College of Imaging Administrators Legal Update May 1, 2014 Tom H. Luetkemeyer

College of Imaging Administrators

Legal Update

May 1, 2014

Tom H. Luetkemeyer

New Developments in Physician and Staff Contracting

© 2014 Hinshaw & Culbertson LLP, an Illinois Limited Liability Partnership. All rights reserved.

Fifield v. Premier Dealer Services, Inc. (Illinois Appellate Court, 1st District; 2013)

Essential Holding:

To the extent an employer relies upon initial employment or continuing employment as consideration for a restrictive covenant, the employment must last two years or more to support a finding of adequate consideration for the restrictive covenant.

Risk:

Existing covenants might not be enforceable to the extent that, aside from initial or continuing employment, no other independent consideration was provided at the time of the execution of the agreement. This means that physicians could solicit referral sources or compete in violation of the express terms of the written agreement.


Fifield v. Premier Dealer Services, Inc. (Illinois Appellate Court, 1st District; 2013)

What to do for existing agreements:

• Re-execute with additional consideration

• Reaffirmation and Ratification Agreements with Cash Consideration

• Evaluate risk and usage

What to do for new agreements:

• Do not rely on initial employment

• Use of signing bonuses

• Set off consideration in separate provision


Equal Employment Opportunity Commission v. CVS(United States District Court, Northern District of Illinois; 2014)

EEOC sued CVS in federal court seeking to enjoin the use by CVS of its standard separation agreement.

What the EEOC found problematic:

• The separation agreement discouraged individuals from participating in the EEOC's investigative process

• The cooperation clause requiring notification of contacts from agencies

• The non-disparagement clause

• The confidentiality clause

• The covenant not to sue

• The "deficient" disclaimer

• Breach consequences


Equal Employment Opportunity Commission v. CVS(United States District Court, Northern District of Illinois; 2014)

The fix:

Protected Rights. Notwithstanding the terms of the release set forth above in Section __, nothing in this Agreement or in the release shall prohibit Employee from filing a charge with any government agency or from participating in the investigation of any such charge. Employee retains the right to file charges and participate in investigations with the Equal Employment Opportunity Commission (EEOC) with respect to its enforcement of Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act and the Age Discrimination in Employment Act; the National Labor Relation Board with respect to Section 7 and other rights under the National Labor Relations Act; or any other federal, state or local administrative agency charged with enforcing laws governing the employment relationship. Employee does, however, waive the right to seek reinstatement, damages, remedies or other individual relief as to any claims that he has released under this Agreement. This release also does not prohibit Employee from enforcing the obligations of this Agreement and does not include within the scope of the release any claim that Employee cannot waive as a matter of law.


Hamilton Memorial Hospital v. April Toelle and Deaconess Hospital(United States District Court, Southern District of Illinois; 2014)

The case raises a question of contract interpretation, and provides helpful reminders to health care providers.

Basic Facts:

Physician signs a three-year-deal and becomes dissatisfied midway through year two

Physician resigns, claiming breach by hospital

Breach is based on the method of compensation for supervision of PAs

Method of supervision did not match the terms of the contract

Method of compensation was agreed upon prior to the execution of the agreement


Hamilton Memorial Hospital v. April Toelle and Deaconess Hospital(United States District Court, Southern District of Illinois; 2014)

Physician prevails on the compensation claim for one of the PAs because:

• She was the primary supervisor

• The contract contained an "entirety" clause

• The agreed upon prior arrangement never made it into the agreement

Was she entitled to quit over the allocation of the $500 per month?

Question of fact, based upon whether the breach was material and would defeat the bargained-for objective of the parties or caused disproportionate prejudice to the non-breaching party, or whether non-performance by the non-breaching party will result in unfairness

Helpful HIPAA Hints


HIPAA and Audits

Health Insurance Portability and Accountability Act (HIPAA) and the Health Information Technology for Economical Clinical Health Act (HITECH) include standards for the privacy of PHI, the security of electronic PHI and breach notification.

HITECH also requires HHS to perform periodic audits of CE and BA compliance with the above.

