November 10, 2007,

Introduction

As I am now enrolled in a correspondence law school, I would like to share my STUDENT understandings of the law with kprc should they be of use to a licensed attorney which I am not.  Such a licensed attorney might, for example, someday be a District Attorney who believes that there is a public risk to health care whereby certain charges might be appropriate.  Alternatively it could be Plaintiff Attorney trying to deal with some civil wrongs (torts) whereby some patient or surviving relative was defrauded through healthy care not living up to advertisement (e.g. a Website of an HMO).  [Of course, any comments I make could also help an HMO defend itself – the study of law focusing on wrong actions and defenses of such actions.]

 

 My focus will be on a fictitious HMO whose name I will call the Bayside HMO.  In a sense all “Health Maintenance Organizations” (HMOs) are fictions because the term HMO was simply created to sell an Act to the public – the HMO Act of 1973.  All they were then – an now – are prepaid health groups who have found that they can underfund intensive care by making a show of disease prevention and siphon off the profit in between.

 

This HMO or” that will, for sake of this discussion, consist of three entities – the Plan, the Hospitals, and the contracting-for-profit Medical Group.  Each of the three are created as state entities with longer names: the Bayside Foundation Health Plan, Inc., a supposed non-profit public trust; the Bayside Hospitals, Inc., a supposed non-profit chain of public trusts; and the the Physician Understaffed Federation, Inc. called PUF for short.  Let’s say that the entities are called the Plan, the Hospitals, and PUF (pronounce as if spelled “poof”). 

 

Who is In Charge?

Who of the three entities actually runs the organization is part of the mystery of the organization.  As a federally registered HMO, government would say it is the Plan that is in charge, with the physicians only being subcontractors.  The docs are thus always at an “arm’s reach” negotiating distance from the public benefit institutions.  Therefore, the government tries to hold the Plan and the Hospitals responsible for keeping the contracting physicians on the right track. 

 

But when one pierces the Bechtel-like and well crafted mystique of secrecy of the HMO’s administration, it becomes clearer that the physicians are in charge.  The original PUF physician started prepaid care in a rural setting.  The physicians of PUF demonstrated once in their history that they could set up their own HMO.  When that dust settled, the physicians bargained for 50% of the profit (net income) and 50% of the decision making.  They won.  That was accelerated when the Plan CEO and the PUF President were made co-chairman of the top executive committee – filtering all information to and from the rubber stamping Board. 

 

In fact, the single most important goal is that the organization reaches at least a 5% profit each year which can translate for each physician partner a doubling of income.  The first $100 an hour is for routine care given; the second $100 an hour during the same hour is for complex care withheld.  This second $100 of profit – less care than promised by the ads and Website – pours into bonuses and a retirement bonanza, which is the best physician retirement in the state.  The retiring PUF partner can look forward to $15,000 a month in income to supplement social security.  The only problems are as follows:  that such physicians must always favor Bayside’s legal position and dream of expansion, the retired physicians can only work at Bayside (hourly), and they must accept Bayside for their family’s medical care - “the scariest” principle of all per one PUF physician.

 

The Law

The study of the law as I am discovering in this first few months as a student is – for the first year – divided into criminal law, torts (civil wrongs), private contracts, and universal (UCC) contracts.   I will probably even improve that sentence within the year. 

 

For a patient to enroll and participate in an HMO, all four of these categories of law may be involved.   And perhaps the best outline of the potential relationships is that found within HARP.org run by Webmaster Harvey Frey, MD, PhD, and JD (attorney at law).  I would hope at some point in my future career that I might contribute something beyond just essays to this online collection toward its goal of “health administration responsibility - project.”

 

Health Plan Immunity

Approaching the responsibility of those at the top of Bayside HMO, one is immediately aware that the federal government in a spineless moment  years ago bent to the will of HMOs and took away the normal right of patients to sue the Plans.  This has been the “patient rights” debate which later got lost in the “errors” campaign – we have moved from rotten barrel analysis to rotten apple analysis as if we only get to review one problem at a time.  Certainly rotten barrels are more likely than sound barrels to produce rotten apples.

 

If one believes that he or she or a deceased relative got poor care in the Bayside system, there is the initiation of a complaint.  After a vague internal process, there comes a point when the person involved my want a legal contest - Person v. Bayside.  But Bayside will gently urge the person to avoid suit of the Plan (really immune).  Rather the complainant is told that he or she should focus on the physicians with or without the hospitals added.  They are aware that physician suit in their favorite state has been limited for financial recovery to the point that perhaps only 1 of 10 people can find an attorney group willing to join the risk of suit.  Often the patient/family ends up paying for the expert fees – perhaps $10,000 up to $50,000 – depending if there was one clear moment (wrong leg) or more often a series of events of under-testing leading to too late diagnosis.   Each event in that error series becomes its own case within a case.

