Mechanic Liens against Public Property

(May 10, 2010): Whenever a company contracts to provide construction work for a city on public property, the company should always check the state law that governs the city in regards to liens against the land where the public property is located.  And the city should always make sure of what rights it has as a governmental unit in regards to liens against land.

In Texas, section 43.002 of the Texas Property Code protects public lands from attachment, execution, and forced sale.  Whenever a city authorizes construction work on public property, the contractor, subcontractors, and material suppliers cannot impose a lien on that land.

What if there is a lien that existed against land before purchase by a city?  Again state law should be checked to determine whether or not liens that are filed against private land later purchased by a city become invalid or remain enforceable.  In Texas, the general rule is that liens that existed on private land later purchased by a city are invalid.

Both companies and cities should always have their attorney review lien rights whenever there is proposed construction on public property or when there is a proposed purchase of private land by a city.

Should you have any questions regarding these issues, don’t hesitate to contact us.  For a complementary consultation, you may call Robert W. Liles or one of our other attorneys at 1 (800) 475-1906.

HHS / CMS Issues Final “Meaningful Use” Objectives for Electronic Health Records (EHRs). Providers Should Exercise Extreme Caution Before Converting to an EHR System.

(July 14, 2010):Yesterday, the Department of Health and Human Services (HHS) issued its final regulations concerning what it means for eligible Medicare and Medicaid providers to be “meaningful users” of certified electronic health record (EHRs) technology in 2011 and 2012.  We are cautiously optimistic that HHS’ approach will allow small providers the flexibility they need to participate in the program if they choose but, as detailed below, are not convinced that CMS contractors are ready for the technology.

The rules support the Health Information Technology for Economic and Clinical Health Act (HITECH), which authorized incentive payments through Medicare and Medicaid to clinicians and hospitals when they use EHRs privately and securely to achieve specified improvements in care delivery.  According to HHS, the incentives could be as much as $44,000 (through Medicare) and $63,750 (through Medicaid) per clinician. Subsequent rules will govern later phases of the ten year program.

The meaningful use objectives for 2011-12 are categorized in two tiers – core and menu objectives.  The first set of “core” objectives comprises basic items essential to creating any medical record, such as:

• Recording patient demographics;
• Maintaining active medication list; and
• Generating and transmitting permissible prescriptions electronically.

The second “menu” set is comprised of 10 additional important activities from which providers will choose any 5 to implement in the first two years.  They include:

• Implementing drug formularies;
• Incorporating clinical laboratory test results into EHRs as structured data; and
• Sending reminders to patients (per patient preference) for preventative and follow-up care.

For most of the core and menu items, the regulations also specify rates at which providers must use the functions to be considered meaningful users and how to report clinical quality measures.

HHS is establishing a nationwide network of Regional Extension Centers to assist providers in adopting and using certified EHR technology.  The full 864 page rule is available at http://www.ofr.gov/OFRUpload/OFRData/2010-17207_PI.pdf

While the concept of EHR and electronic medical records (EMR) may sound great, a number of our clients have already experienced the dark side of EHR / EMR.  Unfortunately, the Centers for Medicare and Medicaid Services (CMS) have completely disregarded (or remained completely ignorant of) the fact that a number of early adopters of this technology have found that Medicare Administrative Contractors (MACs) and Program SafeGuard Contractors (PSCs) (now being replaced by Zone Program Integrity Contractors (ZPICs)) appear to be inexperienced in their review of medical records that have been generated with the assistance of EMR / EHR software programs. 

In some cases, the Medicare contractors have mistakenly alleged that the records documenting the care provided are overly similar – erroneously concluding that the records were “copied” or “cloned.”  Every software program is different.  Nevertheless, many of the programs utilize “drop-down” menus that offer providers a number of different options for documenting their observations, the patient’s symptoms, or clinical findings.  While such an approach may facilitate the completion of an evaluation, progress notes, or other clinical service, it also inadvertently leads to “similar” wording or phrases among classes of documents generated.  When a significantly number of these clinical documents are reviewed by a Medicare contractor, in some cases the contractor has incorrectly concluded that instead of documenting individualized observations, these EMR / EHR-generated medical records are mere “copies” or “clones” of other medical records.  In reaching such a conclusion, PSCs / ZPICs have denied claims and then extrapolated the alleged damages to the universe of claims at issue.

