Beware of Contractors

Tony DeWitt — Thu, 31 Mar 2011 14:45:00 GMT

From Tennessee comes a cautionary tale for nursing home operators about the perils of contracting with parties who provide services reimbursed by the federal government.

Outsourcing and downsizing are sometimes good ways of dealing with not having enough professionals on staff to provide services, but contracts with these providers should be structured in such a way as to insulate the nursing home facility from claims filed by the government or whistleblowers under the False Claims Act.

Lorne Allan Semrau of Jackson Tennessee was indicted in June 2007 for filing false claims with Medicare and Medicaid in Tennessee and Mississippi. Semrau contracted with nursing homes to provide all the medical and mental health services necessary for Medicare and Medicaid patients. He then contracted with psychiatric professionals to provide these services in the nursing homes, and agreed to bill those services for the physicians.

Unbeknownst to either the psychiatrists or the nursing homes, Semrau then implemented a scheme of systematic overbilling where he billed Medicare and Medicaid for services that were never performed by his subcontractors. Over the course of his contracts he defrauded Medicare to the tune of more than $245,000.

In this case the federal government went after the person who was criminally responsible, but Medicare can sometimes recover these funds from other parties where they have knowledge that the services are not provided. For this reason every contract with a person who provides services to residents should include:

A statement that the contractor is aware of and agrees to comply with the federal and state antikickback statutes.
A representation that the facility has verified that the contract is not in violation of any federal or state anti-kickback statutes.
An "indemnify and hold harmless" clause that requires the contractor to indemnify the facility for any sums it must pay because of any act or omission on the part of the contractor while performing or billing for services.
A requirement that the contractor have professional liability insurance that covers claims for medical or professional negligence.
A provision that permits the facility to examine the billing submitted to any federal payor for any given month on 10 days notice to the contractor, and a penalty provision if the billing is not provided that cancels the contract.
A statement that if the facility detects any billing abnormalities it will report these jointly to the contractor and to the fiscal intermediary that was billed.

While these provisions will not completely insulate the facility from liability to the federal government, they will go a long way to demonstrating the facility's good faith in complying with federal law.

Smoker's Rights?

Tony DeWitt — Wed, 13 Oct 2010 13:05:00 GMT

Last week a client called me up and asked me this question: could he legitimately refuse to hire health care workers because they smoke? His position was that as a health care organization, it was important to hire individuals who share the commitment of the organization to healthy lifestyles. He also objected to the fact that smokers actually seem to have more rights than non-smokers, and will walk away from duties to smoke because they're addicted to tobacco. But he did not want to run afoul of anti-discrimination laws.

In most cases, an employer can hire or fire whomever he wants with one exception: he cannot classify or refuse to hire employment applicants on the basis of race, religion, national origin, gender, age, or pregnancy. But where any kind of applicant screening process gets difficult is where some other factor - like smoking - becomes a smokescreen (pardon the pun) for discrimination on some other basis.

Said differently, if you adopt a policy of hiring non-smokers only, you cannot refuse to hire Hispanic smokers and make exceptions for Caucasian smokers. If the policy is going to be enforced, it has to be enforced across the board. It may make good business sense to do this. On the average, smokers are absent from work about 50 percent more often than nonsmokers. A study by Dow Chemical found that smokers missed 5.5 more work days per year than nonsmokers.

Insurance groups put the cost of smoking in excess of $637 per smoker and some school districts and employers are already charging higher rates for smokers for health insurance on this basis.

Beyond the studies, you can gather plenty of anecdotal evidence yourself. Smokers rarely miss an opportunity to go outside and smoke. If you were to track the amount of time a smoker spends outside versus the amount of time a nonsmoker spends on break, you'd likely find that smokers deprive the employer of 15 to 30 minutes of time in an 8 hour shift by virtue of their addiction.

While it may seem uncaring for an employer to require that workers stop smoking, in fact, it may be an act of great compassion. Every single person who smokes develops a smoking-related illness in time. Nonsmokers who live with smokers have increased risks for developing smoking-related diseases. Smoking affects not only the lungs - the primary pathway of injury - but also the heart, blood vessels, brain and other organs. Lung cancer, the primary disease associated with smoking, has a cure rate of 10 percent for men, and 14 percent for women. That "cure rate" simply means that 1 out of every 10 men diagnosed with lung cancer is still alive after five years. It does not mean that the patient is necessarily cancer-free. Smokers inevitably pay for their smoking, and sometimes their family and children pay for it too.

Whenever an employer begins to adopt such a policy, the outcry from smokers is often loud and mean-spirited. "What about our rights?"

Being very familiar with the Constitution, nowhere does it say that smokers have rights that are greater than those of nonsmokers. The Constitution limits what the government can do, and it places no limits on regulating behavior that is hazardous to the public health. This is why doctors must be licensed, drugs must be manufactured according to FDA guidelines, and poisons can be controlled by the EPA.

Employers do not have to abide by the Constitution. The Constitution restrains what the government can do, it does not regulate the conduct of private citizens. Federal laws do. The federal law protects a worker over age 40 from discrimination on the basis of age, but an employer can fire him for any other reason so long as it's not a pretext for firing on the basis of age. Thus an employer can fire an employee and give no reason, and be within the law. Proving discrimination is very difficult.

For this reason an employer is free to adopt any policy it wants on smoking. It can allow it, or it can ban it, and it can say that any employee who smokes after a certain date will be terminated. With the advent of non-invasive carbon monoxide detectors, employees who continue to smoke can easily be detected. For large employers using a combination carrot (discounts on health insurance) and stick (termination for continuing an addiction to tobacco) could be an effective way of reducing personnel costs.

Of course, such a policy is draconian and may result in the loss of long term employees. But the work world is quickly coming to terms with the fact that smokers cost their employers money, and the handwriting is on the wall. If you smoke, smoking cessation classes and medical help to break the addiction are available. Better to act now than when your job is on the line. Your lungs will thank you for it.

Legal Speak : Safety, News

Beware of Contractors

Smoker's Rights?