Newsletter

March 2013 Print

President's Report

Hello CHRMS Members:

As I write this, winter is in full swing and snow has actually arrived.  I’m always in awe, as I suppose you are as well, in amazement over the passage of time.  The holidays flew past and the CHRMS Annual Meeting (a sign of spring) is only two months away.

A special Thank You to Susan Wood O’Leary and the Program Committee for providing a great Winter Half Day Meeting entitled “Everything is New Again,” on January 25th at the Hyatt Lodge on the McDonald’s Campus in Oak Brook.  It was a fresh look at lingering issues as promised.  Richard Frese, Laurette Salzman and Amy Pleuss provided us with relevant information following a tasty lunch.  Unfortunately on February 21st, we ran into technical difficulties when presenting Webinar #3 requiring it to be rescheduled at another time.  Glenna Schindler, from Endurance U.S. Healthcare, was prepared to talk to us about “Managing Drug Diversion & Substance Abuse Disorders within the Healthcare Setting.”   Membership will receive an email notice when a new date is available.

 I’m really looking forward to the CHRMS Spring Membership & Networking Event, “March Membership Madness” at the Scout Waterhouse & Kitchen in the south loop.  I hear it is an upscale restaurant that is known for its great chef’s selection of classic foods.  This is another benefit to the members that has become an annual event to simply network and enjoy each other’s company.  It is a time of leisure to meet with friends.  Remember there is no cost to members and it is an opportunity to bring a colleague along as a new member.  There is a $50.00 charge for the guest that will pay their membership dues.  

Let me take the opportunity to thank our members and supporters for being a great part of CHRMS success.  By participating in the webinars, programs and events, members play a large part in moving our organization forward. 

Just a reminder, soon we will be asking members to respond to the “Call for Nominees” for 2013-2014 CHRMS officers and new board members.  The Nominating Committee will review nomination forms, interview potential candidates and place the names on the election ballot.  Please look forward to receiving and responding to the election ballot in coming weeks.  Consider becoming more active in CHRMS, whether through a board position or on a committee.  As in anything, the more you become involved in the organization, the more you will get out of it.

Regards to All,

Martha Winter, CHRMS President  

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Upcoming Events

We would like to invite you to join CHRMS for

“March Membership Madness”!!!!

 For an evening of networking, great food and beverages, please join us at The Scout, an upscale, South Loop restaurant known for it’s Chef’s Selection of classic American Food.

Appetizers and Beverages will be served.

When:  Thursday, March 7, 2013 from 5:30 – 8:30 pm

Where:  The Scout Waterhouse and Kitchen

1301 S. Wabash

Chicago

312-705-0595

TheScoutchicago.com

 

FREE for CHRMS Members & $50.00 for a Guest Ticket

(This cost will be applied to the $50.00 Annual Membership fee for the coming year)

Members!!  Bring a prospective member and be entered into a drawing for a free 2013 CHRMS membership.  3 Winners will be drawn!! And…..!  CHRMS members will receive a modest incentive for each prospective member they bring.

We are now accepting early membership renewals for 2013-2014 year.

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Legislative Update

SETTLEMENT AT A PRICE!

            On February 15, 2013, Illinois State Senator Kwame Raoul (13th District - D) introduced Senate Bill 1912 (SB 1912), which proposes to amend the Illinois Code of Civil Procedure with respect settlements in any civil action involving money damages. The bill would make 3 significant changes.

            First, the bill would require settling defendants to tender a release to the plaintiff no later than 14 days after the settlement is reached. In some cases, it would also require the plaintiff to timely obtain court approval of the settlement, and to tender a copy of the order approving the settlement to the settling defendant.

            Second, the bill would require a settling defendant to tender the settlement funds to the plaintiff no later than 21 days after the plaintiff tenders a duly executed release (and in some cases, a copy of the order approving settlement), with interest of 9% per annum accruing on any settlement proceeds tendered after the deadline. The bill is silent as to its application to structured settlements.

            Third, the bill would entitle a plaintiff to judgment and interest without further notice against any settling defendant who has not tendered the settlement funds within 21 days.