OCR enforces the above standards.


HIPAA Environment

Fines continue to increase – several million dollar fines – Massachusetts Eye and Ear Infirmary $1.5 million settlement for lost laptop

OCR’s new director is a former prosecutor

HHS authorized to use fines to fund further enforcement activities

The world is changing

• Audits are necessary tools

• Increased enforcement is the rule

• Non-compliance may be expensive


HIPAA Audit Program

January 2012, OCR initiated a pilot program of proactive audits to assess compliance with HIPAA

OCR HIPAA Audit Program contains the requirements to be assessed through performed audits


Audit Protocol

Audit Protocol covers Privacy Rule requirements for:

• Notice of Privacy Practices

• Rights to Request Privacy Protection for PHI

• Access of individuals to PHI

• Uses and Disclosures of PHI

• Amendment of PHI

• Accounting of Disclosures

Audit Protocol covers Security Requirements involving administrative, physical and technical safeguards

Audit Protocol covers requirements for the Breach Notification Rule


Risk Assessments for CEs and BAs

CEs and BAs must conduct regular risk assessments of the safeguards they have in place to protect the security of PHI.

Such assessments can uncover potential weakness and anticipate and prevent health data breaches.

Risk assessment is also a core requirement for providers seeking payment through the Medicare EHR Incentive Program (Meaningful Use Program).


HIPAA Final Omnibus Rule

Final Omnibus Rule issued January 2013, Effective March 26, 2013 and compliance with most provisions must be by September 13, 2013

• Significant Revisions to Business Associate rules and agreements

• Revisions to Notice of Privacy

• New Standards for Breach Notification


Review and Revise Policies, Procedures and Practices (Mock Audits)

What to review:

• Role of Privacy and Security Officers

• Access Control

• Receiving, Sending and Disposing of PHI

• Physical Controls for Visitor Access

• Computer Workstations

• Entity Authentication



What to review:

• Amendment of Health Information

• Accounting for Disclosures

• Patients’ Rights Policy

• Uses and Disclosure – Compliance with Minimum Necessary Standards

• Business Associate Agreements

• Breach Notification



What to review:

• Training

• Reporting Suspected Violations

• Investigation of Potential Violation

• Complaint Process

• Documentation

• Marketing

Employee Benefit Issues inthe ACA World


Dealing with Health Care Reform

What are the rules for employers offering health coverage to employees?

What should employers be doing now?

What are other employers doing?

What will employees want or demand?

How much is it going to cost?

How are unions responding to the ACA?


A Roadmap to the Employer Mandate

Step One: Which Employers Are Subject to the Mandate?

Step Two: Which Employees Must Be Offered Coverage?

Step Three: What Type of Coverage Must Be Offered?

Step Four: Is the Coverage Affordable?

Step Five: What are the Penalties for Noncompliance?


Nondiscrimination in Benefits

Nondiscrimination Rules

• Benefits provided under a group health plan are eligible for favorable tax treatment only if they do not discriminate in favor of participants who are "highly compensated individuals."

Generally speaking, top 25% of earners.

• ALL benefits provided for participants who are highly compensated individuals must be provided for ALL other participants if this test is to be satisfied.

Discrimination as to Eligibility vs. Discrimination as to Benefits



Clear Test for Discrimination as to Eligibility

• Health plan benefits provided to at least 70% of all employees, or if less than all employees are eligible, then at least 80% of eligible employees.

Not as Clear for Discrimination as to Benefits

• Same coverage: OK.

• Different coverage for different class of employees: Maybe not, but check the testing method.

• Employer contribution percentage for payment of premiums? Likely yes.



Potential penalties

• Self-insured: Merely lose the tax benefit.

• Insured: $100 per day excise tax for each employee discriminated against.

Example

• Employer has 300 employees, pays 100% coverage only for President and four other top officers, other employees pay 20% with Company paying 80%.

• Does not change this policy for one month after new guidance is first effective.

• Penalty: $100/day x 295 employees x 30 days = $885,000 (!)


