Fellow Ais 4 Laws Regs & Ethics (Revised)

Laws and Regulations

Susan Greenwood-Clark, RN, MBA, FACHE

This section will focus on your knowledge of the:

• Effects of government policy on healthcare operations

• Opportunities for and restrictions on lobbying activities and other contact with government officials

• Implementation of laws pertaining to healthcare• Legal responsibilities and liabilities of organizations

and professionals• Identification of restraint-of-trade situations• Identification of healthcare-related fraud and abuse


“Law is a system of principles and rules devised by organized society for the purpose of controlling human conduct.”– Southwick, A.F. The Law of Hospital and

Health Care Administration (2nd ed). 1988 page 3.


• Types of Law– Constitutional– Statutory– Judicial– Administrative


Know the trends and pitfalls in legal fields:• Criminal law• Contracts• Antitrust• Negligence• Fraud & abase• Taxation• Administrative Law• Law of Corporations• Environmental regulation• others


Contract Law• Private agreements give rise to certain duties

that are enforceable in a public forum (court system)

• All physician-patient and institution-patient relationships are founded in contract – the patient requests treatment and the provider agrees to provide it in return for payment

• This establishes certain legally enforceable duties and expectations


Contract Law• Contractual aspects exist in relationships

between a healthcare organization and– Physicians– Nurses– Other employees– Suppliers– Payors– Government– others


• Corporation Law

• Because a corporation has a charter from the state, it receives certain benefits:– Perpetual existence– Legal personality– “corporate veil” that shields the individual who

created it and those who operate it


• Corporate charters also create legal obligations– Government licensure– Regulation– Oversight merely to virtue of its corporate

status


Criminal Law

• Prosecution and conviction for:– Assault– False imprisonment– Violation of civil rights– Defamation (libel and slander)– Environmental pollution– murder


Negligence/Tort Law

• Violation of some proven “standard of care” or failure to exercise due care under the circumstances.– Alleged medical malpractice

Healthcare organizations were once protected by the doctrine of “charitable immunity”, this is no longer the case


Negligence – failure to:• Determine the qualification of a physician prior

to granting or renewing staff privileges• Failure to monitor the qualifications of nurses or

healthcare workers• Failure to maintain and implement adequate

institutional policies• Failure to follow the organization’s own bylaws• Failure to maintain adequate facilities and

equipment• Failure to comply with “anti-dumping” laws

regarding emergency room patients



Negligence – failure to:• Supervise the performance of contractors

(including hired physicians)• Maintain appropriate peer review and quality

assurance functions• Prevent the unauthorized disclosure of

information from patient records• Protect patients from healthcare workers who

carry communicable or infectious diseases• Protect the identities of AIDS or substance

abuse patients


Negligence – failure to:

• Follow standard orders and protocols

• Inform the patient or family when injuries result from known deviations from the standard of care

• Counsel persons regarding known or knowable genetic conditions that would affect their children

Fraud and Abuse

• False claims

• “Kickbacks” for referrals or Medicare patients

• Physician self-referrals

Hugh potential for penalties – fines and expulsion from the Medicare program


Antitrust Laws• Physicians and healthcare organizations were

once exempted from antitrust statutes because of their “learned profession” status

• However we are now subject to antitrust laws of both federal and state governments.

• Mergers• Consolidations • Acquisitions• Reduction of services• Joint Ventures


Antitrust Laws

• The incentives of antitrust laws (to preserve and promote competition) seem counter to the policy imperatives of healthcare reform (efficiency, lower cost, reduction of duplication of services).


