Week Two Wrap Up – The Fabric of Healthcare Law By Mary Nell Cummings In week two we discussed how legislation and other laws affect healthcare delivery. While there is no need to understand any law in detail at this point in the course, it is important to understand the source of law. Also, it is important to understand how law affects your organization, as well as how your organization complies with legal requirements. Finally, your understanding of the sources of law, and the process of regulation will help you to make good decisions as a health care administrator. The Sources of Law Many people believe that all law comes from the Congress or from state legislatures. They believe that law is synonymous with “statute” which is a particular kind of law – drafted, debated, and voted on by a group of legislators. This is of course, not correct. There are many other sources of law. There is the federal constitution, and the constitution of each state. There is law made through regulatory agencies (administrative law) and there is law made by judicial decision (common law). This combination of approaches and interests leads to the rich fabric that is simply described as healthcare law. Common Law Contract Law: Contract law is at the heart of healthcare delivery. Insurance companies enter into contracts with patients, providers, facilities, and governments (state and federal). Doctors and hospitals enter into contracts with one another. Unions and employers enter into contracts with one another. Contract workers have employment contracts. All equipment in facilities is acquired and maintained through contracts. Most importantly, the doctor patient relationship is a contract with special duties. The primary source of contract law is common law. Common law is developed through court decision. Court decisions (within the same jurisdiction) are binding on future courts. However, if new facts apply, one court may need to refine or apply a prior decision in a new way. Thus, common law is always evolving. While common law may be at the foundation of contract law, other laws also influence contracts. There may be additional rules and duties imposed by specific statutes and specific regulations. In addition, a state or the federal constitution may be relevant. Finally, there is a rule in common law that a contract cannot be enforced if it is for an illegal purpose or result. For example, a contract will not be enforceable if it violates constitutional rights. Public policy also requires some exceptions to contract enforcement. Tort Law: If healthcare delivery’s heart is contract law, tort law is its immune system. Tort law is an ancient form of common law that recognizes a duty owed to a person, a violation of that duty that results in an injury to the person, and a right to compensation (damages) for the injury. The torts most often associated with healthcare are malpractice (for negligent medical care) and product liability (for medicine and devices that cause harm). The purpose of tort law is to help route out bad practices and keep bad practices to a minimum. Is it working? If there were no tort liability for malpractice or for medicines that cause undisclosed harm, the most a patient could recover is their out of pocket expense. Would this be enough of a deterrent for the healthcare industry? Like contract law, tort law is also influenced by constitutions, statutes, regulations. For example, some state legislatures have passed statutes that limit the amount of damages a party can recover for pain and suffering.

