The Texas Medical Board has adopted new guidelines for interpreting the state’s abortion laws, aimed at clarifying the conditions under which doctors can perform abortions without risking their medical licenses. The guidance reduces some documentation requirements but stops short of providing a comprehensive list of legal abortion scenarios, citing the uniqueness of each medical case. Despite revisions, concerns remain about the clarity and sufficiency of the guidance, particularly in light of recent Texas Supreme Court rulings. The board emphasized that while it aims to protect the doctor-patient relationship, it cannot fully eliminate doctors’ fears of prosecution. The rules are open to future adjustments based on evolving circumstances.
Cosmetic injections, such as Botox and dermal fillers, are considered the practice of medicine in Texas and can only be performed under the authority of a physician. Texas law has seen a series of criminal cases involving unlicensed practice of medicine and cosmetic injections, resulting in serious consequences. Practicing medicine without a license is a crime in Texas, with penalties ranging from state jail felonies to third degree felonies, depending on the harm caused. The Texas Medical Board and Attorney General can also impose civil penalties and issue cease-and-desist orders. Therefore, healthcare providers and med spa owners are advised to consult with a healthcare attorney to ensure regulatory compliance and patient safety.
Physicians are raising concerns over the lack of regulation and policy enforcement in the medical spa (med spa) industry, following the death of Fairfield resident Jenifer Cleveland after an IV treatment at a med spa. Dr. Patricia Aronin, affiliated with the TX400, a group of Texas physicians, has called for changes in the industry, which she describes as largely unsupervised and prone to malpractice.
Med spas, offering services ranging from IV therapy to skincare and cosmetic procedures, have grown in popularity but lack sufficient oversight. According to Dr. Aronin, many people do not realize that these services are medical treatments requiring adequate supervision and record-keeping. She asserts that the current state of affairs has been deteriorating over the past decade and has called for changes before more incidents occur.
The issue is compounded by the structure of the medical industry and Texas law, which has created opportunities for illegal practices within med spas. Dr. Aronin highlights that the Texas Medical Board requires good faith examinations and proper medical record-keeping, both of which she suspects are lacking in many med spas.
In response to Cleveland’s death, the Texas Medical Board temporarily suspended the license of Dr. Michael Patrick Gallagher, who served as the medical director at the med spa where Cleveland received her treatment. Dr. Aronin emphasizes that the role of the medical director in med spas is a critical area requiring reform, including clearer guidelines on hiring practices and the responsibilities of the position.
Dr. Aronin also calls for patients to be more proactive in advocating for their health, urging them to inquire about qualifications, practices, and equipment at med spas. She stresses the need for the public to recognize that med spa treatments are serious medical procedures, not casual beauty treatments. As of 2022, 63% of med spas were owned by non-physicians and non-surgeons, according to the American Med Spa Association.
The proposed rules, according to the TMB, are designed within the limits of existing laws to clarify the criteria the Board will consider if it receives a related complaint. The Board emphasizes that it does not have the authority to change or create new definitions in existing laws, nor does it have the power to regulate or prohibit abortion.
The Board is cautious about specifying particular conditions or scenarios that would qualify as exceptions. It recognizes the individuality of each patient and the complexity of medical practice, asserting that it is impractical and impossible to create a comprehensive list of situations that may arise in any given patient scenario.
The Board stresses the importance of “reasonable medical judgment,” which depends entirely on the patient’s unique circumstances and the expertise of the treating physician. Even if there were a list of conditions, it would not be enforceable without going through the standard process, given the varying impact of the same condition on different patients.
The Texas Medical Board (TMB) has addressed the rise of medical business models offering intravenous (IV) vitamin therapy or hydration, cautioning that these could potentially violate Texas regulations. TMB President, Dr. Sherif Zaafran, emphasized that IV therapy is a medical procedure and must be conducted under the supervision of a licensed physician or delegated non-physician.
Physicians are advised to ensure that such IV hydration services are therapeutically beneficial or necessary for the patient’s treatment, and are properly diagnosed and documented.
The TMB warns against offering medical treatments as a “menu” for patients to choose from without proper medical assessment. The provision of medically unnecessary services could be seen as unprofessional conduct and a violation of the Medical Practice Act and TMB Rules.
A patient must be examined by a qualified healthcare practitioner, who should perform appropriate diagnostic tests and develop a diagnosis before prescribing drug therapies. Prescription of drugs without determining medical necessity may breach the Medical Practice Act and TMB Rules.
The TMB has strict guidelines for standing delegation orders and standing medical orders, including the types of medicines that may be provided. Physicians are encouraged to review the TMB regulation, Chapter 193 – Standing Delegation Orders, for full guidance on the rules related to delegation and supervision requirements and responsibilities.