Antitrust Laws• Litigation is brought by:

– U.S. Department of Justice– Federal Trade Commission– State antitrust agency

• Antitrust action:– Can take years to litigate– Cost millions of dollars to defend– Can cost millions or more in damages and

penalties


Tax Laws• Tax-exempt organizations must comply

with tax laws’ limitations and requirements regarding:– Lobbying activities– Political campaigning– Community benefits– Charitable purposes– Private inurement– Unrelated business income


Other Legal Obligations

• Admission and discharge procedures

• “Hill-Burton Act”

• EMTALA – Emergency Medical Treatment and Active Labor Act

• Involuntary Commitment of Mentally Ill persons


Informed Consent• Know the circumstances when consent

can be refused• Procedures needed to secure and

document informed consent• Legal aspects of medical records

– Forms and consents– Standards for retention/disposal– Rights of ownership and control– Use as evidence in litigation


Informed Consent

• Know the legal principles affecting consent for treatment of: – incompetent adults– Young minor children– Mature minors– Pregnant minors– Seriously ill newborns whose parents refuse

to consent to care


Informed Consent• Know the legal principles affecting consent

for: – Abortion– Sterilization– Euthanasia– Genetic therapies– Other procedures having religious or ethical

overtones

• Potential liability for “wrongful life” or “wrongful birth”


Need more in-depth resources?Southwick, A.F. The Law of Hospital and Health

Care Administration (2nd ed). Health Administration Press. 1988.

J. Stuart Showalter, J.D. Southwick’s The Law of Healthcare Administration, 3rd ed.

Dean M. Harris, J.D., Contemporary Issues in Healthcare Law and Ethics, 2nd ed.

Scott C. Withrow, J.D., Managing Healthcare Compliance



Ready for some test questions?

With respect to the processes by which healthcare organizations maintain the confidentiality, security, and integrity of the medical record, all of the following statements are true except:

1. The original medical record of a patient being transferred from one healthcare organization to another may accompany the patient to the new organization

2. Healthcare organizations must have a mechanism to preserve the confidentiality of data/information identified as sensitive.

3. The organization must have a mechanism to safeguard records against loss, destruction, tampering, and unauthorized access or use

4. Written policies must require that medical records may be removed from the organization’s jurisdiction only in accordance with a court order, subpoena, or statute


Test Questions


Test Questions• Correct answer is 1• Ownership of medical records rests with

the hospital or with the physician who keeps records of private patients. The owner of the record thus has the right of physical possession and control.

• Source: JCAHO, Comprehensive Accreditation Manual for Hospitals, p. IM-10 and IM-11, Standard IM.2. – IM.2.3


Test QuestionsAll of the following are commonly recognized

to be a right of each patient except the right to:

1. Receive considerate and respectful care2. Access protective services3. Communicate with a caregiver in the

language of the patient's choosing4. Be informed about and participate in

decisions regarding their care


Test Questions• Correct answer is 3• When a patient and caregiver enter into a

contractual relationship, the caregiver has agreed to diagnose and treat the patient in accordance with the standards of acceptable medical practice. Acceptable care can be given even if the caregiver cannot communicate in the language of the patient's choosing.

• Source: JCAHO. Comprehensive Accreditation Manual for Hospitals, pp. RI-6-17, Standards RI.1. – RI.4.3.


Test QuestionsAll of the following statements about documentation in the medical record are true except:

1. Verbal orders must be authorized by the practitioner within a time frame to be defined by the medical staff

2. Verbal orders can only be accepted by registered nurses

3. Authentication may be made by actual written signatures, initials, rubber stamp signatures, or computer “signatures”

4. That entries must be authenticated by the actual author only.


Test Questions• Correct answer is 2• Verbal orders must be dated and identify the

names of the individuals who gave them and received them. Individuals who receive verbal orders are qualified to do so and are authorized by the medical staff to do so as identified by title or category of personnel. When required by state or federal law and regulation, verbal orders are authenticated by the author within a specified time frame.

• Source: JCAHO. Pp IM-25 – 26, Standards IM.7.7 and IM.7.8.


Test QuestionsA non-legitimate reasons to release

information from a patient’s medical record is when:

1. Subpoenaed by a court order

2. Requested by the spouse or next of kin

3. The patient becomes incompetent

4. Reporting statistics for a research project


Test Questions• Correct answer is 2• The spouse or next of kin have no inherent

authority to authorize release of privileged information. The other answers are recognized exceptions to the requirement of confidentiality of medical records.

• Source: Showalter, J.S. Southwick’s The Law of Healthcare Administration (3rd ed), 1999, pp. 441-446.


