Q&A: Hospitals’ Refusal to Give Patient Choice

AMARILLO, Texas — “A common problem faced by many
independent HME companies is the lack of patient choice by local
hospitals,” according to heath care attorney Jeff Baird, chairman
of the Health Care Group at Brown & Fortunato. “In a typical scenario,
the local hospital owns an HME operation and refers its discharged
patients to the hospital-owned HME business, effectively leaving
the independent HME located down the street out in the cold.”

How should the independent HME address this problem? “The
aggrieved company wants to get the hospital’s attention, but for
political reasons, does not want to permanently burn its bridge
with the hospital,” Baird notes. Check out his advice on what
independent HMEs can do about the situation in the following
Q&A.

Q: Isn’t there a federal statute that requires a
hospital to give patient choice to a discharged patient who needs
DME?

A: The answer to this question is not
black-and-white. There is a general federal patient choice statute
(42 U.S.C. § 1395a(a) that states: “Any individual entitled to
insurance benefits under this subchapter may obtain health services
from any institution, agency, or person qualified to participate
under this subchapter if such institution, agency, or person
undertakes to provide him such services.”

Unfortunately, the aggrieved HME company cannot bring a lawsuit
against the hospital under this statute. The patient himself can
bring a lawsuit but, from a practical standpoint, that will not
happen.

There is a more detailed patient choice statute (42 U.S.C. §
1395x(ee)(2). It provides, in part: “A discharge planning
evaluation must include an evaluation of a patient’s likely need
for appropriate post-hospital services … including the
availability of home health services through individuals and
entities that participate in the program under this title and that
serve the area in which the patient resides and that request to be
listed by the hospital as available … [T]he discharge plan
shall … not specify or otherwise limit the qualified provider
which may provide post-hospital home health services, and …
identify … any entity to whom the individual is referred in
which the hospital has a disclosable financial interest.” This
statute is limited to patients discharged under a home health plan
of care.

Q: If the federal statutes are of questionable help,
then are there any federal regulations that might be of
help?

A: The Medicare Conditions of Participation
(for the hospital to participate in the Medicare program), located
at 42 C.F.R. § 482. 42 C.F.R. § 482.13(a)(1) state that “a hospital
must inform each patient, or when appropriate, the patient’s
representative … of the patient’s rights in advance of
furnishing or discounting patient care whenever possible.” 42
C.F.R. § 482.43(b)(3) provides that “the discharge planning
evaluation must include an evaluation of the likelihood of a
patient needing post-hospital services and of the availability of
the services.”

According to Section 5000.2 of the State Operations Manual, “CMS
… and the State survey agency are responsible for ensuring
that participating providers/suppliers of health care services
continually meet Federal requirements.”

According to Section 3012 of the State Operations Manual,
“[f]ailure to substantially meet one or more Conditions is a cause
for termination of participation.” The aggrieved HME company can
file a complaint with the appropriate state licensing agency; the
complaint will point out that the hospital (which is not ensuring
patient choice) is violating its Medicare Conditions of
Participation.

Q: What about the hospital’s accrediting
body?

A: 42 C.F.R. § 488.6(a) states, in part, that a
national accrediting organization “may provide reasonable
assurances to CMS that it requires the providers or suppliers it
accredits to meet requirements that are at least as stringent as
the Medicare conditions when taken as a whole.” If the hospital is
in violation of its Medicare Conditions of Participation, then it
is also in violation of the requirements of its accrediting
organization. The aggrieved HME company can file a complaint with
the hospital’s accrediting organization.

Q: If the hospital is steering all of its patients to
its own HME operation, is there some type of antitrust
violation?

A: Perhaps so. Steering by a hospital to its
own HME operation may result in liability under one or more federal
antitrust theories: unreasonable restraint of trade in violation of
Section 1 of the Sherman Act; monopolization in violation of
Section 2 of the Sherman Act; attempted monopolization in violation
of Section 2 of the Sherman Act; conspiracy to monopolize in
violation of Section 2 of the Sherman Act; denial of access to
essential facility in violation of Section 2 of the Sherman Act;
and illegal leveraging.