Same-Sex Spouses Under the ACA

United States v. Windsor Supreme Court decision

What does it do?

• Strikes down Section 3 of the federal Defense of Marriage Act ("DOMA") as unconstitutional.

• Federal government now required to recognize valid same-sex marriages from the States for federal purposes.

• Does not extend to Civil Union Partners or domestic partners.

What does it NOT do?

• No federal requirement for same-sex marriage.

• No new nondiscrimination provisions based on sexual orientation.


Same-Sex Spouses Under the ACA

How does it affect group health plans?

Coverage of spouses

• Employer mandate does not require spousal coverage

Always have been permitted to offer coverage to same-sex spouses (self-insured or insured, if policy allows)

Tax issues

• Now may exclude from income all coverage provided to same-sex spouses

Must be spouse, not Civil Union Partner or domestic partner.

• Refunds going back to any open tax year (three years….hurry for 2010)


Trends in Cost-Sharing

Premiums

• Have increased since 2010.

• Even HHS now admitting that premiums will continue to rise; claims at a "slower rate" than in the past.

Cost-sharing

• Much larger share of premium burden being shifted to employees.

• Much higher deductibles / maximum out-of-pocket costs / copays.

Similar trends for employer coverage and the individual market.


Continued Uncertainty

Very long list of provisions that were to be effective by now, but are not.

Employer mandate.

Nondiscrimination rules.

Automatic enrollment.

Individual mandate penalties for those with cancelled policies.

Simply do not know what it will look like in five years.

• To the extent possible, include reopener provisions in contractual language.

• Triggered based on changes in the law or on significant cost or coverage changes.

Medical Marijuana in Illinois



The Compassionate Use of Medical Cannabis Pilot Program Act

The Act took effect on January 1, and will sunset in four years at the end of 2017

The Act will not allow for the recreational use and purchase of marijuana

Dispensaries will be set up by the Illinois Department of Financial and Professional Regulation and those will be the only legal retailers

The Department of Public Health will issue regulations which are due on May 1, and they will, among other things, define the medical conditions which will benefit medically from the use of cannabis



The expected list of medical conditions includes:

• Cancer

• Crohn's Disease

• Alzheimer's

• Multiple Sclerosis

Conditions such as pain, anxiety or PTSD, are not on the list

Physicians will be the gatekeepers



Very little guidance for employers and managers must tread lightly

How does the new law impact drug-free workplace policies?

What does it actually mean that employers cannot discriminate against medical cannabis patients?

Can employees legally medicate at work?

Ethical and Legal Implications of Implicit Bias


What is Implicit Bias?

Implicit bias is the bias in judgment and/or behavior that results from subtle cognitive processes that often operate at a level below conscious awareness and without intentional control.

Source: National Center for State Courts


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One way to think of implicit bias is to look at it as the process of mental shortcuts.

Given the barrage of sensory detail we confront every day, the mind does so by processing through "schemas", which are templates of knowledge that help us organize specific examples in the broader categories.

Schemas allow individuals to operate without expending valuable mental resources. In this way, most cognitions are implicit.

Source: Jerry Kang, Professor of Law at UCLA School of Law



Also known as implicit social cognition, implicit bias refers to the attitudes or stereotypes that affect our understanding, actions and decisions in an unconscious manner. These biases which encompass both favorable and unfavorable assessments, are activated involuntarily or without an individual's awareness or intentional control.

Source: The Kirwan Institute


Characteristics of Implicit Biases

Implicit biases are pervasive. Everyone possesses them, even people with avowed commitments to impartiality, such as judges.

Implicit and explicit biases are related but distinct mental constructs. They are not mutually exclusive and may even reinforce each other.

The implicit associations we hold do not necessarily align with our declared beliefs or even reflect stances we would explicitly endorse.

We generally tend to hold implicit biases that favor our ingroup, though research has shown that we can still hold implicit biases against our ingroup.

Implicit biases are malleable. Our brains are incredibly complex and the implicit associations that we have formed can be gradually unlearned through a variety of de-biasing techniques.



