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PAYING FOR REFERRALS IS A BAD IDEA
The Medicare/Medicaid Fraud and Abuse Anti Kickback Statute (the "Statute") is alive, still with us and as viable as ever. The Statute provides that the offer or payment, as well as the solicitation or receipt, of "any remuneration" in exchange for referrals of any good, facility, service, or item for which payment may be made in whole or in part under Medicare/Medicaid is prohibited.  
The prohibited activity is a two way street, and both the payer and the receiver are equally culpable. The definition of remuneration, however, is a gray area. While the Statute provides that remuneration includes "any kickback, bribe or rebate," it does not define these terms. Further, there is a prohibition against remuneration "directly or indirectly, overtly or covertly, in cash or in kind."
Clearly, direct cash payments in exchange for referrals violate the Statute. What is less clear, however, is what constitutes "indirect payments."
To date, the courts have interpreted the Statute in a very expansive manner. If remuneration flows from one party to another and if referrals (or the opportunity to provide goods and services) flow back, the potential for criminal prosecution exists regardless of the presence of good business reasons for the venture.  
Paying for referrals, directly or indirectly, overtly or covertly, violates the Statute. Changing the form of the payment will make it no less a violation.
A recent case brings home the realization that the Statute is still very much with us. Consider, for instance, United States v. Krikheli, No. 11-2865 (2d Cir. Feb. 2, 2012), where the U.S. Court of Appeals for the Second Circuit affirmed the convictions under the Statute of Ilya and Rachel Krikheli, husband and wife. The Krikhelis had been convicted of soliciting and receiving kickbacks, offering and paying kickbacks, and conspiring to violate the Statute. Rachel Krikheli was sentenced to a 24-month prison term, and Ilya Krikheli was sentenced to a 20-month term.
The Krikhelis contened “that the evidence showed only that they advertised or recommended the services of Eric Hagerbrant, the owner of a diagnostic imaging company, to physicians who then exercised independent judgment in making referrals. The court did not accept this argument, stating “audio and video recordings demonstrated that the Krikhelis did not simply advertise or recommend Hagerbrant’s services to physicians, but directly paid physicians or indirectly paid them through middlemen, such as co-defendants Bajwa and Srivastava, to induce referrals to Hagerbrant. That conduct is plainly proscribed by [the Statute]. Further, similar recorded evidence showed that the Krikhelis solicited and received payments from Hagerbrant in exchange for orchestrating the fraudulent scheme, conduct proscribed by [the Statute] .”

DEALING WITH THE DISRUPTIVE PRACTITIONER

It is entirely appropriate for hospitals and medical staff executive committees to give less weight to disruptive incidents in the past when the offending practitioner’s performance has improved and a substantial period of time has passed. Nevertheless, removing memoranda documenting these past incidents entirely from the practitioners file is not a good idea, since most disciplinary policies are progressive.
A progressive policy applies increasingly more severe sanctions to additional incidents of bad behavior. Without documentation of past performance, when future incidents occur, it is difficult to justify more severe sanctions. While there is a tendency to reduce the importance of minor incidents, the totality of the circumstances, including past performance and actions taken, should be considered.  
It is very important that the organized medical staff have a disruptive practitioner policy. The first step is to include a statement in the medical staff bylaws to the effect that each member of the staff is expected to comply with all of the hospital and medical staff rules, regulations, policies and procedures relating to behavior and performance. Failure to do so will subject the member to sanction under the corrective action procedure delineated in the bylaws and/or fair hearing plan.  
It is also important to understand what constitutes disruptive behavior. Disruptive behavior includes violent or verbally abusive activity, but it is not limited to such behavior. Some examples of disruptive behavior from actual cases:
In a 2009 Ohio case involving Fairfield Medical Center, the hospital’s CEO delineated the disruptive activity as:
Disruption of the normal function of the department as evidenced by:
1)complaints from staff of harassment;
2)numerous unscheduled prolonged meetings of the radiology group during normal business hours and after hours to address your behavior and issues raised by you;
3)conflict with department management and failure to take issues regarding staff through proper channels as requested;
4)continued imposition of personal issues upon department staff during business hours;
5) ongoing concern regarding your perceived threatening demeanor and cryptic remarks which raise concerns about staff safety;
6) failure to alter behavior in spite of requests to do so both by Hospital Administration and the radiology group;
7) a direct threat made by you to one of the other radiologists. 

In a case involving St. Joseph Health Center , the court described the disruptive behavior as:
. . . posting the “Kama Sutra Indian Sex Guide” on a hospital bulletin board, posting an article titled “Police say man kills wife at work” in the labor and delivery unit, with appellant’s hand-written comments stating, “This happens when wives talk too much. They never learn, they never stop. Why?” Appellant posted this article shortly after a heated argument with a nurse, and it was viewed as a threat. While on vacation, appellant sent a postcard containing pictures of naked men’s buttocks to the nurses’ station with his name or the name of an actor written on each man’s buttocks. Appellant also sent other inappropriate postcards to hospital staff. Appellant posted an article titled, “Cohabitation, Contraception, and Sperm Exposure” on a bulletin board with a bulleted item referring to oral sex. A nurse also completed an incident report wherein she described appellant discussing with her why men enjoy performing oral sex on women and the taste of female ejaculation.

In a case involving Southern Ohio Medical Center, the practitioner was terminated because she made death threats against others, telling another resident, “if I had a gun I'd kill them both," referring to another physician and a staff employee. 
In a case involving Trumbull Memorial Hospital, the court described the disruptive behavior as: 
Appellant has been reprimanded for leaving self-promotional materials in the hospital's cafeteria, for his verbal and written attacks on colleagues and the hospital, and for inappropriate sexual comments toward nurses.
Matters came to a head over three issues: (1) the hospital's lack of a twenty-four hour pediatric house officer to aid in the resuscitation of distressed newborns; (2) appellant's belief that certain pediatricians were not responding immediately to calls to assist distressed newborns; and (3) his department chief, . . . refusal to serve a rotation on the house emergency obstetrics schedule.
Because of his concerns, appellant wrote numerous letters in an effort to resolve these issues to his satisfaction. Many of these letters were pointedly critical of his colleagues. Appellant engaged in numerous verbal altercations with staff members, . . . 
(This appears to be the same physician as the one involved in the St. Joseph Hospital proceeding.)
In a case involving St. Vincent Charity Hospital, the disruptive activity involved statements before a public hearing:
[The practitioner] attended a public hearing on Charity Hospital's request for an Urban Development Action Grant. Dr. Siegel identified himself as being the President of 2475, the Director of the Eye Department, and the Director of the Lions Eye Clinic. He made various statements at the hearing, indicating that the Hospital's expansion plan was the "laughing stock" of other community hospitals and that the plan was "a ruse" to acquire the land.  