 

Bayside also made its patients for decades sign a pledge that they would use “arbitration” rather than the usual public court system on the promise – announced by its own self-chosen “Blue Ribbon Committee” and within state Supreme Court documents – that it was to be faster, fairer, and cheaper rather than arbitration being simply a block to justice.   Bayside tries to force the patients and all relatives into this arbitration funnel and at the same time becomes the largest employer through hourly charges or fees of retired judges in the state (the state called Managed-Care- Heaven).

 

Medical Records

Totally castigated by the Supreme Court of the state of Managed Heaven ten years ago for an unfair arbitration system – run internally and taking two years – Bayside HMO now has externalized the system under an “Independent Arbitrator” attorney.   Although the million dollar contract to this attorney for this service is inducement to be HMO friendly to itself, Bayside has made sure that the medical malpractice (medmal) contests are made defendable by first wrecking medical records before they leave Bayside.  Thus reviews by the Medical Board (licensing physicians), the Licensing Division of the State Health Department (licensing hospitals), and the Medicare “quality” contractor – after such “spoliation” - all find no fault with Bayside.  That turns off plaintiff lawyers.  Some of those step forward only to practice the art of low and quick settlements.  The Supreme Court of the state of Managed-Care-Heaven also decided some years ago that it might clog up the courts to have a separate tort (civil law wrong) for ruining medical records, so somehow the complaining party must figure out the spoiling of the record and try to prove that it was done to defraud the outcome.  OR – one can focus on the Risk Management attorney’s license within the Bar Association Ethics Committee (a track I am trying now).

 

Murder

My first topic of study this Fall of 2007 as a law student was crimes, although I am supposed to study all four first year topics – Contracts, UCC, Torts, and Crimes – all at the same time.  Modest budget has made me learn more about crimes so far than the others.  And I am interested in the question of whether or not a District Attorney (DA) will ever step forward to review an HMO in any state for the crime of murder.

 

Murder is defined in the law as “the killing of one human being by another, with MALICE aforethought.”  Under common law the death had to occur within a year.  In the modern interpretation the time it takes to die has been “extended by statute” (state law).   It would make sense – and the law is supposed to represent fairness despite complexity – that a medical error like missing an early cancer should be held to be a problem even if death takes many years. 

 

One of the most interesting types of murder to me in my HMO analysis is that called “Depraved Heart Murder.”    This is the situation in which there is first “gross negligence” – defined as exacting proof of a wanton or reckless disregard for human life.  There must be, second, a knowledge that the gross negligence could lead to the death of some. 

 

The law is split over how to define the level of gross negligence needed to move from manslaughter to murder.  It is the call of the jury – the trier of facts.  But the judge must try to define the several terms so that the jury can apply the facts they judge to be true.

 

The question I would pose to myself is whether or not an HMO that tries to intimidate patients into coming in less often – by calling them the “worried well,” by making them wait excessively, by setting up distance stress tests in order to continue medications for prevention of illness, by under-reading tests, by blaming life style for most illnesses, by undermining self esteem in a thousand ways, by withholding common tests unless there is a 50% chance of a positive result, etc. – and that such action (producing enormous profits like $2 billion in 2007) puts a large number of patients at risk for late diagnosis and no chance for treatment, would that not constitute a “Depraved Heart” strategy?  To what level is “population medicine” - in which easy cases fit and hard cases fall to poor care – another sign of a Depraved Heart?

 

A DA would probably have to view such a case as a multi-million dollar undertaking with the risk that not all 12 jurors would agree on the level of depravity against the defense that the HMO was only trying to protect the resources of care for more to enjoy.  In fact, Bayshore HMO through its state location and many other state branches, tries to construct an unspecified contract in which cardholders have the desire that the resources be carefully guarded to keep premiums down.  Though there is no proof that any patient wants less than the “Live a Great Live” slogan of the HMO in order to gift his or her cost of care like early testing to the others and live on disease risk.

 

To understand the general trend of the HMO – particularly in the last ten years – so as to better get to motivation for care withholding and its risk to patients, it is helpful to examine some organizational history and changes.  Bayside HMO has always pictured itself as the only solution left beside government control of health – Canada or European style.   The previous “fee for service” physicians are only to be seen as lonely eagles flying over “the canyons of the past.”

 

Balancing the HMO Budget – to Profits

Around 1996 it became clear to all hospitals and HMOs in the country that there was a “Balanced Budget Act” that the Republicans swept through in their “Contract with America” whereby some 400 billion dollars were going to be removed from the health care system – much of it from hospitals.  This bill headed up by Senator Newt Gingrich made the whole manage care industry tumble at the same time.  There were many mergers and many losses.