In addition, tort law is influenced by codes of ethics. Often, it is these codes of ethics that describe the duty a doctor may have toward a patient. Statutory, Administrative and Constitutional Law Constitutional law is good place to start when studying law. This is because the Federal constitution places limits on the Federal government and the state government to pass laws and enact regulations. Supreme Law. The Constitution of the United States creates and limits the power of government. It provides that all powers not specifically enumerated to the federal government or specifically withheld from the states rest with state government. This means that in certain areas federal law will be the supreme law of the land, and state law that contradicts federal law will be ineffective. It also means that certain areas of healthcare law are reserved to the states, and certain areas are the remit of the federal government. State and Federal. State government has the traditional authority to pass laws to protect public health, safety and welfare (this is called the police power). Thus, state laws determine things like licensing requirements, vaccination law. The federal government can pass legislation only under one of its enumerated powers. One of the broadest powers granted the federal government (given today’s complex economies) is the Commerce Clause, an enumerated power in the United States Constitution (Article I, Section 8, Clause 3). It provides that the United States Congress shall have the power “to regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes.” In the past hundred years this authority has expanded as the economy has changed from one of local companies doing local businesses to companies doing business in more than one state. Also, even activity within one state can affect interstate commerce, and courts have held that federal laws that regulate such activity are constitutional. The National Labor Relations Act is an example of such a law. It can regulate the union election of a small machine shop owned by a local company that exists only in one town. In addition to being able to regulate interstate commerce, the federal government uses its conditional spending power to regulate healthcare. This means it can pass laws that only govern those institutions/persons that accept money from the federal government. Medicaid and Medicare make the federal government’s reach very broad. Statutes like EMTALA (Emergency Medical Treatment and Active Labor Act) are enacted under this power. The state governments also pass laws concerning healthcare, and empower state agencies to regulate at the state level. State laws and regulations cover a whole host of health care issues. For example, see http://www.statehealthfacts.org/comparereport.jsp?rep=65&cat=7 (comparing 1 the states which mandate that insurance cover eating disorders). We have talked a little about malpractice and tort reform. Some states that have passed laws limiting recovery for injured plaintiffs are Wisconsin, California and Texas. Statutes and Regulations. Both statutes and regulations are laws, both govern the delivery of healthcare. Both can be subject to judicial review and interpretation. Their differences come from who enacts them, how they are enacted and what purpose they serve. Regulations are enacted by regulatory agencies, which consist of primarily career civil servants (although key positions are appointed by the executive branch). Key federal regulatory agencies involved in healthcare are the Centers for Disease Control and Prevention (CDC); Centers for Medicare and Medicaid Services (CMS); Health Care Financing Administration (HCFA);
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Occupational Safety and Health Administration (OSHA); and the Food and Drug Administration (FDA). Key state agencies are medical boards, pharmacy boards, and the many agencies that regulate delivery of health care (they all have slightly different names). An example would be the Florida Agency for Healthcare Administration (which regulates and monitors all healthcare facilities in the state of Florida). Statutes are enacted by elected officials, who must answer to their constituents, and often, their political party. Our elected officials are not necessarily experts in any particular area of law or business. Therefore, they rely on their constituents, their party, and their staff to help them identify key issues and positions. Legislation comes from a fiery process of debate, compromise, and negotiation. Regulations are created quietly: primarily by career civil servants whose expertise is to understand the industry that they regulate. They are enacted through a process that seeks input from industry, other agencies, and the legislative and executive branch of government. It often takes years for a comprehensive regulatory program to emerge after an law has been passed. (For example, HIPAA was passed in 1996, but the Privacy Rule (a regulation) was not finalized until 2002). Regulators in some cases are held hostage to the political process. This occurs when agencies change direction based on political appointees. However, the day-to-day process of regulating is generally predictable. Examples of Differences. As a result of these tensions, it makes sense that legislation is fairly general, and addresses big picture problems. Regulation, on the other hand, is the means by which legislation is implemented. It is often a much more comprehensive set of laws. As an example, compare the HIPAA (Health Insurance Portability and Accountability Act) law with its regulations. The HIPAA provision protecting health information is much more brief than the related regulations. HIPAA was enacted in 1996 for a number of reasons. Only one small provision empowers HHS to regulate how healthcare providers handle information. See the attached excerpt from the law (I’ve bolded the most relevant parts) and compare with the Privacy Rule regulations (complete text at http://aspe.hhs.gov/ADMNSIMP/final/PvcTxt01.htm.) Note that the regulations include industry comment, and the regulatory agency’s response to the comment. Regulations generally provide a period of public comment, so that the regulators can ensure they have identified the issues associated with the regulation. There were at least two public comment periods when the HIPAA privacy rule was being written. The Role of Regulatory Agencies in Healthcare Delivery Agencies establish regulations that are binding on health care organizations. They enforce regulations through audits, imposing penalties, and enforcing penalties. They interpret laws and regulations through administrative appeal processes. Agencies set the standard that is often voluntarily followed by private industry (through published “Guidance” documents).

The Role of Common Law in Healthcare Delivery One area in which courts have had a major impact is in finding a right to die. This is a relatively new concept in law. As medical technology advances, we have to determine when can an individual (or a decision maker on their behalf) can make a decision to refuse treatment. And what do we do if the person being treated is in a vegetative state? Twenty-five years ago, the idea of unplugging a respirator was extremely controversial. Two major cases in this area are those of Karen Ann Quinlan and Nancy Curzan. The Quinlan case was a New Jersey state court case decided in 1976. In this case, a young woman had slipped into a coma. She was in a vegetative state with no chance of recovery. Her parents requested the hospital remove her respirator. The hospital refused, saying that it had to do everything medically possible to maintain life. The hospital felt that to remove the respirator was akin to criminal homicide. The court determined that it would not be criminal homicide to remove the respirator, so long as the wishes of the patient were known. In determining there would be no homicide, the court reasoned that one must balance the interest of the state in protecting life with the interest of the individual in being left alone. It reasoned that the state has a strong interest in maintaining life. Yet that interest weakened, and the privacy interest of the individual became stronger as the procedures to prolong life became more invasive and the life that was being prolonged was not “a cognitive and sapient life” but a “biological vegetative existence.” It also determined that the father was capable of speaking of what his daughter would want. It said that this right to privacy means nothing if there is no one who can speak for the vegetative patient. The court allowed the father’s request to disconnect the respirator. (Karen Anne ended up surviving, still in a vegetative state, until 1985, when she died of pneumonia). Karen Anne also had a feeding tube. I don’t believe they ever sought to disconnect that. The Quinlan case was decided by the New Jersey Supreme court, and therefore became the law of New Jersey. Federal law, and other state laws were in flux for the next 14 years, until the US Supreme Court decided the Nancy Curzan case. Nancy Curzan was a resident of the state of Missouri, severely brain damaged after an automobile accident. She was kept alive by artificial hydration and nutrition. The Supremes confirmed that an individual has a right to die, basing it on slightly different constitutional grounds. Interestingly, in that case, Missouri law required “clear and convincing evidence” of what the patient would want before turning off life support. Even though there was testimony that Nancy that had told a housemate she would never want to “live as a vegetable,” the court did not find that this evidence was “clear and convincing.” Thus, they denied the parents’ request to disconnect life support. These decisions, and others like them, cleared the way for Advance Directives.