So we see that disruptive activity takes many forms. Understanding that, when it happens, what steps should the hospital and/or the medical staff take to see that it does not affect patient care or disrupt operations. 
After having the bylaws clearly state that such activity will not be tolerated, the next step is to have a medical staff policy regarding disruptive behavior that includes progressive discipline and/or sanctions that may be imposed before taking formal action under the corrective action directives. Such a policy should include:
Where a practitioner is not meeting the medical staff’s standards of behavior and/or performance, the staff member responsible for the staff section to which the practitioner is assigned (usually the department chairman) should take the following action:
omeet with the offending practitioner to discuss the matter (it is usually a good idea to have another staff member in attendance who can testify to what occurred if necessary);
oinform the practitioner of the nature of the problem and the action required to correct it; and
oprepare a memorandum for the practitioner’s file detailing the problem, the meeting and the required action.  

When there is a second incident, the supervising staff member should again meet with the offending practitioner and take the following action:
o issue a written reprimand to the practitioner;
oinform the practitioner in writing that if there is a future incident, the matter will be referred to the medical executive committee for appropriate sanction under the corrective action procedures; and
oprepare a memorandum for the practitioner’s file detailing the problem, the meeting and the action taken. A copy of the reprimand and the notice to the practitioner should be included as attachments to this memorandum.

If there is a third incident, the supervising member should refer the matter, along with the practitioner’s file, to the medical executive committee with a recommendation that formal action be taken in accordance with the corrective action procedures.  

Sometimes the medical executive committee can address this issue without taking a formal adverse action. There are several good programs available dealing with correcting disruptive behavior. The medical executive may want to consider requiring the offending practitioner to attend one of these programs.

Where there is serious misconduct, the matter should be referred to the medical executive committee for corrective action immediately, disregarding the series of steps outlined above. 
Many times as a hearing officer, I find that the medical staff management simply condones the problem until it gets to a point where it can no longer be ignored. In these cases, even where there are meetings with the practitioner, they are poorly documented, or there is no documentation. Therefore, when the medical executive committee attempts to impose corrective action, there is little documented evidence of the prior offending behavior and/or of the action taken. It then appears that the staff is, to use a metaphor, trying to kill a fly with a sledge-hammer. 
However, if the steps outlined above are taken, there is ample evidence that this is a continuing problem, and the staff has made every effort to correct it without resorting to an adverse action. This procedure also provides documentation that the medical executive committee took the adverse action based on a substantial factual basis and that its action was not arbitrary, unreasonable or capricious.


HOSPITAL-PHYSICIAN RELATIONSHIPS

History of Peer Review in Hospitals: The Physician’s Workshop 

William Mack Copeland, MS, JD, PhD, LFACHE

Hospitals, as corporate entities, have the ultimate responsibility for the quality of medical care provided in their facilities. Such has not always been the case. Until a few years ago, the hospital was considered simply a "workshop" for the physician. There was no duty on the part of the hospital to evaluate the quality of care given; in fact, those who suggested it should be done were dismissed as being eccentric:
I am called eccentric for saying in public:
That Hospitals, if they wish to be sure of improvement, 
Must find out what their results are.
Must analyze their results, to find their strong and weak points.
Must compare their results with those of other hospitals.
Must care for what cases they can care for well, and avoid attempting to care for cases which they are not qualified to care for well . . . 
Must assign the cases to members of the Staff (for treatment) for better reasons than seniority, the calendar, or temporary convenience . . .
Must welcome publicity not only for their successes, but for their errors, so that the Public may give them their help when it is needed.
Must promote members of the Staff on a basis which gives due consideration to what they can and do accomplish for their patients.
Such opinions will not be eccentric a few years hence. 

History has certainly proven that for a hospital to evaluate the quality of care practiced within its walls is not eccentric. The relationship between the hospital, its medical staff, and the physicians on that staff has changed dramatically over the last one hundred years. It is now well accepted that the hospital has the final responsibility for the quality of care provided within its facilities. This statement can be misleading, however, if one concludes that the hospital is liable for all acts of negligence or malpractice by a physician who practices at the hospital. In truth, the hospital must take reasonable steps:
1)To select a competent medical staff,
2)To ensure that the individual physician on it staff performs only procedures for which he or she is qualified, and
3)To implement certain quality control measures to verify that only qualified practitioners remain on the staff and that quality care is provided in the institution.
The focus of this article is on the relationship between the medical staff and the hospital. The foundation of that relationship and the basis for these requirements rests on the legal responsibility of the hospital for the care provided by the physicians on that medical staff. To fully appreciate and have a true perspective of the basis of the current law, one must have an appreciation of the historical relationship between the physician and the hospital. Further, to see this relationship in the proper context, the roles each plays under the "corporate responsibility doctrine" must be analyzed. 
Traditionally, hospitals have provided the physician a place to care for his patients. While this is still true in the purest sense, there have been some drastic changes in the concept of what a hospital does and what its responsibilities are as an institution. From its very inception to the middle part of the twentieth century, a hospital was simply a "workshop" for the physician. It was not, even to the slightest degree, responsible for the medical care provided by the members of its medical staff unless these members were employed by it. No less than the eminent jurist Benjamin Cardozo, in 1914, addressed the problem as follows:
The wrong was not that of the hospital; it was that of physicians, who were not the defendant's servants, but were pursuing an independent calling, a profession sanctioned by a solemn oath, and safeguarded by stringent penalties. If, in serving their patient, they violated her commands, the responsibility is not the [hospital's]; it is theirs. 