Thus, providers should exercise extreme care before transitioning over to an EMR / EHR system.  Every effort should be made to ensure that your observations are individualized to the greatest extent possible.  Prior to choosing a software program, a provider should test the program with a significant number of claims to ensure that the end product generated by the program does not leave a third party reviewer with an incorrect picture of the care provided.

Should you have any questions regarding these issues, don’t hesitate to contact us.  For a complementary consultation, you may call Robert W. Liles or one of our other attorneys at 1 (800) 475-1906.

Limitations and City Claims

(May 10, 2010): Normally there is statute of limitations that will apply to most civil lawsuits.  This means that a claim must be filed in Court within a certain time after the action complained about occurred.  For instance, in Texas, if you are involved in a motor vehicle accident and suffer an injury you must file a lawsuit within 2 years of the date of the accident.  Failure to do so will prevent you from being able to file a lawsuit after the 2 years expires.

A common statute of limitations for a party to bring a lawsuit for breach of contract is four years from the date of the breach.  However, in many states, the statute of limitations does not apply or is greatly expanded for a City or other governmental unit if the cause of action is for a public purpose, such as collecting taxes or recovering money or damages for a breach of contract for public construction.  In Texas, Section 16.061 of Texas Civil Practice and Remedies Code Section provides that the statue of limitations does not apply and does not bar many causes of actions that a city may have against an individual or a private entity.

Courts in various other states have also provided that limitations do not bar a City in certain civil  actions.  The cases and summaries are provided by the treatise“McQuillin The Law of Municipal Corporations” 17 McQuillin Mun. Corp. § 49:6 (3rd ed.).

In conclusion, Cities should always consult legal counsel on their ability to pursue monies owed or damages to Cities, no matter how long ago the breach or damage occurred.  Concurrently, individual and entities that contract with a City should also consult their attorney in regards to limitations and what measures they can take to alleviate or protect from lawsuits for incidents that occur many years in the past.

Arizona

Statute of limitations did not run against city in action against county for taxes collected. City of Bisbee v. Cochise County, 52 Ariz. 1, 78 P.2d 982 (1938)

Colorado

Statute of limitations was inapplicable to statutory action of county to recover expense of relief to paupers. Cherrington v. Board of Com’rs of Otero County, 89 Colo. 116, 299 P. 711 (1931)

Shootman v. Department of Transp., 926 P.2d 1200 (Colo. 1996)

Board of Educ. of City of Chicago v. A, C and S, Inc., 131 Ill. 2d 428, 137 Ill. Dec. 635, 546 N.E.2d 580, 57 Ed. Law Rep. 206, Prod. Liab. Rep. (CCH) ¶ 12285, 10 U.C.C. Rep. Serv. 2d 90 (1989) (school seeking compensation for removal of asbestos as public purpose); City of Shelbyville v. Shelbyville Restorium, Inc., 96 Ill. 2d 457, 71 Ill. Dec. 720, 451 N.E.2d 874 (1983) (street and sidewalk construction as public purpose); Brown v. Trustees of Schools, 224 Ill. 184, 79 N.E. 579 (1906); Greenwood v. Town of La Salle, 137 Ill. 225, 26 N.E. 1089 (1891); People ex rel. v. Town of Oran, 121 Ill. 650, 13 N.E. 726 (1887)

Iowa

Chicago & N.W. Ry. Co. v. City of Osage, 176 N.W.2d 788 (Iowa 1970); State ex rel. Schlagel v. Munn, 216 Iowa 1232, 250 N.W. 471 (1933)

Suit by public to oust owner of electric lighting system in operation over 10 years was not barred by limitation statute. State ex rel. Schlagel v. Munn, 216 Iowa 1232, 250 N.W. 471 (1933)

Illinois

Savoie v. Town of Bourbonnais, 339 Ill. App. 551, 90 N.E.2d 645 (2d Dist. 1950) (matters involving public rights)

Oregon

City of Pendleton v. Holman, 177 Or. 532, 164 P.2d 434, 162 A.L.R. 249 (1945)

The common-law rule is that statutes of limitations do not apply against government bodies unless they are included expressly or by necessary implication. City of Medford By and Through Medford Water Com’n v. Budge-McHugh Supply Co., 91 Or. App. 213, 754 P.2d 607, Prod. Liab. Rep. (CCH) ¶ 11831 (1988) (negligence in product liability actions)

Should you have any questions regarding these issues, don’t hesitate to contact us.  For a complementary consultation, you may call Robert W. Liles or one of our other attorneys at 1 (800) 475-1906.

