20 June

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Florida Senate Bill 8-A’s Effect on Physicians’ Medical Marijuana Practices

Background

President Trump he has not taken a firm stance publicly in favor of or opposed to the use of medical marijuana. Currently, he intends to leave the medical marijuana issue up to the individual states. The 2016 fiscal year omnibus appropriations bill appears to be in line with Trump as it contains language prohibiting the Department of Justice from meddling in state medical marijuana laws.

According to a Department of Health report, the state registry now has 16,614 patients. A recent state revenue impact study projects that by 2022 there will be approximately 472,000 medical marijuana patients and $542 million in sales.

Many activists expect that there will be several lawsuits related to SB8A. Legislators anticipated this and have added language that divides SB8A so that if certain parts are held unconstitutional the court would only invalidate those parts without invalidating the entire law.

Qualified Physician

Under SB8A, a “qualified physician” is a person who holds an active and unrestricted license to practice medicine in compliance with the physician education requirements. In order to be approved as a qualified physician, the physician must successfully complete a 2-hour course and exam by either the Florida Medical Association or the Florida Osteopathic Medical Association. The exam will not cost more than $500. This requirement also applies to those seeking to become Medical Directors in medical marijuana treatment centers (“MMTC”).

A “Medical Marijuana Treatment Center” means an entity that acquires, cultivates, possesses, processes (including development of related products such as food, tinctures, aerosols, oils, or ointments), transfers, transports, sells, distributes, dispenses, or administers marijuana, products containing marijuana, related supplies, or educational materials to qualifying patients or their caregivers and is registered by the Department. As you can see, the definition of an MMTC is very broad and includes virtually every type of business in the medical marijuana industry.

A qualified physician may not be employed by, or have any direct or indirect economic interest in, a medical marijuana treatment center or marijuana testing laboratory. This sentence is important because it means that not every physician is bound by this rule. If you are a physician and you have not taken the course and exam to become certified so that you can certify marijuana to your terminally ill patients then this law doesn’t apply to you. For example, if you are a dermatologist who does not treat any terminally ill patients and you are not a “qualified physician” for purposes of providing marijuana to terminally ill patients then you are not prohibited from being employed by or having an economic interest in an MMTC or marijuana testing laboratory (“MTL”). An MTL or “Independent testing laboratory” means a laboratory, including the managers, employees, or contractors of the laboratory, which has no direct or indirect interest in a dispensing organization.

This aforementioned provision of SB8A places broad limits on the types of marijuana facilities and businesses that a qualified physician is permitted to have a financial interest in. MMTCs and MTLs are off-limits to qualified providers. Non-Qualified providers are thus able to work for or have a financial interest in medical marijuana retailers, medical marijuana delivery devices, and medical marijuana delivery companies to name a few.

A qualified physician may not authorize a patient to receive more than three 70-day supply limits of marijuana. However, a physician may request an exception to the daily dose amount limit electronically. Further, a physician must evaluate an existing patient at least once every 30 weeks prior to issuing a new physician certification.

Physician Certification

Physician’s Certification means that a physician may authorize a qualified patient to receive marijuana and a marijuana delivery device (i.e. vape pen) from a MMTC. A physician may certify that a patient is in need of medical marijuana only after she has:

Conducted a physical examination while physically present in the same room as that patient (Telemedicine is not permissible) and recorded a full assessment of the medical history of the patient.
Diagnosed the patient with at least one qualifying medical condition.
Determined that the use of medical marijuana would likely outweigh the potential health risks for the patient and it is documented as such in the patient’s medical record. If a patient is under 18 years old, a second physician must concur with this determination, and it too must be documented in the patient’s medical record.
Determined that the patient is pregnant. A pregnant patient may only receive low-THC cannabis.
Reviewed the patient’s controlled drug prescription history in the prescription drug monitoring program database.
Reviewed the medical marijuana use registry and confirmed that the patient is not currently receiving medical marijuana from another qualified physician.
Registers as the issuer of the certification to the patient on the medical marijuana use registry.
Obtains the voluntary and written consent of the patient, or their parent or legal guardian if they are a minor, only after the physician has sufficiently explained its content, for the medical use of marijuana each time the physician issues the certification to the patient.

A physician certifying the use of medical marijuana for their patient must use a standardized informed consent form adopted by the Board of Medicine or Board of Osteopathic Medicine, which must include, at a minimum the following:

The Federal Government’s classification of marijuana as a Schedule I controlled Substance.
The approval and oversight status of marijuana by the Food and Drug Administration.
The current state of research on the efficacy of marijuana to treat the qualifying conditions.
The potential for addiction.
The potential effect that marijuana may have on a patient’s coordination, motor skills, and cognition, including a warning against operating heavy machinery, operating a motor vehicle, or engaging in activities that require a person to be alert or respond quickly.
The potential side effects of marijuana use.
The risks, benefits, and drug interactions of marijuana.

That the patient’s de-identified health information contained in the physician certification and medical marijuana use registry may be used for research purposes.

Medical Marijuana Use Registry

Physicians should be aware that a review panel will be created by their respective Boards to review all physician certifications submitted to the medical marijuana use registry. The panel will track and report the number of physician certifications and the qualifying medical conditions, dosage, supply amount, and form of marijuana certified. The panel will report the data by individual physician and in aggregate formats by county and statewide. On the surface, it appears that the Board is just collecting data from those who certify patients to receive medical marijuana. However, it also appears that the Board is analyzing patterns and potential abuse by physicians who over prescribe or prescribe at a much higher rate than other qualified physicians that are similarly situated. At this time, I am not sure what action the Board would take if any, if they determine that there is some irregularity with the prescribing pattern of a particular physician.