The Texas Medical Board suspended Frisco anesthesiologist Dr. Michael Gallagher after a mother of four died in July at a med spa for which he was the medical director.
She died after receiving an IV treatment administered by the non-licensed owner of the business.
The med spa did not have protocols or policies for the staff’s IV therapy administration.
There was only an unsigned agreement between Gallagher and the med spa.
There were no licensed medical staff or experienced personnel onsite while IV therapy was being administered.
The treatment the patient received before dying included vitamin B complex, vitamin B12, TPN electrolytes, and ascorbic acid. TPN electrolyte solution requires a prescription and is known to cause complications.
IV therapy is a growing market, but complications can be deadly because it is often administered in medical spas with little medical supervision.
This is a four-part series on Handling Licensing Board Investigations from Complaint to SOAH Hearing. In preparation for this series, I talked to several of the staff attorneys and investigators for the Texas Medical Board, the Board of Nursing, and the Board of Chiropractic Examiners. I asked them what advice they would give lawyers practicing before their boards. Some of the suggestions throughout this series come from the staff attorneys and others come from trial and error on my part through years of representing clients before these boards.
The series will present issues associated with the phases of the investigation and resolution:
Part III – The Informal Settlement Conference (ISC)
Part IV – The SOAH Hearing
The purpose of this series is to give licensees and their attorneys a greater understanding of the complaint and investigation process. Of course, each board is different and each investigation is driven by the issues and personalities involved. Licensees and their attorneys are encouraged to understand the rules and processes applicable to the relevant board. Further materials about the complaint, investigation, and hearing process are available on board websites.
Part II of this series explores the investigation and the discovery issues involved.
The Big Picture
The investigation process starts with a complaint. The complaint goes through a preliminary evaluation process and may be dismissed. If it passes this preliminary evaluation, the board will open a formal investigation during which a board investigator will gather information about the case, including medical records and witness statements.
When the investigation is complete, the information will be presented to a review committee. The committee will either refer the matter to litigation or be dismissed. The terminology of “referral to litigation” is most often used by the Texas Medical Board and simply means that the matter is assigned to one of their staff attorney for further handling, with the assistance of the investigator.
At this point, the matter could still be dismissed, but most likely will proceed to some type of Informal Settlement Conference (ISC) or proposed Agreed order. If it’s not resolved at this more informal stage, the matter goes to the State Office of Administrative Hearings (SOAH) for a more formal proceeding.
There is a big difference in terms of tone and focus from the complaint and the informal settlement conference, and the SOAH hearing. The first part of the investigation is more of an informal process. A SOAH proceeding has a much different tone, similar to a lawsuit. A judge will preside, without a jury, listen to testimony, and rule on evidence. After the SOAH proceeding, the judge will issue a ruling with findings of facts and conclusions of law. The licensing board will consider the ruling and take appropriate action.
The Complaint
Having explained the process in general, let’s get into the details of each step.
Complaints can be initiated in several ways. There is an online form or a written complaint form that can be downloaded. There is a complaint hotline that patients can call. Most complaints come from patients, but they can be initiated by the licensee’s fellow practitioners. Practitioners are required to report their peers if they feel like their conduct is a threat to public safety. Finally, complaints can be initiated by the board itself. This most often occurs if the licensee gets arrested or charged for a crime – e.g. driving while intoxicated.
Once a complaint has been initiated with the Texas Medical Board, there are no takebacks. The patient cannot withdraw it if they change their mind. That is not the case with the chiropractic board or the board of nursing, where they can be withdrawn. At some point, the ability to withdraw a complaint becomes moot because the complaint has progressed into the formal investigation phase where the investigator has likely have found other issues and does not the complaint to continue the process.
The complainant’s identity is confidential, with certain rare exceptions. But complaints cannot be anonymous. Anonymous complaints are dismissed without further action. See 22 Tex. Admin. § 178.4.
The Preliminary Evaluation
Once the complaint is filed, an investigator will be assigned to the file and they will communicate with the complainant as part of their preliminary evaluation.
The preliminary evaluation is not a detailed review of all the allegations and supporting facts. It is a narrow evaluation to determine if the licensing board has jurisdiction over the complaint.
The preliminary evaluation must be conducted within 45 days. Within 45 days, the board will know whether they have jurisdiction over the matter. It has been my experience that if the board determines they have jurisdiction, the matter will most likely be referred to a staff attorney to direct the handling in conjunction with an investigator to gather facts.
At the beginning of the preliminary evaluation, the licensee is notified and allowed to respond.
It is difficult for the licensee to adequately respond. While the licensee is told generally about the nature of the complaint, it is typically vague.