 

After having a net profit for sixty years straight perhaps reaching about 500 million dollars toward the end, Bayside HMO foresaw and realized a loss of profit for two years in a row in about 1996 due to this government action.  They determined not to close, not to merge, and instead to create a “recovery” of lost funds by 2001.  There many steps included:

 

1.       The creation of an “Institute” in which to derive medical science and impose it on frontline care; the Plan would pay for it (through charity offsets), while the physicians would run it –yet the output of Guidelines (outpatient) and Pathways (inpatient) would remain secret as internal “business products”;

 

2.       The creation of a physician’s journal to look academic and successful, perhaps one of the most colorful of journals a physician might receive; it was also to communicate among the physicians to announce PUF came to be “superior medicine”;

 

3.       The merging of physician and non-physician leadership into the dynamic duo at the top – each able to trump the other; the future CEO of the Plan/Hospitals (same board) would never be a physician again;

 

4.       There would be a national expansion to try to appear as if Bayside had a national and “private” solution to the rising cost of medical care, a cost scaring Congress as the (post World War II) “Baby Boomers” would start to come into Social Security Medicare in about 2008 in large numbers; thus Bayside bought into the East Coast in several locations including Washington, D.C.

 

5.        The creation in Delaware (for incorporation) but run out of Oakland, a physician investment group to match hospital investments in venture projects; some of those included medical books, dialysis treatment, etc.

 

The PUF group of physicians also decided to spend enormous amounts on national advertising to try to keep their enrollment at 9 million even though national HMO enrollment was declining.  The initial image (advertising “tagline”) was “In the Hands of Doctors” but this had to stop when a law case proved it was untrue; that case got buried for a settlement never really disclosed or enforced.  In about 2004 the new “Live a Great Life” campaign was developed as if the HMO and its physicians were pro-long-life-span. [ At the same time they were planning the future when patients would basically stay home and talk to their “primary care providers” (perhaps just RNs and pharmacists) through video machines.]

 

Although the ad budget reached $100 million at its peak (during state expansion), it had settled to about 40 million dollars a year in 2006.  The transplant debacle made Bayside raise the amount to 45 million dollars a year.  The goals were twofold – keep enrollment above 8 million and keep the media silent.  They have accomplished both. 

 

The imposition of HMO fees at all levels – a return to “fee for service” – has lead to the largest profits in history.  The regulator of HMOs in the primary state – always 75% of all enrollees - have imposed fines during this time but the ratio of fine to profit is about 1 to 1000.

 

“Evidence” vs. “Expert”

One of the problems in withholding care is the need to create your own medical science and try to elevate that illusion to the top level.   It has to be at least sufficient for use by the frontline providers of care – physicians , family nurse practitioners, physician assistants, nurses, and pharmacists.  At one point Bayside even had janitors “service coordinators” answering emergency room call buttons, but the state caught on and the organization went through one of its thousands of morphing substitution to achieve profit.  [It its grand, internal, pictorial scheme, Bayside portrays the government similar to the ugly and dreaded Cyclops throwing boulders out to try to sink Ulysses, the hero, and his small fleet.]

 

Any HMO striving for legitimacy needs to be seen as providing care at the frontiers of research so that patients will not rush toward universities – the supposed “centers of excellence.”  At the same time, you need to have physicians within the universities for those stray patients who do get sent there for second opinion [usually with no records sent along].  Bayside holds out in its [required by IRS] charitable gloating documents that it sponsors on its property the largest non-governmental research organization in the country; much of that “research” is chart review to proclaim good patient output despite doing less.  [Yet its physician journal is not really accepted as a “medical journal” since science is not its primary goal.]

 

Begun at McGill University Family Practice Department in Ontario, Canada, there was an effort that has been called “evidenced based medicine” in which world evidence is supposed to be filtered down to the single best way to approach most problems.   And while this should all be pure science and budget neutral, governments have always first studied (with HMO help) those conditions where they hoped less care would be proven best.   Pretty soon – armed with “evidence” - only nurses need see patients with sore throats and very few of those people need antibiotics.

 

Frontline physicians are then told that they are too busy to have time to look up all the research – as they were told to do in medical school – and instead should allow others – like Bayside specialists – to pick out the best information.  Just let the hints pop up on the computer and do what is suggested or explain why not.  And there is little reason to bother a Bayside specialist, since the specialists have already defined what to do anyway.

 

This system of medical science creates the perfect condition for the illegal, corporate practice of medicine.   Pressure from the Plan can be applied to the funding of the Institute unless the latter develops through its own specialists these compromises in care now called “evidenced based medicine” as if it is better than before.  If fact, it is sardine medicine – one size fits all – in which the patient that is slightly different will be put at unnecessary risk for getting worse.  Some will die.