An aggrieved HME company can bring a private cause of action
against the hospital under one or more of these theories.

Q: Are there any state statutes and/or regulations that
apply?

A: Each state has licensure standards for
hospitals. The independent HME company can file a complaint with
the appropriate state licensing agency. Each state has its own
antitrust statutes. Last, all states have common law and/or
statutory prohibitions against unfair competition and tortuous
interference with business relations. The aggrieved HME company may
want to bring a lawsuit against the hospital under one or both of
these theories. In so doing, the HME company can ask for injunctive
relief, actual damages, punitive damages, attorney’s fees and costs
of court.

Q: OK, I understand the legal theories involved. But
from a practical standpoint, what should I do?

A: As stated above, the independent HME company
normally needs to walk the fine line between insisting that the
hospital ensure patient choice while not irreparably burning a
bridge. If you are an independent HME owner, there are four
suggested types of actions you can take. These range from a polite
to an aggressive approach.

The polite approach is for your health care attorney to write a
letter, addressed to the hospital’s HME company, which sets out the
law on patient choice. The letter can discuss the patient choice
statutes, state law theories and antitrust principles. You can then
deliver the letter to your contact (upper-level management or a
member of the board) at the hospital, at which time you can discuss
the importance of ensuring patient choice.

A more aggressive approach is for your health care attorney to
address the letter to the hospital’s CEO, possibly with a copy to
the hospital’s board chairman and legal counsel. Your attorney can
then follow up by calling the CEO or the hospital’s legal counsel.
The letter may or may not disclose the name of your company. For
example, the opening sentence of the letter might say: “This firm
represents one or more HME companies in [name of town where the
hospital is located].”

An even more aggressive approach is for your attorney to send
the letter to the Department of Justice, Office of Inspector
General, Federal Trade Commission and/or the state Attorney
General’s Office with a “cc” to the hospital CEO, legal counsel and
board chairman. The letter may or may not disclose the name of your
HME company.

The most aggressive step is for you to sue the hospital under
antitrust and tortuous interference theories. But before filing a
lawsuit, you need to think through all of the ramifications,
including the following:

• A lawsuit is time-consuming. It will take quite a bit of time
  to gather evidence.
• Discovery (e.g., depositions) is expensive and
  time-consuming.
• It will take years to go to trial, and this does not take into
  account the appeals process.
• The lawsuit will likely disrupt relationships in the
  community.
• Attorney’s fees and out-of-pocket costs are expensive. If the
  plaintiff’s attorney charges by the hour, then the litigation will
  be very expensive. If the attorney takes the case on a contingency
  fee basis, then the plaintiff nevertheless must pay out-of-pocket
  expenses (e.g., depositions, production of documents, expert
  witnesses, travel).

Q: Are there any preventive steps I can
take?

A: An effective course of action for you to
take, one that has proven to be successful, is to educate customers
and potential customers, as well as physicians, about the right of
a hospital patient to choose his or her HME company.

For example, an HME company can place billboards throughout the
community that say: “I use ABC Medical because I choose
ABC Medical.” The HME company can place similar ads in the
newspaper. The HME company can educate its existing and past
customers regarding their right (or the right of a family member)
to select their HME company when they are being discharged from the
hospital. The HME company can also educate referring physicians
that when the physician is about to release a patient from the
hospital, he or she can recommend to the patient that the physician
has confidence in the HME company.

Jeffrey S. Baird, Esq., is chairman of the Health Care Group
at Brown &
Fortunato, P.C., a law firm based in Amarillo, Texas. He
represents pharmacies, infusion companies, home medical equipment
companies and other health care providers throughout the United
States. Baird is Board Certified in Health Law by the Texas Board
of Legal Specialization. He can be reached at 806/345-6320 or
[email protected].

Do you have a legal question about an HME issue? Send your
questions to HomeCare
Monday for an answer from health law firm Brown &
Fortunato.
(No names will be used if your question is published.)