            This bill would have undesirable consequences for both settling defendants and plaintiffs with respect to the resolution of liens upon settlement. When a settlement is reached, the Illinois Healthcare Services Lien Act, 770 ILCS 23/1 et. al., provides a framework for the reimbursement of unpaid bills from health care providers who provided services to the plaintiff that were necessitated by the settling defendant’s alleged negligence.

            If a plaintiff fails to satisfy a lien from the proceeds of a settlement, the lienholder can, in many cases, seek satisfaction of the lien from the settling defendant. If the lienholder is Medicare, it can seek satisfaction of its lien not only from the settling defendant, but also from the settling defendant’s liability insurer. If a settling defendant tenders settlement proceeds before the lien amounts have been finalized between the plaintiff and the lienholders, the settling defendant has no way to ensure the liens are satisfied, leaving the settling defendant vulnerable to actions by lienholders. An agreement by the plaintiff to indemnify the defendant from future actions by lienholders is unreliable because it depends on the plaintiff’s future financial health, which is often less than certain. Therefore, settling defendants have an incentive to withhold settlement funds until after liens have been finalized.

          However, the resolution of liens between the plaintiff and lienholders can be a time-consuming process. Lienholders are often willing to accept reduced amounts from the plaintiff in satisfaction of their liens, but not until a settlement has been reached, because the amount by which the lienholder is willing to reduce the lien is often contingent upon the amount of the plaintiff’s settlement (i.e. the larger the settlement, the less willing the lienholder will be to reduce its lien). As a result, negotiations between the plaintiff and the lienholders often won’t even begin until after a settlement is reached, and will last beyond 21 days. In fact, resolution of liens held by Medicare can often take several months.

            Under SB 1912, if a settlement is reached and liens are not resolved within 21 days, the settling defendant is forced to tender the settlement proceeds before the liens are resolved, thereby exposing herself to potential future lien actions, in order to avoid incurring interest and potentially an adverse verdict. To avoid this catch-22, settling defendants will likely insist on including all holders of unresolved liens as payees on the settlement check, which ensures each lien will be satisfied. However, this practice requires each lienholder to sign the settlement check before the plaintiff can present it for payment, which can cause significant delay in the plaintiff obtaining her share of the settlement proceeds.


            While SB 1912 seems to be intended to benefit plaintiffs, its practical effect will be undesirable to both plaintiffs and defendants. Other issues with this legislation are profound, including cases requiring set-asides under Medicare, cases in which a settlement is reached but the plaintiff must amend pleadings before dismissal can be secured, and cases in which various other conditions must be satisfied after an agreement is reached but before settlement drafts can be tendered. The bill has not made it past the first reading to date. This is a bill that should be watched carefully and opposed through your state legislator. 

 

Jamie Crowley

Lowis & Gellen, LLP

jcrowley@lowis-gellen.com

 

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Feature Article

Product Liability Issues in Medical Malpractice Cases

Many people have heard about the deadly U.S. meningitis outbreak.  This occurred when physicians provided steroid injections to its patients, and those patients developed fungal meningitis.  There are reports of incidents from all over the United States, including 12 cases reported in Indiana.  The drug-mixing pharmacy linked to the outbreak, the New England Compounding Center, is relatively small, and patients exposed to meningitis will undoubtedly sue more well-insured defendants.

The meningitis-related cases present an interesting dichotomy between the practice of products liability and medical malpractice.  In these cases, the Courts will be forced to consider whether the tainted injections are to be considered products that were sold as opposed to services rendered by the physicians.  There are different standards for each claim, and will present plaintiff’s attorneys with multiple theories.

For those who have defended healthcare providers in medical malpractice claims based on drugs or medical devices, there is substantial risk of finger pointing.  In some states, doctors cannot be sued under strict liability standards. In others, caps are imposed on damages for such claims.  We can expect that plaintiff’s attorneys will do all they can to put the physician or hospital in direct conflict with the drug manufacturer or device manufacturer.