Don’t Take ZPIC or RAC Extrapolation Calculations at Face Value – Can Their Results Be Readily Reproduced?

(July 14, 2010): Imagine a ZPIC, PSC, or RAC handing you a claim analysis rife with alleged errors, an indecipherable list of statistical formulae, and an extrapolated recovery demand that will cripple your practice or clinic.  What steps should you take to analyze their work?  Based on our experience, providers can and should carefully assess the contractor’s actions, use of formulas and application of the RAT-STAT program when selecting a statistical sample and extrapolating the alleged damages based on the sample pulled.  Over the years, we have challenged the extrapolation of damages conducted by Medicare contractors around the country, covering tens of thousands of claims.  Regardless of whether you are providing Partial Hospitalization, Evaluation and Management, Home Health, Physical Therapy, Surgical or other services, it is imperative that you work with experienced legal counsel and statistical experts to analyze the statistical sampling and extrapolation steps taken by the contractor. Should you succeed in invalidating the extrapolation, the whole games changes.  The question is – “How can you go about fighting an extrapolation calculation?”

One method is to show that the contractor’s auditor failed to identify a Statistically Valid Random Sample (SVRT).  Among the first steps is you should take is to retain experienced legal counsel to review the Medicare contractor’s actions.  Notably, there are a multitude of legal arguments which may be asserted (depending on the specific facts in your case).  Our firm has worked with several outstanding statistical experts over the years, each of which has a proven track record of analyzing the contractor’s actions and identifying any flaws made by the ZPIC or PSC when extrapolating damages.

Notably, Section 3.10.4.2 of CMS’ Medicare Program Integrity Manual establishes that the contractor is obligated to fully document the statistical methods an auditor employs:

“The PSC or ZPIC BI [Benefit Integrity] unit or the contractor MR [Medical Review] unit shall identify the source of the random numbers used to select the individual sampling units. The PSC or ZPIC BI unit or the contractor MR unit shall also document the program and its algorithm or table that is used; this documentation becomes part of the record of the sampling and must be available for review.” (emphasis added)

“The PSC or ZPIC BI units or the contractor MR units shall document all steps taken in the random selection process exactly as done to ensure that the necessary information is available for anyone attempting to replicate the sample selection.” (emphasis added)

ZPIC and PSC statisticians must be able show their work to the extent that a reviewer can attempt to “replicate” their actions and determine whether or not the steps taken were consistent with accepted principles and practices of statistical sampling.  The failure of a ZPIC or PSC statistician to fully and properly document his actions may serve as the basis for seeking to invalidate the extrapolation. The calculation of a valid statistical sample and the extrapolation of damages by ZPIC and PSC statistician is a highly complex process. After handling many extrapolated damages cases, we have found that few ZPIC or PSC statisticians fully meet their obligations to document the steps taken and / or conduct the process in a proper fashion, consistent with accepted statistical sampling procedures.  Should your practice or clinic find that it is facing an extrapolated Medicare audit, it is strongly recommended that you engage qualified, experienced counsel to represent you in the process.  Your legal counsel can then engage a qualified statistician to assess the contractor’s actions.

Should you have any questions regarding these issues, don’t hesitate to contact us.  For a complementary consultation, you may call Robert W. Liles or one of our other attorneys at 1 (800) 475-1906.

Cities and Trade Secrets

(May 3, 2010): Is your company information confidential when given in an electronic or written format to a City officer or employee?  Alternatively, is your pricing information and technological information provided in conjunction with a contract with a City confidential?

The answer to both questions is “maybe”.  The public information laws of the state where the City is located should always be reviewed, by both the City and the Company.

For example, most state public information laws start with the proposition that all documents given to a City are public information.  There are exceptions to this rule, such as social security numbers,  attorney/client communications and trade secrets.   The burden is normally on the City to show that an exception applies to the information requested thereby making it confidential and not “public”.  And a City usually has a specific time frame in which to respond or to assert the reasons why the information is not public and is confidential.  Failure to do so usually will result in the requirement the documents be released without any type of redress other than filing a protective action in Court.

