1. Basic Health Law for Public Administration Students
Strategic Management of Health Care Organizations
27 April 2006
Edward P. Richards
Professor of Law, LSU Law Center

2. Learning Objectives
What does a health care administrator need to know about the law?
Sample legal issues
How do you work with lawyers?
Discuss problems from the end of the chapter

3. What Do You Need to Know About the Law?
Basic business law course
General familiarity with health law concepts
Specific details in the area you work
Employment law for personnel managers
Reimbursement law for billing specialists

4. Why Do You Need to Know the Law?
Be a good citizen
Stay out of jail
Bad for the resume
Legal fees will bankrupt you, even if you are acquitted
Keep your employer from losing money in lawsuits
Avoid bad publicity
Keep your employer from going out of business
See Enron, Arthur Anderson

5. Systems of Law Criminal Law Can imprison or execute
Constitutional protections
Private Law
Torts
Contracts
Administrative Law
Government regulatory law
Most health law is administrative law

6. Agencies Carry out Political Choices
Agencies carry out executive branch policy
Control through the appointments process
Independent agencies (SEC)
Legislative control
Budget
Statutory Direction

7. Agency Functions Rulemaking
Agencies can make rules to particularize statutes and for public guidance
The public participates in rulemaking
Adjudications
Licensing, permits, inspections
Prosecute through the Justice Department or AG

8. Judicial Deference to Agency Action
Courts defer to agency decisionmaking in areas of agency expertise
Fact finding
Rulemaking
Cannot be "arbitrary or capricious"
Courts do not defer to agency interpretations of the law, but look to its persuasiveness

9. St. Mark's Baths
... defendants and the intervening patrons challenge the soundness of the scientific judgments upon which the Health Council regulation is based .... While these arguments and proposals may have varying degrees of merit, they overlook a fundamental principle of applicable law:
"It is not for the courts to determine which scientific view is correct in ruling upon whether the police power has been properly exercised. The judicial function is exhausted with the discovery that the relation between means and end is not wholly vain and fanciful, an illusory pretense.

10. Why do Courts Defer to Agencies?
Expertise
Agencies have expert staff who manage complex problems
Efficiency
Agencies have more efficient enforcement powers because they are not limited by criminal law protections
Speed and Flexibility
Agencies can act without new legislation
Agencies can tap new expertise as needed

11. What Does this Mean in Health Care?
Congress and state legislatures have great freedom to pass laws giving agencies the power to regulate health care
Regulatory actions, especially federal regulations, are very difficult to fight in court
Failing to follow regulations can result in large fines and imprisonment

12. Medical Malpractice and Tort Reform

13. Cost
Medical malpractice is not a significant % of the total health care budget
The problem is that it is not evenly distributed over the budget
Neurosurgeons and bad backs
Obstetricians
The cost is also cyclical because of flaws in the insurance market

14. Fairness
Current system provides no compensation for most injuries under $100,000 and none under $50,000
In some states plaintiffs with the right facts get a windfall
In some states plaintiffs with terrible injuries do not get adequate compensation
LA caps damages at $500,000 + future medical

15. Efficiency
The majority of the dollars in the med mal system go to lawyers, not injured persons
Plaintiff's lawyers - 40+% and expenses
Defense - thousands to hundreds of thousands, win or lose
The system can be fast with a settlement, but can take years or decades if there are is a trial with contested legal issues
These delays hurt claimants and exacerbate the insurance cycle

16. Quality
Current system does not link fault determinations made for compensation to discipline or reeducation to improve quality
Random nature of claims undermines any signal that malpractice claims might send to improve quality
Plaintiffs and defendants argue unworkable and sometimes even dangerous standards of practice to win their cases

17. What is the real solution?
Why do people sue?
What is different in Europe?

18. Whistle Blowers Health care is a vindictive business
Whistle blowers get fired and have trouble getting jobs
State and federal whistle blower laws provide little protection

19. Working with Lawyers You need legal advice before you get in trouble
You need a lawyer who understands your business
There are way too many health care providers represented by good old boys who do not understand health care regulation
You need to use the lawyer to help you avoid political as well as legal problems

20. Using Lawyers Strategically
You will be pressured to do things that are illegal or just plain stupid, with potential legal consequences
Counsel can tell the boss that the idea is stupid or dangerous better than you can
This only works if you have lawyers with independent judgment
If you hire lawyers to rubber stamp things, they will always say that what you want to do is fine
Remember - the lawyer's motto is to make sure that if someone is going to jail, it is the client.

21. Case 1 - Reporting Child Abuse
Administrator finds that child abuse reporting is down from previous years
Finds that residents are not reporting
Parents injured a child after a report that was ignored
Must protect the best interests of the patients and their privacy
What are the issues?

22. Case 2 - Effective Consent
Ghost surgery
Patient is upset to find that the cardiac catheterization was done by a resident without his permission
Threatens to sue
No consent form in the file
What are the issues?
Is it true that there are no damages?

23. Case 3 - The Missing Needle Protector
Old and politically powerful surgeon is getting sloppy
Administrator is working on limiting privileges
Operating Room supervisor says they left a needle protector in a patient
Missed it in the post surgical count, caught it later, after the patient was dismissed
Surgeon does not the patient told, says it probably will not be a problem
What are the politics?

24. Case 4 - Is this the Most Efficient Way?
Patient is injured by a delayed diagnosis
Nurse was overworked, doing a double shift, and screwed up
Defense attorney says the case will likely settle for $25k
Wants to go slow because it is a contingent fee case to make the plaintiff more willing to settle
Is this the right thing to do?

25. Case 5 - Paid off Legislator
Not really an administration issue, unless you are paying him off
LA rule is no more than $100
Is that a good policy?
What should be the relationship between interest groups and legislators?
What about legislators who own nursing homes?

26. Case 6 - Staying out of Jail
Federal law prohibits hospitals taking federal payments from giving physicians any financial incentives to refer patients to the hospital
Administrators have gone to jail over this
Many hospitals do this anyway, often as part of deals that have been in place for years
What do you do when you find such a deal that involves critical staff?
What if you will go broke without the deal?