This is a letter from one of my cases before the Texas Medical Board. You will note that the letter includes general statutory allegations such as unlawful advertising, practice, inconsistent with health and health and welfare, and unprofessional conduct, which you will see in every case involving non-therapeutic prescribing or treatment.
That gives us the gist of the complaint, but it does not tell us much about the context. At least we know it has something to do with advertising. So in this case that’s all the information we received when they invited the practitioner to respond.
In hindsight, the complaint involved advertising IV infusions that could allegedly prevent COVID. This was long before the vaccinations existed. The licensee was trying to imply that her vitamin-enriched solutions would make you more healthy which would make you less susceptible to contracting COVID. The medical board was not pleased.
The challenge is how do you respond to such vague allegations?
This is where licensees typically make a series of mistakes. They fail to get a lawyer involved and casually send responses to the board, usually by email, and often with a tone of informality.
It is important to understand that the scope of the investigation is not limited by the complaint. If the board finds other potential violations, they can and will broaden their investigation. Neither the practitioner nor the investigator knows what information is going to be relevant.
In my view, the best course of action is to respond very narrowly and succinctly. You will have plenty of time as you go through this process to respond further.
If you are counsel representing a practitioner, it is also a good idea to call the investigator to try to get more information about the allegations. The chiropractic board, for example, has a policy of trying to give as much information to the licensee as possible while respecting the bounds of confidentiality. Not all boards may be quite as forthcoming. It depends on the board and the investigator, but it does not hurt to ask. Some boards want to facilitate this communication. They want to get as substantive of response as they can, so they can make that preliminary evaluation.
Is the Complaint Jurisdictional?
The key question in the preliminary evaluation is whether the complaint is jurisdictional. What does that mean?
The issue is whether this particular licensing board has the authority to handle the complaint and impose a penalty on the practitioner if warranted. The first question then is whether the complaint is about one of the board’s licensees.
This is not always a simple issue. Patients do not always know who the provider is. In some practices, the patient may never see the doctor. Perhaps the patient is treated by a nurse practitioner or physician assistant. The physician may not be on-site. Supervision is accomplished by reviewing samples of charts sometime after the care is provided. Not understanding the relationship, the patient may complain to the medical board about the nurse practitioner, or they may complain to the nursing board about the physician. In the case of a med spa, where a physician acts as the medical director, the patient may complain to the nursing board because they talked to a nurse practitioner.
Providers should be careful about blurring the lines about who is responsible for the care. If your client is in one of these multidisciplinary practices, make sure the website is clear about who is providing what care.
The next question is whether the complaint if taken as true states a violation of the board statute or board rule. Complaints can be dismissed because the subject of the complaint is not a violation. With that said, almost any complaint can constitute “unprofessional conduct” depending on the context. Many of the board rules are written to include a broad range of conduct.
If there is no jurisdiction, the board will dismiss the complaint. Depending on the allegations, the board may also refer the matter to the appropriate licensing board or state agency.
One exception is the Texas Medical Board. If they do not have jurisdiction over the practitioner, but feel like the practitioner is practicing medicine without a license, they will issue Cease and Desist letter.
Here’s an example of one such letter. This was sent to a nurse practitioner. The medical board felt like she was practicing beyond the scope of her delegation.
The letter is a notice of a hearing inviting the nurse to explain why a Cease and Desist Order should not be issued. The burden is on the practitioner, and in most cases, the Cease and Desist Order is issued.
Following an investigation, the complaint will be dismissed because the practitioner is not licensed by the Texas Medical Board. The board cannot issue penalties against a non-licensee, but it can issue a Cease & Desist Order because the board does regulate the practice of medicine. The board can also refer the matter to the Travis County District Attorneys’ office for possible criminal charges for the unauthorized practice of medicine.
Formal Investigation
If the board determines it has jurisdiction, the complaint is officially filed and a formal investigation is opened. The same investigator who conducted the preliminary evaluation will also handle the investigation. The transition from evaluation to investigation is just a continuation of the process. They just keep going with their investigation.
The licensee is now called the Respondent. Both the Respondent and the complainant are notified within this 45-day window of the result of the preliminary evaluation.
This is a notice letter from the Texas Medical Board that a formal investigation has been opened.
This is another example of a notice layer, but this one is a formal investigation for a cease and desist hearing.
Discovery Tools
Once a formal investigation is opened, the board will use various discovery tools to investigate the matter. They will interview witnesses, request documents through subpoena power, and refer the matter for expert review, if necessary.
This is an example of the Texas Medical Board using its subpoena power.
The investigation remains confidential. See 22 Tex. Admin. § 178.4. The respondent will not see the transcripts of interviews with the complainant or witnesses unless it reaches a SOAH hearing. These investigations can last some time.
