What legal threats await?

October 6, 2006

Our roundtable of experts pinpoint the key legal areas-besides malpractice-that are likely to land doctors in trouble next year.

Squeezed by rising costs and declining reimbursements, doctors have begun to think creatively.

Individually, collectively, and in collaboration with others who feel the pinch, you're pursuing strategies aimed at boosting the bottom line. You're adding ancillary services; merging with, acquiring, or integrating with other practices; recruiting star players to your clinical team; forming all manner of joint ventures with hospitals.

These entrepreneurial strategies are, at once, financial opportunities as well as ways to improve patient care. But such strategies are not without risk-whether it's the risk of economic failure or, perhaps more frightening, the risk of tripping a legal land mine.

To help readers navigate this legal minefield, we assembled a panel of some of the nation's top health law experts. The panel met at the American Health Lawyers Association Annual Meeting in Philadelphia in June; the experts: Alice G. Gosfield, of Alice G. Gosfield and Associates, Philadelphia; Robert F. Leibenluft, a partner in the Washington, DC, office of Hogan & Hartson and the former assistant director for healthcare in the Federal Trade Commission's Bureau of Competition; Charlene L. McGinty, a partner at Powell Goldstein, in Atlanta; and Sanford V. Teplitzky, chair of the Health Law Practice Group at Ober, Kaler, Grimes & Shriver, in Baltimore.

Land mine No. 1: Practice mergers

Done the right way, says Charlene McGinty, mergers can increase efficiency, achieve certain economies of scale, permit intragroup referrals, and even strengthen a group's negotiating position in the managed care market.

But before any of this can happen, doctors must be willing to change their individual practice styles for the sake of the new group. In other words, they must really merge. Too often, they're not willing to make those changes, says Alice Gosfield, and that reluctance can not only scuttle the merger itself but also plunge the putative group into legal hot water.

Bob Leibenluft, the former FTC official, recalls a Washington state surgery clinic that got itself into just this predicament. "When the partners realized how different they really were, they resisted changing, insisting that life go on the way it was before the merger," says Leibenluft. "Then the FTC and the state attorney general went after them. Each enforcer told doctors, in effect, 'Look, despite calling yourself a merged practice, you haven't economically integrated in any fashion, and that means you're little more than independent practices engaged in per se price fixing.' Soon thereafter, the clinic was forced to break up."

But even doctors who've managed to create a truly integrated practice aren't home free. There are still significant risks, says Sandy Teplitzky: "One is the possibility that the larger group will throw its weight around, especially in its relations with the local hospital. If the group goes far enough-saying to hospital officials, for instance, that because we're responsible for 70 percent of your surgeries, we're entitled to this or that benefit-they run a real Stark and antikickback risk."

There's a second danger that merged groups run, Teplitzky says, and it falls under the federal False Claims Act: "This law makes each group member responsible for the actions of every other group member. And so, for example, if there are members in the group who bill more aggressively than others do, the group as a whole needs to deal with this issue. Otherwise, the less-aggressive members could be held jointly responsible if the actions of the other members cross the legal line."

Land mine No. 2: Partial integration