Implicit Bias – Example

A 2012 study used identical case vignettes to examine how pediatricians' implicit racial attitudes affect treatment recommendations for four common pediatric conditions. Results indicated that as pediatricians' pro-white implicit biases increased, they were more likely to prescribe pain killers for vignette patients who are white as opposed to black.



Implicit Bias – Example

Another example concerned an implicit bias study in Sweden where the testing predicted the rate of call-back interviews for Arab applicants for employment.

Source: Dan-Olof Rooth, Implicit Discrimination in Hiring: Real World Evidence (2007)


Testing for Implicit Bias

Numerous psychological studies have been conducted to assess the impact of implicit bias on our decision-making processes. Those studies have included:

• Interviews and polling

• Physiological exams

• The Implicit Association Test (IAT)


The Implicit Association Test (IAT)

The IAT was first introduced in scientific literature in 1998 by Anthony Greenwald, Debbie McGhee and Jordan Schwartz.

The IAT utilizes reaction times to measure how a mind associates and sorts concepts.

For example, a typical racial attitude test will require the test-taker to sort both pictures of white and black faces and good words and bad words in front of a computer.

The test measures the speed at which the test-taker makes the proper association.

The average time differential is the measure of implicit bias.


RED


GREEN


The Implicit Association Test (IAT)

A test-taker may be asked to pair "women" with "math" or "women" with "liberal arts". The scoring of the IAT generally assumes that the more closely the test-taker associates concepts in his or her mind, the faster the test taker will be able to pair them together on the test.

The IAT is available on-line, and since 1998, over 4.5 million have taken the test. The data strongly suggests that many people hold implicit biases toward members in particulate groups. For example, over 80% of people who completed an IAT on age bias demonstrated a negative implicit bias against the elderly.

Source: Stanford School of Medicine (2013)


What Does This Tell Us?

Many of our day-to-day decisions are affected substantially by subconscious processes.

Bias may manifest itself in the absence of bad intent.

We are not fully aware of the operation of implicit bias on our decision-making.

Implicit bias is a subtle but potent form of race discrimination.


The Law and Implicit Bias

Title VII of the Civil Rights Act of 1964 makes it an unlawful employment practice to fail or refuse to hire, or to discharge any individual, or otherwise discriminate against any individual…because of such individual's race, color, religion, sex or national origin.

The law also makes unlawful limiting, segregating or classifying employees based upon those same categories.

42 U.S.C. Section 2000e-2



The law has long recognized that intentional discrimination is prohibited.

• Disparate treatment

• Retaliation

• Harassment

Where does implicit bias fit in?



Title VII also has been construed to prohibit those practices which are fair in form but have a discriminatory impact. This theory was first recognized in Griggs v. Duke Power Co. 401 US 424 (1971). The disparate impact theory has been utilized to make unlawful facially neutral requirements which have no substantial relationship to job performance.

For example, the requirement of a college degree may be unrelated to the work performed by a maintenance worker, and the degree requirement could substantially limit the availability of workers from certain racial groups.



Where does implicit bias fit in?

Implicit bias is not intentional discrimination.

Implicit bias also does not involve the application of neutral criteria.

The existing legal framework for resolution of discrimination disputes does not necessarily fit a claim based on implicit bias. In one Law Review article, Linda Krieger and Susan Fiske concluded that behavioral realism stands for the proposition that judicial models regarding discrimination should be revisited periodically so as to remain current with psychological science.

Source: Behavioral Realism and Employment Discrimination Law: Implicit Bias and Disparate Treatment (California Law Review – 2006)



Developments in psychological studies have influenced developments in the law. Examples:

• Collaboration between the NAACP Legal Defense and Education Fund and the social scientist who authored the Social Science Statement submitted to the Supreme Court in Brown v. Board of Education, 347 U.S. 483 (1954).

• The American Psychological Association's Amicus Participation in Price Waterhouse v. Hopkins, 490 U.S. 228 (1989), a case which concerned the role of stereotypes in employment discrimination jurisprudence.