The board is required to give you notice every 90 days that the investigation is ongoing. Understand that many of these cases are complex and take time. You may get several of these letters, especially from the medical board, especially if standard of care issues are involved and the board engages an expert to review the records.
Initial Requests
When the board opens a formal investigation, they will send the Respondent a request for a narrative and one or more requests for documents. In the example above, the medical board requires the respondent to explain in detail how supervision of the mid-level practitioner by the physician is accomplished at this clinic (Item #2). The board wants copies of supervision agreements (Item #3, with reference to a forthcoming 14-day subpoena) and a narrative about the services provided at the clinic (Item #4).
The board can require the practitioner to provide a narrative and provide documents. One of the obligations of licensure is that the licensee agrees to cooperate in formal investigations. Failure to respond is itself a violation that will result in a penalty. It is customary for the Board of Nursing to file “Formal Charges” with SOAH if the licensee does not respond.
Subpoenas
When asking for documents, the board will provide a standard form subpoena and a standard business records affidavit they require the provider to sign, notarize, and return. The subpoena will require a response by a certain date. In my experience, however, the investigators are willing to grant additional time to respond.
When responding to the subpoenas, have your clients produce the records directly to you. Then have a frank conversation with them to make sure you have been provided all the responsive documents. It will be easy for them to produce electronic records. However, there may be other hard-copy records in storage. You must produce those documents too.
Review the documents for obvious errors, altered records, or recent additions. I’ve had clients change dates or create records after the fact, including very descriptive exam notes or supervision logs. Board investigators review a lot of records and will notice alterations. The cover-up is always worse than the initial mistake.
Narrative Responses
If the licensee has hired an attorney, the attorney should draft the narrative response with factual assistance from the practitioner. Attorneys should be advocates for their clients, but recognize their audience is the investigator, the investigation committee, and ultimately the ISC panel members. You are not advocating to an unbiased jury. Most of the ISC panel members are providers too. They will see right through your spin. Put them in your client’s position. Let them see the situation through your client’s eyes.
As with the documents your client provides to you, take what your client says with a grain of salt. On rare occasions, clients will flat-out lie to you. Sometimes they will spin the facts or convince themselves of a fact that is not entirely accurate. Most of the time, they think they did not do anything wrong and so they want to put themselves in the best light possible. Be very cautious about the statements you make back to the licensing board. Make sure you have a very upfront and blunt conversation with your client.
You should also limit your narrative as narrowly as possible. The scope of the investigation is not limited by the complaint. Answer what you have to, but do not go beyond the issue. You could be inadvertently opening additional lines of investigation. This is not your only chance to speak. You can always submit a supplemental narrative response later in the process, such as before the ISC or a SOAH hearing.
Expert Review
If there is a standard of care issue, the board will send the matter out to up to three experts for review. They will send the results of the investigation out to two experts. If both experts come back with the same opinion, it stops there. If they have different opinions, one finding a fault and another not, then they’ll send it to a third expert.
That’s not the case with all boards. The nursing board and the chiropractic board, only send materials out to one expert. I’m told by the medical board staff attorneys that the vast majority of these types of reviews come back with no finding of a violation of the standard of care. I think that is probably true, but it doesn’t mean that that stops the investigation. Just because the licensee’s conduct did not violate the standard of care does not mean the practitioner did not violate a board rule or that there was no unprofessional conduct.
If the expert reports indicate there is a violation of the standard of care, you should review consider obtaining your own expert review and report in opposition. It might be persuasive to the ISC panel members and can be used in a SOAH trial if that is in your future.
Up Next: The Informal Settlement Conference
In Part III: The Informal Settlement Conference, I’ll review the informal settlement process employed by the board and how Agreed Orders are negotiated.
This is a four-part series on Handling Licensing Board Investigations from Complaint to SOAH Hearing. In preparation for this series, I talked to several of the staff attorneys and investigators for the Texas Medical Board, the Board of Nursing, and the Board of Chiropractic Examiners. I asked them what advice they would give lawyers practicing before their boards. Some of the suggestions throughout this series come from the staff attorneys and others come from trial and error on my part through years of representing clients before these boards.
The series will present issues associated with the phases of the investigation and resolution:
Part III – The Informal Settlement Conference (ISC)
Part IV – The SOAH Hearing
The purpose of this series is to give licensees and their attorneys a greater understanding of the complaint and investigation process. Of course, each board is different and each investigation is driven by the issues and personalities involved. Licensees and their attorneys are encouraged to understand the rules and processes applicable to the relevant board. Further materials about the complaint, investigation, and hearing process are available on board websites.
Part I of the series will help licensees and attorneys who are new to board investigations get their bearings and understand the rules and processes involved.
