Members of the legal profession play an essential role in the health care industry.
The flashing red lights of an ambulance and the arrival of white-coated medical personnel inspire confidence and hope: Help is at hand when life is at risk. And while health care professionals are on the front lines, behind the scenes, a whole team is responsible for making medical services available, and that includes lawyers, even though the public rarely sees them. Beyond the high-profile cases that make headlines, members of the legal profession play an essential role in the health care industry, diligently working to make sure doctors and hospitals have contracts in place and are in compliance with the laws that let them provide vital services to their communities.
Lawyers working in the health care arena represent many different interests, including physicians, hospitals and health care systems, health maintenance organizations, health insurers, life science, managed care companies, nursing facilities, home care providers and consumers. And they’re all subject to myriad laws that govern the health care industry, ranging from those that require public disclosure to others designed to protect patient privacy. Federal and state laws require hospitals to comply with all kinds of regulations, and health care facilities have contracts with employees and vendors as well as with doctors, all of which require legal assistance.
“With so many laws on the books, healthcare is one of the most regulated industries,”says Dan Glassman, vice president and associate general counsel for St. Joseph Health System, which operates Petaluma Valley Hospital, Santa Rosa Memorial and Napa’s Queen of the Valley Medical Center. And although health care administrators must be familiar with legislation that applies to their staff and facilities, the attorneys who work with them provide necessary support, alerting them to changes, using their expertise and experience to make sure current laws are applied correctly and interpreting complex new legislation.
Attorney William J. Arnone of Merrill, Arnone & Jones, LLP in Santa Rosa describes the Affordable Care Act (aka Obamacare), as a classic example of the medical and legal industries intersecting. “Supreme Court justices are making decisions that doctors and hospitals will have to live with,” he says. The act is comprised of more than 2,400 pages, and just reading it is a daunting task, so lawyers make an invaluable contribution, as they devote the time to thoroughly understanding the legislation and making sure health care professionals and administrators understand and implement it correctly as it gradually goes into effect. (See “Ready or Not,” Oct. 2012.)
The health care industry is familiar territory for Arnone, who’s represented the North Sonoma County Healthcare District, which operates Healdsburg District Hospital, for 10 years. “I’ve had to walk that line [between the legal and medical]. Health care is such a heavily regulated industry,” he says. “Doctors and health care facilities have to jump through all kinds of hoops.”
For a start, to receive any compensation from a hospital, a doctor must have a signed agreement that complies with detailed state and federal laws regarding patient referrals and anti-kickback rules. In addition, both doctors and hospitals have to comply with the Health Insurance Portability and Accountability Act, better known as HIPAA, which protects an individual’s personal health information and keeps it private.
Medicare and Medicaid are also areas in which health care professionals sometimes require legal assistance. These two governmental agencies pay for many services, but doctors and hospitals have to follow lots of rules if they’re to receive reimbursement for the care they provide, and a lawyer can help them make sure they’ve attended to all the details. If they’ve done something that isn’t in compliance, and they’ve already received payment, they have to be prepared to pay back the money. “Billing in health care is a huge enterprise in itself. It’s challenging and often needs legal services,” says Arnone.
He points out that, because laws impact the delivery of health care, it’s important for the health care industry to have lawyers who know what those laws are and how to comply with them. “I represent a California healthcare District, which is kind of a unique entity,” he says.
In full view
Arnone began providing legal services for the newly formed North Sonoma County Healthcare District in 2002, when it was in the process of acquiring the assets of Healdsburg District Hospital and completing arrangements to take over its operation. The hospital was previously a nonprofit, but when it became a facility of a public health care district, it had to transition to making its business open to the public. “It was a difficult culture change,” says Arnone, explaining that health care districts are public entities, unlike not-for-profit hospital groups such as Sutter Health and Kaiser Permanente, which operate privately. “Public entity hospitals have a lot of constraints,” he says.
Health care district boards, which are responsible for public hospitals, are elected by voters living in the district (instead of being appointed), and they must comply with the Ralph M. Brown Act, which went into effect in 1953 and requires public disclosure and open meetings for local legislative bodies. “That changes the whole governance structure,” says Arnone. Among the requirements, they have to post agendas 72 hours in advance of regular meetings in publicly accessible spots; trustees can discuss only those items on the posted agenda; they must report any actions they took in closed session; and they cannot discuss board matters outside of posted meetings.
An attorney can smooth the way by helping members of the board understand what they must do to remain in compliance. This is especially important for new trustees, because boards typically consist of candidates that the electorate chooses (instead of an agency’s being able to select individuals with particular qualifications to meet specific needs). Consequently, newly elected trustees are often neophytes who lack experience in the field and must learn the strict requirements of the Brown Act. (At press time, legislative changes designed to cut costs eliminated the funding designated to assist with compliance for three years, threatening to weaken the Brown Act.)
“There’s a lot of scrutiny these days,” says Arnone, who observes that the purposes of health care facilities can change over time and, as a result, Local Agency Formation Commissions (LAFCOs), which the state legislature created in 1963 to study local government agencies and find ways to increase efficiency and reduce costs, are looking at health care districts and asking if so many entities are really necessary or if some of them could be consolidated, which would create yet another need for legal counsel.
The business of health care
Whether public or not-for-profit, hospitals and health care systems face similar legal issues, and it’s all part of doing business. Glassman says the faith-based St. Joseph Health System has to deal with everything one would expect in a large business, such as employment, contracts and real estate. “Day-to-day, we deal with many, many issues,” he says, citing contracts with doctors and compliance with laws such as HIPAA; the Emergency Medical Treatment and Active Labor Act (EMTALA), which requires hospitals to treat anyone needing emergency health care treatment regardless of citizenship, legal status or ability to pay; and the Stark Law, which governs physicians who refer Medicare or Medicaid patients to facilities in which they have a financial interest.
