by Jane Orient, MD

The guarantees of due process at both state and federal levels are under siege on several fronts. This was the recurring theme of the 47th annual meeting of AAPS in Scottsdale, AZ, September 13-15.

The repeal of the Fourteenth Amendment to the US Constitution, which extends federal protections to the citizens of all states, could effectively be accomplished by the judicial invalidation of the Civil Rights Act of 1871, the grandfather of all civil rights legislation. The "anti- Ku Klux Klan Act'' provides that a person who, under any statute, ordinance, or custom of any state, subjects another person to a deprivation of rights secured by the Constitution and laws shall be liable to the injured party in an action at law. This means that he can sue for damages, injunctive relief, or other proper redress.

Can a physician who is deprived of his privileges in a public hospital, without being afforded his due process rights, bring a civil rights action? This was the question raised in Caine v. Hardy, Mason, et al. (see AAPS News, Sept 1990). The answer appears to hinge on the interpretation of the Parratt/Hudson Doctrine. This doctrine was first enunciated in 1981, in the case of a prisoner named Parratt, whose $25 hobby kit was discarded by a guard. The Supreme Court ruled that Parratt had no cause for a civil rights action because the state could not have afforded him a predeprivation hearing, and the action of the guard was "random and unauthorized.''

Writing the dissenting opinion in the Fifth Circuit court decision, Edith Jones (the only judge other than David Souter interviewed for the recent Supreme Court vacancy) argued that the Parratt/Hudson doctrine applied because state regulations did not authorize the action taken against Dr. Caine. The state had appropriate regulations; its employees had simply violated them. In other words, it was not the state itself, but persons employed by the state who were responsible for any wrong that might have been done.

In his report of the Limited Legal Consultation Service, AAPS Counsel Kent Masterson Brown stated that the Caine case will reach the Supreme Court. If the decision of the Fifth Circuit is overturned, it essentially means that "there is no civil rights cause of action against a State.''

The due process problems involved in Medicare-Medicaid fraud investigations were discussed by psychiatrist Carol Brown, MD, of Honolulu and her attorney, R. Steven Geshell. The first problem is the vagueness of the regulations that physicians agree to abide by when they sign the contract with the government (usually without reading it).

"They tell you not to speed, but they won't tell you what the speed limit is,'' she explained.

Then there are the investigative techniques. Once a physician is targeted (perhaps because she has spoken out on politically sensitive issues), the investigators seek evidence. Dr. Brown stated that 127 of her patients, including the sickest ones, were interviewed. In return for their testimony against her, prostitutes and drug dealers were promised reductions in their own sentences. Before Dr. Brown could even find out what the accusations were, investigators threatened to break down the door of her home in order to search for patient records. All records, even those of private patients who could be severely harmed by breaches of confidentiality, were subject to scrutiny. Photographs of Dr. Brown's office were identified as the "scene of the [still unspecified] crime.''

In a two-week jury trial, Dr. Brown was acquitted of all charges. (Conviction could have carried a sentence of 670 years in prison for "defrauding'' the government, as by coding visits in a manner not approved by the regulations.) The judge com- mented that the case should have been handled administratively, but that Medicaid had not followed its own rules.

Dr. Brown filed a lawsuit against the State of Hawaii on the 200th anniversary of the ratification of the US Constitution. Although one count is still pending, the allegation of denial of civil rights due process has been thrown out.

In addition to the possibility of investigators' disregard of their agency's own rules, proposed regulations concerning fraud and abuse sanctions may exceed statutory authority and violate the US Constitution, according to Astrid Meghrigian, Legal Counsel to the California Medical Association. Issues include the following:

  • (1) Subjecting physicians to both criminal and civil sanctions for the same activity may violate the double jeopardy clause of the Fifth Amendment to the US Constitution.
  • (2) Definitions of investigators' rights to ``- immediate access'' to records upon ``reasonable request'' seriously undercut Fourth Amendment protections from unreasonable searches and seizures.
  • (3) Physicians proposed for exclusion from Medicare are in many respects presumed guilty until proved innocent.
  • (4) Prohibiting the cross-examination of witnesses and almost all forms of discovery (such as depositions and interrogatories) violates fundamental concepts of fairness and justice.

