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Lawsuits Against Doctors Are For More Than Just Medical Care Delivered

PHYSICIAN AND HEALTHCARE EXECUTIVE LIABILITYGetting back to the asset protection roots of our discussions, today we examine a variety of liabilities for doctors that are not strictly related to the “standard of care” at the center of most malpractice claims.

If you joined us last week, we discussed so-called “defensive medicine” and the idea that limiting diagnostics based on what third parties want to pay for can lead to tragic results for patients and their doctors. There’s a logical nexus between the most common cause of medical malpractice lawsuits and the issue of what is subjectively enough diagnostics and testing. Approximately 35 percent of all such claims are related to “failure to diagnose” including the closely related claim of “misdiagnosis,” according to a 2013 medical malpractice study.

RELATED:  So-called “Defensive Medicine” is often Good Medicine and “Best Practice” for Doctors http://www.proassetprotection.com/2014/03/defensive-medicine-is-often-good-medicine-and-best-practice-for-doctors/

As serious and obvious as this exposure is to doctors, the actual care delivered is only one of many reasons that patients sue doctors. Below we examine some recent examples that range from shocking to arguable, but in most cases, it is actually the doctor’s fault.

In one recent case that displays a shocking lapse of judgment, a California anesthesiologist put stickers on a patient’s face to make a mustache, gang tears, and etc., during surgery. Upon being shown the photo, the patient sued and her lawsuit seeks damages from the hospital, the anesthesiologist, and his entire medical group for violation of privacy, infliction of emotional distress, and other allegations. Her attorney said the plaintiff was forced to leave her job ordering and maintaining supplies for the hospital’s operating rooms because she was “ridiculed and humiliated while under anesthesia.” While this may seem funny, I know plenty of attorneys that would use an incident like this as de facto evidence of the surgical team’s ineptitude in the event of any adverse patient outcome (fortunately, not a claim here) and I’d bet plenty of courts would agree.

An even more egregious case is a $1.5 million suit in Cook County, Ill., that names Dr. V. Puppala, the Feinberg School of Medicine, and the Northwestern Memorial Hospital. A patient is claiming invasion of privacy and infliction of emotional distress according to court documents. The patient was allegedly admitted to the hospital in extremely intoxicated condition and was then allegedly photographed by the attending ER physician who photographed her crying, passed out, with an IV, etc., and then not only posted her pictures on social media but later refused to take them down when requested to do so by hospital security. The plaintiff patient is a Northwestern student that had the “potential to someday work for Fortune 500 companies, which may now not occur because of said photographs,” according to the complaint.

In perhaps a more defensible case, a New York physician was sued by a patient for testing her for HIV and telling her she had it without her express consent. The treating physician was concerned about her white blood cell count after her condition failed to improve despite continued treatment and he had blood drawn and had the test done, presumably to protect her health. Unfortunately, this is a case of “strict liability” as New York law requires specific informed consent, counseling after testing, patient education, and a litany of other conditions that control how this testing is administered, regardless of the doctor’s actual intent. Given the patient’s history of non-compliance, the idea that she would have gone through all the required steps is frankly ludicrous, but I imagine a “failure to diagnose” claim would have followed in the future had he not acted and had her condition continued undiagnosed. What’s the right answer? Hard to say in case like this, perhaps having her sign a strongly written (i.e. by a healthcare lawyer) waiver of the test would have helped.

No compliance plan can protect doctors where shocking conduct, lack of common sense, or a failure to follow state law controls the claim. As always, effective asset protection for doctors involves doing the right thing in terms of policies, best practices, insurance and legal structures, and compliance for all medical personnel in the chain of care including staff and enforcing the same for your physician partners, who hold the future of your practice in their hands as well every time they see a patient.

“Defensive Medicine” is often Good Medicine and “Best Practice” for Doctors

PHYSICIAN AND HEALTHCARE EXECUTIVE LIABILITYAsset protection for doctors is the main focus of this column (note: this article originally appeared at www.PhysiciansPractice .com, The Nation’s Leading Practice Mgmt. Resource) and we’ve examined it from many angles over the last 100+ articles I’ve shared here. Today, we examine the issue of defensive medicine, much decried by politicians and insurance companies and the role a thorough diagnosis, free of fear of such claims by a third-party payer, plays in good medicine and your own risk management plan.