Normally the facts are that a public information request is made to the City for any and all documents given to the City by Company “A”.  The City determines if there is an exception that applies to the documents.   The City may either argue the exception to the appropriate authority (usually the state attorney general (AG)) or notify the AG that the City believes the information is confidential and will rely on the Company to make the arguments the information is confidential.   Of course the City is usually required to timely notify the Company of the action taken and the Company has a specific time frame to assert the reasons why the information is confidential.

Confidentiality provisions in a contract between the City and a Company should always be reviewed.  The City should review to make sure that there is language such as “to the extent provided by law” the City agrees to keep certain information confidential.  The Company should make sure that there is a provision stating that the City will timely notify the Company of any requests for its information and to take the appropriate actions to allow the Company to protect any information the Company believes is confidential.

As always, both the City and the Company should have their respective attorneys review the contracts and confidentiality provisions.

Should you have any questions regarding these issues, don’t hesitate to contact us.  For a complementary consultation, you may call Leonard Schneider or one of our other attorneys at 1 (800) 475-1906.

Can ZPICs Use Minimal Reviews to Maximize Recoupment? Maybe. . . Maybe Not. . .

(July 12, 2010): A ZPIC’s use of extrapolation can be a surefire way of destroying a provider’s practice.  We’ve known it for years and yet the government’s passion for statistical sampling only seems to be growing.  This makes it essential for providers to involve experienced counsel as soon as possible after the audit has been conducted.  Over the last decade, Liles Parker attorneys have noted a marked increase in the prevalence of extrapolated damages.  Rather than assume that the contractor’s calculations are correct, we have aggresively challenged their use of statistical sampling in Medicare overpayment audits.

“Extrapolation” is the process of using statistical sampling in a review to calculate and project (extrapolate) alleged overpayments made in connection with Medicare claims.  Basically, ZPICs seek out errors in an alleged “statistically relevant sample” of the provider’s Medicare claims and then calculate and apply the “error rate” to the entire universe of claims covering a given period of time.  This long-standing practice allows ZPICs to grossly inflate the monetary demands on their audit targets while avoiding actually reviewing each of the Medicare claims in the universe for which they are seeking recoupment or offset.

The practice dates back twenty years to a decision by the Secretary of Health and Human Services (HHS) to authorize the use of statistical sampling in lieu of engaging in onerous claim-by-claim reviews.   In Chaves County Home Health Services v. Sullivan, 931 F.2d 914 (D.C. Cir. 1991), the district court upheld extrapolation as being within the Secretary’s discretion.

In 2003, after years of protest, physicians groups and others succeeded in convincing Congress to place some limitations on the use of extrapolation.  Under Section 935 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA), before an auditor can employ extrapolation, there must be either a determination of a sustained or high level of payment error, or documentation that educational intervention has failed to correct the payment error.  While this keeps the door to challenging an extrapolation open, ZPICs and PSCs now regularly participate in ALJ hearings in order to defend their use of statistical sampling.

Over the years, Liles Parker has worked with a number of the best statisticians in the country, challenging the extrapolation and having it invalidated at either the Qualified Independent Contractor (QIC) level or at hearing before an Administrative Law Judge (ALJ).  If your practice or clinic is audited by a ZPIC, PSC or RAC,we strongly recommend that you engage experienced legal counsel to represent your interests during this complex process.

Should you have any questions regarding these issues, don’t hesitate to contact us.  For a complementary consultation, you may call Robert W. Liles or one of our other attorneys at 1 (800) 475-1906.

Texas Physician Indicted and Arrested

(July 9, 2010):  On June 14, 2010 the U.S. Attorney’s Office for the Western District of Texas announced that a Federal Grand Jury had returned a 99-count indictment against a pain management physician who operated clinics in San Antonio and El Paso.  The physician was charged with 21 counts of health care fraud, 20 counts of false statements relating to health care fraud matters, 21 counts of mail fraud, 16 counts of wire fraud, 4 counts of unlawful distribution of a controlled substances and 16 counts of money laundering.  The indictment alleges that the physician “caused to be submitted claims for reimbursement of peripheral nerve injections, facet injection procedures and Level Four office visits–typically involving 25 minutes of face-to-face time between patient and physician–which never were performed.”  Instead, the U.S. Attorney’s Office alleges that the physician performed “prolotherapy” on his patients — a procedure that Federal health care benefit programs do not reimburse.