The hospital's responsibility to its patients was limited to administrative liability for its ministerial acts, such as referring the emergency room patient only to a competent physician and making reasonable efforts to ensure the competence of its employees. There was no duty to supervise the performance of non-employee members of the medical staff or even to ensure their competence. The theory was that since only physicians could practice medicine, which by its very nature requires a high degree of specialization in skills and an ability to exercise discretion, the hospital management was inherently incapable of exercising effective control over the medical care provided by the physician who operated as an independent contractor when utilizing its facilities.  
 When a doctor diagnoses, treats and operates on a patient in a hospital, he is in command of these functions, and the hospital and its employees subserve him in his ministrations to the patient. He has sole and final control in the matter of diagnosis, treatment and surgery. Possessed of this authority, it follows that his actions as doctor are his responsibility.
The purport of the cited statutes and of the decisions is that the hospital cannot and does not practice medicine and, hence, cannot be charged with the careless and negligent performance of medical services by a doctor on the staff of the hospital or employed by the hospital as a resident surgeon.  

The professional medical process was considered entirely in the hands of the individual treating physician. 
The right to practice medicine is, in this state, controlled by statute. It is held in some jurisdictions that corporations may legally engage in the practice of medicine and surgery. The question involves the consideration and construction of local statutes. Under the statutes of this state it has never been doubted that it is unlawful for a corporation to practice medicine, and any contract made in the name of a corporation, binding it to diagnose or treat ailments or diseases, is not only ultra vires, but unlawful and against public policy. The right to practice medicine and surgery under a license by the state is a personal privilege. It cannot be delegated, and a corporation, or other unlicensed person, may not engage in the practice of medicine by employing one who is licensed to do the things which constitute practicing the profession.  
The courts went to great lengths to differentiate between the two kinds of negligence: administrative and medical. The New York Court of appeals, in overruling its prior holdings, discussed its own attempts to interpret the distinction between these terms:
The difficulty of differentiating between the "medical" and the "administrative" in this context, highlighted as it is by the disagreement of the judges below, is thus brought into sharp focus.
[T]hat difficulty has long plagued the courts and, indeed, as consideration of a few illustrative cases reveals, a consistent and clearly defined distinction between the terms has proved to be highly elusive. Placing an improperly capped hot water bottle on a patient's body is administrative, while keeping a hot water bottle too long on a patient's body is medical. Administering blood, by means of a transfusion, to the wrong patient is administrative, while administering the wrong blood to the right patient is medical. Employing an improperly sterilized needle for a hypodermic injection is administrative, while improperly administering a hypodermic injection is medical. Failing to place sideboards on a bed after a nurse decided that they were necessary is administrative, while failing to decide that sideboards should be used when the need does exist is medical.

From distinctions such as these there is to be deduced neither guiding principle nor clear delineation of policy; they cannot help but cause confusion, cannot help but create doubt and uncertainty. 
Even where the hospital was held responsible for the injury to a patient because of a failure to perform competently its administrative responsibilities, most escaped liability through the doctrine of charitable immunity. This doctrine was first declared in this country in 1876 and served to provide total immunity from liability for charitable institutions. It was, in fact, the judicial compromise between this doctrine and respondent superior that caused the administrative/medical dichotomy.  
It is little wonder that professional management of hospitals was almost nonexistent; the situation led one commentator to conclude:

​The governance of the American hospital has always been elusive, amorphous, and confusing. Bewildered students of management have been able to find no theories to fit the apparently headless enterprise and have dismissed the situation as an enigma...The hospital was originally conceived as an agency devoted to doing good rather than well. It was little more than a home away from home for the sick poor. The physicians didn't need the hospital in the beginning and the hospital didn't need management.

Peter Rogatz, M.D., a former senior vice president of Blue Cross and Blue Shield of Greater New York, states it very succinctly in this manner:
[H]ospital trustees were supposed to mind their own business. They weren't supposed to worry about what doctors did or how they did it. [T]rustees aren't doctors, the reasoning went, so let the doctors alone and let them take care of patients. 

While it is true that each hospital had an organization called its medical staff, this staff was usually loosely organized and was said to be self-governing. Except in the most extreme circumstances, the hospital's governing body adopted a noninterference policy toward professional standards and toward medical affairs. 

And then, the Illinois Supreme Court decided Darling. The Impact of this decision will be discussed in future articles. Stay tuned. 

  


 

​i[T]hat difficulty has long plagued the courts and, indeed, as consideration of a few illustrative cases reveals, a consistent and clearly defined distinction between the terms has proved to be highly elusive. Placing an improperly capped hot water bottle on a patient's body is administrative, while keeping a hot water bottle too long on a patient's body is medical. Administering blood, by means of a transfusion, to the wrong patient is administrative, while administering the wrong blood to the right patient is medical. Employing an improperly sterilized needle for a hypodermic injection is administrative, while improperly administering a hypodermic injection is medical. Failing to place sideboards on a bed after a nurse decided that they were necessary is administrative, while failing to decide that sideboards should be used when the need does exist is medical.

From distinctions such as these there is to be deduced neither guiding principle nor clear delineation of policy; they cannot help but cause confusion, cannot help but create doubt and uncertainty. 
T]hat difficulty has long plagued the courts and, indeed, as consideration of a few illustrative cases reveals, a consistent and clearly defined distinction between the terms has proved to be highly elusive. Placing an improperly capped hot water bottle on a patient's body is administrative, while keeping a hot water bottle too long on a patient's body is medical. Administering blood, by means of a transfusion, to the wrong patient is administrative, while administering the wrong blood to the right patient is medical. Employing an improperly sterilized needle for a hypodermic injection is administrative, while improperly administering a hypodermic injection is medical. Failing to place sideboards on a bed after a nurse decided that they were necessary is administrative, while failing to decide that sideboards should be used when the need does exist is medical.