The inappropriately deemed “common wisdom” regarding medical malpractice lawsuits and the overuse of diagnostics due to so-called defensive medicine is something like this:

1. There is a national medical malpractice lawsuit crisis;

2. Doctors run too many unnecessary tests to avoid being sued;

3. These tests have little medical value and are not necessary or reasonable to providing good care; and

4. It is because of this so-called abuse that healthcare and insurance costs are high, fewer medical procedures including testing can be covered, and your compensation must continually be reduced.

This is an admitted oversimplification of the arguments from both sides, but it seems to me that the loudest opponents of this standard of care regularly fall into two primary categories: marginally informed politicians looking for a hot button issue to trumpet and insurance companies and their lobbyists and publicists. It’s my opinion that neither of these groups have effective diagnosis, treatment. or doctors at heart.

I have worked with a national client base of several thousand doctors for 11 years and have seen every imaginable form of liability you can imagine. If you’re a regular reader of this column you know I take the threat to your wealth posed by litigation very seriously and have repeatedly addressed the threat of medical malpractice lawsuits in particular, so let’s assume that I agree you are at risk; in fact most of you will statistically face such a claim twice in your career.

Now, let’s look at the fact pattern behind a vast number of medical malpractice claims, a majority of which (some 35%) center on either “failure to diagnose” or “misdiagnosis” claims by plaintiff patients or worse, their surviving family members. We don’t need to look far for examples. I get news updates on medical malpractice claims, settlements, and lawsuits several times a week and cases like the recent failure to diagnose a bone infection in Texas  that lead to a suit against an orthopedic surgeon, the death of a six-year-old child in Dallas after his internal injuries were misdiagnosed as constipation and treated with enemas, and the misdiagnosis of lymphoma in Louisiana as an infection that was treated with antibiotics and which led to the patient later needing surgery and radiation are common. In the latter case, the lawsuit included claims for damages including, “medical expense, physical pain and suffering, mental anguish, economic loss, diminution of earning capacity, disability, fear of death, scarring, disfigurement and loss of enjoyment of life”. What else do these three cases have in common? They are all from the headlines of the last one week.

I’m not a doctor and my knowledge of the cases is limited to the reports I’ve shared, so humor me and assume that the facts in these are accurate as reported. I am, however, an attorney and I know many other excellent attorneys, including the ones that sue doctors (and everyone else) for a living, here’s a little of what they’ve shared with me:

• Yes, is there is a pool of crooked attorneys out there churning frivolous cases and looking to scare and extort settlements out of any poor doctor they can get their sights on;

• This group is relatively small and spends most of their time on lower level cases that are typically settled or relatively easier to win, like conventional personal injury, dog bites, car accidents, slip and falls, etc;

• The best (meaning most successful and highest recovering) medical malpractice attorneys play to win and hedge their bets by carefully screening cases. They invest significant amounts of time and actual dollars in fronting costs for many claims and don’t usually take cases they don’t think they can win or which are at least strongly arguable as to causation in their client’s favor; and

• A key element of their claims is often related to the testing that could or should have been done to prevent further distress, or worse, to the patient. This standard of care is easily arguable both ways and poses a significant risk to your career and solvency.

My advice to doctors given these fact patterns is simple: Practice “defensive medicine” that puts the full range of modern diagnostics at your patient’s disposal. Its good medicine, good risk management, and the life you save may also be your own.

 

Asset Protection and Wealth Preservation Attorney and Author to Speak on in Maui, November 21st, 2013

A Seminar About Protecting Your Wealth and AssetsFOR IMMEDIATE RELEASE:  

Maui, HI.  November 17, 2013.

Asset Protection Attorney Ike Devji will be the featured guest speaker at a November 21st, 2013 educational seminar for doctors, business owners and other high net worth individuals sponsored by Ronsman & Associates, a wealth advisory firm serving specially qualified clients in Hawaii, Arizona and Alaska.