He points out that hospitals have to be in compliance with all laws, both federal and state, or they risk losing their accreditation, which they must keep if they’re to continue serving patients. Regulations are constantly changing, so the role of the legal team is to be aware of updates and clarifications and make sure health care professionals understand them. “We see our role as being a piece of the process,” he says.
Licensing and accreditation are big issues that surface regularly. “When the government conducts an onsite survey, we do all we can to support our clinical team to ensure it goes smoothly,” says Glassman. He credits the hospital staff for making the periodic surveys, which are sometimes on short notice, successful. “They’re wonderful about pulling the information,” he says, while the legal staff makes sure everything is in order and interacts with the government if a problem arises.
In addition, lawyers interpret court rulings and make sure administrators understand the implications. “We do a lot of education,” says Glassman, explaining that attorneys educate senior management personnel on issues they need to know, and sometimes administrators make requests when issues come up and they need to find out how to handle them. Then they ask for information, come up with a plan and submit it to Glassman for review. He runs it through the legal and compliance department to make sure everything is correct.
A matter of choice
As a partner in a local law firm, Arnone is also legal counsel for a number of other public entity clients, including fire districts, recreation and park districts, and tourism districts. He believes that a small firm based in the community has more local knowledge, so attorneys can bridge gaps and bring in other local resources. “We provide services to a wide variety of businesses in the North Bay,” he says. “One of the roles I sometimes play is liaison between the health care district and a large law firm from outside the North Bay,” he adds, giving the health care district the benefit of both local and more specialized legal services.
He cites a case in which Healdsburg District Hospital and Palm Drive Health Care District initiated a lawsuit against Sutter Health contending that Sutter didn’t comply with California Environmental Quality Act (CEQA) guidelines in the planning process leading to construction of a new hospital north of Santa Rosa. The two local district hospitals took the lead, retaining Shute, Mihaly & Weinberger of San Francisco, a firm specializing in government, land use, natural resource and environmental law, to handle the litigation. “I interfaced with the attorney doing the briefs,” says Arnone.
Large firms often have departments specializing in health care, because they have the staff and resources to do so, but their rates are higher. “It’ll cost more to address your needs with a large law firm,” says Arnone, who worked in San Francisco and Palo Alto before relocating to Sonoma County. He says that large law firms located in big cities have higher overhead that must be factored into their billing rate, so for example, a partner in a top-flight San Francisco firm might charge $800 per hour for the same work that could be done by a partner in a Sonoma County law firm for closer to $300 per hour.
St. Joseph Health System, a large health care provider with several facilities in Northern California, has its own legal department with a multidisciplinary staff of attorneys. “We have a very talented team,” says Glassman.
Looking forward
As the Affordable Care Act moves ahead, it’s sure to create more work for attorneys. “Litigation is likely to flow from the Supreme Court’s decision to strike down the attempted expansion of Medicaid,” says Arnone, who explains that the U.S. Supreme Court has ruled that the Medicaid mandate portion of the act is unconstitutional. “The effort to compel states to provide insurance to people who are either underinsured or not insured by withholding payments otherwise owed to the state is an intrusion on states’ rights,” he says. He believes the Supreme Court’s interpretation of the law also will have ripple effects on the insurance industry, which are likely to result in additional legal actions.
Glassman expects that attorneys will have to deal with issues such as changes in the way hospitals and doctors are reimbursed when the new law takes effect, but he sees health care reform as a positive development and says that St. Joseph is being proactive and starting to plan for it. “We look at it as a great time of hope and opportunity,” he says.
As hospitals continue to upgrade and expand, real estate, land use and environmental concerns also are issues requiring legal expertise. A new law requires that hospitals in California remain fully operational after an earthquake, and being seismically safe is especially important for Marin General Hospital, because it’s the only full-service hospital and trauma center in Marin County.
To meet the requirements of the new law, the Marin Healthcare District, which ended a lease with Sutter after 26 years and took local control of the hospital in 2011, is planning construction of new buildings to replace those from the 1950s, giving Marin County the opportunity to have a first-class hospital with the best technology and green standards for health care, which is noteworthy, because hospitals have one of the largest carbon footprints of any business, CEO Lee Domanico pointed out in a recent talk. The health care district plans to ask county voters to approve a bond measure to finance the construction of new buildings in 2014.
In Napa, at St. Joseph’s Queen of the Valley Medical Center, a three-story, 72,000-square-foot state-of-the art Advanced Diagnostic and Surgical Pavilion designed to withstand a major seismic event is under construction and scheduled to open in fall 2013. It will be one of the first hospitals in California to be LEED Gold certified for a design that complies with the U.S. Green Building Council’s Leadership in Energy and Environmental Design requirements for green health care facilities.
Glassman’s enthusiasm for the new facility shows. He finds that one of the most rewarding, tangible parts of his job is seeing new buildings designed to serve the community take shape. He says that substantial legal work is involved in any construction project, and it’s one of the ways lawyers can play a small part in providing an incredible benefit to the community.
While buildings are impressive, an observer looking at bricks and mortar is unlikely to think about lawyers. They might not be at the forefront, but throughout the health care industry, attorneys contribute services that are crucial for the clients they serve, as they work to provide the knowledge and support that lets medical personnel and facilities operate efficiently and make available the best care for their patients, which, ultimately, benefits everyone.
