CHICAGO – Accepting poor legal advice or inadvertently waiving the client-attorney privilege may result in tougher judicial scrutiny or have a direct impact the outcome of payment investigations, experts warned at a physicians’ legal issues conference held by the American Bar Association.
"While some audits are relatively minor, others can result in huge reimbursement demands or even more frightening things, including civil or criminal charges being made based on claims of fraud and abuse," said Michael E. Clark, chair of the American Bar Association’s Health Law Section. Legal advisers need to be able to guide physicians through the payment investigation process while protecting their rights.
Mr. Eric C. Tostrud
Bad advice by a lawyer cannot be used as a court defense for a physician’s acts or oversights, health lawyer Eric C. Tostrud said. However, in some instances, poor legal advice can be used as a defense to a fraud claim.
"There are important nuances to the issue," said Mr. Tostrud, an attorney in Minneapolis. For example, a defense of "poor legal advice" depends on the accuracy and completeness of the information the doctor initially disclosed to the attorney as well as whether the physician was completely forthcoming. In addition, courts will review whether health providers disregarded one attorney’s advice for more self-seeking guidance from another lawyer.
The question of bad legal advice arose in the recent case of U.S. v. Tuomey Healthcare System, in which the South Carolina–based health system was accused of submitting Medicare claims that violated the Stark Law. This purported violation included reimbursement claims for services by physicians with whom Tuomey allegedly had financial relationships. As part of its defense, Tuomey said it had relied on attorneys to design and approve the physician contracts. But during the trial, the government presented evidence that Tuomey had dismissed adverse legal and expert opinions when entering into the contracts and had retained subsequent legal opinions that supported the arrangements. A federal jury found the system had violated Stark Law and the False Claims Act, and a federal judge in 2013 ordered Tuomey to pay $237 million in fines.
The attorney-client privilege is another complex concept that can land physicians – and their attorneys – in legal trouble. The privilege protects communications between an attorney and client that are made for the purpose of furnishing or obtaining professional legal advice or assistance. But physicians can waive the privilege by disclosing confidential information through conversations, paper documentation, or e-mails. Doctors who reveal details about such communications to colleagues thus relinquish the protection, Mr. Tostrud said.
"Doctors by their nature are very collaborative," he said in an interview. "They want to talk to other people and consult with others about issues and that includes the advice they might be getting from a lawyer. But the risk of doing that is that they will waive the privilege."
Also, not every communication from or to a lawyer is privileged. The privilege generally protects communications involving legal advice, but does not extend to underlying facts.
In the case of U.S. v. Halifax Hospital Medical Center, a federal court ruled that the Daytona Beach, Fla.–based hospital’s compliance "referral log" was not subject to the privilege even though it was prepared at the instruction of an attorney. The logs merely recorded facts and did not meet the purpose of the privilege. The court concluded also that hundreds of e-mails and other documents relating to Halifax’s compliance and audit activities were not protected. While an attorney may have been included in the e-mails, the lawyer was copied for business purposes, not for legal advice, the court said. Halifax in March agreed to pay the government $85 million to resolve False Claims Act and Stark Law violations.
"E-mail often becomes a lawyer’s nightmare because it’s permanent and clients and people generally tend to treat e-mail like a conversation," Mr. Tostrud said in an interview. "They are not thinking about the permanency of it and are not thinking of the long-term litigation consequences."
One privileged e-mail does not necessarily extend the privilege to an entire string of e-mails, he said. To be protected, each e-mail within a string must be for the purposes of legal advice.
Enlisting the help of an attorney early in an audit or payment investigation is essential, said Mr. Clark, who practices law in Houston. For instance, if it becomes necessary to retain specialized consultants to help review coding and documentation issues, an attorney can help structure a framework whereby the consultants report to the attorney, and the attorney then formulates advice to the physician client.