 

The complimentary event will be held from 5:30 to 7:00 PM at the Maui Beach Hotel’s Molokai Room.

Attorney Ike Devji will share insight gained as a former litigator who has spent the last decade of his legal career helping thousands of successful individuals across the United States protect over $5 Billion dollars of their personal assets from litigation, risk and other variables.

“We are at a point where we have 70,000 lawsuits filed per day in the U.S., and Hawaii is not immune to this issue, or the many other areas of risk management not addressed by basic liability or malpractice insurance that continually take successful people by surprise”, said Devji. “Wayne Ronsman, President of Ronsman & Associates, has many existing Maui clients who he originally wanted to share this vital educational content with and he decided to make it available to general

Maui community as a public service. Wayne understands that it’s not just what you make, it’s what you keep, and the most successful Americans are more worried about loss than growth right now. We are going to make sure they have a starting point in defending their success in plain English.”

The seminar will common cover the risk picture in the U.S. and address key issues like the difference between traditional estate planning and asset protection planning and a variety of key issues that must be addressed by every doctor, business owner and executive. Ike Devji is a national speaker, author and educator on the area of his practice and was recently a guest speaker at ACR 13, the annual convention of the American College of Rheumatology in San Diego.

He is the former managing of attorney of one of the United States leading asset protection law firms and has been listed among a select group of WORTH magazine’s “Leading Wealth and Legal Advisors”, is rated a “Perfect 10.0 by AVVO, appears on various Top Lawyer lists and has literally hundreds of nationally published articles in publications including Financial Consultant, Advisor Today, Public Accountant, countless medical journals (with over 130 articles for doctors at Physicians Practice alone), in addition to being a contributing author to the book, Optimal Financial Health. He has also recently completed an CME (continuing medical education) course for doctors at the request of the American Educational Institute (AEI) that will be shown in AEI’s marquee classrooms all over the U.S 1000 times in the next 12 months.

For his part, Wayne Ronsman brings Maui 40 years of financial industry experience with high net worth clients like doctors and business owners and is the Founder and President of the Benefit Institute which is in the business of providing financial services. The Company works extensively with Trust Officers, CPA’s and Attorneys, frequently playing a key role in finding solutions to their clients’ tax and estate problems and in taking advantage of their existing financial opportunities. Part of this work includes finding experts in other fields that are vital to persevering his clients’ success and using them to educate and serve his clients.

For More Information or To Reserve a Seat:

Wayne Ronsman, President, The Benefit Institute

toll-free at (877) 759-2181 EMAIL: wjronsman@msn.com or FAX to (480) 460-5748

Website: http://waynejronsmanassociates.com/About.html

FOR MORE INFO ON THE SEPAKER:

Ike Devji, J.D. Managing Attorney – Pro Asset Protection

(602) 808-5540 EMAIL: ID@thewealthy100.com

Website: http://www.proassetprotection.com

Tagged: Lawsuits, Asset Protection, Wealth Preservation, Maui, Hawaii, Doctors, Executives, Physicians, Business, wealth, Wayne Ronsman, Ike Devji, medical, seminars, continuing education, CME, medical practice management, CEO, entrepreneur, Business Owner, CPA

 

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Employees, Financial and HIPPA Data Create Risk for Medical Practices and Business Owners

BUSINESS AND MEDICAL PRACTICE OWNER LAIBILITYHIPAA and financial data present an ongoing asset-protection issue for physicians and medical practices. This week we take a look at a specific exposure suffered by up to 40,000 (yes, 40,000) patients of one Arizona medical practice and some simple precautions that may help your practice avoid the same exposure. 

While written for doctors, this applies to ANY business that handles HIPPA protected info or client financial data like social security numbers, account numbers, credit cards, etc.

