Saturday, August 21, 2004

Down and Dirty....
A whistleblower, intimidation by company thugs with threats about ones family, bugging of offices, Richard Scruggs filing lawsuits, and the filing of a counter-suit. A fight against big tobacco, asbestos, or big food? No it is all about a community hospital in rural Georgia. From the Atlanta Journal-Constitution:Hospital challenger feels he's a target:
Charles Rehberg is learning that being an industry whistle-blower has an ugly side.

First came the private investigators, who showed up at his medical office parking lot as he was leaving work on the evening of Aug. 9, blocked his pickup and, he says, threatened him and his family.

Then this week came the lawsuit from the hospital system that hired the private investigators. It accuses Rehberg of racketeering and fraud, among other things.

"This sort of thing doesn't usually happen to a CPA," said Rehberg, an accountant who manages Albany Surgical, a general surgery practice.

For the 44-year-old Rehberg, nothing has been usual in the year since he and a prominent doctor at Albany Surgical, John Bagnato, decided to investigate the financial practices and political power of nonprofit hospitals.

The two men spent much of 2003 poring over tax returns, financial statements and databases on nonprofit hospitals, first in Georgia and then nationally. They came to believe that Albany's Phoebe Putney Health System and scores of nonprofit hospital systems throughout the nation were overcharging patients without health insurance and then aggressively seeking payment --- thereby violating their charitable obligation.

The information they gathered --- and delivered to famed Mississippi litigator Richard Scruggs in March --- was the catalyst for a series of lawsuits filed this summer against hospital systems that now total 45.
So Rehberg and Bagnato did some investigating of the hospital and were not pleased with the results. They then apparently sent their findings to Scruggs as part of his lawsuit. There was also some unfavorable information about the hospital floating around:
Langley said he hired former FBI agents, working for an Arizona private investigation firm, to help the hospital determine who in Albany was sending anonymous faxes containing derogatory information about Phoebe Putney. The faxes mentioned, among other things, executive salaries, a Cayman Islands account, and political and business connections.

Those faxes, titled "Phoebe Factoids," were sent to local business leaders and politicians....

A lawsuit alleging racketeering and fraud followed two days later, accusing Rehberg and unnamed other defendants of trying to inflict "economic harm" on Phoebe Putney.

The hospital system contends it traced the "Phoebe Factoid" faxes to a phone number at Albany Surgical --- and to a number used by Rehberg. Langley claims the faxes contained falsehoods and innuendo.

Rehberg called the lawsuit against him "absurd." His Atlanta attorney, Robert Mulholland, said the charges were without merit and an attempt by Phoebe Putney to distract attention from its financial practices.

When asked by a reporter whether he had a role in the faxes, Rehberg referred the question to his attorney. Mulholland's response: "We don't discuss the substantive aspects of litigation until we're in court."
Does Phoebe Putney have its' own "plumber's squad"?
There have been other troubling developments. Albany Surgical's president, Dr. Christopher Smith, a longtime critic of Phoebe Putney's administration, said an electronic surveillance device was found within his practice's gray concrete walls. And Rehberg said there was an attempt in February to bug his house.
Sounds scary.
It seems to me that these hospitals are being sued because they took steps to avoid running afoul of Medicare regulations which have been interpreted to mean that you could not charge anyone fees below that of Medicare. There was also concern that if hospitals were not aggressive with debt collection they could get into trouble as well. This was cleared up by HHS in a February 2004 memo and hospitals are moving to change their policies.
Some legal scholars have called into question the strength of Scrugg's case.
Some health law attorneys are skeptical that Scruggs' arguments will succeed.

"The behaviors they're targeting (billing and collection practices against the uninsured) are atrocious in some circumstances, but they're not illegal," says Gregg Bloche, a law professor of health law at Georgetown University. "The suits will fail."

Nor do they think there is an implied contract between hospitals and the government.

"That's never been recognized in the law," says Stuart Gerson, a partner at Epstein Becker & Green in Washington, D.C., who represents a hospital being sued. "The idea of an individual citizen, a taxpayer, seeking to enforce charitable obligations is, at least, a very novel argument that finds little support."

If any laws are being broken by the common hospital practice of allowing for-profit doctors to use their facilities, or if facilities are improperly steering business to trustees' companies, those arguments should be heard by taxing authorities or federal and state antitrust or anti-kickback regulators, Gerson says.

The lawsuits are renewing debate over the legal and ethical responsibility the nation's non-profits have to provide charity care.

"The IRS has never been really clear about what the grant of tax-exempt status means," says attorney John Reiss of the law firm Saul Ewing in Philadelphia. "It's never been clear that it actually commits you to providing any particular amount of charity care or anything else."
Having addressed the facts I would now like to address the possible motives behind this.

I would like to ask Mr. Rehberg, Dr. Bagnato, and Dr. Smith about the policy of Albany Surgical's concerning payment of bills by uninsured patients. Do they refer individuals to a collection agency after a period of time? How do their debt collection efforts differ from that of Phoebe Putney? Do they turn away uninsured patients from their office? Do they insist on down payments and a payment plan prior to performing elective surgery? If their motivation was to protect the uninsured, the answers would be revealing.

If they were concerned over financial impropriety, why didn't they notify the IRS or the HHS Inspector General? Why ally themselves with Scruggs?

Dr Smith is described as a "longtime critic of Phoebe Putney's administration". Could these actions be in retaliation to some unrelated action on the part of the hospital?

All of this makes for a good soap opera. The fact that it is fairly local makes it even better. This could however evolve into a "cutting off your nose to spite your face" situation. If the hospital takes a severe enough hit, they could be forced to curtail services.

Mr Rehberg must be naive to assume that he wouldn't get some backlash over this. As with many small to medium-sized communities the local hospital is a major employer. And some in the community will not sit back and allow such a major player in town to be attacked without a response.
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