From distinctions such as these there is to be deduced neither guiding principle nor clear delineation of policy; they cannot help but cause confusion, cannot help but create doubt and uncertainty. 
T]hat difficulty has long plagued the courts and, indeed, as consideration of a few illustrative cases reveals, a consistent and clearly defined distinction between the terms has proved to be highly elusive. Placing an improperly capped hot water bottle on a patient's body is administrative, while keeping a hot water bottle too long on a patient's body is medical. Administering blood, by means of a transfusion, to the wrong patient is administrative, while administering the wrong blood to the right patient is medical. Employing an improperly sterilized needle for a hypodermic injection is administrative, while improperly administering a hypodermic injection is medical. Failing to place sideboards on a bed after a nurse decided that they were necessary is administrative, while failing to decide that sideboards should be used when the need does exist is medical.

From distinctions such as these there is to be deduced neither guiding principle nor clear delineation of policy; they cannot help but cause confusion, cannot help but create doubt and uncertainty. 
gence: administrative and medical. The New York Court of appeals, in overruling its prior holdings, discussed its own attempts to interpret the distinction between these terms:
The difficulty of differentiating between the "medical" and the "administrative" in this context, highlighted as it is by the disagreement of the judges below, is thus brought into sharp focus.
courts went to great lengths to differentiate between the two kinds of negligence: administrative and medical. The New York Court of appeals, in overruling its prior holdings, discussed its own attempts to interpret the distinction between these terms:
The difficulty of differentiating between the "medical" and the "administrative" in this context, highlighted as it is by the disagreement of the judges below, is thus brought into sharp focus.
courts went to great lengths to differentiate between the two kinds of negligence: administrative and medical. The New York Court of appeals, in overruling its prior holdings, discussed its own attempts to interpret the distinction between these terms:
The difficulty of differentiating between the "medical" and the "administrative" in this context, highlighted as it is by the disagreement of the judges below, is thus brought into sharp focus.
The courts went to great lengths to differentiate between the two kinds of negligence: administrative and medical. The New York Court of appeals, in overruling its prior holdings, discussed its own attempts to interpret the distinction between these terms:
The difficulty of differentiating between the "medical" and the "administrative" in this context, highlighted as it is by the disagreement of the judges below, is thus brought into sharp focus.

[T]hat difficulty has long plagued the courts and, indeed, as consideration of a few illustrative cases reveals, a consistent and clearly defined distinction between the terms has proved to be highly elusive. Placing an improperly capped hot water bottle on a patient's body is administrative, while keeping a hot water bottle too long on a patient's body is medical. Administering blood, by means of a transfusion, to the wrong patient is administrative, while administering the wrong blood to the right patient is medical. Employing an improperly sterilized needle for a hypodermic injection is administrative, while improperly administering a hypodermic injection is medical. Failing to place sideboards on a bed after a nurse decided that they were necessary is administrative, while failing to decide that sideboards should be used when the need does exist is medical.

From distinctions such as these there is to be deduced neither guiding principle nor clear delineation of policy; they cannot help but cause confusion, cannot help but create doubt and uncertainty. 

Even where the hospital was held responsible for the injury to a patient because of a failure to perform competently its administrative responsibilities, most escaped liability through the doctrine of charitable immunity. This doctrine was first declared The courts went to great lengths to differentiate between the two kinds of negligence: administrative and medical. The New York Court of appeals, in overruling its prior holdings, discussed its own attempts to interpret the distinction between these terms:
The difficulty of differentiating between the "medical" and the "administrative" in this context, highlighted as it is by the disagreement of the judges below, is thus brought into sharp focus.

[T]hat difficulty has long plagued the courts and, indeed, as consideration of a few illustrative cases reveals, a consistent and clearly defined distinction between the terms has proved to be highly elusive. Placing an improperly capped hot water bottle on a patient's body is administrative, while keeping a hot water bottle too long on a patient's body is medical. Administering blood, by means of a transfusion, to the wrong patient is administrative, while administering the wrong blood to the right patient is medical. Employing an improperly sterilized needle for a hypodermic injection is administrative, while improperly administering a hypodermic injection is medical. Failing to place sideboards on a bed after a nurse decided that they were necessary is administrative, while failing to decide that sideboards should be used when the need does exist is medical.

From distinctions such as these there is to be deduced neither guiding principle nor clear delineation of policy; they cannot help but cause confusion, cannot help but create doubt and uncertainty. 

Even where the hospital was held responsible for the injury to a patient because of a failure to perform competently its administrative responsibilities, most escaped liability through the doctrine of charitable immunity. This doctrine was first declared raditionally, hospitals have provided the physician a place to care for his patients. While this is still true in the purest sense, there have been some drastic changes in the concept of what a hospital does and what its responsibilities are as an institution. From its very inception to the middle part of the twentieth century, a hospital was simply a "workshop" for the physician. It was not, even to the slightest degree, responsible for the medical care provided by the members of its medical staff unless these members were employed by it. No less than the eminent jurist Benjamin Cardozo, in 1914, addressed the problem as follows:
The wrong was not that of the hospital; it was that of physicians, who were not the defendant's servants, but were pursuing an independent calling, a profession sanctioned by a solemn oath, and safeguarded by stringent penalties. If, in serving their patient, they violated her commands, the responsibility is not the [hospital's]; it is theirs. 

The hospital's responsibility to its patients was limited to administrative liability for its ministerial acts, such as referring the emergency room patient only to a competent physician and making reasonable efforts to ensure the competence of its employees. There was no duty to supervise the performance of non-employee members of the medical staff or even to ensure their competence. The theory was that since only physicians could practice medicine, which by its very nature requires a high degree of specialization in skills and an ability to exercise discretion, the hospital aditionally, hospitals have provided the physician a place to care for his patients. While this is still true in the purest sense, there have been some drastic changes in the concept of what a hospital does and what its responsibilities are as an institution. From its very inception to the middle part of the twentieth century, a hospital was simply a "workshop" for the physician. It was not, even to the slightest degree, responsible for the medical care provided by the members of its medical staff unless these members were employed by it. No less than the eminent jurist Benjamin Cardozo, in 1914, addressed the problem as follows:
The wrong was not that of the hospital; it was that of physicians, who were not the defendant's servants, but were pursuing an independent calling, a profession sanctioned by a solemn oath, and safeguarded by stringent penalties. If, in serving their patient, they violated her commands, the responsibility is not the [hospital's]; it is theirs. 