Recent news reports from Scottsdale, Ariz., detail the alleged activities of a medical billing firm employee and her boyfriend. According to news reports, Brittany Davidson and her boyfriend Winfred Aurelious Dick, Jr., were arrested after a Maricopa County Sheriff Captain spotted an unauthorized charge on his credit card. Further investigation revealed Davidson had reportedly stolen his credit card information from the medical billing firm where she worked, which handled billing for a Scottsdale dermatology clinic.

As a result, the financial data of as many as 46,000 patients may have been exposed by the duo that used patient credit card numbers for items ranging from rims and tires to fast food. The practice, Scottsdale Dermatology, has offices around the city and data from multiple offices was potentially exposed by the billing company’s security breach.

 

What Could Have Helped?

 

  1. 1.    Cyber liability insurance.

We’ve previously covered a variety of vital forms of commonly overlooked medical-practice insurance policies, and discussed the importance of data breach or cyber liability policies, which we can only hope the practice owner has in place here. These policies cover a variety of issues in our increasingly electronic world, including not only outside theft or loss of medical records but also the intentional misuse of patient data by employees. In this case both the medical practice and the billing company, which is likely a “business associate” of a covered entity, face substantial liability for a variety of issues including:

 

• Any actual losses incurred by patients;

• The expense of formal notification of over 40,000 patients;

• Ongoing remediation including credit monitoring and credit repair for those actually exposed;

Reputational damage and loss of patient trust.

 

I’d also add that EPLI, or employment practices liability insurance, could prove useful in such a situation. While much of my previous coverage of this vital issue has centered on its value in protecting a doctor’s office from an employee lawsuit, the best policies often include riders that protect the employer from the liability associated with the unsanctioned actions of an employee as well.

  1. 2.    Background checks and proper employee credentialing.

In this case the billing and subsequent breach occurred at a third-party company that we can only hope was properly credentialed and met the specifications of the dermatology practice’s third-party payer contracts. It could just as easily have been at the doctor’s office itself. Part of your HIPAA security procedures should include a discussion of the entire chain of custody of the records your practice handles and discloses to third parties and that review should include questions about any third party’s background-screening practices. Find out if they indemnify you for their loss or misuse of the information you share with them, and get a copy of their “in-force” liability policy that covers you in the event of such a breach.

 

I can only hope some phones are ringing on these issues at billing companies across the country later this week.

Is your housekeeper, chef or nanny a lawsuit liability? Probably.

DOMESTIC EMPLOYEEThe frequency and exposure of lawsuits by various domestic help is a serious and growing threat. In the last few years I have seen more claims by domestic staff including maids, nannies, housekeepers, cooks, gardeners, personal trainers and etc. than ever before.

Claims include wage and labor issues, sexual harassment, personal injury, wrongful termination, and discrimination.  In other words, all the same issues you’d be worried about in a business setting but which are seemingly ignored at home.

If you are financially successful and/or famous, the stakes are even higher as the reputational damage and media attention that comes from these claims can be damaging in many ways beyond just a lawsuit judgment itself.  See the headlines for big cases with nasty allegations against celebrities and CEOs as two glaring examples.  We’ve seen it affect contracts, endorsement deals and even stock prices.

All my clients that have domestic help are advised to have the following:

  1. A written employment agreement that includes mandatory mediation and arbitration provisions as well as a confidentiality agreement;

  2. EPLI (employment practices liability) insurance – this covers you against lawsuits by your staff;

  3. Worker’s comp coverage;

  4. A high limit personal liability policy on the home with an umbrella of at least $2MM, and based on your net worth, maybe higher.

If you haven’t been advised to do this, get better legal help and implement  these measures going forward. Juries don’t feel sorry for people with household help, in fact, many of them will be household help.

As always, back all this up with proactive wealth preservation and asset protection strategies implemented by an experienced professional.