Phases of Licensing Board Complaints
Licensing board complaints and investigations usually follow two general phases. There’s the informal phase from the filing of the complaint to the informal settlement conference and agreed order. If a licensee chooses not to accept the board’s resolution, the practitioner can request a more formal hearing before the State Office of Administrative Hearings (SOAH).
The strategies of each phase are very different. In the informal phase, you deal with a panel of 3 members of the licensing board. There is no impartial third party like a judge. Licensing boards are not impartial. I’m not suggesting they are unfair, but they are not impartial. They have an obligation to police their licensees and hold them accountable. The panelists come into an Informal Settlement Conference (ISC) with the intent to serve that purpose. ISCs are much more like mediations where you have a dialogue with panelists and a staff attorney and try to convince them to dismiss the complaint or to minimize the scope and degree of the violation and penalty.
If you get to the more formal SOAH hearing, there will be an administrative law judge, but no jury. The judge is impartial, but depending on the board involved, has varying degrees of authority in the outcome of the matter. After the hearing (like a trial), the judge will make findings of fact and conclusions of law. Most boards do not have to accept those findings and conclusions. And all the boards have the flexibility to take disciplinary action despite the findings.
TMB Statistics
I’ll give you some context about the scope of licensing board complaints with a few statistics. These are statistics from the Texas Medical Board (TMB) only. I have not included other licensing boards.
There are roughly 9,000 complaints that are filed annually. If you do the math that translates to about 750 complaints per month, about 25 complaints each day. The TMB tells me that about 90% of these complaints are dismissed, either on jurisdictional issues or because they do not pass a preliminary evaluation. Roughly 10% of those complaints, or 900, continue beyond the preliminary evaluation phase and into a phase where the board is considering some type of sanction or penalty.
Those that continue are relatively significant matters. Many practitioners think that any complaint against them must be bogus and therefore all they need to do is tell the board their version of the events and it will all go away. I will no go away. The board has already determined that the allegation, if true, is significant enough for them to impose some kind of sanction. The complaint can still get dismissed, in this phase, but that is the exception rather than the rule.
Most of these 900 complaints are ultimately resolved by agreed order either before or after an informal settlement conference. The vast majority are resolved by agreed order. If they are not resolved by agreed order, then they proceed to the State Office of Administrative Hearings (SOAH) for trial.
Types of Violations
Before we dive into the different phases of a complaint, I want to give you an idea of the types of violations that the practitioners can find themselves facing.
It could be quality of care issues where the allegation is that the practitioner has violated the applicable standard of care. It could be impaired physician issues where the physician’s ability to practice is compromised by substance abuse.
The complaint could also allege business issues like over-billing, deceptive advertising, or breaches in confidentiality. Maybe they did not close the doors of their practice appropriately and face allegations of patient abandonment. Or perhaps the practitioner failed to provide required disclosures to their patients.
Licensing boards are seeing an increase in what’s called, "boundary cases.”These are situations in which the provider has crossed a professional line by attempting to engage in an inappropriate personal relationship with the patient. Pro-tip: Practitioners, do not friend your patients on Facebook. Nothing good will come of it.
Finally, in almost every case, there will be an allegation of unprofessional conduct, which is kind of a catch-all. It’s very broad and very common.
Disciplinary Actions and Outcomes
There is a slew of possible outcomes from a board investigation. The panel can recommend dismissal of the complaint at any stage. I have had complaints dismissed before and after Informal Settlement Conferences, but it is not common.
If disciplinary action is warranted, the board has several tools available. They can revoke or suspend a license. They can put the licensee on probation. They can impose monetary fines, continuing education, monitoring, and reporting. When an agreed order is proposed, the board will often recommend several of these options.
All agreed orders will impose continuing education which will include, at a minimum, a Texas jurisprudence course. Depending on the findings of the panel, they will also require topical subjects like medical decision-making, nursing judgment, documentation, supervision of mid-levels, or understanding board orders. These classes are available online and usually take 2-6 hours each to complete. The agreed order will give the licensee a time period to complete the courses, during which the licensee remains on probation. If continuing education is the only disciplinary action, then the probation ends when the courses are complete.
The agreed order might also require monitoring and reporting. The licensee is required to check in with a monitor at regular intervals. The monitor will then report to the board the status of the licensee’s progress. For example, for nurse practitioners under the supervision of a physician, the Board of Nursing may require the supervising physician to file certain quarterly performance assessments.
I’ll discuss the process of negotiating agreed orders in Part II – The Informal Process.
Once a panel makes its recommendation, the matter will be considered by the full board at its next quarterly meeting. Agreed orders are not final until approved by the entire board.
The licensing board will publish the outcome of the investigation in its quarterly newsletter and online. The disciplinary action will also be reported to the National Practitioner Data Bank.