Source: Krieger and Fiske



30 years of empirical research and social psychology have clarified the relative roles of controlled and automatic processes in human judgment and choice.

"Far more appears to go on in the cognitive background, beyond the perceiver's conscious additional focus, then naïve theories of human behavior suggest. In other words, much of what we do is mindless, proceeding on automatic pilot."




The Krieger and Fiske Law Review article ends with a prediction that at some day, a court will be confronted with a disparate treatment case in which the fact-finder has concluded that implicit stereotypes, operating outside of the decision-makers' conscious awareness, was the factor causing the discriminatory effect.




That case now has been filed.

• Pippen v. The State of Iowa is currently pending before the Iowa Supreme Court, and oral argument was heard in September of this year. The plaintiffs in that case allege that up to 6,000 African Americans were passed over for jobs or promotions since 2003.

• The plaintiff's theory is that implicit bias resulted in fewer African Americans being called for interviews. Approximately 11% of qualified African Americans were called back for interviews, while approximately 20% of qualified white applicants were called for interviews.



The judge dismissed the class action lawsuit, claiming that plaintiffs failed to prove their "unique legal theory" which is based on research concerning implicit bias.

The plaintiffs did not allege that they faced overt race discrimination; rather, they said managers throughout state government "subconsciously" favored whites with respect to employment decisions.

The NAACP filed an amicus brief on behalf of the plaintiffs.


Debiasing Techniques

The process of debiasing begins with an awareness of how our subconscious affects our conscious decision-making.

Just as we are influenced by subliminal stimuli, our own past life experiences, upbringing and education affects us more on a subconscious level than we all realize.

Debiasing techniques have been widely discussed in the literature and essentially break down into lawful compensation techniques and unlawful overcompensation on an individual or organizational basis.



One noted researcher and commentator on the topic of implied bias has stated that he attempts to "overcompensate" for his own implicit (subconscious) bias by giving preference to those outside of his "ingroup".

However, this tactic admittedly involves taking race, gender, national origin or religion into consideration, and likely would be expressly prohibited by Title VII of the Civil Rights Act of 1964.

Selected criterion, such as race or gender, may not be a motivating factor in an employment decision except in very limited circumstances.



Most debiasing techniques that are lawful incorporate one or more of the following components:

• Increasing diversity within an organization.

• Slowing down the deliberative process or the decision-making process.

• Providing for layers of review of decision-making in hiring, promotion and evaluation.

• Implementing and training on EEO and anti-discrimination policies.



Most experts agree that individuals first must accept that implicit bias plays a role in decision-making and acceptance of the fact that implicit bias impacts negatively those not part of the "ingroup".

• To this end, internal organizational education becomes a key component.

• Fostering an attitude that implicit bias is a factor that affects most if not all of us to some extent, and that understanding is not an admission of a character flaw.



Simple procedural mechanisms can mitigate the effects of implicit bias.

• In one example, orchestras started using a blind screen in auditioning new musicians, and afterwards women had much greater success in hires and promotions.

• Another exercise is to maintain a list of assignments broken down by gender among various employees in the office. This allows managers to identify patterns and deal with outliers.

Source: The Law of Implicit Bias; Yale Law School Legal Scholarship Repository; Christine Jolls and Cass Sunstein (2006)



Many commentators have pushed for the expanded use of affirmative action plans; however, their use in private employment in the absence of historical pattern of discrimination could prove problematic.

Managers must be careful because affirmative action plans often promote a "bottom line" mentality which places too much emphasis on "express" considerations of race, gender, and other classes identified in Title VII.



Multiple approaches to debiasing are warranted, including:

• Employee and manager education

• Historical review of employee staffing

• Historical review of employee evaluation

• Establishing diversity initiatives

• Implementation of EEO and anti-discrimination policies

• Implementation of procedural steps where subjective decision-making is a primary factor in promotion or hiring


Tom H. Luetkemeyer Hinshaw & Culbertson LLP Chicago | [email protected]

Documents

College of Imaging Administrators Legal Update May 1, 2014 Tom H. Luetkemeyer