The medical marijuana use registry must be accessible to qualified physicians and MMTCs to verify the authorization of a qualified patient or a caregiver to possess marijuana or a marijuana delivery device and record the marijuana or marijuana delivery device dispensed. The goal of the registry is to prevent an active registration of a patient by multiple physicians who can then receive and possess an amount of marijuana that exceeds the legal limits. The fear is that this will lead to an abuse of the Schedule I drug.

Penalties

SB8A doesn’t contain many penalties for physicians apart from the other laws and Board rules that currently exist to which physicians are bound by. However, I’m confident that with the proliferation of medical marijuana use by terminal patients and the tracking of prescribing patterns by the Board that there will be additional penalties for physician-owners and qualified physicians on the horizon. A qualified physician who issues a physician certification for marijuana or a marijuana delivery device and receives compensation from a MMTC related to the issuance of the physician certification for marijuana or a marijuana delivery device is subject to disciplinary action under the applicable practice act and Fla. Statute. 456.072(1)(n).

***This blog post does not constitute legal advice and is only intended for educational purposes only. You should consult a licensed attorney in the State of Florida that specializes in healthcare law.***

05 March

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Seeing Through the Smoke of Florida’s Medical Marijuana Industry

Posted by Jamaal R. Jones, Esq.

in Blog

As you may be aware, On November 8, 2016, Florida voters approved the use of Medical Marijuana in a constitutional ballot initiative called Amendment 2. This Amendment approved the use of Medical Marijuana in treatment for patients who suffer from specific debilitating medical conditions. These debilitating medical conditions include, but, are not limited to, cancer, AIDS, PTSD, glaucoma, Parkinson’s Disease, epilepsy, and Crohn’s disease. Physicians may also prescribe Medical Marijuana for “other debilitating medical conditions of the same kind or class” as those mentioned above and “for which a physician believes that the medical use of marijuana would likely outweigh the potential health risks for a patient.” Those looking to do business in the medical marijuana industry must proceed with some caution because even with the passage of Amendment 2 marijuana is still considered a controlled substance consumption of which is illegal under federal law.

Who Can Prescribe Medical Marijuana

Believe it or not, medical marijuana is a Schedule I drug and is regulated by the Florida Department of Health’s Office of Compassionate Use. In order to prescribe Medical Marijuana to a patient a physician must be licensed to practice medicine in Florida and certified by the Department of Health (“DOH”). Further, the physician must complete an 8-hour course and exam offered by either the Florida Medical Association (“FMA”) or Florida Osteopathic Medical Association (“FMOA”). Additionally, if the physician is a medical director of a Medical Marijuana Treatment Centers (“MMTC”) they are required to take a 2-hour course.

Restrictions on Use

Currently, Marijuana is only supposed to be used for the treatment of medical conditions and any recreational use is prohibited. Medical Marijuana may only be consumed in the form of food, tinctures, aerosols, oils, ointments, or related products. Notably missing is the permissibility to consume or use Medical Marijuana in a plant form that can be smoked.

Further, medical marijuana may only be prescribed to eligible patients as defined in Fla. Stat. §499.0295 as having a “terminal condition”. Patients will be classified as terminally ill only if two physicians designate them as such.

Additionally, Amendment 2 makes no accommodations for the use of medical marijuana at the workplace, public places, or school settings. Currently, federal and private program payors are not required to reimburse patients for medical marijuana treatment.

The DOH must register and regulate MMTCs that produce and distribute medical marijuana. Identification cards must be issued to patients and caregivers. In order to receive medical marijuana a patient must be: (1) a permanent Florida resident; (2) a patient of the ordering physician for at least three months; and (3) diagnosed with a debilitating medical condition.

Reaction to the Legalization of Medical Marijuana

The Trump Administration has stated that it intends to enforce federal law that prohibits the use of recreational marijuana, but they are unlikely to prohibit the legitimate use of medical marijuana for treatment purposes.

However, in some cities and counties throughout Florida, legislators and local officials are still trying to determine whether medical marijuana is even legal despite its overwhelming support by voters in Amendment 2. Throughout Florida, many cities are ill-prepared to regulate various aspects of the medical marijuana industry prior to the September deadline requiring its statewide availability. Even after the Trump Administration has made a public statement regarding medical marijuana officials are weary about implementing regulations because it is still federally prohibited. However, at least twenty-eight states have operated without significant intervention from the federal government after they have legalized either recreational or medical marijuana.

Many physicians welcome Amendment 2 and feel that it’s long overdue. Physicians are educating themselves on administering medical marijuana to their patients. For example, they are learning about the various strains of Cannabis and how certain illnesses may respond differently to a particularly strain and dosage. Many doctors prefer to prescribe medical marijuana rather than narcotics, which can be highly addictive to the patient. As a country, we are facing an opioid epidemic and by using medical marijuana as an alternative when appropriate may help to curb the addiction.

Medical Marijuana is Big Business

According to reports, there might be as many as 450,000 patients throughout Florida who may be eligible to receive medical marijuana treatment. That number is expected to rise as the types of illnesses that are treatable by marijuana becomes less narrow and not limited to debilitating medical conditions or terminal conditions. According to New Frontier’s projections, medical marijuana users in Florida will spend an estimated $200 million annually, and by 2020 Florida will account for 14% of the permissible marijuana use in the country.

There will likely be an expansion of dispensing organizations but it will not be easy. Currently, there are seven approved dispensing organizations in Florida. The following is a non-exhaustive list that the DOH considers when dispensing organizations apply:

The technical and technological ability to cultivate, process, and dispense low-THC cannabis;
The ability to secure the premises, resources, and personnel necessary to operate as a Dispensing Organization;
The ability to maintain accountability of all raw materials, finished products, and any byproducts to prevent diversion or unlawful access to or possession of these substances;
The financial ability to maintain operations for the duration of the 2-year approval cycle;
Passing a background check; and
Posting a performance bond.