As you can see, licensed healthcare providers are subject to the oversight of the board that issues their license. These boards have similar, but separate, rules for handling complaints and imposing disciplinary actions.
All of the board rules are published in Title 22 of the Texas Administrative Code, Examining Boards. Many of the rules also refer to the relevant statutory authority.
I have been practicing health law for more than 25 years and have had the benefit of working with a lot of healthcare providers. My clients will often repeat myths about the practice of healthcare they have heard from their colleagues. There are also occasions when my fellow attorneys will make assumptions about healthcare law that are not accurate.
There is a lot of confusion and misinformation floating around about the legalities of healthcare. Let’s debunk the top 10 myths right now.
Myth No. 1: Everyone is doing it, so it must be okay.
Truth: There is no strength in numbers. The more people doing things the wrong way, the more they attract the attention of enforcement agencies and licensing boards.
This is perhaps the most pervasive myth there is. I can’t tell you how many times I explain to clients how their business should be structured or some restriction or requirement they must observe. They will often ask how their competitors are getting away with doing things differently.
The truth is, they probably misunderstand what their competitors are doing. Some healthcare providers have only a vague understanding of how their business is structured. Just because some other provider told you their business functions a certain way doesn’t mean it is true.
But even if other people are doing things a certain way, that doesn’t make it correct or legal. Remember the question your mother would ask you: “If everyone was jumping off a cliff, would you do it too?” The truth is, many people are jumping off the proverbial cliff. Don’t follow them.
This is particularly important when it comes to governmental billing. CMS has established the Center for Program Integrity that uses big data to identify fraudulent billing. If everyone else is doing something wrong, Medicare is more likely to take notice.
Myth No. 2: If you don’t see Medicare patients, you can’t violate the Anti-Kickback Statute or the Stark Law.
Truth: You can violate the fraud and abuse rules even if you don’t see Medicare patients.
People are rightfully concerned about submitting false claims to the federal government given the significant civil and criminal penalties involved. However, too many providers think they are safe from these penalties if they don’t see Medicare patients.
The truth is there are other federal laws, and even state laws, which carry civil and criminal penalties that apply to all patients, even if they are not Medicare beneficiaries.
Consider the Federal Travel Act. The use of the Travel Act in healthcare prosecutions is a hot topic nationally, and especially in North Texas following the Forest Park Medical Center case.
The Travel Act was passed in 1961 at the behest of Attorney General Robert F. Kennedy to combat the prevalence of organized crime and racketeering syndicates. Despite the name, you don’t have to travel to violate the Travel Act. The Travel Act makes it a federal crime to use facilities of interstate commerce to promote, manage, establish, or carry on specific, statutorily defined “unlawful activity.”
These unlawful activities are can be any state law crime. As it relates to healthcare fraud and abuse, state crimes such as commercial bribery can form the basis for Travel Act liability. By co-opting these state law offenses, the Travel Act effectively federalizes state law violations.
State also have their own laws which apply. The Texas Patient Solicitation Act (TSPA) is sometimes called the Texas Anti-Kickback Statute or the Texas Stark Law because it has elements of both. You violate the TPSA by offering to pay or agreeing to accept anything of value to secure or solicit a patient or patronage for or from a licensed professional. Called an “All-Payor” statute, a TPSA violation is not limited to referrals for services paid by government health programs.
By default, a TPSA violation is a Class A misdemeanor, but it can become a third-degree felony if the person has violated the TPSA previously or was employed by a federal, state, or local government at the time of the offense.1
Just because you don’t see Medicare patients, or your arrangement doesn’t involve Medicare patients, don’t think you are beyond the reach of anti-referral laws.
Myth No. 3: Sales representatives are a good source of legal advice
Truth: Sales representatives are not attorneys and may not be familiar with the latest developments in health law. Plus, they are incentivized to sell products and don’t necessarily have your best interests at heart.
I’m not disparaging sales representatives. I am admonishing the providers to beware of their motivations. Their job is to sell you supplies and equipment, and like any good sales representative, they will put their product in the most favorable light. They do not necessarily have the legal expertise to analyze the legalities of reimbursement, business structures, patient disclosures, or your licensing board requirements.
Invariably, the sales representative will start the conversation by saying, “I’m not an attorney but…”, then they proceed to give the provider legal advice regarding a complex application of an Anti-Kickback Safe Harbor. I have been on phone calls where the sales representative provided the client with incorrect advice and which I had to gently correct.
Even in the best of situations, legal advice in the healthcare context can be complex and nuanced. Coupled with the fact that most of the sales representatives are not attorneys and you’ve got a recipe for confusion and misinformation. Providers should consider the source of any legal advice they receive and discerning about the advice they choose to accept.
