David M. Glaser, JD
The government recently filed a False Claims Act case in California against several physicians who operated a physician-owned distributorship.
Even if you would never consider anything related to a physician-owned distributorship (POD), there are some important lessons to be gleaned from the complaint. When litigation is at the complaint stage you only have one side of the story. We can’t evaluate the truth of the complaint, but the validity of the claims only matters to the parties. For the rest of us, the lessons and the law are all we care about. The law won’t be clear until the case is resolved, but some of the lessons are already apparent:
Assume someone is taping every word you say.This may sound unduly paranoid, but the truth is the government is increasingly using recordings and informants in health care cases. They have been wiretapping phone calls, asking employees to wear a wire, and sending in fake patients with a recorder (yes, that really happens. The some individuals serve their sentence of “community service” by being “patients” for health fraud investigations.) In addition, disgruntled employees sometimes opt to record conversations. There is an expression “dance like no one is watching.” That might be good advice for a club, but “talk like the whole world is watching” is a great principle to apply at work.
Think about how what you are saying will sound to patients or members of a jury. Some of the quotes from the complaint sound like they are from Dickens. The first one removes any pretense that the speaker expects people to place patient care above all else: “If you are truly in this to make money and you have a finite time limit to do it, I don’t know a better way to do it.”
The second fuels conspiracy theories: “We don’t share this with everyone…”
The third one speaks for itself: “I always scoff at someone I am sitting with who says ‘Well, it is really not about the money.’ It is about the money. We make a lot of money.”
Whether talking about the economics of the practice, or coding and compliance, a poorly chosen phrase may come back to haunt you. Moreover, the listener doesn’t always hear your words exactly as you intend them. If you say “this rule is stupid” it is possible that the listener will hear “I am not going to follow the rule.” Many false claims cases start in large part because a disgruntled ex-employee latches on to a quote that offended the employee’s sensibilities.
Err on the side of disclosure. The physicians in this case allegedly were asked by hospitals whether they had a financial relationship related to the devices they used. Despite owning the POD, they denied having any economic relationship. If the government is able to prove that the physicians lied, the harm to their credibility could easily be enough to undermine their entire case. Openness suggests comfort with the legality of your actions while secrecy suggests a nefarious intent. Freely disclosing things to patients and colleagues makes it more difficult for anyone to later attack your actions. If you are worried about the world learning about one of your practices, then you might want to seriously reconsider whether you want to continue with it.
If you have a written agreement, follow it. The government claims that when a physician stopped using the devices sold by the POD, the POD forces the physician to sell the investment. Then, rather than paying the buyout called for by the documents, the POD said past distributions were deemed to be the buyout. The government is using the disregard for the agreements as evidence that the documents are a sham. I have been involved in several cases where physicians had an agreement with a medical device company and the physicians never forced the device company to follow the agreement to the letter. The government used that as evidence that the written agreements were “cover” for an illegal agreement. After you take the trouble to write an agreement, make sure you follow it.
Know what your colleagues are doing. In a physician group, it is reasonable for everyone to disclose their health care-related business ventures. If any physician is involved in a questionable arrangement, then it has the potential to have negative implications for the entire group.
As part of our practice management session at Orthopedics Today Hawaii 2015, will we will discuss tips for how you can engage in business ventures while still minimizing your legal risk. I hope to see you there.