Attachment 1 Privacy Provision within HIPAA:
SEC. 264. RECOMMENDATIONS INFORMATION. WITH RESPECT TO PRIVACY OF CERTAIN HEALTH

(a) IN GENERAL- Not later than the date that is 12 months after the date of the enactment of this Act, the Secretary of Health and Human Services shall submit to the Committee on Labor and Human Resources and the Committee on Finance of the Senate and the Committee on Commerce and the Committee on Ways and Means of the House of Representatives detailed recommendations on standards with respect to the privacy of individually identifiable health information. (b) SUBJECTS FOR RECOMMENDATIONS- The recommendations under subsection (a) shall address at least the following: (1) The rights that an individual who is a subject of individually identifiable health information should have. (2) The procedures that should be established for the exercise of such rights. (3) The uses and disclosures of such information that should be authorized or required. (c) REGULATIONS(1) IN GENERAL- If legislation governing standards with respect to the privacy of individually identifiable health information transmitted in connection with the transactions described in section 1173(a) of the Social Security Act (as added by section 262) is not enacted by the date that is 36 months after the date of the enactment of this Act, the Secretary of Health and Human Services shall promulgate final regulations containing such standards not later than the date that is 42 months after the date of the enactment of this Act. Such regulations shall address at least the subjects described in subsection (b). (2) PREEMPTION- A regulation promulgated under paragraph (1) shall not supercede a contrary provision of State law, if the provision of State law imposes requirements, standards, or implementation specifications that are more stringent than the requirements, standards, or implementation specifications imposed under the regulation. (d) CONSULTATION- In carrying out this section, the Secretary of Health and Human Services shall consult with-(1) the National Committee on Vital and Health Statistics established under section 306(k) of the Public Health Service Act (42 U.S.C. 242k(k)); and (2) the Attorney General.

Attachment 2 The Fabric of Healthcare Law
a. Legal Framework for Healthcare 1) Laws that effect healthcare delivery a) Antitrust laws – These laws affect competition between health care providers. b) Access to care laws – Emergency Medical Treatment and Active Labor Act (EMTALA) of 1986 c) Clinical laboratory laws (CLIA) – Regulate clinical labs d) Food, drug, medical device, blood, radiologic, biologic, tobacco regulation – Effect approval process for drugs, medical devices, and so on e) Nondiscrimination laws (1) Title VII – Race, color, national origin, religion, sex – These laws prohibit discrimination and harassment based on race, color, national origin, religion, and sex. (2) Pregnancy Discrimination Act of 1978 – This law prohibits discrimination based on pregnancy. (3) Age Discrimination in Employment Act (ADEA) of 1967 – This law prohibits discrimination of those 40 and over. (4) Americans with Disabilities Act (ADA) of 1990 – This law prohibits discrimination based on disability and requires reasonable accommodation that is not an undue burden. (5) Americans With Disabilities Amendment Act (ADAAA) of 2008: This law expands the definition of disability. (6) Genetic Information Nondiscrimination Act (GINA) of 2008 – This prohibits discrimination based on genetic information. f) Employment laws (1) Fair Labor Standards Act (FLSA) of 1938 – This sets the workweek at 40 hours, and provides for overtime at 1 ½ times base wage, and sets limits on youth workers. g) Family Medical Leave Act (FMLA) of 1993 – This provides for leave time for workers, organizations, and leave reasons that qualify. h) Fraud and abuse laws – These laws define fraud and abuse in health care and define activities that are and are not legal. (1) False Claims Act of 1986– This sets parameters for good billing practices. (2) Stark law – This prohibits referrals by a physician to designated health services (DHS) the physician has an interest in. (3) Antikickback statute – This prohibits financial renumeration to physicians for referrals. (4) Other fraud and abuse laws – These provide for times fraud and abuse will be criminally prosecuted. i) Health care privacy and security laws – This protects the privacy of personal health information (PHI). (1) Health Insurance Portability and Accountability Act (HIPAA) of 1996 (2) Health Information Technology for Economic and Clinical Health (HITECH) Act of 2009 j) Health care reform laws – This expands health insurance coverage by mandating coverage by employers and individuals, by providing for credits for insurance payments, and expands preventive and quality of care requirements in health care.