Myth No. 4: All lawyers are well-versed in healthcare law, or the corollary, that health law is just like business or corporate law.
Truth: Healthcare is the most regulated industry. As a result, health law is expansive and nuanced. Many attorneys are not equipped to offer comprehensive advice on health law topics.
This myth manifests itself in several ways. Some providers have business or family attorneys (or CPAs) they rely on for advice on various health law issues. Perhaps, that is better than no advice at all, but oftentimes healthcare issues turn on a complicated framework of federal and state statutes and regulations. Most attorneys do not take health law classes in law school and are therefore not familiar with all of the issues at play.
I’ve also seen this issue arise with unscrupulous businesses who, to entice physicians to enter into a deal, will hire lawyers to draft “opinion letters” that the deal is legal. Some of these opinion letters are nothing more than marketing propaganda. As with sales representatives, you should consider the source of the information. Recognize that the attorney is being paid to write the letter and does not represent you. If you get into trouble, that attorney will be nowhere to be found.
At the very least, providers should have their own health law attorney review the arrangement rather than taking someone else’s word for it.
Myth No. 5: Non-compete provisions are not enforceable against physicians.
Truth: Non-compete provisions are enforceable against physicians and other healthcare providers. Do not sign any restrictive covenant without the advice of competent counsel.
Noncompete provisions are common in healthcare and are routinely enforced. Unfortunately, some physicians think the opposite is true and incorrectly reason they can agree to anything without fear of repercussion.
Perhaps this myth stems from a unique statute in Texas. Based on the theory that a private contract should not unreasonably restrict a patient’s right of access to the physician of their choice, Texas has some unique requirements for noncompetes to be enforceable. One such requirement is that the noncompete must include a buyout provision, meaning, the physician must be allowed to pay a fee to “buyout of” the restriction.2
Texas also limits the scope and geographic area of noncompetes to the most narrow restriction necessary to accomplish the business purpose of the restriction. If the restrictions are reasonable, courts will enforce the provision. If the restrictions are not reasonable, courts have broad discretion to revise them as appropriate.
Myth No. 6: Medical school prepares physicians to handle the business and legal aspects of practicing medicine by themselves.
Truth: Legal concepts in healthcare are complex and dynamic. Great physicians are not necessarily great lawyers.
Schools do a great job educating healthcare providers to provide healthcare. And while many of them also offer courses on business and Texas jurisprudence, it is simply impractical to instill in the provider all the information he or she will need to navigate the legalities of modern healthcare. Even lawyers who specialize in health law must constantly stay up-to-date on recent developments.
I’ve met some wonderful physicians over the years, but a common trait among them is that they will sign or enter into an agreement without reading the agreement or truly understanding what they are getting themselves into.
I once came across a physician who tried to sell my client her medical practice, not realizing she had sold it to someone else. Two years prior, she sold the practice to a “management company” and didn’t realize she was just an employee and not the owner. This example may be extreme, it is a consistent theme.
The practice of law is as technical as the practice of medicine. Lawyers shouldn’t practice medicine and physicians shouldn’t practice law. You will save yourself a lot of money and heartache if you retain competent legal counsel rather than trying to go it alone.
Show me a physician who tries to handle legal problems themselves and I’ll show you a physician who is going to be a great client. It’s much better to avoid the problem in the first place than to fix the problem after the fact.
Myth No. 7: There is a way around any legal prohibition or restriction.
Truth: The government has broad discretion to prosecute fraud and abuse. The Department of Justice will closely scrutinize arrangements designed to circumvent the law.
It is not uncommon for initial conversations with clients to begin, “I want to practice ethically and do everything above board, but is there a way around… [fill in the blank.]” This attitude is dangerous.
Federal and state healthcare and reimbursement statutes are broad and sweeping. The anti-kickback statute, for example, applies to any remuneration, that is, anything of value. And it applies to both sides of the transaction whether soliciting kickbacks or paying kickbacks. The government has broad discretion to review business arrangements and identify possible kickbacks. You may find yourself on the wrong side of a civil or criminal prosecution because the result of your arrangement is to pay you or someone else for the volume or value of referrals.
The Stark Law has a special penalty for “circumvention schemes” designed to avoid technical violations of the law. The Texas Patient Solicitation Act applies even more broadly than its federal counterparts.
The point is that you should avoid getting too clever with the types of arrangements you enter into. There are ways to structure deals legally, but there are also deals that can’t be structured in any way to make them appropriate.
Providers are right to want to stay above board, but that means saying no to certain questionable arrangements.
Myth No. 8: The government has better things to do than to focus on a single provider.
Truth: The government will investigate individual providers, but even if they don’t investigate you, your own employees may start legal action against you.