Individuals seeking to enter the medical marijuana industry face several challenges due to federal laws that prohibit its manufacture, distribution, and use. Banks, insurance companies, and real estate brokers are hesitant to contract with medical marijuana companies due to the existing federal laws. Since it is illegal to operate a medical marijuana company on the federal level banks can’t or are unwilling to loan them money out of fear that there will be retribution for funding an illicit enterprise. This will only change if Congress passes a measure to legalize the medical marijuana industry.

Conclusion

Legislators must quickly determine the ongoing medical marijuana education requirements for physicians and how it will be regulated. Providers will increasingly enter into the business because the law effectively shields them from civil or criminal actions that arise from their prescribing of medical marijuana. However, physicians may face discipline for wrongfully prescribing low-THC marijuana or medical marijuana. Physicians must ensure that they receive the requisite informed consent prior to prescribing medical marijuana. It’s still uncertain if Amendment 2 will expand the number of dispensaries and by how many. Also, if you are a non-physician looking to enter into the medical marijuana business it is not clear what role one can legally play in the medical marijuana industry other than owning a dispensing organization.

29 January

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What to Look for When Negotiating Physician Employment Agreements

Posted by Jamaal R. Jones, Esq.

in Blog

Physicians employed by hospitals, group practices, or any other type of healthcare facility usually enter into the business relationship by signing a Physician Employment Agreement unless the physician is an independent contractor. At Jones Health Law, we instruct all of our physician clients to carefully review their Physician Employment Agreement prior to signing.

Many physicians believe that they can’t negotiate the contract. THIS IS NOT TRUE. Every section of the contract can be negotiated by your attorney. If you don’t approve of some of the terms contained therein you have to power to ask your prospective employer to change that provision so that it better suits you and your needs. Of course, the prospective employer may be unwilling to revise some of the terms of the contract, and at that point you have a very important decision to make. You have to decide whether these terms are deal breakers or not. Only you can decide whether you are going to take it or leave it.

There’s no secret that there’s a shortage of physicians and it’s even more difficult to find physicians adequately suited and licensed in certain specialties. Use that to your advantage when you enter the negotiation process. Younger physicians may have more difficulty with negotiating contracts but it is not impossible. You want to place yourself in the best situation possible even if it means walking away from a prospective employer.

Physicians must realize that while working for a specific healthcare facility may initially be a dream job it can turn into a nightmare later on. Terms of the contract can pose limitations on the physician for several years after their employment with that particular employer has concluded.

Some physicians don’t bother to read the contract thoroughly if the financial incentives are very appealing. Yes, making $175,000 is a great salary, but here are a few things to consider that might not make that salary look so good after all:

Restrictive Period and Geographic Location: Physician Employment Agreements usually have a Covenant not to Compete clause that imposes limitations on certain actions that the physician can or cannot engage in. Many times the time and geographic restrictions are very lengthy and far-reaching. For example, a physician employment agreement may state that “You cannot solicit for current and past referral sources, or own, manage, operate, control or be employed by a medical practice or health care provider for a period of three (3) years within ten (10) miles of any of our office locations.” This becomes problematic if your employer has offices in every county in South Florida.

Transparency of Care: Many practices require that you follow the Practice Guidelines and Company Policies but don’t specifically identify any actions that can be taken against you or the procedure that follows if any of those guidelines and policies are violated.

Performance Evaluations: Negative performance evaluations may become a part of your employment record and may be used against you at subsequent PEER Review hearings, during litigation, or future contract negotiations. You want to determine who will be conducting the performance evaluations and whether that party will do so in a neutral and objective manner. This is very important because these evaluations can give rise to “for-cause” termination, which may negate your employer’s requirement to compensate you in accordance with the contract. Also, if you were to fail their performance evaluation you want to determine what its effect is and what recourse would be taken (i.e. mandatory education courses, termination, suspension, etc.)?

Conflicts, Confidentiality, and Nondisclosure: These paragraphs are usually drafted very broadly and in many cases they are too broad. For example, language in this section may preclude you from engaging in any type of business activity that could potentially interfere with the business of your employer. The employer may require that you obtain express written consent from them prior to engaging in any other type of business activity. This means that if your wife wants to open a dance studio and you want to be a co-owner you would first have to seek approval from your employer. Failure to do so might result in a breach of contract. Typically, the employer grants herself a lot of authority in this section and it will remain that way unless you negotiate a change.

Covenant not to Solicit Employees of Employer: For example, “You many not directly or indirectly orally or in writing solicit any Employee of Employer to work for another healthcare provider rendering the same or similar services to the services of the Employer.” This is one clause that causes a lot of physicians because they don’t realize that “stealing” an employee from a former employer may be actionable in court. Additionally, this clause as written is broad and means that you cannot place ads in any form of media while looking for employees of your practice if the employees of the employer could potentially see it. If you do so, and the employee is hired by your company you may have to pay the employer thousands of dollars for each violation. The reason for this is because an ad may be viewed as an indirect written solicitation even if the Employee wasn’t targeted specifically.

Effects of Termination: This is arguably the most costly section of any Physician Employment Agreement. I’ve seen agreements that state if a physician terminates the employment agreement prior to its natural expiration the physician will be responsible for paying to the employer six months of your base salary. In other words, if you resign from your employment and you are earning $150,000 base salary you would have to pay a whopping $75,000 to your employer.

Continuation of Contract: Many employers require advance notice that you don’t intend to extend the contact for another term period. Some employers require as much as six months written notice before the expiration of the agreement. Failure to do so may be actionable and they might seek damages. I advise my clients to reduce the requirement to three months notice at most because business opportunities may arise within that six month window.