 

The PUF physicians will try to appear as “partnering” with the American Diabetes Association, the American Heart Association, the Communicable Disease Center, and many others in the rush to “evidence.”  But the official documents all get altered so that, for example, PUF refuses to test its coach potato type patients for diabetes.  Though perhaps half of its diabetics are undiscovered – some showing up at dialysis time – Bayside reasons that they are to blame by lifestyle; the answer is to encourage everyone to exercise and broccoli rather than to be tested for diabetes.  If patients show up with just discovered diabetes at dialysis time, new federal monies turn on and the dialysis venture profit system makes this a Win-Win for the doctor partners.  This is all about keeping risk with the patients – the opposite intent of Congress.

 

As much of what goes on under PUF is secret and PUF specialists are all lined up at the retirement trough to participate in sharing the loot from care withholding, the cost of proving the fraud of all this exceeds the risk to plaintiff or trial lawyers.  It would be the exceedingly rare Bayside patient that could actually afford to take on the system and pay the attorney on a shared risk basis (like $150 an hour if we lose and $300 and hour if we win).

 

The public ends up paying through Bayside tax deductions for guidelines that are used to take the place of medical science and secretly limit care in all areas.   Some will die.  The physicians will come out “vested” in a great retirement – no real risk at all.  The Plan pays for all legal contests.

  

“Creature of Congress”

One could envision that a hundred laws could be invoked against all this – fraud in contract inducement, fraud in contract, lack of intent to deliver what is advertised , fraudulent legal remedy, judges that like to keep their average of three cases a year, unethical spoliation of medical records, lack of regulation, etc.   But all await the case or cases by which solving any of this fits the business of lawyering.  

 

Some years ago Texas in dispatching Bayside HMO at a point in time seemed to be up to the job of HMO reform in general.  But when their attempts got to the Supreme Court, the decision was that as uncomfortable as the judges are with HMOs these medical hoaxes are, in fact, the creation of and “creature of Congress.”   Written into the law is that HMOs intended to ration.  Written into the law, physicians were supposed to be put at profit-loss risk.  The law was supposed to exclude patients from really holding the risk – but how can this risk-pass- thorough be proven?

 

Congress has not intent to explain to the public that it took away the right of HMOs to sue – creating a diplomat type of immunity – because the HMOs were willing to limit care and take the blame.  In fact, HMOs have always expected eggs to be thrown at them – meanwhile protecting the physicians within who make most of the care limiting decisions.

 

In 2007 it became clear that HMOs always cost Congress more than the original and “too expensive” fee for service approach it replaced.  But Congress still likes it and tipped the HMOs millions of dollars in the changes made in 2004 during the addition of Part D (medications) in the Medicare Modernization bill.   The idea is to tell the public that HMOs are part of the “private” solution for medical care to avoid the problems of government run medicine (like the VA).   But Bayside HMO and the VA are gradually converging.  In the end – as with the conclusion of the book called Animal Farm – the pigs end up in charge and no better than the farmers.

Legal Remedies

Apparently I need to understand more about legal remedies if I want to share useful legal solution.  And that will be part of my goal in studying the law.  I do have a few ideas so far:

 

1.       In any case of spoliation of medical records, the malpractice recovery monies should triple and all deadlines for filing be extended in favor of the plaintiff;

 

2.       Medicare now has the authority to require truth in advertising and words like “non profit” and “live a great life” need to be seen as lies;

 

3.       States need to make fines proportionate against that year’s HMO profit scheme;

 

4.       District attorneys need to be ready to apply Murder by Depraved Heart rules when care is purposely ruined – e.g. wrong testing scheme for Lyme Disease – such that death can be anticipated among some;

 

5.       The IRS needs to step in and see if the governance of an HMO corporation by conjoined twins – one overtly out for profit – still fits the “non-profit” designation against which in one HMO some $5 billion has been avoided being taxed;

 

6.       Courts need to dredge up those buried decisions whereby there was public risk and settlement lead to persistent secrecy;

 

7.       The whole concept that physicians have a gag clause not to tell tales about HMOs or they will lose their retirement has to be judged against the necessary public good of contracts in general;

 

8.       Patients who have been wronged need restitution from the enormous profits – generally managed offshore – that have accrued through fraud;  it is the same principle by which  the US freezes the assets of Burmese dictators and an Iranian megalomaniac.

 

Conclusion

President Kennedy said it best at Amherst College when dedicating the Robert Frost Library in the Fall of 1963, “power corrupts” and “absolute power corrupts absolutely.”  HMOs have defrauded patients so that Congress could give the illusion of being “balanced” in budget.  Congress owes the public the right to have restored the “patient right” to sue HMOs and the right to so sue before a “jury of their peers.”

 

 

                                             Charles Phillips, MD, FACEP, law student