Test QuestionsIn the past, hospitals have been less

effective in lobbying than physicians because:

1. Legislators like physicians more

2. Physicians have better lobbyists

3. The law prevents hospitals from lobbying

4. Hospitals don’t vote


Test Questions• Correct answer is 4• Legislators are persuaded by their impressions

of how many voters agree or disagree with any particular position. Hospitals have often been thought of as impersonal institutions rather than groups of potential voters. Viewed thus, when physicians’ interests and hospitals’ interest conflict, the interests of physicians (who vote in large numbers) consistently prevail.

• Source: Webbed, L.J., “A Positive View of Lobbying”, Health Progress. Nov 1993. 74(9):64


Test QuestionsIn general, courts exhibit attitude regarding controversies over medical staff privileges?

1. Human lives are at stake and the courts must intervene to protect physicians’ rights to save those lives.

2. If the decision were supported by reasonable evidence, courts will not substitute their judgment for that of the hospital board.

3. Hospitals must not be permitted to interfere with the doctor-patient relationship.

4. Courts may not entertain suits regarding medical staff privileges.


Test Questions• Correct answer is 2

• Although they will entertain suits regarding medical staff privileges, courts generally give great deference to a hospital's decision to deny or limit privileges so long as a reasonably fair process for making that decision was in place.

• Source: Showalter, pp. 510-514


Test QuestionsUnder federal law, whenever a patient comes to a hospital emergency department with an emergency condition:

1. With few exceptions, the patient's ability to pay may be considered in determining whether to provide treatment

2. With few exceptions, the patient’s condition must be stabilized before he/she is transferred or discharged

3. A police officer may be asked to authorize treatment

4. The hospital has no duty to treat the person if he/she is not a patient or a member of the medical staff


Test Questions• Correct answer is 2• The federal “anti-dumping” statue clearly

provides that emergency patients must not be transferred or discharged before their condition has been stabilized, regardless of their ability to pay for care.

• Source: Showalter, J.S. and Reams, B.D. The Law of Hospital and Healthcare Administration: Cases and Materials. 1993. p.98


Test QuestionsIn considering applications for medical staff privileges, hospitals receive reports from a U.S. Government clearinghouse on malpractice payments and adverse medical staff and licensure actions. In general, these reports have had which effect?

1. Reports have rarely led hospitals to make privileging decisions they would not have made otherwise

2. Reports have been timely and helpful and have reduced the complexity of the privileging process

3. Had they not received the reports, most hospitals’ privileging decisions would usually have been different

4. Hospitals usually receive significant information that neither the practitioner involved nor any other sources had provided.


Test Questions• Correct answer is 1• According to a study by the HHS Office of

Inspector General, without the data bank reports, hospitals’ privileging decisions would have been different only one percent of the time.

• Source: Dept. of Health and Human Services, Office of Inspector General, “National Practitioner Data Bank: Usefulness and Impact of Reports to Hospitals”. Feb 1993.


Test QuestionsWhich of the following statements best summarizes the prevailing legal standard used to judge the actions of members of a not-for-profit healthcare organization’s governing board?

1. They must act in good faith, with reasonable care, and with the best interests of the corporation in mind.

2. They must exercise the same high level of fiduciary duty as is applied to the trustees of a trust.

3. The must avoid gross negligence and willful misconduct.

4. They are immune from personal liability.


Test Questions• Correct answer is 1• In most jurisdictions, acting in good faith with

reasonable care is the standard for personal liability of board members. Regardless of whether they are called “trustees” or “directors”, board members are not held to be trustees in the fiduciary sense of the word. Regardless of the standard applied, they can be held personally liable under some circumstances, and though they certainly should avoid gross negligence and willful misconduct, that is not the best answer.

• Source: Showalter, pp. 101-103


Test QuestionsWhich of the following is the clear trend regarding a hospital's liability for the actions of members of its medical staff?

1. The hospital may be held liable for a physician’s negligence even though the physician is an “independent contractor”.

2. Hospitals are not liable for such actions because they are simply physical sites where patients receive treatment from privately retained physicians.

3. Courts are becoming more reluctant to impose liability on hospitals for the negligence of physicians who use their facilities.