Employer May Assign Agreement: Businesses are bought and sold all of the time and medical practices are no different. Many agreements state that the employment agreement will belong to the new owner and you are bound by the terms of the agreement during the remaining term period. I tell my physicians to negotiate this clause so that they have the option to terminate this employment agreement without triggering the Effect of Termination clause should the employer choose to assign its interest to a successor.

These are just a few of the problematic clauses that I typically encounter in Physician Employment Agreements but this is by no means an exhaustive list. The terms in Employment Agreements vary from one employer to the next. I strongly advise you to contact Jones Health Law so that an experienced healthcare attorney can review the contract and negotiate it on your behalf.

05 December

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Implementing Policies and Procedures into your Medical Practice

Posted by Jamaal R. Jones, Esq.

in Blog

As a child, my mother always stressed the importance of being neat and organized. She told me that I should be able to walk into my house in the dark and find anything that I need because I know exactly where it is. At the time, I didn’t know how those values would apply to not only my personal life but also my business life. With that being said, life gets in the way and there are days when my office or my house is in disarray. This reduces my productivity because I have to spend time searching for important documents at my office or my car keys at home.

I place a lot of emphasis on maintaining a neat and organized medical practice for all of my clients because it will make their life easier for numerous reasons. The best way to maintain a neat and organized medical practice is to implement policies and procedures that you and your employees must strictly follow. These policies and procedures can range from physical security of the facility, security of HIPAA protected information, employee time-keeping, janitorial services, medical substances and pharmaceutical drug internal audits, etc.

Everyone on the staff should be held accountable for the tasks that they perform or fail to perform. As the owner of the practice, you should periodically review the procedural tasks to make sure that everyone is performing their duties adequately and on-time. It only takes one missed log entry for a crisis to arise. This brings me to my next point, you should implement a policy where everyone on your staff must sign off on or use a unique identifier and password that only they have. This is important so that you can trace most of the activities that occur in your practice. Providers have to play “big brother” and watch over their practice because as you let things slide so will your staff and certain policies and protocols will be abandoned.

It is not unusual for a provider to contact me after a regulatory authority, such as the Florida Department of Health (“DOH”) or the Centers for Medicare & Medicaid Services (“CMS”) has contacted them about a potential violation within their practice (i.e. billing). Typically, these regulatory bodies make certain requests for documentation in their correspondence. I am often surprised by how unorganized the medical practice’s files are and the lack of adequate policies and procedures within the practice. As I mentioned earlier, I understand that life gets in the way, but being organized and having policies and procedures in place to maintain organization should be a priority. Lack of time will not be a valid excuse for the regulators. In fact, there are several state and federal record-keeping requirements that a medical practice must strictly adhere to or run the risk of receiving fines and penalties. Take one day or weekend and work alongside your staff to clean up those files and perform an audit of your inventory.

The following is a sample of some of the steps that I would take to ensure that my medical practice is neat and organized:

Create a formal policy and procedure manual that every employee must sign and adhere to.
Document everything and save it on-site as well as off-site on a cloud-based service and limit employee access to those documents.
Maintain employee files, including, but not limited to, emergency contacts, termination letters with reason for termination, professional and drivers licenses, periodic drug test results, personal and medical history, progress reports, professional and academic performance evaluations etc.

In the event that you have to self-report or if any state or federal regulatory authorities contacts your practice for a potential violation of a law or rule you should be as prepared as possible. Implement policies and procedures into your medical practice that will protect you and will ensure that your practice runs efficiently and smoothly. A healthcare attorney can assist you in creating a fully functioning policy and procedure manual specific to your practice.

14 October

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My DEA Number Was Stolen by an Employee and Used to Self-Prescribe Controlled Substances

Posted by Jamaal R. Jones, Esq.

in Blog

Most doctors have various licenses that provide them with unique identification numbers. If any of these identification numbers find their way into the wrong hands it can be detrimental to the healthcare provider’s practice, their patients, and the public. Doctors hire support staff to run their practice efficiently by perform tasks that they don’t have time to do or don’t have the training to perform. This employer-employee relationship requires a certain level of trust from both parties because a bad act by either party can have a negative impact on the other party’s license, privileges, or reimbursement for services. Some of the support staff working in a doctor’s office may have access to HIPAA-protected information and a doctor’s unique identification numbers, such as his NPI and DEA numbers. What should you do if one of your employees steals your DEA number and uses it to self-prescribe controlled substance through e-prescribing or traditional prescription pads? What if they use your DEA number to order controlled substances for the practice without your knowledge or consent? Doctors should also be concerned with their potential liability for the unauthorized use of their DEA number.

Reporting Requirement

According to Florida Statute §893.07(5)(b), if your DEA number has been stolen and used to divert controlled substances you must file a police report with the local sheriff of that county within 24 hours after discovery. A person who fails to report a theft or significant loss of a controlled substance commits a misdemeanor of the second degree. It is not required that you press charges against the perpetrator of the theft, but I always recommend that my clients do so for several reasons. First, it shows authorities that you were not complicit in the theft. Second, it becomes part of the employee’s record and prospective future employers will be able to see this information on their criminal history during background checks. Third, as punishment for the emotional despair you will endure, negative impact on your practice, and the cost to hire an attorney to represent you in this matter.

You must also notify the Drug Enforcement Agency (“DEA”) within one business day upon discovery of a theft or significant loss of controlled substances. “Upon discovery” means that a report should be filed once the doctor has made a good-faith effort to determine whether a theft has in fact occurred. To determine whether a loss is significant the DEA provided the following factors in 21 C.F.R. § 1301.74(c):

1) The actual quantity of controlled substances lost in relation to the type of business;
2) The specific controlled substances lost;
3) Whether the loss of the controlled substances can be associated with access to those controlled substances by specific individuals, or whether the loss can be attributed to unique activities that may take place involving the controlled substances;
4) A pattern of losses over a specific time period, whether the losses appear to be random, and the results of efforts taken to resolve the losses; and, if known,
5) Whether the specific controlled substances are likely candidates for diversion; and
6) Local trends and other indicators of the diversion potential of the missing controlled substance.