The hospital's responsibility to its patients was limited to administrative liability for its ministerial acts, such as referring the emergency room patient only to a competent physician and making reasonable efforts to ensure the competence of its employees. There was no duty to supervise the performance of non-employee members of the medical staff or even to ensure their competence. The theory was that since only physicians could practice medicine, which by its very nature requires a high degree of specialization in skills and an ability to exercise discretion, the hospital management was inherently incapable of exercising effective control over the medical care provided by the physician who operated as an independent contractor when utilizing its facilities.  
 When a doctor diagnoses, treats and operates on a patient in a hospital, he is in command of these functions, and the hospital and its employees subserve him in his ministrations to the patient. He has sole and final control in the matter of diagnosis, treatment and surgery. Possessed of this authority, it follows that his actions as doctor are his responsibility.
The purport of the cited statutes and of the decisions is that the hospital cannot and does not practice medicine and, hence, cannot be charged with the careless and negligent performance of medical services by a doctor on the staff of the hospital or employed by the hospital as a resident surgeon.  

The professional medical process was considered entirely in the hands of the individual treating physician. 
The right to practice medicine is, in this state, controlled by statute. It is held in some jurisdictions that corporations may legally engage in the practice of medicine and surgery. The question involves the consideration and construction of local statutes. Under the statutes of this state it has never been doubted that it is unlawful for a corporation to practice medicine, and any contract made in the name of a corporation, binding it to diagnose or treat ailments or diseases, is not only ultra vires, but unlawful and against public policy. The right to practice medicine and surgery under a license by the state is a personal privilege. It cannot be delegated, and a corporation, or other unlicensed person, may not engage in the practice of medicine by employing one who is licensed to do the things which constitute practicing the profession.  

HOSPITAL-PHYSICIAN RELATIONSHIPS

History of Peer Review in Hospitals: The Physician’s Workshop 

William Mack Copeland, MS, JD, PhD, LFACHE

Hospitals, as corporate entities, have the ultimate responsibility for the quality of medical care provided in their facilities. Such has not always been the case. Until a few years ago, the hospital was considered simply a "workshop" for the physician. There was no duty on the part of the hospital to evaluate the quality of care given; in fact, those who suggested it should be done were dismissed as being eccentric:
I am called eccentric for saying in public:
That Hospitals, if they wish to be sure of improvement, 
Must find out what their results are.
Must analyze their results, to find their strong and weak points.
Must compare their results with those of other hospitals.
Must care for what cases they can care for well, and avoid attempting to care for cases which they are not qualified to care for well . . . 
Must assign the cases to members of the Staff (for treatment) for better reasons than seniority, the calendar, or temporary convenience . . .
Must welcome publicity not only for their successes, but for their errors, so that the Public may give them their help when it is needed.
Must promote members of the Staff on a basis which gives due consideration to what they can and do accomplish for their patients.
Such opinions will not be eccentric a few years hence. 

History has certainly proven that for a hospital to evaluate the quality of care practiced within its walls is not eccentric. The relationship between the hospital, its medical staff, and the physicians on that staff has changed dramatically over the last one hundred years. It is now well accepted that the hospital has the final responsibility for the quality of care provided within its facilities. This statement can be misleading, however, if one concludes that the hospital is liable for all acts of negligence or malpractice by a physician who practices at the hospital. In truth, the hospital must take reasonable steps:
1)To select a competent medical staff,
2)To ensure that the individual physician on it staff performs only procedures for which he or she is qualified, and
3)To implement certain quality control measures to verify that only qualified practitioners remain on the staff and that quality care is provided in the institution.
The focus of this article is on the relationship between the medical staff and the hospital. The foundation of that relationship and the basis for these requirements rests on the legal responsibility of the hospital for the care provided by the physicians on that medical staff. To fully appreciate and have a true perspective of the basis of the current law, one must have an appreciation of the historical relationship between the physician and the hospital. Further, to see this relationship in the proper context, the roles each plays under the "corporate responsibility doctrine" must be analyzed. 
Traditionally, hospitals have provided the physician a place to care for his patients. While this is still true in the purest sense, there have been some drastic changes in the concept of what a hospital does and what its responsibilities are as an institution. From its very inception to the middle part of the twentieth century, a hospital was simply a "workshop" for the physician. It was not, even to the slightest degree, responsible for the medical care provided by the members of its medical staff unless these members were employed by it. No less than the eminent jurist Benjamin Cardozo, in 1914, addressed the problem as follows:
The wrong was not that of the hospital; it was that of physicians, who were not the defendant's servants, but were pursuing an independent calling, a profession sanctioned by a solemn oath, and safeguarded by stringent penalties. If, in serving their patient, they violated her commands, the responsibility is not the [hospital's]; it is theirs. 

The hospital's responsibility to its patients was limited to administrative liability for its ministerial acts, such as referring the emergency room patient only to a competent physician and making reasonable efforts to ensure the competence of its employees. There was no duty to supervise the performance of non-employee members of the medical staff or even to ensure their competence. The theory was that since only physicians could practice medicine, which by its very nature requires a high degree of specialization in skills and an ability to exercise discretion, the hospital management was inherently incapable of exercising effective control over the medical care provided by the physician who operated as an independent contractor when utilizing its facilities.  
 When a doctor diagnoses, treats and operates on a patient in a hospital, he is in command of these functions, and the hospital and its employees subserve him in his ministrations to the patient. He has sole and final control in the matter of diagnosis, treatment and surgery. Possessed of this authority, it follows that his actions as doctor are his responsibility.
The purport of the cited statutes and of the decisions is that the hospital cannot and does not practice medicine and, hence, cannot be charged with the careless and negligent performance of medical services by a doctor on the staff of the hospital or employed by the hospital as a resident surgeon.  