Formerly, civil rights "entailed a limitation of government power."  The meaning of the term may now be actually reversed, implying an expansion of government power (Tom Bethell, The American Spectator 10/90). While quotas are effectively imposed for the supposed benefit of "certified victims,'' another type of quota exists for certified villains, such as physicians (see p. 2). And if one class of citizens can be attainted, who shall be safe?

Kusserow Named Bureaucrat of the Year; Resignation Called For

HHS Inspector General Richard Kusserow, recipient of the AAPS Bureaucrat of the Year Award, was hanged in effigy at the 47th Annual Meeting. The awards ceremony was based on a tradition begun in 1764 by the Sons of Liberty, who hanged an effigy of Andrew Oliver from the Liberty Tree. (Oliver was the bureaucrat responsible for enforcing the Stamp Act.)

Kusserow received all the due process rights that his office accords to physicians in Medicare sanctions proceedings, including representation by counsel. His attorney, Vickie Yates Brown, was gagged after her first motion was denied by the judge. The jury, unbiased despite previously facing sanctions threats from HHS, deliberated for several microseconds before returning the verdict of ``Guilty.''

At the trial, Kusserow was indicted for initiating the bounty system that awarded merit pay increases to his agents based on the number of sanctions imposed, as was documented in the case of Melashenko v. Bowen. According to Carol Brown, MD, fraud was indeed found in the first few years of investigations. After that, she stated, agents had to ``find'' fraud where none existed in order to keep their jobs and justify the annual budget of $800 million. The 1984-85 performance review for James Patton (who made initial determinations of physicians' fates) showed that he needed to assess 10% more sanctions than in the preceding year in order to gain Level II merit pay-that is 390 sanctions with dollar penalties amounting to $9 million.

The OIG confirmed that the performance appraisals did say something like "must complete X number of sanctions,'' but ``that's not a quota. It's a measure of a person's effectiveness'' (Psychiatric Times 9/90).

The procedure for meeting these "targets'' has been described as ``legalized extortion'':

Investigators routinely consider how to maximize the physical, emotional, and financial stress brought to bear on the potential victim....[T]he provider must engage in a risk analysis which weighs payment of the investigator's outrageous dollar demands against public embarrassment and/or the advisability of pleading guilty to a civil count rather than risking criminal prosecution (D. Zerendow and H. Fishman, Psychiatric Times 9/90).

One high-ranking official in the OIG stated that if a doctor said he didn't have that kind of money, investigators might reply ``We're willing to accept your mortgage and if you die, we'll also take your estate'' (ibid.)

In an interview with Psychiatric Times, Donald Zerendow, former chief of the Medicaid Fraud Control Unit, stated that Medicaid providers are ``held responsible for protecting the program from its own confusions, complexities, and ambiguities. The provider is expected to unravel the mysteries, and then bill accordingly.'' Vague code descriptions allow them to prosecute ``essentially anyone they want to prosecute.'' ``If providers really understood all of this, I suspect that many would be hesitant ever to submit another bill to Medicare or Medicaid,'' Zerendow concluded (Psych Times 10/90).

Abuses by Kusserow and his agents were shown by ABC on Prime Time Live, September 20. The program was followed by demands for Kusserow's resignation from several medical organizations, including AAPS, the AMA, and the Massachusetts Medical Society.

AAPS Endorses NCPA Task Force Report, Declares Patients' Freedoms

"An Agenda for Solving America's Health Care Crisis,'' a task force report released by the National Center for Policy Analysis, has been endorsed by AAPS. This positive program, backed by careful economic analysis, offers free-enterprise solutions instead of more of the same. The program was summarized in the August issue of AAPS News. Copies of the report for yourself and other community leaders are available; call headquarters at 1-800-635-1196.

The Assembly approved the statement of patients' freedoms published in the September issue of AAPS News, with minor changes.

In other business, the Assembly voted the first dues increase in five years. Regular dues will be $250; introductory membership $125.