The six factors mentioned above are not exhaustive and should be taken into account with other factors where appropriate.

According to 21 C.F.R. § 1301.76(b), the DEA’s implementing regulations for the Controlled Substance Act, all DEA registrants must complete DEA Form 106 and submit it to the DEA electronically or by mail. Once submitted, the DEA will begin the investigatory process and contact you to obtain additional information.

Additionally, you should contact the board or association that grants you your license to practice (i.e. Florida Board of Osteopathic Medicine) to see what reporting requirements they may have. For example, although I could not find a clearly defined rule requiring so, the Florida Board of Osteopathic Medicine (“FDOM”) strongly suggests that the doctor file a complaint with the Florida Department of Health (“DOH”) against the perpetrator of the crime so that they may conduct their own investigation into the matter. The complaint should be sent to the Consumer Services Section of the DOH. You will typically receive a response from the DOH within ten business days at which point in time they may schedule a phone call or an in person meeting as part of their ongoing investigation. This investigation may include interviewing parties in your practice about the perpetrator or the crime and facts and events that gave rise to the incident.

During all stages of the investigation, whether talking to the DEA, local police authorities, or the DOH you must be candid with the investigating authorities so that there isn’t any indication of impropriety on your part.

Steps To Prevent A Theft From Occurring Again

To limit the occurrence of future thefts or significant loss, providers should do the following:

Conduct employee background checks for all employees, including those employees with access to controlled substances. This background check should be performed in any local, state jurisdiction where the employee has worked and resided. Federal background checks should also be performed.
Schedule I and II drugs must be stored separately from other drugs in an approved safe. Schedule III and IV drugs must also be kept under lock and key but the security measures are more relaxed than their counterparts.
Utilize tracking software that records specific employee’s removal of controlled substances from locked cabinets together with an associated patient identifier. The software is designed to flag and alert the doctor of suspicious or unusual employee activity.
Providers should also conduct periodic internal audits to ensure that the inventory of controlled substances is accurate.
Providers may also want to consider a adopting a policy into their practice which requires employees to be periodically drug tested and suspicion-based drug testing. Drug testing should be performed prior to employment; the offer of employment should be conditional on a clean drug test.
Sparingly share you DEA number and e-prescribing log-in information only with trusted employees.
Make sure that your prescription pads are locked up in a secure area. Utilize watermarks on your prescription pads because it makes it more difficult to replicate.
Monitor remittance advice, claims and reimbursements to verify billed services match your income.
Observe and takes notes of erratic or unusual behavior by an employee (i.e. lying and mood swings) and physical abnormalities, such as “track marks”, excessive sweating, pale skin, red face with red eyes, etc.
Implement a training program to educate staff on controlled substance diversion.

Conclusion

If you are unable to determine whether a theft of controlled substances did in fact occur within one business day, you should err on the side of caution and file a report with the DEA and other appropriate authorities. It may also be necessary to notify the Center for Medicare and Medicaid Services If you fail to timely report a theft or significant loss you may face penalties and fines or any other remedial actions that the authorities deem are necessary. If any patients were affected by the theft you must determine how to appropriately notify your patients. Make sure to gather any documents or evidence that can be useful for authorities during their investigation. Any theft of prescribing pads should be reported to the Board of Pharmacy.

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This post was authored by Jamaal R. Jones, Esquire of Jones Health Law, P.A. for more information contact me at (305) 877-5054; email us at JRJ@JonesHealthLaw.com, or visit our website at www.JonesHealthLaw.com.

It should be noted that I am not your lawyer (unless you have presently retained my services through a retainer agreement). This post is not intended as legal advice, it is purely educational and informational, and no attorney-client relationship shall result after reading it. Please consult your own attorney for legal advice. If you do not have one and would like to retain my legal services please contact me using the information listed above.

All of the information and references made to laws, regulations, and advisory opinions were accurate based on the law as it existed at this time, but laws are constantly evolving. Please contact me to be sure that the law which will govern your business is current. Thank you.

17 August

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What Are My Options If I’ve Been Wrongfully Terminated from my Hospital Residency Program?

Posted by Jamaal R. Jones, Esq.

in Blog

Introduction

The long and arduous road to becoming a doctor is one that only a few people get to experience in their lives. Those few, dream of becoming a doctor at an early age which makes the journey seem that much longer. Your parent or neighbor might have been a doctor and that relationship might have created a desire to pursue the same career path. Maybe you were motivated by a desire to serve your community by providing health services to the poor or disabled. Unfortunately for you, your career as a doctor may come to a screeching halt before you complete your medical residency program. If you are at risk of being unceremoniously discharged from your residency program or have already been discharged there are certain legal considerations that you should examine.

Disciplinary Board

If you are discharged from a medical residency program it is important to examine the language contained in the hospital policies and procedure manual. In the manual it will explain the procedure for internal disciplinary action taken against hospital staff, which may require a mandatory board hearing depending on the alleged infraction. Prior to the board hearing, a neutral intermediary may be utilized so that direct communication between the hospital and the resident is limited. The disciplinary board may be comprised of a three-person panel where you can choose to present your defense. I would advise against signing any documents presented to you by the hospital after you have received written notice of the disciplinary hearing until you have spoken to an attorney with experience in health and employment law. The manual will state how many days the panel has to render its final decision regarding your status in the hospital residency program, and the method by which the panel used to render the final decision. There will also be a procedure for filing a timely appeal should you choose to do so after an unsuccessful initial board hearing.