The professional medical process was considered entirely in the hands of the individual treating physician. 
The right to practice medicine is, in this state, controlled by statute. It is held in some jurisdictions that corporations may legally engage in the practice of medicine and surgery. The question involves the consideration and construction of local statutes. Under the statutes of this state it has never been doubted that it is unlawful for a corporation to practice medicine, and any contract made in the name of a corporation, binding it to diagnose or treat ailments or diseases, is not only ultra vires, but unlawful and against public policy. The right to practice medicine and surgery under a license by the state is a personal privilege. It cannot be delegated, and a corporation, or other unlicensed person, may not engage in the practice of medicine by employing one who is licensed to do the things which constitute practicing the profession.  

The courts went to great lengths to differentiate between the two kinds of negligence: administrative and medical. The New York Court of appeals, in overruling its prior holdings, discussed its own attempts to interpret the distinction between these terms:
The difficulty of differentiating between the "medical" and the "administrative" in this context, highlighted as it is by the disagreement of the judges below, is thus brought into sharp focus.

[T]hat difficulty has long plagued the courts and, indeed, as consideration of a few illustrative cases reveals, a consistent and clearly defined distinction between the terms has proved to be highly elusive. Placing an improperly capped hot water bottle on a patient's body is administrative, while keeping a hot water bottle too long on a patient's body is medical. Administering blood, by means of a transfusion, to the wrong patient is administrative, while administering the wrong blood to the right patient is medical. Employing an improperly sterilized needle for a hypodermic injection is administrative, while improperly administering a hypodermic injection is medical. Failing to place sideboards on a bed after a nurse decided that they were necessary is administrative, while failing to decide that sideboards should be used when the need does exist is medical.

From distinctions such as these there is to be deduced neither guiding principle nor clear delineation of policy; they cannot help but cause confusion, cannot help but create doubt and uncertainty. 

Even where the hospital was held responsible for the injury to a patient because of a failure to perform competently its administrative responsibilities, most escaped liability through the doctrine of charitable immunity. This doctrine was first declared in this country in 1876 and served to provide total immunity from liability for charitable institutions. It was, in fact, the judicial compromise between this doctrine and respondent superior that caused the administrative/medical dichotomy.  
It is little wonder that professional management of hospitals was almost nonexistent; the situation led one commentator to conclude:
The governance of the American hospital has always been elusive, amorphous, and confusing. Bewildered students of management have been able to find no theories to fit the apparently headless enterprise and have dismissed the situation as an enigma...The hospital was originally conceived as an agency devoted to doing good rather than well. It was little more than a home away from home for the sick poor. The physicians didn't need the hospital in the beginning and the hospital didn't need management. 

Peter Rogatz, M.D., a former senior vice president of Blue Cross and Blue Shield of Greater New York, states it very succinctly in this manner:
[H]ospital trustees were supposed to mind their own business. They weren't supposed to worry about what doctors did or how they did it. [T]rustees aren't doctors, the reasoning went, so let the doctors alone and let them take care of patients. 

While it is true that each hospital had an organization called its medical staff, this staff was usually loosely organized and was said to be self-governing. Except in the most extreme circumstances, the hospital's governing body adopted a noninterference policy toward professional standards and toward medical affairs.  
And then, the Illinois Supreme Court decided Darling. The Impact of this decision will be discussed in future articles. Stay tuned. 

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HOSPITAL-PHYSICIAN RELATIONSHIPS

History of Peer Review in Hospitals: The Physician’s Workshop 

William Mack Copeland, MS, JD, PhD, LFACHE

Hospitals, as corporate entities, have the ultimate responsibility for the quality of medical care provided in their facilities. Such has not always been the case. Until a few years ago, the hospital was considered simply a "workshop" for the physician. There was no duty on the part of the hospital to evaluate the quality of care given; in fact, those who suggested it should be done were dismissed as being eccentric:
I am called eccentric for saying in public:
That Hospitals, if they wish to be sure of improvement, 
Must find out what their results are.
Must analyze their results, to find their strong and weak points.
Must compare their results with those of other hospitals.
Must care for what cases they can care for well, and avoid attempting to care for cases which they are not qualified to care for well . . . 
Must assign the cases to members of the Staff (for treatment) for better reasons than seniority, the calendar, or temporary convenience . . .
Must welcome publicity not only for their successes, but for their errors, so that the Public may give them their help when it is needed.
Must promote members of the Staff on a basis which gives due consideration to what they can and do accomplish for their patients.
Such opinions will not be eccentric a few years hence. 

History has certainly proven that for a hospital to evaluate the quality of care practiced within its walls is not eccentric. The relationship between the hospital, its medical staff, and the physicians on that staff has changed dramatically over the last one hundred years. It is now well accepted that the hospital has the final responsibility for the quality of care provided within its facilities. This statement can be misleading, however, if one concludes that the hospital is liable for all acts of negligence or malpractice by a physician who practices at the hospital. In truth, the hospital must take reasonable steps:
1)To select a competent medical staff,
2)To ensure that the individual physician on it staff performs only procedures for which he or she is qualified, and
3)To implement certain quality control measures to verify that only qualified practitioners remain on the staff and that quality care is provided in the institution.
The focus of this article is on the relationship between the medical staff and the hospital. The foundation of that relationship and the basis for these requirements rests on the legal responsibility of the hospital for the care provided by the physicians on that medical staff. To fully appreciate and have a true perspective of the basis of the current law, one must have an appreciation of the historical relationship between the physician and the hospital. Further, to see this relationship in the proper context, the roles each plays under the "corporate responsibility doctrine" must be analyzed. 
Traditionally, hospitals have provided the physician a place to care for his patients. While this is still true in the purest sense, there have been some drastic changes in the concept of what a hospital does and what its responsibilities are as an institution. From its very inception to the middle part of the twentieth century, a hospital was simply a "workshop" for the physician. It was not, even to the slightest degree, responsible for the medical care provided by the members of its medical staff unless these members were employed by it. No less than the eminent jurist Benjamin Cardozo, in 1914, addressed the problem as follows:
The wrong was not that of the hospital; it was that of physicians, who were not the defendant's servants, but were pursuing an independent calling, a profession sanctioned by a solemn oath, and safeguarded by stringent penalties. If, in serving their patient, they violated her commands, the responsibility is not the [hospital's]; it is theirs. 

