AHLA Seeks Clarification on Physician Malpractice Insurance
Last month, we discussed some possible ways that hospitals, in order to maintain staffing needs, can help physicians obtain medical malpractice insurance coverage at reasonable rates. These possible solutions range from giving physicians outright payments to help cover their premiums to establishing a physician insurance program through an independent or hospital-owned insurer. It is important, however, that when hospitals and physicians consider any of these alternatives, they take into account the regulatory implications of any program they may devise.
Supreme Court Deals Blow to Malpractice Plaintiffs
In a disappointing decision for malpractice plaintiffs and their medical caregivers, the U.S. Supreme Court ruled on June 21 that patients do not have a state law private right of action against their Health Maintenance Organizations (HMOs) when such entities make coverage decisions that impact the patient's health care. The decision means patients have little recourse against their HMOs, which under federal law are liable to plan beneficiaries only for the cost of services they wouldn't cover.
Verdicts
Recent rulings of importance to you and your practice.
Better Safe Than Sorry
In 2000, the DOL began auditing health and welfare plan audits, focusing on a sample of employers to measure compliance with, among other laws, the pre-existing condition exclusion requirements under the Health Insurance Portability and Accountability Act (HIPAA). A representative of the DOL recently informed a national audience of benefits lawyers that these "random selection" audits ceased in 2003, and it appears that the DOL is intensifying its health and welfare plan audit activities in response to specific complaints. A DOL audit can present a significant burden for employers, given the volume of documentation the agency asks to review, and the penalties imposed for findings of noncompliance can be considerable, depending on the particular statutory requirement in question. The following checklist highlights issues you may want to review to avoid potential problems, should the DOL come calling.
Willingness to Limit SOX Application?
On May 12, 2004, the U.S. Court of Appeals for the Ninth Circuit issued its opinion in <i>Securities and Exchange Commission v. Yuen et al.</i>, No. 09-56129, D.C. No. CV-03-03124-MRP (9th Cir. May 12, 2004), the first appellate holding under Sarbanes-Oxley. The Sarbanes-Oxley legislation, enacted in 2002 (as Public Law No. 107-204), was designed to strengthen corporate governance of publicly traded companies in the wake of recent corporate accounting and fraud scandals. Sarbanes-Oxley (SOX) represents the most far-reaching corporate governance and securities law reform since enactment of the first federal securities laws in the 1930s, and has given a variety of new tools to enforcement agencies. The <i>Yuen</i> decision suggests, however, that the courts might not defer to enforcement agencies' interpretation of the statute, especially where no implementing regulations have been enacted.
SOX Changes the Ink from Red to Black
SOX has been characterized by many as a hastily prepared, poorly written piece of legislation. Most agree some reform was necessary after the revelation of the alleged and acknowledged misconduct by and systematic failures of several corporations and their advisers. However, the sweeping, all-inclusive nature of the most significant change in securities regulation in 50 years is all but overwhelming to many public companies. While SOX was intended to restore faith in the capital markets and is supported by many, it is not without its criticisms.
Legislative Solutions to Toxic Torts: Congress and the Thimerosal and Asbestos Litigations
It has been estimated that at least 600,000 people have brought asbestos-related personal injury suits. Typically, each plaintiff sues dozens of defendants, so the total volume of litigation has reached nearly astronomical proportions. The total amount spent on asbestos litigation (awards and expenses) to date is staggering and has been estimated to be on the order of $54 billion. Many critics have said that this litigation has been abused, leading to the enrichment of plaintiff lawyers at the expense of those actually injured by asbestos exposure. According to one study, only about 43% of total spending has reached the claimants as their net recovery. <i>See</i> Stephen Carroll, <i>et al</i>., <i>Asbestos Litigation Costs and Compensation: An Interim Report,</i> RAND Institute for Civil Justice, Santa Monica, Calif. (Sept. 2002). The RAND report is available at <i>www.rand.org/publications/DB/DB397.</i>
Avoiding Product Liability Traps in the New Dietary Supplement Regime
A year ago, manufacturers and marketers of dietary supplements benefited when the U.S. Food and Drug Administration (FDA) implemented a new regulation allowing such companies to make unproven health claims on their labels. Under the new relaxed FDA requirements regulating the marketing and promotion of dietary supplements, manufacturers have more leeway to tout the healthfulness of products by making "qualified health claims" on dietary supplement labels, even if there is no "significant scientific agreement" over the validity of these claims. Under the former policy, supplement manufacturers that had scientific support for their claims, but lacked conclusive evidence, were prohibited from marketing their potential health benefits, thus losing out on important marketing opportunities. The new, more flexible dietary supplement regime enables companies to market their products more aggressively and increase sales.
Online: Learn About Crash Prevention at Insurance Institute Site
The Insurance Institute for Highway Safety (IIHS) is a nonprofit research and communications organization funded by auto insurers. Its purpose is to ascertain what works and doesn't work to prevent motor vehicle crashes and to reduce injuries in the crashes that occur. The Institute's Web site (<i>www.iihs.org</i>) is a resource for practitioners who need information on vehicle safety. IIHS research focuses on countermeasures aimed at all three factors in motor vehicle crashes (human, vehicular, and environmental) and on interventions that can occur before, during, and after crashes to reduce losses.