Suspension, Termination, or Resignation

The panel may recommend suspension or termination from the hospital residency program. The length of suspension will vary depending on the circumstances. A board’s decision to suspend or terminate a resident should be determined objectively but it’s difficult to refute the fact that there is a subjective component. This is why one resident who committed similar bad acts may only be suspended while another resident may be terminated. Hospitals have the authority here to make that determination and unless there is clear employment discrimination a court is unlikely to undermine and overthrow the hospital’s decision.

In some instances, I have witnessed the hospital allow the resident to voluntarily withdraw or resign from the residency program so that it doesn’t diminish their chances of gaining acceptance to another residency program. The thought of starting anew in a different residency program is chilling, but given the circumstances this could be your best option. You must decide whether you want to explain why you resign from the program or you can let your records speak for themselves. If you elect to be terminated from the program and subsequently apply for admission into a different program you will be required to submit your records from your previous residency program. Additionally, the hospital residency program may ask for references where the details of your departure may come to light. Further, the hospital manual should be examined alongside your hospital residency employment contract.

Arbitration, Lawsuit, or Administrative Complaint

Your residency employment contract will contain the terms and conditions of your employment during the residency program. The contract will most likely bind you to a mandatory arbitration in the event that a legal matter arises between you and the hospital. Hospitals prefer arbitration because:

They are usually less expensive;
Parties can choose the arbitrator:
Parties can choose the time and place of the arbitration;
The proceedings are held privately behind closed doors; and
Its outcome does not become part of the public record.

Arbitration is not held in court but in a court-like setting complete with discovery proceedings and an arbitrator acting as a judge. Additionally, the arbitration is resolved much faster since the parties don’t have to wait for availability on the court’s docket, which can take months before you are actually heard by a judge. Final judgment by an arbitrator is binding and very difficult to successfully appeal.

Depending on the reason why you were fired you may be able to file a complaint with the Accreditation Council for Graduate Medical Education (“ACGME”) which is an organization that in part, helps physicians in graduate medical education receive fair solutions to residency/fellowship education-related concerns and formal complaints. Most residency programs are accredited by the ACGME. The ACGME requires that residents have a right to present their defense before a board or panel. The ACGME’s Resident Services division does not adjudicate disputes between individual persons and residency/fellowship programs or sponsoring institutions. Resident Services does not address issues regarding matters of admission, appointment, contract, credit, discrimination, promotion, or dismissal of faculty members, residents or fellows.

As such, depending on the facts and circumstances I advise residents against filing a lawsuit against the hospital unless you are terminated for an illegal reason. Illegal reasons can include, but are not limited to, discrimination based on race, gender, sexual orientation, country of origin, nationality, or religion. You may make a claim alleging discrimination under Title VII of the Civil Rights Act of 1964 and breach of contract if the facts could support such a claim. In cases where residents have successfully won lawsuits against the hospital for discrimination they introduced ample evidence from which it could be concluded that they were unlawfully discriminated against. Residents may try to obtain evidence of the following:

(a) testimony or affidavit from doctors in a direct supervisory position to attest to the satisfactory nature of your work;

(b) evidence to rebut other supervisor’s negative evaluations of you – the resident;

(c) evidence of other residents with low test scores and unfavorable evaluations who have been allowed to continue in the program; and

(d) evidence that you were able to successfully complete the residency requirements since leaving the hospital.

In some jurisdictions, direct evidence of discrimination is not required. A plaintiff may entitled to rely on circumstantial evidence to convince the trier of fact that an employer’s explanation for his discharge is pretextual and that his discharge was more likely than not motivated by discriminatory intent. However, more of today’s courts are less likely to rule in a resident’s favor unless the resident can show direct evidence of discrimination. In Zaklama, M.D. v. Mt. Sinai Medical Center, 842 F.2d 291, 296 (11th Cir.1988), Dr. Zaklama was able to obtain evidence of a-d above, but it took approximately six years for the case to be fully adjudicated and a lot of money in legal fees.

Regardless of whether you go before a hospital board, arbitration, or file a complaint with the ACGME you will have the opportunity to review your evaluations, personnel file, and credentialing so that you can build your defense.

Conclusion

If you feel that you are at risk of being removed from your Hospital Residency Program and would like to speak to an attorney about your options please contact us immediately. You should explore all of the options available to you because this is your career at stake. There is typically a very short window to file an appeal so it is imperative that you contact an attorney immediately if you are facing a disciplinary board hearing at your hospital.

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This post was authored by Jamaal R. Jones, Esquire and Matt Lester of Jones Health Law, P.A. for more information contact us at (305) 877-5054; email us at JRJ@JonesHealthLaw.com, or visit our website at www.JonesHealthLaw.com.

08 July

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Business and Legal Considerations for Selling my Physician Practice

Posted by Jamaal R. Jones, Esq.

in Blog

Business and Legal Considerations for Selling my Physician Practice

Physicians may be determine that it is in their best interest to sell their medical practice for various personal and business reasons. A few of the reasons may chose to sell are because: (1) they are retiring; (2) relocating to another city/state; (3) maintaining the practice is too much of a burden/stress; (4) they are physically unable to meet the demands; (5) lower reimbursement rates; or (6) someone simply made them an offer that they couldn’t refuse. Regardless of the reason why a physician may choose to sell their practice there are certain business and legal considerations that they should factor into the decision process.

Who is Buying Physician Practices?

Florida is one of the few states that allows for a non-physician to own a medical practice, excluding optometry, dentistry or chiropractic practices. Large corporations, private equity firms, hospitals, health systems and ambitious physicians looking to expand their practices are all common buyers in today’s market. Due to healthcare reform the value of physician practices are diminishing in many markets.

What is the Value of my Physician Practice?