4. The hospital is liable only if the physician is an employee.


Test Questions• Correct answer is 1• There has been a clear trend in recent

years toward imposing liability on hospitals through the doctrines of “apparent authority” and “ostensible agency”. This is in contrast to the traditional rule that physicians were independent contractors who merely used the hospital’s facilities.

Source: Showalter, chapter 5


Test QuestionsA joint venture laboratory owned by a hospital and

physicians on its medical staff would probably be in violation of fraud and abuse laws if it were to:

1. Market its services to both investors and non-investors

2. Offer ownership shares at the same price to referrers and non-referrers

3. Require investors to refer business to it

4. Base its profit distributions on the amount of capital contributed, not on referrals.


Test Questions• Correct answer is 3• Physicians’ referral of business to entities in which they

have an ownership interest is closely scrutinized under federal “antikickback” laws, which are intended to outlaw arrangements that induce physicians to refer patients and thus enhance revenues. Any physician-owned entity that required physician investors to refer business to it would directly violate “safe harbor” regulations promulgated by HHS. The other answers represent circumstances unrelated to inducement of referrals and within published “safe harbor” guidelines.

• Source: Crane. T.S. “The Problem of Physician Self-Referral under the Medicare and Medicaid Antikickback Statute”. JAMA. 268(1): 86-91 (1992.)

Professionalism

and Ethics

The American College of Hospital Administrators (ACHA) was established in 1933 for the following hallmarks:– Public service orientation– Self-regulation– A code of ethics– Expectations, such as assuring competence of

members through continuing professional education– Samaritanism– Charity

These hallmarks can be found in the ACHE Code of Ethics

Professionalism and Ethics

• Ethical Policy Statements have also been developed by ACHE to address specific concerns of healthcare executives

• These are published on the ache.org website, and included in the annual report.


Ethics is often defined as a formal study of morality.

Sociologists – mores, customs and behavior found in a culture

Physicians – meeting the expectations of their profession and society and acting in certain ways towards patients


Ethics to Healthcare Executives – special charge and responsibility to:

• patient• client• others served• The organization• Its personnel• Themselves• The profession• And ultimately, but less directly, to society


ACHE’s Code of Ethics • first published in 1939• Several iterations since• Major revision in 1987• Code is reviewed and updated annually• Primary and contextual focus of the Code

is protecting and furthering the interests of the patient, client and others served.


In the Code, special attention is given to such issues as:

• Responsibility to those served by the organization

• Obligations to the profession and the organization

• Roles in providing health services to the community and those in need of services

• Conflicts of interest


The Code encompasses the concept of moral agency (or advocate) which holds that healthcare executives are morally accountable for the implications of their:

Malfeasance (wrongdoing or misconduct, especially by a public official)

Nonfeasance (failure to do what ought to be done) and

Misfeasance (the performance of a lawful action in an illegal or improper manner)


• ACHE affiliates are obliged to bring to the attention of the ACHE Ethics Committee any information that reasonably causes them to believe there has been an infraction of the Code.

• Alleged infractions of the Code are reviewed by the Ethics Committee, with the help of other elements of the ACHE governance structure.

• The Ethics Committee makes a recommendation to the Board of Governors, which has final authority.

• The Code includes appeals and reviews, which provide for substantive and procedure due process.


American Medical Association’s Principles of Medical Ethics

• Based on work of a 19th century English physician, Sir Thomas Percival.

• Subsequent revisions continue to incorporate portions of the Hippocratic philosophy governing physician-patient relationships.

• The Principles were last revised in 1980 – which moved away from previous emphasis on benefits and harms, and adopted the language of rights and responsibilities.

• The Principles direct members to “strive to expose those physicians deficient in character or competence, or who engage in fraud or deception”.


American Nurses Association’s Code for Nurses• Philosophy is that the goal of nursing is to

support the client’s responsibility and self-determination to the greatest extent possible.

• Specific provisions set out the relationships among nurses, and with nursing, clients, employers and the public.

• Nurses are expected to act when healthcare and safety are affected by the incompetent, unethical or illegal practice of any person.


Codes of Ethics for professional groups• Provide for self-regulation• Must be sufficiently precise so that guidance is

meaningful, both to the members of professional groups and societies and to those who are charged with enforcing the code.

