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Liability Insurance for Health Care Providers: Is It Adequate?

When you, as a health care provider, undergo a regulatory Medicare or Medicaid audit, your liability insurance could be your best friend or your worst enemy. It is imperative that you understand your liability coverage prior to ever undergoing an audit.

There are two very important issues that you need to know about your liability insurance:

1. Whether your liability insurance covers your choice of attorney; and
2. Whether your liability insurance covers settlements and/or judgments.

I cannot express the importance of these two issues when it comes to regulatory audits, paybacks and recoupments. Let me explain why…

Does your liability insurance cover attorneys’ fees for your choice of provider?

I have blogged numerous times over the past years about the importance of knowing whether your liability insurance covers your attorneys’ fees. I have come to realize that whether your liability insurance covers your attorneys’ fees is less important than knowing whether your liability insurance covers your choice of attorney. Believe it or not, when it comes to litigating regulatory issues in the Medicare/Medicaid, attorneys are not fungible.

A client of mine summed it up for me today. She said, “I wouldn’t go to my dentist for a PAP smear.”

Case in point, here are some examples of misconceptions that attorneys NOT familiar with the Office of Administrative Hearings (OAH) might think:

Myth: Getting the case continued is a breeze, especially if all the parties consent to it.

Reality: Generally, OAH is reluctant to continue cases, except for good cause, especially when a case has pended for a certain amount of time. (This has been a more recent trend and could change in the future).

Myth: When my case is scheduled for trial on X date, it will be a cattle call and we will only determine when the case will be actually heard, so I don’t need to prepare for trial. (This is true in superior court).

Reality: Incorrect. Most likely, you will be heard. OAH has a number of administrative law judges (ALJs) who are assigned cases. Generally, they only schedule one case per day, although there are exceptions.

Myth: Since we are going to trial next week, the other side must not intend to file a motion to dismiss or motion for summary judgment. I don’t need to prepare any counter arguments.

Reality: The administrative rules allow attorneys to orally file motion the day of trial.

You can imagine how devastating attorney misconceptions can be to your case. An attorney with these misconceptions could very well appear unprepared at a trial, which could have catastrophic consequences on you and your company.

Tip:

Review your liability insurance. Determine whether your liability insurance covers attorneys’ fees. Then determine whether it covers your choice of attorney.

Does your liability insurance cover settlements and/or judgments?

Recently, a client was informed that the agency allegedly owes over $400,000 to the auditing agency. We will call him Jim. Jim came to me, and I instructed him to determine whether his liability insurance covers attorneys’ fees. It turned out that his insurance did cover attorneys’ fees, but only a certain attorney. Jim had overlooked our first issue.

Despite the fact that his insurance would not cover my fees, he opted to stick with me. (Thanks, Jim).

Regardless, once settlement discussions arose between us and the auditing entity, which in this particular case was Palmetto, I asked Jim for a copy of his liability insurance. If his liability insurance covers settlements, then we have all the incentive in the world to settle and skip an expensive hearing.

I was shocked at the language of the liability insurance.

According to the contract, insurance company would pay for attorneys’ fees (just not mine). Ok, fine. But the insurance company would contribute nothing to settlements or judgments.

What does that mean?

Insurance company could provide Jim with bargain basement attorneys, the cheapest it could find, with no regard as to whether the attorney were a corporate, litigation, real estate, tax, bankruptcy, or health care lawyer BECAUSE

The insurance company has no skin in the game. In other words, the insurance company could not care less whether the case settles, goes to trial, or disappears. Its only duty is to pay for some lawyer.

Whereas if the insurance company were liable for, say, 20% of a settlement or judgment, wouldn’t the insurance company care whether the hired lawyer were any good?

Tip:

Print off your liability insurance. Read it. Does your liability insurance cover attorneys’ fees for your choice of provider?

Does your liability insurance cover settlements and/or judgments?

What Is the Legal Process for Contesting a Termination of a Medicaid Contract?

What is the legal process?
How long does it take?
How much does it cost?
What is the likelihood of success?
If I win, what will happen?

These are probably the most FAQ by providers who have either been placed on prepayment review or been through prepayment review, only to have their Medicaid contracts terminated at the end of six months.

First, what is prepayment review?

If you are an old hat to this blog, then skip this section. Most likely, you already know what the dreaded term “prepayment review” means. If you are a newbie, prepayment review is a status. A bad status. A status created by the Department of Health and Human Services (DHHS). In essence, prepayment review means that, for 6 months, you must have all claims evaluated by a third-party prior to being paid. You can render medically necessary services (for which you obtained prior authorization) and the third-party could decide that you do not deserve to be reimbursed. You can go 6 months without reimbursement, but provide services and pay your staff, then have your Medicaid contract terminated erroneously and because of the subjective and incorrect opinion of the third-party contractor.

However, this blog is about the legal process of fighting your Medicaid contract termination, not the absurdity of the prepayment review process.

The legal process:

You determine that (a) you are wrongfully withheld Medicaid reimbursements while on prepayment review; or (b) your Medicaid contract has been terminated based on an erroneous prepayment review.