By way of example, suppose a plaintiff has a medical device such as a pace maker installed by a licensed physician who has been trained on the use and monitoring of said pace maker.  Should the pace maker fail to operate in its intended way, it is conceivable that a prudent plaintiff’s attorney will file suit against both the physician charged with installation and/or monitoring of the unit, as well as the company who designed or sold it.  A device manufacturer, in such a case, might be inclined to take the position that there was nothing wrong with the unit, and that the physician was negligent in his role as installer or monitoring physician, whereas the physician might argue the unit was defective when sold.  In any event, when there is finger-pointing, it is typically the plaintiff who wins.  He or she is able to sit back and let the defendants determine who is liable. 

Finger pointing is not a new concept, and it is something most hospitals and physicians guard against in the handling of matters.  The contemporary view is that defendants are almost always better off working together or at least not blaming one another.  However, this is more difficult in medical device or, in the case described above, pharmaceutical cases, where there may be distinct standards and defenses available to a respective defendant.

Generally, services provided by medical professionals are guided by medical negligence rules. In those cases the plaintiff will have to show that they suffered a harm that was caused by the professionals breaching a specific standard of care (acting negligently). It is unclear in these cases how difficult it will be for plaintiff to collect enough evidence to show that the medical professionals should have done something specific to prevent the development of the fungus (i.e. conduct outside investigations into the safety of the pain medication).

On the other hand, the drug itself might be deemed a product which was merely distributed by the doctor to the patient (or distributed in addition to be injected into the body as a service). If the doctor and medical clinic have a role in the distribution of the product, then product liability rules might apply instead of traditional negligence rules. This alters what the plaintiff is required to prove in the case to recover for their losses. Most notably, individual acts of negligence on the part of defendants are not relevant.

The key issues instead are the harm caused by the product and the defendant's role in getting that product to the plaintiff. If strict liability rules apply, then it is more likely those affected by this fungal meningitis outbreak will be able to receive some compensation from the medical caregivers who gave them the drug and the clinic they received it from.

Many drugs have “off label” uses which are generally accepted by providers. Off-label prescribing is common in almost every field of medicine. In 1995, the American Medical Association estimated that in the United States 40-60% of prescriptions were written for off-label uses. Currently, off-label use is especially common in the areas of oncology, rare diseases, AIDS treatment, and pediatrics. For example, it is approximated that 50% of cancer treatment drugs, 80-90% of drugs used to treat rare diseases, and 80% of drugs used in the pediatric field are prescribed off-label to patients.

Failure to warn litigation is the most likely liability risk for manufacturers. Both litigation expenses and damage awards can cause a significant cost burden to the manufacturer, which will be passed along to drug purchasers. Drug marketers have no common law or statutory duty to directly warn patients of the risks involved with prescription drugs. Manufacturers, however, fulfill their legal duty by providing adequate warnings to physicians, under the Learned Intermediary Doctrine.  If the patient claims malpractice from the prescription of inappropriate medications, commentators have suggested that the causes of action could include failure to obtain informed consent, ordinary negligence, or strict liability arising out of failure to adhere to the statements about the drug in the Physician Desk Reference ("PDR") or package insert.

These types of claims automatically place providers in conflict with manufacturers.  In order to avoid conflict, we would recommend early communication between both parties.  Most manufacturers, big and small, have robust risk management programs in place, and are more proactive than reactive.  We would urge health care providers to take a similar approach, so that information can be shared and a cogent, cohesive defense can be developed.  In some cases, a defense may not be possible.  In that case, cooperation in resolution is always preferred.  Tolling agreements have typically been used wherein defendants can agree to refrain from the filing of contribution actions and other counterclaims, so as to present a unified defense.

Adam Sidoti

Johnson & Bell

sidotia@jbltd.com

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Special Report

HIPAA, HITECH and the Discovery Process

Anyone involved in litigation that requires a review of medical records should be familiar with the acronym HIPAA.  The Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) established a minimum federal standard for patient privacy and healthcare industry standards.

Health care clearinghouses, health plans, and health care providers are all covered entities under the Privacy Rule. Every health care provider who electronically transmits health information in connection with certain transactions is a covered entity.  These transactions, such as claims and benefits eligibility requests, are covered whether the health care provider electronically transmits them directly or uses a third party billing service or other entity to do so on its behalf.

Health care providers are the covered entities more commonly referred to as “custodians” when legal professionals are requesting medical information in relation to litigation.  Custodians have become increasingly cautious about releasing patient records since the Privacy Rule compliance deadline of April,  2003.  Many have not become educated with the specific regulations that allow for the release of PHI during litigation and thus sometimes cause delay when attorneys try to obtain the information during discovery.