• Must be living documents that provide meaningful guidance to individuals who want to do the right thing, but who are uncertain as to what that is.

• Education about its ethical code and expectations should be a part of any continuing education development program undertaken by a profession


Patient Rights and ResponsibilitiesTwo moral philosophies are especially important

as a context for solving ethical problems:• Utilitarianism – is a type of teleology that

measures the ends or results produced by a certain action; the action producing the greatest good is that which is morally correct.

• Deontology – based on duty; there are right and wrong actions, regardless of the end produced by that action.


Four principles that can be used to guide healthcare executives in developing a personal ethic:

• Respect for persons (which incorporates autonomy, confidentiality, fidelity and truth telling)

• Beneficence• Nonmaleficence• Justice


Principles guiding personal ethics should:• permeate an organization’s philosophy• be reflected in its mission statement and

other written expressions of values• be reflected in all the policies, procedures

and rules used by the organization• be part of the healthcare executive’s

personal ethic, as well as part of all decision making


Institutional Ethics CommitteesInterdisciplinary teams to provide• advice• Consultation• Education• Analysis for physicians, patients, staff and healthcare

executives.Focused on biomedical ethical issues and

administrative ethics.


Infant care Review Committees (ICRC) are established in response to the Federal Child Abuse Amendments of 1984.

1. Educate hospital personnel and families of disabled infants

2. Recommend institutional policies and guidelines as to withholding medically indicated treatment

3. Offer counsel and review in such cases


Institutional Review Board• Established to meet the requirements of

the department of Health and Human Services, and other federal and state agencies in various types of research.

• Prospectively review proposed research that involves human subjects to determine whether research subjects will be at risk of harm and to ensure that legally effective informed consent will be obtained


Types of research in healthcare organizations• Clinical trials – primarily performed in academic

health centers and other teaching hospitals• Practice of Medicine research – performed in

larger hospitals and HMOs – use of previously collected data and survey research to evaluate the practice of medicine

• Patient satisfaction• Outcomes measurement


Patient Bill of Rights• Suggest appropriate ethical relationships

between the patient and the organization and its employees

• Emphasize maximization of patient autonomy while recognizing the needs of the health services organization

• Responsibility of patients in the care process


Expectations of Ethical Conduct• Statements or guidelines established by trade

associations• Set out expectations for ethical conduct and

relationships with the community, and those served, and organizational conduct in general.

• Health care providers are expected to accommodate the religious and social beliefs and customs of patients whenever possible.


Cultural and Spiritual DiversityEqual Employment Opportunity CommissionCreate protected classes of persons against whom

it is illegal to discriminate• Unlawful discrimination• Sexual harassment• Intimate or romantic relationships in the

workplace• Sexual orientation• Affirmative action• Diversity programs


Provision of services based on values• There is no expectation that the organization’s legally

compliant value system as expressed in its statement of organizational philosophy or other guiding principles must be breached to meet the demands of patients, clients, or others served, or of employees.

• Governmental facilities may not enforce theologically based positions since this constitutes an unconstitutional establishment of religion.

• Thus, governmental facilities provide services that nongovernmental facilities may not be forced to provide.


Conflicts of InterestOccur when one has conflicting duties or

responsibilities and meeting one of them makes it impossible to meet the other

Example: a decision maker (manager or corporate director) is also a decision maker for an organization with which business is done.


ACHE Code of EthicsACHE affiliates are expected to accept no

gift or benefit “offered with the express or implied expectation of influencing a management decision”.

An organizational policy that no gratuities can be accepted is the cleanest and clearest approach and leaves nothing to the potential recipient’s judgment.



Need more in-depth resources?ACHE’s Code of EthicsACHE Ethical Policy StatementsContemporary Issues in Healthcare Law and Ethics, 2nd ed.

by Dean M. Harris, J.D.Ethics in Health Service Management, Kurt J. Darr, J.D.,

Sc.D., FACHEHeath Care Ethics, John F. Monagle and David C.

ThomasmaOrganizational Ethics in Health Care, Philip J. Boyle Edwin

R. DuBose, Stephen J. Ellingson, David E. Guinn, and David B. McCurdy

The Tracks We Leave: Ethics in Healthcare Management, Frankie Perry R.N., FACHE


Ready for some test questions?