The slate of officers proposed by the Nominating Committee was elected by acclamation. Claud A. Boyd, Jr., MD, who practices dermatology in Augusta, GA, assumes the office of President. John H. Boyles, Jr., MD, ENT specialist from Centerville, OH, is the new President-Elect. V.L. Goltry, MD, of Boise, ID; James F. Coy, MD, of DeLand, FL; Nino Camardese, MD, of Norwalk, OH; and John Dwyer, MD, of Chicago, IL, were elected to the Board of Directors.

AAPS long-range plans include development of a set of model rules for binding arbitration in medical staff disputes, which could be incorporated into medical staff bylaws.

Message from the President

Current trends in medicine reflect the spiritual malaise of our society. We have embraced what Hayek called the fatal conceit: the idea that mankind has the ability to shape the world according to his wishes. At the same time, we still wish to turn our lives over to someone more powerful, despite confusion about who that someone might be. When we fail to obtain what we think is ours, we call for the state to intervene at the expense of others. This has led to a tremendous proliferation in governmental power, and marked decrease in our freedom to contract with one another for mutual benefit....

AAPS continues to teach the same philosophy as it has for nearly 50 years. The best medical care in this imperfect world occurs when the physician and patient together decide on a course of action, without third-party coercion or interference.

excerpted from Dr. Gregory Polito's welcoming remarks

Laboratory Regulations a Threat to Due Process

HCFA has received 43,000 comments on the proposed rules for implementing the Clinical Laboratory Improvement Act of 1988 (CLIA). Many have dealt with the cost of compliance, estimated to be $4 billion, and the effects on access to care. As many as 95% of physician office laboratories performing Level II tests may be shut down. An even more serious concern is the threat to physicians' due process rights.

The California Medical Association (CMA) in its comments states that the rules impermissibly burden physicians' and laboratories' rights by assessing fees to cover

the costs of follow-up visits, complaint inspections, sanctions, and administrative hearings if a laboratory appeals a sanction:

Given the fact that a "certificate'' is essential to the pursuit of a laboratory owner's livelihood, DHHS is constitutionally required to provide a hearing in license revocation cases. The Supreme Court has recognized the importance of these hearings where the state maintains a monopoly over the issuance of licenses. For example, in Bell v. Burson, 402 U.S. 535 (1971), the Supreme Court held that a suspension of a driver's license and vehicle registration without the notice and opportunity for a hearing before the termination becomes effective violated the due process clause....

Laws that penalize the exercise of a constitutional right, as through the assessment of fees to cover the government's costs of adjudication, are probably unconstitutional. For example, an Oklahoma requirement that tenured teachers pay half the cost of a due process hearing was held impermissible by the 10th Circuit Court in Ranken v. Independent School District 876 F.2d 838 (1989).

In actuality, a certificate may be essential not only for the pursuit of a laboratory owner's livelihood but for the practice of medicine. According to Christopher Shaughnessy of the AAPS legal consultation service, the Act effectively institutes federal licensure for physicians. The definition of a ``laboratory'' is all-inclusive:

A ``laboratory''... means a facility for the biological, microbiological, serological, chemical, immuno-hematological, hematological, biophysical, cytological, pathological, or other examination of materials derived from the human body for the purpose of providing information for the diagnosis, prevention, or treatment of any disease or impairment of, or the assessment of the health of human beings.

Does ``other examination'' include visual inspection of a discharge of bodily fluids during a physical examination?

Further, the Act states: No person may solicit or accept materials derived from the human body for laboratory examination or other procedures unless there is in effect for the laboratory a certificate issued by the Secretary under this section.

A venipuncture and catheterization for specimen are defined to be clinical laboratory services by Aetna, the Arizona Medicare carrier, even if the physician sends the material to the laboratory for analysis. Does a physician become a laboratory by drawing blood or even by ordering a blood test?

Or is he responsible for ascertaining that the laboratory has a valid certificate from the DHHS?

The definition of laboratory is crucial-an issue that also figures in the decision in AAPS v. Bowen, and one on which the Sixth Circuit Court declined to comment. (Physicians may decline Medicare assignment; laboratories may not.)

The penalty for intentional violation of any requirement of this section or any regulation promulgated thereunder is a year's imprisonment or a fine or both.

Christopher Shaughnessy of LLCS states that under the Federal Administrative Procedure Act, federal agencies are required to respond to every comment that is submitted. If they fail to do so, regulations are invalid.

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