Many business owners, including physicians, have an idea in their head of what they THINK that their business is worth. Often there is an emotional component that is factored into what the physician perceives their practice to be worth. I encourage my physician clients to be realistic with their expectations. Let’s face it, there’s no guarantee that patients will remain with a practice once their beloved physician departs and purchasers are aware that while there is some benefit to buying an existing practice there is also significant risk. For this reason, many purchasers choose to pay the purchase price over several months after closing and hire the prior owner as an independent contractor during the transition. I advise my clients to meet with a healthcare consultant and bankers who work primarily in the medical and dental industry so that they can determine what the fair market value (“FMV”) of their practice is. A FMV is partly based on the tangible assets of a practice and consist of all furniture, fixtures and equipment owned by the practice such as examination tables, desks, chairs, and medical equipment.

There are numerous methods and factors to be considered in determining the value of the physician’s practice when preparing to sell. The value of a physician practice fluctuates based on: (a) payer mix; (b) referral sources; and (c) the presence of ancillary services. If a practice has one or more ancillary services that it provides that can dramatically increase the value and eventual purchase price of your practice due to the increased profit margins.

The process includes requirements or rules that must be followed in order to legally sell a practice. All legal and business considerations should be addressed to ensure the selling physician receives the best possible price for the sale of their practice. The selling physician must be careful to avoid any actions that can reduce the value of the practice during the sale.

Sellers must be careful not to misrepresent terms and conditions of the physician practice because it is highly likely everything will be discovered during the purchasers exclusive due diligence period. The selling process ends with a negotiated agreement with attorneys covering the asset purchase agreement, revised partnership agreement (if applicable) and employment agreements to name a few. During the closing process all agreements will be signed and executed.

How do I Structure the Sale of my Physician Practice?

The sale of physician practices can be structured in various ways depending on the facts and circumstances specific to that particular practice (i.e. debts, obligations, leases, etc.) A physician has to choose between selling stock in their practice, assets, or in some cases a combination of both.

A physician that sells stock in their practice will pay less taxes on the purchase price. However, purchasers are weary of purchasing stock because they assume responsibility for the practice’s liabilities. The trade off with a stock purchase is that the purchaser retains the physician’s payer contracts, tax ID number resulting in a much smoother and faster transaction.

In an asset purchase agreement the physician has to be very specific about what is included in the sale (i.e. art and certain furniture isn’t included). In this strategy, the physician-seller positions the sale as an alternative to a startup practice. The value is not as high, but a small amount of intangible value can be justified for:

Speed when compared to that of than a startup;
Less losses than a startup;
a trained workforce already in place, telephone number, website, and historical marketing already in place;
Medical Equipment and furniture are present;
Stronger Patient base and reputation.

A transaction involving the value of intangible assets of a practice could trigger violations of various state and federal healthcare laws, including, but, not limited to, the Florida and Federal Anti-kickback Statutes and Stark law. Tangible and intangible assets can all be included in the sale of a physician practice however to avoid anti kickback issues, the final price must not overwhelmingly exceed the FMV of the practice. If the purchase price exceeds the FMV of the physician practice it will be a red flag for regulators. Regulators might interpret the sale to be disguised as an impermissible payment for patient referrals also knows as Patient-Brokering in Florida. You should always consult with a healthcare attorney to conduct an analysis of Stark law and Anti-Kickback Statutes before proceeding with the sale.

The sale of a physician practice may include a “competitive auction process”. Smaller physician practices don’t usually go through this auction process, but it is not uncommon for a larger practice with several offices and expensive medical equipment to go up for auction with a minimum reserve that must be met. All parties involved must agree to the terms and a price. A competitive auction includes an invitation of greater than 20 buyers to bid. Buyers in competitive auctions typically have a six-week deadline to submit a letter of intent to purchase at a tentative price pending exclusive due diligence performed by the buyer for 60-120 days.

Protecting your Practice

Physicians spend a significant amount of money and devote countless hours to building their practice. It’s not always easy to part ways with your practice, but prior to completing the sale you want to make sure that you and your practice are adequately protected. No matter the size of your practice, when you are entertaining offers from potential purchasers a well crafted Non-Disclosure Agreement (“NDA”) should be drafted by a healthcare attorney and signed by those potential purchasers. The NDA ensures that any documents or information that they receive during the negotiation process will be returned, destroyed, and kept confidential or else there will be a lawsuit for resulting damages. Also, the information gathered during the negotiation practice, such as trade secrets can’t then be used to directly compete with you. Once signed the potential purchasers are given access to secure online data rooms, which include financial statements, confidential information memorandum (CIM or pitchbook), and operational statistics.

What if you Own the Practice and Real Property?

Physicians that also own the practice facility need to prepare for the sale of both their practice and the practice facility. Alternatively, if the physician is interested in keeping the practice facility, he or she can lease the space to the buyer of the practice. In the leasing agreement, the physician may give the buyer and option to purchase the facility in an amount of time specified. If the selling physician wishes to remain employed by the purchasing party, remaining a landlord represents a conflict of interest that needs to be addressed. Therefore, the selling physician should contract for the sale of the practice facility with the buying party or an independent property management business.

Conclusion

The following is a list of Legal Considerations for sale of physician practice:

Beware of Fee Splitting and Kickbacks
Structure the Transaction in a legally permissible manner, such that it doesn’t violate any applicable healthcare or business laws.
Purchasers must conduct Due Diligence
Physicians must protect patient protected health Information (“PHI”)
Account for and protect against any Data/Information Breach
Resolve any existing contract disputes
Determine whether you can assign third party contracts
Negotiate the noncompetition clause
Negotiate an agreeable indemnification clause
Adhere to any termination Provisions
Consult a CPA to determine the tax risks
Transition the non-physician employees appropriately

In addition to these considerations, there are many other factors to consider before deciding to purchase or sell your practice. The sale of a practice can’t be completed over night and could take several months. The purchaser may have to obtain a Healthcare Clinic License and ensure that the transaction doesn’t violate Stark or meets one its exceptions. It’s up to you to determine whether the time is right to sell your practice. No matter the size of your practice you should always consult with an experienced healthcare attorney.