Related stories:

HAMPTONS NANNY SPILLS: My Wealthy Employers Only Buy   Me Rice And Ramen Noodles

http://www.businessinsider.com/hamptons-nanny-daily-front-row-interview-2013-8

Paula Deen Lawsuit Thrown Out In Court

http://www.businessinsider.com/paula-deen-lawsuit-thrown-out-in-court-2013-8

Personal Assistant Who Says Lady Gaga Made Her Sleep In Her Bed  Will Get Her Day In Court

http://www.foxnews.com/entertainment/2013/09/11/lady-gaga-trial-lawsuit-brought-by-former-assistant/

 

Drug-Based Treatment Liability Issues for Physicians

DRUG LIABILITYA variety of medical specialties use drug-based treatments administered by the  physician’s office as a routine part of their treatment regimes. This usage presents expanding serious liability issues that require serious consideration  and risk management.

The use of specialty-compounded drugs to treat a variety of ailments is on the rise (one recent report says they account for a full 6 percent of medical-error claims) and so are associated risks for medical practices. One recent case involved the use of infected epidural steroid compounds unknowingly used by pain management practices across the country. Hundreds of patients across a dozen states came down with meningitis and a variety of other diseases, and in some nearly 50 cases with fatal results.

A review of many top malpractice and drug-injury lawsuit websites makes it clear that the doctor will very much be part of the lawsuit chain in these unfortunate circumstances. One such website reads, in part, “The doctors who prescribed (or administered) the drug that injured you may also be liable for your injuries because they are part of the chain of distribution of the drug.” Given this hostile environment it is more important than ever to have and enforce a drug-quality policy at your practice whether you work in pain management, cardiology, or any other specialty. Regardless of actual “fault” always remember that lawsuits seek deep, easy pockets like yours.

What You Can Do to Protect Your Patients and Practice

1. Have a written plan. Just as with HIPAA liability a key issue in attributing blame to a medical practice and its owners is whether or not they took any reasonable efforts to ensure quality and prevent harm.

2. Make someone responsible for enforcing it, then implement at least one secondary check and failsafe.

3. Keep immaculate records of the quality assurance program and note each time you check the responsible party’s work for compliance. Also keep detailed notes and examples on the correspondence and marketing between yourself and your vendors.

4. Do some due diligence on your vendors. Check their licensing, look for lawsuits and complaints, and get specific representations in writing about the quality and source of any pharmaceuticals you personally administer in your office. Common red flags we’ve seen emerge over the last few years include billing from outside the United States, drugs labeled in foreign languages instead of or in addition to English, and prices that are too good to be true.

5. Implement a comprehensive and proactive risk management program that includes not only your regular malpractice coverage but also director’s and officer’s insurance (for those who make executive decisions on vital like the “who, when and where” of such purchases made by the practice) and RAC audit insurance (to help defend you against things like Medicare audits).

6. Remember that many insurance programs you may bill for treatment, including the use of drugs, require that all pharmaceuticals are sourced from licensed U.S. providers. If you use and bill for tainted drugs that do not meet these conditions you have both risk of injury to the patient and the potential to face a Medicare fraud claim, another exceptionally onerous issue that will have to be litigated and defended separately if you think you can prove you were an “innocent purchaser”.

7. Finally, review the informed-consent procedures you have in place in connection with such treatments. This area has been key in establishing liability for the doctors themselves.

Asset Protection Trust Jurisdictions For Doctors Part 2: Going Offshore

OFFSHORE TRUSTSLast week marked the second chapter of our discussion of asset protection trusts for doctors, with a look some basic issues of jurisdiction, that is, what geographic location’s set of laws control the trust. For those who want a potentially higher degree of security with a longer track record, offshore tools like international asset protection trusts (IAPTs) are often attractive. 

 

Although painted in a negative light in recent popular lore because of issues with large numbers of tax evaders (many of who are American doctors) the defensive value of the IAPT remains intact. The simple mistake made by most of the people you read about having trouble with offshore accounts can be reduced to simply failing to report the accounts as the law requires. You do have a well-established right to have offshore bank accounts and trusts and the event of moving money to a foreign bank account owned by a trust or held personally as we covered in our previous article on offshore finance is typically not taxable in and of itself. 