This is a corollary to the myth about strength in numbers. Once the government identifies the providers who have been involved with a particular scheme, they can and will go after single healthcare providers. Small clinics or large practices. It doesn’t matter. The government will target anyone who has been involved in the scheme.
But even if the government doesn’t seek you out, your employees are incentivized to turn you in.
The government provides incentives to turn people in who have submitted false claims to the government. Qui tam actions, also called “Whistleblower” actions, allow a citizen to file a lawsuit on behalf of the government and share in the money recovered. In the healthcare context, the False Claims Act allows private persons and entities with evidence of fraud against federal programs to sue the alleged wrongdoer on behalf of the government.
For 2018, the Department of Justice recovered over $2.5 billion in fraud judgments and settlements in the healthcare industry. $1.9 billion came from these whistleblower actions.
Don’t think your employees won’t turn you in. Disgruntled employees or competitors are rich sources of qui tam actions or unsolicited complaints to the government.
The government makes it easy to report fraud via various fraud hotlines. I have had clients whose disgruntled employees sent emails to the authorities outlining all the alleged fraudulent conduct. Just do a Google search on whistleblower attorneys in your area. You will be surprised at how many attorneys advertise this type of representation.
Don’t think for a minute that the government won’t focus on your small clinic. It will. But perhaps the government is not your biggest concern. Your employees or competitors can turn you in as well.
Myth No. 9: A new treatment, drug, or protocol, will make you a lot of money quickly.
Truth: There are no shortcuts to a profitable healthcare business. Watch out for those pushing such schemes.
One of the greatest joys of my practice is to be able to help healthcare providers be successful in their practices. Whether it is a new business venture or an ongoing practice, it’s great to see healthcare providers be successful. But there are times when clients think they are on the cusp of the next big thing. All we have to do is set up a business and do this or that, and they will catch the wave to financial prosperity.
There are very few get-rich-quick opportunities. That is even more true in healthcare. Because it’s so highly regulated, new and innovative products, treatments, or drugs often become the subject of fraud and concern. Even if it is effective, it takes years for the standard of care and the law to catch up. Coupled with the fact that the FDA monitors devices and drugs, and that the Texas Medical Board is concerned about unapproved treatments, being on the cutting-edge is usually not desirable.
A great example is stem cell therapies. Stem cells offer great promise. However, the science is still developing and many of these products are not yet approved by the FDA. The Texas Medical Board has taken a unique interest in stem cell therapies and the types of representations been made to the public about their efficacy.
Be very skeptical about embracing the “next big thing.” Focus on marginal improvements in your practice and business that compound over time to yield outstanding results. Address the legal liabilities and pitfalls immediately in front of you rather than taking on an entirely new set of risks.
Myth No. 10: If someone files a complaint against you with your licensing board, all you need to do is send a letter to the Board and explain your side of the story. The complaint will go away.
Truth: Providers often make the situation worse by failing to appreciate all the rules and regulations governing the practice of medicine in Texas.
The unfortunate reality of being a professional is that you may one day be faced with a complaint filed against you by a patient. Complaints are filed for many reasons. Sometimes, providers fall short of the expected standard of care. Other times, clients file complaints because they are angry about some aspect of their treatment or want their money back. Whatever the reason, complaints must be taken seriously and responded to timely and appropriately.
I’ve been called more than once by providers who tried to handle it themselves. They fired off an answer to the Board only to make the situation worse. Now, instead of facing a minor complaint, they are dealing with a more serious violation.
Besides the legal aspects of the case, there are practical considerations. As the provider, you may not be able to look at the situation objectively. You may not recognize some important element of the complaint, or appreciate how a casual explanation can raise questions about other statutes and regulations. I’ve had several clients who thought they were helping themselves by explaining their side of the story, but all they did was create additional questions about other potential violations.
Most providers don’t realize that once the Board starts an investigation, they are not limited to the specific complaint. Like the Camel’s nose, once they are in a little, they are all in. Nothing is off-limits. The Board will review all aspects of your practice and your care. While defending yourself against one violation, you might inadvertently admit to another.
Even if you feel like the complaint has no merit, you should hire experienced counsel to represent you throughout the complaint process. Your attorney can make sure you meet all the applicable deadlines and put you in the best position possible for a favorable outcome.
Also, an experienced attorney has been through the complaint and hearing process before and understands the expectations of the Board and what resolution is possible.
Conclusion
These are just a few health law myths. It is unfortunate that there is such misinformation. Healthcare practice in today’s environment is challenging enough, but doing so with the wrong understanding makes it more difficult.
Finding a good health law attorney to help you avoid costly mistakes can make your practice more profitable and less stressful.