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(1) Patient Protection and Affordable Care Act (PPACA) of 2010 (2) Health Care and Education Affordability Reconciliation Act of 2010 Labor laws – These laws provide for unions and union negotiations. (1) Norris LaGuardia Act of 1932 (2) National Labor Relations Act (NLRA) of 1935 (3) Taft Hartley Act of 1947 (4) Landrum Griffin Act of 1959 Managed care laws – These laws limit certain managed care practices. (1) Any willing provider laws – These laws all any provider who is willing to treat a patient to do so. (2) External appeals – These laws allow appeals to go to an unbiased, organization outside the HMO for final review. (3) Ombudsman – These laws provide for an ombudsman to speak out on behalf of consumers. (4) Bans on financial incentives – These laws limit HMO financial incentives for denials of care. (5) Bans on gag clauses – These laws ban gag clauses in managed care contracts. Gag clauses prohibit the physician from speaking about treatment options that are outside the managed care contract. (6) Coverage mandates – These laws mandate certain minimum health insurance coverage such as mental health provisions, maternity care, and so on. Medical malpractice laws (1) State prelitigation panels – These panels review medical malpractice claims prior to litigation. (2) Damage caps – Limits on damages in medical malpractice lawsuits. Patient decision making laws – These laws preserve patient autonomy in health care decision making. (1) Patient Self Determination Act (PSDA) of 1991 – This act gives the patient the right to determine if they will be resuscitated or refuse care. (2) State living wills – Living wills allow a person to designate if they want to be kept alive on life support or not prior to becoming incapacitated. (3) Power of attorney – State laws allowing for a person to be designated to make decisions on behalf of an incapacitated person (4) Guardianship laws – These laws allow for a formal appointment of a legal guardian for those who lack capacity. Insurance laws (1) Employee Retirement Income Security Act (ERISA) of 1974 – This federal law allows for retirement and health plans and creates a fiduciary duty for the company to manage these plans for the best interest of the employee. (2) Medicare – Government insurance for those 65 and over (3) Medicaid – Government insurance for those who meet income qualifications (4) Children’s Health Insurance Pool (CHIP) – Government insurance for children. (5) Temporary Health Insurance Pools (HIP) – Government temporary insurance for those who have previously been uninsurable. (6) Social Security Act of 1935 – Government retirement system for those over 67 (7) VA System – Government insurance and health services for veterans (8) Indian Health Service – Government health services for Native Americans

(9) State insurance laws – These laws set the requirements for an insurance company to operate and sell health insurance. (10)Patient Protection and Affordable Care Act (PPACA) of 2010 – Insurance Exchanges – These laws provides for health insurance exchanges (HIE) to sell insurance that meets certain plan coverage requirements. p) Quality of care laws – These laws encourage quality of care in health care. (1) Health Care Quality Improvement Act (HCQIA) of 1986 – This law provides for quality review and confidentiality of information obtained as part of a quality review. (2) Patient Safety and Quality Improvement Act (PSQIA) of 2005 – This provides for confidentiality of patient safety information used for quality improvement. q) Safety and infection control laws (1) Occupational Safety and Health Act (OSHA) of 1970 – This law provides for employee safety. (2) National Institute for Occupational Safety and Health (NIOSH) – This agency conducts research on safety and health. (3) Center for Disease Control (CDC) – This agency focuses on infection and disease control. r) State licensing laws – State boards of medicine set licensing requirements for physicians. States set licensing requirements for all health care professionals. b. Regulatory influence over healthcare. 1) Governmental health care agencies a) Agency for Healthcare Research and Quality (AHRQ) b) Center for Disease Control and Prevention (CDC) c) Centers for Medicare and Medicaid Services (CMS) d) Department of Health and Human Services (HHS) e) Department of Justice (DOJ) f) Department of Labor (DOL) g) Equal Employment Opportunity Commission (EEOC) h) Food and Drug Administration (FDA) i) Federal Trade Commission (FTC) j) Health Resources Services Administration (HRSA) k) National Institute of Occupational Safety and health (NIOSH) l) Occupational Safety and Health Administration (OSHA) 2) State administrative agencies a) State departments of health 3) Nongovernmental agencies a) Accrediting organizations (1) Commission on Accreditation of Rehabilitation Facilities (CARF) (2) Joint Commission on Accreditation of Health Care Organizations (JCAHO) (3) National Committee for Quality Assurance (NCQA) (a) Health Plan Employer Data and Information Set (HEDIS) b) Professional organizations (1) American Cancer Association (2) American Heart Association (3) American Medical Association (4) American Nurses Association

(5) Other professional organizations