A large number of successful American doctors set up this kind of defensive planning in the first place because they lack full confidence in the often inconsistent and subjective nature of the American court system and are unwilling to remain exposed to any claim or lawsuit that may come along, regardless of its validity and amount. One of the questions that I’ve asked clients pondering the domestic vs. foreign asset protection trust question is this: If you feel you that ensuring your life’s efforts against the above mentioned exposures in the U.S. court system is a good idea, does it make sense to rely on that very same system’s laws and subjective judgment in the planning you implement against it? While opinions and tactics vary widely among planners not all of those strong opinions are backed by actual long-term experience; make sure the answers you are getting actually are.

There are many international jurisdictions to choose from when creating an IAPT ranging from familiar Caribbean islands to Belize, Jersey, The Isle of Mann and the Cook Islands, one of my personal favorites. Some jurisdictions (especially many of the romanticized Caribbean ones) are now too close and connected to the United States to provide the full value of an offshore trust structure and others may be too remote, politically unstable or under-developed to provide many westerners comfort. This author’s personal experience with several thousand of these structures has been to use a remote but well-established protective jurisdiction staffed by top international banks and trust companies that controls assets housed in first-world, European-state-owned and insured banks. These provide superior solvency risk and political stability.  Banks such as these provide the many layers of protection and part of the system of checks and balances so important when moving your assets.

Once assets are moved, the “investment advisor” to the trust can allocate the trust’s assets to nearly any imaginable conventional investment and a few you can’t participate in directly as an individual U.S. citizen. In addition to the basic legitimate business purposes of wealth preservation and estate planning, the IAPT is also gaining popularity with those who have concerns about having their entire investment portfolio here in the United States. Currency stability as well as social political and economic variables have prompted more Americans than ever before to investigate these options over the last five years.

The costs and legal formalities, as well as the history and legal protection afforded, vary widely between jurisdictions, so it’s important to work with an experienced planner that has full range of required support resources like banks, trust companies, protectors, and investment advisors. As always, timing is key, so looking at these tools after an exposure has occurred dramatically reduces their effectiveness and legality.  In this limited forum we can’t possibly cover every detail, so get personalized professional legal help when examining this important asset protection strategy or any other.

 

 

Asset Protection Trust Jurisdictions for Physicians – Part 1, Domestic

law and money for doctorsIn our discussion two weeks ago we introduced the Asset Protection Trust (or APT) as a tool and answered some of the most frequently asked questions regarding what it is and how it differs from the estate-planning trust many doctors already have in place. We continue our discussion of the APT this week and examine the often argued and misunderstood issue of jurisdiction, that is, the place and laws under which the trust is created that ideally control any legal action with or against it.

The Options

The most basic division between choices is simple; APTs can be on-shore or “domestic” or offshore, typically referred to as “international” or “foreign.” Look for these prefixes to indicate this elemental distinction. Both DAPTs and their offshore or international (IAPT) counterparts share some common elements:

 They are irrevocable

They must strictly comply with all legal, formational and operational requirements imposed by a specific jurisdiction and state so in their drafting

They have trustees appointed to mange the trust and its assets

Some require that the assets seeking legal protection are actually located within the jurisdiction and that an approved local agent, trustee or authority is appointed

 They must be set up and funded in advance of any claim or specific liability you want them to be effective against

 Neither structure is secret or tax free, despite what’s promised

Both are usually ineffective against a current spouse when used in a legal way

There are a number of states that have created laws that allow the formation of a domestic APT or DAPT in their jurisdictions. This number has grown over the last few years due to consumer demand and the states’ realizations that they can generate significant fees as part of being in the trust business.

Among the most popular of the DAPT jurisdictions are Nevada, Montana, Delaware, and Wyoming but there are many others that have similar statutes. Experienced planners have strong opinions about which jurisdictions are best and why and should be able to explain the benefits and how they can effectively apply to you and your assets well beyond just, “Because we are in state X”.  

These trusts are typically less expensive than their offshore counterparts but are as yet untested on any wide scale and rely on the hope that, for instance, a judge in California with jurisdiction over a California defendant will refrain from trying to grab that defendant’s assets in Nevada because Nevada says they are in a special trust. This also unfortunately flies in the face of “full faith and credit” which essentially states that a judgment in any state is good and enforceable against a defendant and their asset in every other state. Large numbers of DAPTS have been established over the last few years in various jurisdictions by planners of widely varying skill for clients with questionable timing.