PHI is defined as any individually identifiable health information; including demographic information, that relates to the past, present, or future physical or mental health or condition of an individual and is transmitted by electronic media. Covered entities may not use or disclose PHI unless specifically permitted by the Privacy Rule.  Permitted disclosures that do not require the individual’s authorization include those to the individual, and those used for the covered entities for treatment, payment, and healthcare operations.  Under most circumstances, the individual’s written authorization must be obtained by the covered entity to disclose PHI for any other reason not permitted by the Privacy Rule.

Obtaining medical records during the course of litigation has become increasingly difficult since 2003.  Law firms representing covered entities now need to pay special attention to the HIPAA Privacy and Security Rules because of HITECH.  The Health Information Technology for Economic and Clinical Health (HITECH) Act, was enacted as part of the American Recovery and Reinvestment Act of 2009 and amended several aspects of the Health Insurance Portability and Accountability Act of 1996 (HIPAA). HITECH affects all business associates of covered entities, including law firms.  Business associates are entities that act on behalf of covered entities by performing duties that involve the transmission, creation or maintenance of PHI.  Law firms representing hospitals and health insurance companies, consulting firms, etc. are all now required to comply with the HIPAA Security Rule.

Previously, business associates of covered entities had only contractual obligations under HIPAA.  Covered entities drafted the Business Associate Agreements and their lawyers, consultants and other vendors signed them, ensuring that PHI would be protected.  Now, under HITECH, those same business associates must proactively comply with the Security Rule provisions of HIPAA and they face the same fines and reporting requirements as covered entities.  This includes ensuring that anyone assisting the law firm with litigation involving a covered entity must also be HIPAA compliant.

Law firms representing covered entities must now comply with the HIPAA Privacy and Security Rules as well as HITECH in all business dealings with their clients.  The first step to compliance is the risk assessment to discover issues should be addressed.  Attorneys should create specific HIPAA policies and procedures that cover the administrative, technical and physical safeguards of the Security Rule to ensure that PHI is secured at all times.  The law firm workforce should be trained on the HIPAA policies and incident reporting mechanisms should be implemented to track and correct any suspected breaches of PHI.

While these rules and regulations will require changes in the way law firms handle medical records during discovery, proper security measures can limit the exposure to both the firm and clients.  When representing covered entities, HIPAA compliant policies and procedures in law firms are not only a requirement under the new regulations, but they can also be an attractive marketing tool with potential clients. 

For more information on HIPAA, HITECH and the Discovery Process contact Heather Hughes, U.S. Legal Support HIPAA Privacy Officer, hhughes@uslegalsupport.com

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2012-2013 Sponsors

CHRMS acknowledges its 2012 - 2013 Sponsors


Gold Level - CNA HealthPro; Lowis & Gellen, LLP; SmithAmundsen

Silver Level - Alholm, Monahan, Klauke, Hay & Oldenburg, LLC; Allied World Healthcare; Anderson, Rasor, & Partners, LLP; Barker & Castro, LLC; Foran, Glennon, Palandech, Ponzi & Rudloff, PC; Ironshore; Johnson & Bell, Ltd.; Ruff Weidenaar & Reidy, Ltd.; U.S. Legal Support

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CHRMS Newsletter Submissions

Call for Presentations

CHRMS invites you and your colleagues to submit your application for consideration as a Content Expert and/or Speaker!   CHRMS Content Expert Database seeks to compile content experts in the following categories:

Risk Management, Patient Safety, Quality & Operations, Accreditation & Regulatory Compliance, Claims & Litigation, Risk Financing, Insurance, Health Information & Technology, and Lessons Learned. 

CHRMS programs and webinars provide a great venue/opportunity for you to represent your employer, disseminate your lessons learned, and network with local healthcare professionals in the risk management field.  Please share this colleagues! 

Additional information and the applicaiton is available on our website, Quick Links tab, Connections.

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Disclaimer

Opinions expressed in this publication are those of the authors and do not necessarily reflect the opinions of the Chicagoland Healthcare Risk Management Society.

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