Professionalism & Ethics

Test QuestionsThe major purpose of the code of ethics for

members of a healthcare executive’s association is to:

1. Enhance the image of the healthcare management profession

2. Set forth standards of ethical behavior for healthcare executives

3. Set ethical guidelines for the advancement of members within the organization

4. Provide a forum for dialogue on healthcare policy issues


Test Questions

Correct answer is 2

A code of ethics sets guidelines and standards for behavior (not for advancement, as in answer 3). Answers 1 and 3 may happen as a result of having a code of ethics, but they are not the major purpose.


Test QuestionsHealthcare facilities serving disabled populations

might wish to systematically review concerns by:

1. Adding specific questions to patient satisfaction instruments

2. Consulting periodically with advocacy groups

3. Reviewing patient complaints raised by disabled individuals

4. Reviewing their compliance with the Americans with Disabilities Act.


Test QuestionsCorrect answer is 1The key word is systematic, as the other

offered strategies are episodic or perfunctory.

A well-designed satisfaction instrument would be attentive to the organization’s responsiveness to various special needs groups.

Source: Rakich, J., Longest, B. and Darr, K. Managing Health Service Organizations, 3rd ed. 1993. chapter 17.


Test Questions

The healthcare executive with opposing duties (obligations) – meeting one of which makes it impossible to meet the other – has a:

1. Conflict of interest

2. Management ethical dilemma

3. Need for a consultant

4. Situation that is impossible.


Test Questions

Correct answer is 1

This is the classic definition of conflict of interest – when someone has two duties/obligations (loyalties) and meeting one duty/obligation makes it impossible to meet the other.

Source: Darr, K. Ethics in Health Services Management, 3rd ed.1997. p.99


Test Questions

The ethical percepts (organizational philosophy) that guide an organization’s activities are found in a variety of sources that are:

1. Reflected in everyday actions

2. The sole province of senior management

3. Part of the governing body’s formal actions

4. Written and unwritten


Test Questions

Correct answer is 4

Written and unwritten evidence of the organization’s philosophy can be found in the various activities that it undertakes through its governance activities. Choice 4 is the broadest and therefore the most correct. Choice 2 is wrong. Choices 1 and 3 are correct, but only partially explain the stem.

Source: Darr, pp. 46-53.


Test Questions

The most common and useful ways to overcome resistance to change in organizations are:

1. Education and communication

2. Manipulation and co-optation

3. Committees and task forces

4. Inspirational leadership and managerial skill.


Test QuestionsCorrect answer is 1

Committees and task forces and inspirational leadership and management skills may produce education, but they may not.

Manipulation and co-optation are attempted in some instances, but both involve an element of deceit and raise ethical questions.

The correction answer is education and communication.

Source: Rakich, Longest, and Darr. Pp.594-597


Test QuestionsCoordination among governance, management,

and professional staff is a major problem for most healthcare organizations. A common way to solve the problem of coordination is:

1. Provide a local area network to leaders of each group using personal computers

2. Have overlapping membership of committees that are part of each group

3. Have quarterly meetings where issues of concern to the groups are discussed

4. Provide copies of memoranda and policy statements to leaders of each group


Test Questions

Correct answer is 2

Overlapping committee membership is a common technique used by healthcare organizations because it enhances the quality of decision making and facilitates communication among governance, management and professional staff.

Source: Rakich, Longest, and Darr. Pp. 248-249


Test QuestionsIn efforts to encourage licensed clinical staff to

engage in continuing education, healthcare executives are given substantial assistance by the fact that these professionals:

1. Are encouraged by significant peer pressure

2. Must meet requirements of their certifying group

3. Are often interested in opportunities to transfer

4. Must meet malpractice law continuing education standards


Test Questions

Correct answer is 2

Professional groups that certify health services professionals increasingly require those who wish to remain certified to engage in continuing education, usually measured in hours per year. Choices 1 and 3 stimulate interest in continuing education, but are very secondary. Choice 4 is nonsensical.

Fellow Ais 4 Laws Regs & Ethics (Revised)

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