I’m a strong believer that “bad facts make bad law” and given the number of bad fact-planning cases that have been executed in the last few years, I feel it is likely that you will see many of these structures pierced. Although these cases should be judged individually on their merits, human nature makes it more likely that they will begin to be viewed as a group by the courts and either generally upheld or viewed as ineffective. Until that drama plays out I advise not be in the legal equivalent of a clinical trial.

Consumers must be wary of who they chose to work with for both DAPT and offshore-based planning. There are significant ramifications for making transfers to these kinds of vehicles including tax, estate, and fraudulent conveyance issues that you must understand or have counsel that does. Many recent entrants to the asset-protection business are applying form documents without a full understanding of their use and how it will affect your future defense, control, and use of those assets. Get personalized help from an experienced attorney who can help make sure that you are following the letter of the law to get any and every possible benefit the trust may provide.

Our next discussion on this issue will turn to the use of offshore asset protection trusts by doctors and the myths surrounding IAPT planning and its effectiveness.

 This article was originally written for and published by www.PhysiciansPractice.Com, The Nation’s Leading Practice Mgmt. Resource, where Mr. Devji is also a regular contributor.

Medical Practice Liability Insurance Tune Up: The First Line of Defense

law and money for doctorsWe’ve previously detailed both the most common fatal flaws in physicians’ asset-protection planning and the reasons insurance alone is inadequate to protect doctors. Those issues aside, insurance against known and recurring exposures is always the essential first line of defense.
 
As you’ve seen in this column before, it is unreasonable to think that we can adequately insure against any and every possible loss or liability to an unlimited amount, but we can catch some of the big and predictable ones. Below is basic list to consider, along with an expert, which can explain the details and gaps common to many policies.

1. Adequate liability and loss coverage. It’s important to not only insure your physical facility for liability but also for loss and in an amount that adequately covers the structure, its replacement, the improvements you’ve made, and the fixtures and equipment at actual replacement value. Work with a reputable company that has national claims service offices, which can be held accountable under bad faith jeopardy and that is experienced in insuring businesses like yours.

2. Employment practices liability insurance. We’ve covered the issue of employment and the significant exposure it creates for every medical practice with employees in several articles in the past. It remains the number one exposure most practices face and sexual harassment awards average over $500K.

3. Data breach insurance. Make sure you are protected against the loss, theft, or intentional misuse of patient financial and HIPAA-protected information. Be careful about the use of mobile devices, laptops, and tablets and make sure they are covered as well. Have demonstrable security policies in place and enforce them; in some cases liability is based on your proactive efforts, or a lack of them.

4. Directors and officers insurance, a.k.a. D&O. We’ve covered this in detail recently; many physicians, practice managers and executives face severe civil and even criminal liability for their decisions, acts and omissions. Make sure those that have such responsibility are adequately insured against this additional professional liability.

5. Workers’ compensation insurance. This provides coverage for an employee who has suffered an injury or illness resulting from job-related duties. Coverage includes medical and rehabilitation costs and lost wages for employees injured on the job. The law in most states requires some form of workers’ compensation insurance and this protects the employer by limiting an employees right to sue for further damages.

6. RAC audit insurance. Any business that bills Medicare, Medicaid, or a private health-care provider should be prepared to be audited and have payments denied or classified as over-payments at some point. Defending against such an audit and the ensuing manpower demands the massive record production can create is stressful and expensive. There is coverage available to handle the various costs and exposures involved.

This list is no complete but is a good start in examining the adequacy of your risk management plan. As this week’s column is devoted to the practice itself, I’ll save a discussion of the personal coverage so crucial to practice owners themselves for a future column.

Be aware, however, that life, disability, and long-term care insurance are increasingly vital parts of doctors’ planning that need to be implemented in a tactical way and are often an extension of the practice’s own risk management and continuation plan.