1. You hire counsel. (It does not have to be me. Just a knowledgeable Medicaid attorney).

2. The attorney files a Motion to Stay, Temporary Restraining Order, and Preliminary Injunction (TRO) against DHHS, DMA. The third-party auditor that conducted the prepayment review does not need to be named because the auditor is considered to be an agent of the state. In fact, whenever I have filed a TRO, DMA automatically brings a witness from the third-party auditor. If DMA did not, DMA would not be able to dispute my contention that the prepayment review was conducted erroneously.

3. NC Civil Rule of Procedure, Rule 65 governs injunctions (A TRO is legally considered an injunction. The difference is between a court of equity and a court of law).

4. Usually within 7-10 days, (barring some unforeseen hurdle) the Administrative Law Judge (ALJ) will either grant or deny the TRO.

It is important to note that not all ALJ’s procedural postures for TROs are identical. One ALJ may grant the TRO with no legal arguments heard from opposing counsel and schedule the Preliminary Injunction hearing in the near future. Another ALJ may require telephonic legal arguments prior to granting the TRO. Yet another ALJ may require legal arguments in person at the Office of Administrative Hearings (OAH).

5. Once the TRO is granted, status quo governs. In other words, the TRO allows you to have your Medicaid contract, service Medicaid recipients, and get reimbursed…just as if the prepayment review had never happened.

6. A TRO is VERY temporary. For the most part, if executed strictly according to Rule 65, a TRO is granted without hearing from the other side. Therefore, a preliminary injunction hearing must be scheduled as soon as possible. The ALJ does not want to burden an unheard party’s rights for too long without hearing that unheard party’s side.

7. Within a month or so after the grant of the TRO, a preliminary injunction hearing is scheduled. (This is normally conducted in one, full-day hearing…sometimes shorter if you have one particular Judge, because he or she has such a clear understanding of the facts).

8. At the preliminary injunction hearing, you must show: (1) likelihood of success on the merits; and (2) irreparable harm. Which means, in the vernacular, (1) that the prepayment review was conducted incorrectly (or your Medicaid reimbursements are being wrongly withheld); and (2) if the termination of your Medicaid contract is not stopped, then you would suffer great consequences.

9. If the ALJ grants the preliminary injunction, then that grant of relief maintains status quo until the full-blown hearing.

10. The full-blown hearing will be held, generally, over 6 months in the future. Which means that you will be able to render medically necessary services for Medicaid recipients and be reimbursed for services rendered until the final adjudication of the lawsuit.

Basically, once the TRO is filed, you could be “back to normal” or status quo within 7-10 days.  That does not mean that the legal battle is over.  In fact, once the TRO is granted and you are back to normal, the legal battle just begins.  The legal battle can be a long, stressful and drawn-out process.  But, at least, you are able to render medically necessary services and receive reimbursement.

As to cost, the legal process is expensive.  Obviously, cost depends on the attorney that you hire, that hired attorney’s billable rate, and that hired attorney’s legal knowledge of Medicaid.  Be sure to ask many questions prior to engaging any attorney.  Anybody would hate to get an unexpectedly high bill.

Also, check with your liability insurance to determine whether your liability insurance will cover attorneys’ legal fees.  Many times your liability insurance will cover regulatory audits.

Also, NCGS 6-19.1 allows a party defending against an agency decision to petition the court for attorneys fees within 30 days of final disposition of the case.  Therefore, there is a possibility to have your attorneys’ fees reimbursed, but not until the very, very end of your case.  You would be responsible for fronting the attorneys’ fees with a chance of not recovering your attorneys’ fees at the back-end.

As to likelihood of success, obviously, it depends on your particular facts.  Was the third-party auditor really actually wrong in its audit denials? Does your documentation actually meet compliance requirements. Remember, just because the auditor believes that your documents are not compliant, does not mean your documents are actually noncompliant.  But likelihood of success rests primarily in your facts/documents.  Your attorney should be able to be more specific.

NC Medicaid Providers: Does Your Insurance Cover Legal Fees for Regulatory Audits??

I must confess…I do not know much about health care providers’ liability insurance.  I just haven’t had to deal with liability insurance many times.

But, a client has recently informed me that their liability insurance will compensate them for 100% of my attorney fees that pertain to my representation germane to their regulatory audit. If this is true, then I have many clients that need to have a chat with their insurance companies.

Please understand…I have NOT read the small print with this insurance coverage. I do NOT know the ins and the outs of this insurance, or, even, whether it will actually, truly cover 100% of attorneys fees.

But, IF there is a possibility of your insurance company covering attorneys fees, what is there to lose?

This is all I know:

Alleged insurance that covers legal fees for regulatory audits? “APA Plus.”

From what I understand, if you pay an extra $15/month, the insurance will cover legal fees associated with regulatory audits, up to $50,000.

Again, please understand, this is hearsay, and I have read no insurance contract.  The ONLY reason I am blogging about an issue that I do not have verification of its veracity is because if, and only if, there is even a 1% chance that your insurance company will cover legal fees, this could be such a burden off your shoulders during such a stressful time anyway.

What does it hurt to try?