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Health is law’s
hot new field
Managed care and
complex new laws are fertile grounds for lawyers
by
Marjolijn Bijlefeld and Robert Burke
Virginia Business
April 2003
Here’s
how bad it’s become: Norfolk lawyer Patrick C.
Devine Jr. got a call recently from a perplexed doctor
who asked, “Will I violate new federal privacy
rules if I send holiday greeting cards to my patients?”
Send the cards, Devine told him.
But
the question wasn’t that off the wall. Many health
care providers are struggling to figure out the new
privacy rules that take effect this month and are part
of the Health Insurance Portability and Accountability
Act of 1996 (HIPAA). The patient-privacy rules, says
Devine, have distorted a relatively straightforward
concept and made it nearly unintelligible. “I spent
the better part of a not-so-great vacation reading the
regulations,” he says. “They’re so thick,
they’re painful.”
Painful
for doctors and others in health care, maybe. But these
days they’re one reason health care lawyers like
Devine are in such demand. It’s not just privacy
laws — the health care industry is a labyrinth
of regulatory and business-related complexities. Consider
who’s at the table — consumers, HMOs, hospitals,
doctors, pharmacies, drug companies and business and
government payors. There are dozens of different hot
spots — fraud and abuse, the fight over reimbursements
and coverage and quality of care, to name a few. Breakthroughs
in medical care and technology keep changing the rules.
Everybody, it seems, needs a lawyer. Whereas 20 years
ago in Virginia there were just a handful of lawyers
in the health care field, today there are nearly 500.
Among
Virginia law firms, one new entrant to the field is
LeClair Ryan, which last fall added health care law
to its practice areas and now lists seven attorneys
with health care law expertise. Other firms are bigger
and more established. Richmond-based McGuire Woods,
the state’s second-largest firm, has more than
50 in health care law. The state’s largest firm,
Hunton & Williams, began its health care practice
area in 1980. Of its 33 health care lawyers, 18 are
in Virginia.
What keeps them busy? Untangling the constant flow of
new regulations, for one. LeClair Ryan’s Rodney
Adams, who has worked in the field for nearly 20 years,
says health care is the nation’s second most-regulated
industry, behind nuclear power. “Every time there’s
an issue, legislators think there’s another regulation
that will take care of it,” he says.
The
latest regulatory wrinkle is the HIPAA privacy rules,
which take effect April 14 and restrict access to patients’
personal health information. That’s not exactly
a radical concept, but the law is causing havoc in medical
offices as doctors and staff take steps to make sure
patient records are kept out of sight, appointment books
are closed, computer access is limited and that conversations
with patients can’t be overheard.
With
the threat of fines up to $50,000 per violation, many
practitioners aren’t taking chances. That’s
why companies that do business with health care providers
— from janitorial services to software consultants
and billing firms — are being told they must agree
to abide by the privacy rules, since they, too, might
have access to patient records. “They’re going
to be swept up into HIPAA,” says Thomas C. Brown
Jr. of McGuire Woods in McLean. “A lot of businesses
are going to be surprised.”
Then
there’s the business side. The financial pressures
of managed care have forced new business models upon
everyone. Doctors, for example, used to enjoy a certain
level of independence before insurers put the squeeze
on their income levels, says William R. Van Buren III
with Kaufman & Canoles in Norfolk. Today many are
forced to negotiate partnerships with other doctors
or even hospitals to stay profitable. This strategy
gives doctors leverages with insurers and some economies
of scale. For example, a group might share the cost
of expensive diagnostic equipment, Van Buren says, to
“capture profit that would have otherwise escaped.”
Of
course not every contract or business agreement works
out. Doctors, hospitals, insurers and others that were
caught up in the restructuring of the health care sector
increasingly want to change the agreements or escape
them entirely. The health care sector “goes through
cycles,” says Brown of McGuire Woods. “Change
is a constant,” he says. “You have to be fast
on your feet.”
Attorneys
also have to cope with complexities of state law. Virginia
is one of a number of states that require a Certificate
of Public Need from the state health commissioner before
opening a new medical facility. That requirement can
lead to protracted legal fights, such as the nearly
four-year battle between Bon Secours Richmond Health
System and rival HCA Inc., a Tennessee-based for-profit
corporation that owns about 200 hospitals in the U.S.
and Europe. Bon Secours proposed replacing the Stuart
Circle Hospital in Richmond, which it closed in October
2000, with the new $75 million St. Francis Medical Center
in Chesterfield County. HCA opposed the project. It’s
the parent company of CJW Medical Center, which has
two campuses about eight miles from the proposed hospital.
The
St. Francis project was originally approved in late
1999, but HCA challenged that in state court, saying
its arguments against the project hadn’t been heard.
The Virginia Court of Appeals in late 2001 agreed with
HCA and sent the matter back to the commissioner. In
January, Health Commissioner Dr. Robert Stroube approved
the project, which is scheduled to be completed in 2005.
Matt Jenkins, the Hunton & Williams attorney who
represented Bon Secours, says providers “need someone
who can illuminate the dark corners created by new laws
and regulations. That’s kind of what lawyers do.”
So
broad is the health care field that attorneys often
specialize only in a narrow subject area. Van Buren’s
firm, which works mostly with physicians and physician
groups, has health care specialists in topics such as
Medicare fraud, employment agreements and malpractice
defense. The firm’s health care lawyers meet at
least once a month to update each other on regulatory
changes “so we’re up to speed on this, because
no one lawyer can follow all these issues.”
And
the number of issues that need following seems to grow
constantly. The Virginia General Assembly, for example,
passed legislation this year that lowered the threshold
for bringing a doctor before the State Board of Medicine
for disciplinary action. The lower threshold will likely
put more doctors in the hot seat, with their attorneys
nearby. The bill also takes a novel approach to confidentiality.
A doctor cited for minor misconduct, for example, can
keep the disciplinary action private under some circumstances.
Who defines what “minor misconduct” is? “That
will be defined by regulations or case law,” says
Devine. That’s the nature of health care law, to
grow more and more complex, says Adams of LeClair Ryan.
“It’s like the tax code that way.”
More
complex also means more lucrative for law firms. It’s
difficult to say how much impact health care law has
on a firm’s bottom line because it overlaps with
so many other practice areas. But it does add up to
a significant share of total firm revenue that “is
growing and will continue to grow,” says Brown
of McGuire Woods. “Now that the bloom is off the
rose for high tech, I think a number of law firms are
now taking a closer look” at health care law.
They’ll
probably like what they see. The financial stakes in
the health care industry are high, and there’s
every reason to think state and federal legislators
will continue to tinker. You won’t always need
a doctor, but your doctor always needs a lawyer.
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