The hospital's responsibility to its patients was limited to administrative liability for its ministerial acts, such as referring the emergency room patient only to a competent physician and making reasonable efforts to ensure the competence of its employees. There was no duty to supervise the performance of non-employee members of Even where the hospital was held responsible for the injury to a patient because of a failure to perform competently its administrative responsibilities, most escaped liability through the doctrine of charitable immunity. This doctrine was first declared in this country in 1876 and served to provide total immunity from liability for charitable institutions. It was, in fact, the judicial compromise between this doctrine and respondent superior that caused the administrative/medical dichotomy.  
It is little wonder that professional management of hospitals was almost nonexistent; the situation led one commentator to conclude:
theedical staff or even to ensure their competence. The theory was that since only physicians could practice medicine, which by its very nature requires a high degree of specialization in skills and an ability to exercise discretion, the hospital management was inherently incapable of exercising effective control over the medical care provided by the physician who operated as an independent contractor when utilizing its facilities.  
 When a doctor diagnoses, treats and operates on a patient in a hospital, he is in command of these functions, and the hospital and its employees subserve him in his ministrations to the patient. He has sole and final control in the matter of diagnosis, treatment and surgery. Possessed of this authority, it follows that his actions as doctor are his responsibility.
The purport of the cited statutes and of the decisions is that the hospital cannot and does not practice medicine and, hence, cannot be charged with the careless and negligent performance of medical services by a doctor on the staff of the hospital or employed by the hospital as a resident surgeon.  

The professional medical process was considered entirely in the hands of the individual treating physician. 
The right to practice medicine is, in this state, controlled by statute. It is held in some jurisdictions that corporations may legally engage in the practice of medicine and surgery. The question involves the consideration and construction of local statutes. Under the statutes of this state it has never been doubted that it is unlawful for a corporation to practice medicine, and any contract made in the name of a corporation, binding it to diagnose or treat ailments or diseases, is not only ultra vires, but unlawful and against public policy. The right to practice medicine and surgery under a license by the state is a personal privilege. It cannot be delegated, and a corporation, or other unlicensed person, may not engage in the practice of medicine by employing one who is licensed to do the things which constitute practicing the profession.  

The courts went to great lengths to differentiate between the two kinds of negligence: administrative and medical. The New York Court of appeals, in overruling its prior holdings, discussed its own attempts to interpret the distinction between these terms:
The difficulty of differentiating between the "medical" and the "administrative" in this context, highlighted as it is by the disagreement of the judges below, is thus brought into sharp focus.

[T]hat difficulty has long plagued the courts and, indeed, as consideration of a few illustrative cases reveals, a consistent and clearly defined distinction between the terms has proved to be highly elusive. Placing an improperly capped hot water bottle on a patient's body is administrative, while keeping a hot water bottle too long on a patient's body is medical. Administering blood, by means of a transfusion, to the wrong patient is administrative, while administering the wrong blood to the right patient is medical. Employing an improperly sterilized needle for a hypodermic injection is administrative, while improperly administering a hypodermic injection is medical. Failing to place sideboards on a bed after a nurse decided that they were necessary is administrative, while failing to decide that sideboards should be used when the need does exist is medical.

From distinctions such as these there is to be deduced neither guiding principle nor clear delineation of policy; they cannot help but cause confusion, cannot help but create doubt and uncertainty. 

Even where the hospital was held responsible for the injury to a patient because of a failure to perform competently its administrative responsibilities, most escaped liability through the doctrine of charitable immunity. This doctrine was first declared in this country in 1876 and served to provide total immunity from liability for charitable institutions. It was, in fact, the judicial compromise between this doctrine and respondent superior that caused the administrative/medical dichotomy.  
It is little wonder that professional management of hospitals was almost nonexistent; the situation led one commentator to conclude:
The governance of the American hospital has always been elusive, amorphous, and confusing. Bewildered students of management have been able to find no theories to fit the apparently headless enterprise and have dismissed the situation as an enigma...The hospital was originally conceived as an agency devoted to doing good rather than well. It was little more than a home away from home for the sick poor. The physicians didn't need the hospital in the beginning and the hospital didn't need management. 

Peter Rogatz, M.D., a former senior vice president of Blue Cross and Blue Shield of Greater New York, states it very succinctly in this manner:
[H]ospital trustees were supposed to mind their own business. They weren't supposed to worry about what doctors did or how they did it. [T]rustees aren't doctors, the reasoning went, so let the doctors alone and let them take care of patients. 

While it is true that each hospital had an organization called its medical staff, this staff was usually loosely organized and was said to be self-governing. Except in the most extreme circumstances, the hospital's governing body adopted a noninterference policy toward professional standards and toward medical affairs.  
And then, the Illinois Supreme Court decided Darling. The Impact of this decision will be discussed in future articles. Stay tuned. 
SPITAL-PHYSICIAN RELATIONSHIPS

History of Peer Review in Hospitals: The Physician’s Workshop 

William Mack Copeland, MS, JD, PhD, LFACHE

Hospitals, as corporate entities, have the ultimate responsibility for the quality of medical care provided in their facilities. Such has not always been the case. Until a few years ago, the hospital was considered simply a "workshop" for the physician. There was no duty on the part of the hospital to evaluate the quality of care given; in fact, those who suggested it should be done were dismissed as being eccentric:
I am called eccentric for saying in public:
That Hospitals, if they wish to be sure of improvement, 
Must find out what their results are.
Must analyze their results, to find their strong and weak points.
Must compare their results with those of other hospitals.
Must care for what cases they can care for well, and avoid attempting to care for cases which they are not qualified to care for well . . . 
Must assign the cases to members of the Staff (for treatment) for better reasons than seniority, the calendar, or temporary convenience . . .
Must welcome publicity not only for their successes, but for their errors, so that the Public may give them their help when it is needed.
Must promote members of the Staff on a basis which gives due consideration to what they can and do accomplish for their patients.
Such opinions will not be eccentric a few years hence. 

