health Act (HITECH). Such records shall be accessible to other practitioners and to the patient in a timely fashion when lawfully requested to do so by the patient or by a lawfully designated representative of the patient.


(C) In addition to those requirements set forth in subsections (A) and (B), a licensee who establishes a physician-patient relationship solely via telemedicine as defined in Section 40-47-20(52) shall: (1) adhere to current standards for practice improvement and monitoring of outcomes and provide reports containing such information upon request of the board; (2) provide an appropriate evaluation prior to diagnosing and/or treating the patient, which need not be done in-person if the licensee employs technology sufficient to accurately diagnose and treat the patient in conformity with the applicable standard of care; provided, that evaluations in which a licensee is at a distance from the patient, but a practitioner is able to provide various physical findings the licensee needs to complete an adequate assessment, is permitted; further, provided, that a simple questionnaire without an appropriate evaluation is prohibited; (3) verify the identity and location of the patient and be prepared to inform the patient of the licensee's name, location, and professional credentials; (4) establish a diagnosis through the use of accepted medical practices, which may include patient history, mental status evaluation, physical examination, and appropriate diagnostic and laboratory testing in conformity with the applicable standard of care;


(C) In addition to those requirements set forth in subsections (A) and (B), a licensee who establishes a physician-patient relationship solely via telemedicine as defined in Section 40-47-20(52) shall: (5) ensure the availability of appropriate follow-up care and maintain a complete medical record that is available to the patient and other treating health care practitioners, to be distributed to other treating health care practitioners only with patient consent and in accordance with applicable law and regulation; (6) prescribe within a practice setting fully in compliance with this section and during an encounter in which threshold information necessary to make an accurate diagnosis has been obtained in a medical history interview conducted by the prescribing licensee; provided, however, that Schedule II and Schedule III prescriptions are not permitted except for those Schedule II and Schedule III medications specifically authorized by the board, which may include, but not be limited to, Schedule II-nonnarcotic and Schedule III-nonnarcotic medications; further, provided, that licensees prescribing controlled substances by means of telemedicine must comply with all relevant federal and state laws including, but not limited to, participation in the South Carolina Prescription Monitoring Program set forth in Article 15, Chapter 53, Title 44; further, provided, that prescribing of lifestyle medications including, but not limited to, erectile dysfunction drugs is not permitted unless approved by the board; further, provided, that prescribing abortion-inducing drugs is not permitted; as used in this article "abortion-inducing drug" means a medicine, drug, or any other substance prescribed or dispensed with the intent of terminating the clinically diagnosable pregnancy of a woman, with knowledge that the termination will with reasonable likelihood cause the death of the unborn child. This includes off-label use of drugs known to have abortion-inducing properties, which are prescribed specifically with the intent of causing an abortion, such as misoprostol (Cytotec), and methotrexate. This definition does not apply to drugs that may be known to cause an abortion, but which are prescribed for other medical indications including, but not limited to, chemotherapeutic agents or diagnostic drugs. Use of such drugs to induce abortion is also known as "medical", "drug-induced", and/or "chemical abortion";


(C) In addition to those requirements set forth in subsections (A) and (B), a licensee who establishes a physician-patient relationship solely via telemedicine as defined in Section 40-47-20(52) shall: (7) maintain a complete record of the patient's care according to prevailing medical record standards that reflects an appropriate evaluation of the patient's presenting symptoms; provided that relevant components of the telemedicine interaction be documented as with any other encounter; (8) maintain the patient's records' confidentiality and disclose the records to the patient consistent with state and federal law; provided, that licensees practicing telemedicine shall be held to the same standards of professionalism concerning medical records transfer and communication with the primary care provider and medical home as licensees practicing via traditional means; further, provided, that if a patient has a primary care provider and a telemedicine provider for the same ailment, then the primary care provider's medical record and the telemedicine provider's record constitute one complete medical record; (9) be licensed to practice medicine in South Carolina; provided, however, a licensee need not reside in South Carolina so long as he or she has a valid, current South Carolina medical license; further, provided, that a licensee residing in South Carolina who intends to practice medicine via telemedicine to treat or diagnose patients outside of South Carolina shall comply with other state licensing boards; and (10) discuss with the patient the value of having a primary care medical home and, if the patient requests, provide assistance in identifying available options for a primary care medical home.


(D) A licensee, practitioner, or any other person involved in a telemedicine encounter must be trained in the use of the telemedicine equipment and competent in its operation. (E) Notwithstanding any of the provisions of this section, the board shall retain all authority with respect to telemedicine practice as granted in Section 40-47-10(I) of this chapter.

SOUTH CAROLINA CODE SECTION 40-47-10(I).

(I) In addition to the powers and duties enumerated in Section 40-1-70, the board may: (1) publish advisory opinions and position statements relating to practice procedures or policies authorized or acquiesced to by any agency, facility, institution, or other organization that employs persons authorized to practice under this chapter to comply with acceptable standards of practice; (2) develop minimum standards for continued competency of licensees continuing in or returning to practice; (3) adopt rules governing the proceedings of the board and may promulgate regulations for the practice of medicine and as necessary to carry out the provisions of this chapter; (4) conduct hearings concerning alleged violations of this chapter; (5) use minimum standards as a basis for evaluating safe and effective medical practice; (6) license and renew the authorizations to practice of qualified applicants; (7) approve temporary licenses, limited licenses, and other authorizations to practice in its discretion as it considers in the public interest; (8) join organizations that develop and regulate the national medical licensure examinations and promote the improvement of the practice of medicine for the protection of the public; (9) collect any information the board considers necessary, including social security numbers or alien identification numbers, in order to report disciplinary actions to national databanks of disciplinary information as otherwise required by law; (10) establish guidelines to assist employers of licensees when errors in practice can be handled through corrective action in the employment setting.