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11 April

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Legal Eligibility Requirements for the Terminally Ill to Receive Hospice Care

Posted by Jamaal R. Jones, Esq.

in Blog

We’ve all heard the saying that dying and paying taxes are the only two guaranteed things in life. Taxes and death have another thing in common – extensions. A CPA may instruct you on how to obtain an extension to pay certain taxes. Hospice care is to dying as a CPA is to taxes. Placing a loved one in hospice may extend a loved one’s life by weeks or months. Let’s face it, hospice is grim and the outlook is bleak, but that doesn’t mean that you shouldn’t be prepared for it. In order to do so, it is important to determine how the law may affect your loved one’s eligibility, patient rights, and duration of benefits for hospice care.

Hospice Care

Hospice means a public agency or private organization primarily engaged in providing hospice care. Hospice care includes palliative care and they are used in unison by an interdisciplinary group to provide physical comfort and emotional and spiritual support to terminally ill patients and their families. Hospice care is focused on caring for the patient and not curing them. Hospice care can be in a standalone facility, a department within a nursing home, or in a hospital. However, it is not uncommon for the terminally ill to receive hospice care in their homes. Terminally ill patients are individuals that have a medical prognosis that his or her life expectancy is 6 months or less if the illness runs its normal course. Hospices provide specialized care for terminally ill patients, including, but not limited to, cancer patients, HIV/AIDs patients, and those suffering from severe functional limitations and advanced cognitive impairment (i.e. Alzheimer’s Dementia).

In 2014, an estimated 1.65 million patients received hospice care services, but that number is expected to rise. During that same period, only 7.6% of the patients in hospice care were Black/African-American compared to 8.4% in 2013. By comparison, White/Caucasians (Hispanics were reported as an ethnicity and not a race) accounted for 76% of patients in hospice care in 2014 compared to 80.9% in 2013.

Medicare and Other Payors

Hospice care is covered by Medicare, Medicaid, and most private insurers, but patients may also receive hospice care if they are destitute or unable to pay. States may elect to include hospice in their Medicaid programs. Medicare is by far the predominant source of payment for hospice care in the United States. As a result, Congress decided to enact the Medicare Hospice Benefit.

Hospice Care Eligibility

Hospice care is governed by the guidelines and requirements contained in the Code of Federal Regulations (See 42 CFR ch iv. Part 418) and the Sections 1102, 1861 and 1871 of the Social Security Act. The law states that in order to be eligible to elect hospice care under Medicare, an individual must be (1) entitled to Medicare Part A and (2) certified as terminally ill.

Providers determine whether you are terminally ill based on strict legal guidelines. The hospice must obtain written certification of terminal illness for each of the time periods listed below and only when they receive this certification can they submit the claim for payment. The certification requires that:

the provider state that patient’s life expectancy is 6 months or less should the illness run its normal course;
provide documentation to support the medical prognosis;
a brief narrative of the provider’s clinical findings;
a physician or nurse practitioner must attest in writing that he or she had a face-to-face encounter with the patient, including the dates of the visit; and
all certifications must be signed and dated by the physicians and include the benefit periods for the certification or re-certification.

Duration of Hospice Care

Initial treatment at a hospice is not provided in perpetuity until an individual succumbs to their illness, but care may be extended for successive periods. Federal law requires an individual to receive hospice care for (1) an initial 90-day period; (2) a subsequent 90-day period; or (3) an unlimited number of subsequent 60-day periods. The two 90 day periods must precede the 60-day period, and before the 60-day commences a hospice physician or hospice nurse practitioner must have a face-to-face encounter with the patient. This face-to-face encounter must be repeated for each successive period thereafter in order to determine whether the individual is still eligible for hospice care.

Patient Rights for Hospice Care

An individual or their representative may elect to receive hospice care if they properly file an election statement with that hospice, and the hospice must in turn file a Notice of Election (“NOE”) with its Medicare Contractor within 5 calendar days in order to receive payment during that period. A medical director must consult with the patient’s attending physician before a recommendation is made about admitting the patient to hospice. In making his recommendation, the medical director must consider:

(1) the diagnosis of the terminal condition of the patient;

(2) other health conditions, whether related or unrelated to the terminal condition; and

(3) any current clinically relevant information supporting all diagnoses.

If a patient elects to receive hospice care Medicare will not cover (a) treatment intended to cure the patient’s terminal illness and//or related conditions; (b) prescription drugs to cure the illness; and (c) room and board.

Patients or their representatives always have the right to revoke the election of hospice care at any time during the election period. To do so, the patient must draft a signed statement revoking their election and date when the revocation is effective. If the patient revokes their election they are not barred from seeking future hospice care if they are eligible.

Patients have the right to be informed of his or her rights, and the hospice must protect and promote the exercise of these rights. Patients have the right to:

receive effective pain management and symptom control from the hospice for conditions related to terminal illness;
involvement in her hospice plan of care;
refuse care or treatment;
chooser her attending physician;
confidential clinical record;
free from neglect, mistreatment, or any type of abuse;
receive information about the services covered under the hospice benefit; and
receive information about the scope of services that the hospice will provide and specific limitations on those services.

Hospice is a challenging and emotional time in your life if you are the patient or a family member. Be proactive and create an Advance Directive Plan that describes the care you want to receive and your wishes about continuing or withdrawing medical treatments during the final stages in your life. This is essential in the event that you become incapacitated and unable to speak. It will allow your family to spend those final precious days without the need to make difficult decisions on your behalf.