 This article was originally written for and published by www.PhysiciansPractice.Com, The Nation’s Leading Practice Mgmt. Resource, where Mr. Devji is also a regular contributor. He works with a national client base from his office in Phoenix, Arizona. His legal practice is devoted solely to asset protection and wealth preservation.

What Medical Practices Must Know About RAC Audits and Insurance

 

In a series of recent discussions we have examined exposures like ELPI Insurance, cyber liability insurance, and the need for directors and officers coverage by many physicians and practice owners. Continuing our examination of commonly overlooked medical practice risk management issues we turn to today to the issue of Recovery Audit Contractor (RAC) Audits, or the government’s Recovery Audit Program.

 

What is a RAC Audit?

As many physicians know, RAC audits is part of the government’s program to reduce fraud, waste, and errors in healthcare insurance billing practices and Medicare and Medicaid in particular. Audits run as part of the test program between 2005 NS 2008 resulted in nearly $1 billion in compensation being returned to the Medicare Trust Fund by medical service providers, that $1 billion (approx) was the yearly dollar number by 2012.

Auditors are assigned regions of the country and conduct audits on providers in response to whistle-blower tips and complaints and as a result of irregularities and red-lag markers in billing and coding practices by “…providers that have a high propensity for error based on the Comprehensive Error Rate Testing (CERT) program and other CMS analysis,” according to information available at CMS’ website.

The site lists the following key reasons for determining overpayment:

-Incorrect payment amounts;

-Non-covered services (including services that are not reasonable and necessary under section 1862(a)(1)(A) of the Social Security Act);

-Incorrectly coded services (including DRG miscoding); and

- Duplicate services

Who do RAC Audits affect?

Almost any healthcare provider (including hospitals, doctors offices, home health care providers, nursing homes, or anyone else who submits bills to government programs such as Medicaid or Medicare) should prepare to be audited at some point.

What are the risks and burdens of a RAC Audit?

The auditors themselves work on a contingency fee basis and the five regional firms contracted by the government are paid up to 12.5 percent of all claims they successfully identify as invalid and which they collect. The burden this places on healthcare providers from both a resource, financial liability and record-keeping standpoint is significant, they can go back as far a three years and the maximum number of requests per 45 days is 400. The maximum request amount is per campus.

Campus is defined as one or more facilities under the same Tax Identification Number (TIN) located in the same area (using the first three positions of the ZIP code). This means two locations of your practice properly incorporated separately, with different tax ID numbers in the same city, could theoretically be required to produce and defend up to 800 files in a 45-day period. The average payment denied to hospitals, as one example, on automatic denial basis is nearly $600 and those defined as “complex” denials on larger cases average a loss or denial to the provider of nearly $6,000, yet more than 50 percent of hospitals say that they have had no training on avoiding payment errors from either CMS or its contracted RACs.       

How do I protect myself and my practice against RAC Audits?

First, as with all effective defensive or preventative legal and financial planning, it’s better to identify the issues and correct them before a RAC auditor does it for you. Over the last few years a substantial industry of compliance auditors and software systems that will proactively identify and correct issues has emerged. Choose carefully, as some are law firms or accounting firms with specialized training and experience, some are software companies, and some are independent “consultants” with murky credentials that may or may not be of value.

Second, get your own professional audit counsel in place if your practice is subject to a RAC Audit. A significant percentage of claims are appealed and a percentage of those denials are overturned in the provider’s favor, but this seems to statistically favor hospitals over other providers.

Finally, and perhaps most importantly, insure yourself against the costs. There is RAC Audit liability coverage available that will help address the massive research cost and resource drain an audit creates.

A good policy may also cover expensive related exposures like:

Medicare & Medicaid Audit (RAC Audit)

Commercial Payer Audits

STARK Violations

HIPAA Compliance

EMTALA Violations

Coverage is typically affordable and includes the costs of defending a healthcare provider such as legal fees, specialized consultants, secure document reproduction costs, and independent audit work in addition to the audit fines and penalties themselves.

 

This article was originally written for and published by www.PhysiciansPractice.Com, The Nation’s Leading Practice Mgmt. Resource, where Mr. Devji is also a regular contributor.