Notably, an indictment is merely a charge and is not considered to be evidence of guilt.  In issuing this indictment, the Texas HEAT task force, comprised of Federal prosecutors and investigative agencies,  have continued to ramp up efforts to investigate and prosecute allegations of health care fraud.  Notably, the use of “prolotherapy,” a relatively new therapeutic approach, has been supported by some of the best known clinics and physicians in the country.

While this case has yet to fully develop, it again points out that health care providers must take care when utilizing new approaches, despite the fact the therapeutic technique may be considered to be state-of-the-art.  Unfortunately, Medicare may take years to recognize and cover some techniques.  In the mean time, it is essential that providers take care when coding and billing for procedures that may not clearly qualify for coverage under applicable Medicare and / or contractor guidance.

Should you have any questions regarding these issues, don’t hesitate to contact us.  For a complementary consultation, you may call Robert W. Liles or one of our other attorneys at 1 (800) 475-1906.

ACA Creates a Minefield for Medicare Providers Who Fail to Promptly Return Overpayments

(July 9, 2010): Does the failure to promptly return a Medicare overpayment really warrant liability under the False Claims Act (FCA)?  Congress thinks so.  The Patient Protection and Affordable Care Act (also known as the “Affordable Care Act” or “ACA”) creates an obligation under the FCA whereby a Medicare provider who fails to timely report and refund an overpayment may be subject to substantial penalties and damages.

Section 6402 of the ACA requires Medicare providers, including physicians and partial hospitalization providers, among others, to a) return and report any overpayment, and b) explain, in writing, the reason for the overpayment.

This law creates a minefield for physicians and other Medicare providers.  First, providers have only 60 days to comply with the reporting and refund requirement from the date on which the overpayment was identified or, if applicable, the date any corresponding cost report is due, whichever is later.  Of course, the ACA does not actually explain what it means to “identify” an overpayment.

Nonetheless, the ACA makes this reporting and repayment requirement an “obligation” under the FCA.  Pursuant to the Fraud Enforcement and Recovery Act of 2009 (FERA) amendments to the FCA, an individual or entity may be liable if he or it “knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the Government.”  Thus, providers who fail to meet their 60 day “obligation” may be subject to monetary penalties of up to $11,000 per claim, and treble damages.

Several Liles Parker attorneys have worked former Federal and / or State prosecutors.  Our attorneys have extensive experience working on False Claims Act cases.  Should you have any questions, hesitate to contact us.  For a complementary consultation, you may call Robert W. Liles or one of our other attorneys at: 1 (800) 475-1906.

President Obama Appoints New Head of CMS

Identity Theft “Red Flags” Rule Treating Doctors Like Banks Is Delayed Once Again

(July 5, 2010): The Federal Trade Commission (FTC) has agreed to once again delay enforcement of its illogical and onerous “Red Flags” rule with respect to physicians.

The “Red Flags” rule arises under the Fair and Accurate Credit Transactions Act of 2003 and requires “financial institutions” and “other creditors” to develop written plans to detect identify theft in their day-to-day operations.  Under the FTC’s interpretation of the rule, physicians who permit patients to pay after they have rendered medical service are transformed into “creditors.”

Extension of the rule to physicians has been delayed several times as the extent of the burden on health care providers has become clear.  As recently as May 28, the FTC made note of the concerns:

“At the request of several Members of Congress, the [FTC] is further delaying enforcement of the ‘Red Flags’ Rule through December 21, 2010, while Congress considers legislation that would affect the scope of entities covered by the Rule….The Commission urges Congress to act quickly to pass legislation that will resolve any questions as to which entities are covered by the Rule and obviate the need for further enforcement delays.”

The June 25^th agreement arises in connection with a suit filed against the FTC last month by the American Medical Association (AMA) and others seeking to prevent enforcement of the “Red Flags” rule and alleging that the FTC overreached its bounds in seeking to enforce the rule against physicians.   A similar complaint by the American Bar Association (ABA) is currently making its way through the appeals process after the U.S. District Court for the District of Columbia enjoined enforcement of the rule against lawyers.  Until a ruling is issued in the ABA case, the AMA case will be held in abeyance and physicians will be safe from the “Red Flags” rule.

Should you have any questions regarding these issues, don’t hesitate to contact us.  For a complementary consultation, you may call Robert W. Liles or one of our other attorneys at 1 (800) 475-1906.

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