History has certainly proven that for a hospital to evaluate the quality of care practiced within its walls is not eccentric. The relationship between the hospital, its medical staff, and the physicians on that staff has changed dramatically over the last one hundred years. It is now well accepted that the hospital has the final responsibility for the quality of care provided within its facilities. This statement can be misleading, however, if one concludes that the hospital is liable for all acts of negligence or malpractice by a physician who practices at the hospital. In truth, the hospital must take reasonable steps:
1)To select a competent medical staff,
2)To ensure that the individual physician on it staff performs only procedures for which he or she is qualified, and
3)To implement certain quality control measures to verify that only qualified practitioners remain on the staff and that quality care is provided in the institution.
The focus of this article is on the relationship between the medical staff and the hospital. The foundation of that relationship and the basis for these requirements rests on the legal responsibility of the hospital for the care provided by the physicians on that medical staff. To fully appreciate and have a true perspective of the basis of the current law, one must have an appreciation of the historical relationship between the physician and the hospital. Further, to see this relationship in the proper context, the roles each plays under the "corporate responsibility doctrine" must be analyzed. 
Traditionally, hospitals have provided the physician a place to care for his patients. While this is still true in the purest sense, there have been some drastic changes in the concept of what a hospital does and what its responsibilities are as an institution. From its very inception to the middle part of the twentieth century, a hospital was simply a "workshop" for the physician. It was not, even to the slightest degree, responsible for the medical care provided by the members of its medical staff unless these members were employed by it. No less than the eminent jurist Benjamin Cardozo, in 1914, addressed the problem as follows:
The wrong was not that of the hospital; it was that of physicians, who were not the defendant's servants, but were pursuing an independent calling, a profession sanctioned by a solemn oath, and safeguarded by stringent penalties. If, in serving their patient, they violated her commands, the responsibility is not the [hospital's]; it is theirs. 

The hospital's responsibility to its patients was limited to administrative liability for its ministerial acts, such as referring the emergency room patient only to a competent physician and making reasonable efforts to ensure the competence of its employees. There was no duty to supervise the performance of non-employee members of the medical staff or even to ensure their competence. The theory was that since only physicians could practice medicine, which by its very nature requires a high degree of specialization in skills and an ability to exercise discretion, the hospital management was inherently incapable of exercising effective control over the medical care provided by the physician who operated as an independent contractor when utilizing its facilities.  
 When a doctor diagnoses, treats and operates on a patient in a hospital, he is in command of these functions, and the hospital and its employees subserve him in his ministrations to the patient. He has sole and final control in the matter of diagnosis, treatment and surgery. Possessed of this authority, it follows that his actions as doctor are his responsibility.
The purport of the cited statutes and of the decisions is that the hospital cannot and does not practice medicine and, hence, cannot be charged with the careless and negligent performance of medical services by a doctor on the staff of the hospital or employed by the hospital as a resident surgeon.  

The professional medical process was considered entirely in the hands of the individual treating physician. 
The right to practice medicine is, in this state, controlled by statute. It is held in some jurisdictions that corporations may legally engage in the practice of medicine and surgery. The question involves the consideration and construction of local statutes. Under the statutes of this state it has never been doubted that it is unlawful for a corporation to practice medicine, and any contract made in the name of a corporation, binding it to diagnose or treat ailments or diseases, is not only ultra vires, but unlawful and against public policy. The right to practice medicine and surgery under a license by the state is a personal privilege. It cannot be delegated, and a corporation, or other unlicensed person, may not engage in the practice of medicine by employing one who is licensed to do the things which constitute practicing the profession.  

The courts went to great lengths to differentiate between the two kinds of negligence: administrative and medical. The New York Court of appeals, in overruling its prior holdings, discussed its own attempts to interpret the distinction between these terms:
The difficulty of differentiating between the "medical" and the "administrative" in this context, highlighted as it is by the disagreement of the judges below, is thus brought into sharp focus.

[T]hat difficulty has long plagued the courts and, indeed, as consideration of a few illustrative cases reveals, a consistent and clearly defined distinction between the terms has proved to be highly elusive. Placing an improperly capped hot water bottle on a patient's body is administrative, while keeping a hot water bottle too long on a patient's body is medical. Administering blood, by means of a transfusion, to the wrong patient is administrative, while administering the wrong blood to the right patient is medical. Employing an improperly sterilized needle for a hypodermic injection is administrative, while improperly administering a hypodermic injection is medical. Failing to place sideboards on a bed after a nurse decided that they were necessary is administrative, while failing to decide that sideboards should be used when the need does exist is medical.

From distinctions such as these there is to be deduced neither guiding principle nor clear delineation of policy; they cannot help but cause confusion, cannot help but create doubt and uncertainty. 

Even where the hospital was held responsible for the injury to a patient because of a failure to perform competently its administrative responsibilities, most escaped liability through the doctrine of charitable immunity. This doctrine was first declared in this country in 1876 and served to provide total immunity from liability for charitable institutions. It was, in fact, the judicial compromise between this doctrine and respondent superior that caused the administrative/medical dichotomy.  
It is little wonder that professional management of hospitals was almost nonexistent; the situation led one commentator to conclude:
The governance of the American hospital has always been elusive, amorphous, and confusing. Bewildered students of management have been able to find no theories to fit the apparently headless enterprise and have dismissed the situation as an enigma...The hospital was originally conceived as an agency devoted to doing good rather than well. It was little more than a home away from home for the sick poor. The physicians didn't need the hospital in the beginning and the hospital didn't need management. 

Peter Rogatz, M.D., a former senior vice president of Blue Cross and Blue Shield of Greater New York, states it very succinctly in this manner:
[H]ospital trustees were supposed to mind their own business. They weren't supposed to worry about what doctors did or how they did it. [T]rustees aren't doctors, the reasoning went, so let the doctors alone and let them take care of patients. 

While it is true that each hospital had an organization called its medical staff, this staff was usually loosely organized and was said to be self-governing. Except in the most extreme circumstances, the hospital's governing body adopted a noninterference policy toward professional standards and toward medical affairs.  
And then, the Illinois Supreme Court decided Darling. The Impact of this decision will be discussed in future articles. Stay tuned. 

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