On July 13, 2010 CMS issued the final rule defining meaningful use of Electronic Health Record (“EHR”), and the Office of the National Coordinator for Health Information Technology issued the final rule setting for the standards and certification criteria for establishing “certified EHR technology”. Both rules can be viewed at http://www.ofr.gov/inspection.aspx As discussed in previous Health care postings (April and July 2009) in order for Hospitals and eligible healthcare professionals to receive Medicare and Medicaid incentive payments over a five – six year period, they must show that they are using EHRs in a meaningful way. The final rule on Meaningful Use will be published in the Federal Register on July 28, 2010.

Stage I - The Meaningful Use Rule provides for a phased in approach to implementing the meaningful use criteria. The first phase, Stage I, will be the first two years of the program, years 2011 and 2012. Stage 2 and Stage 3 meaningful use criteria will be provided for in future rulemaking.

Stage I meaningful use requires eligible professionals to meet 15 core set objectives. Eligible hospitals will be required to meet 14 core set objectives. Eligible professionals and hospitals will be required to also meet 5 of 10 additional objectives, as they choose. To review the Stage I Meaningful Use Objectives go to http://www.ofr.gov/OFRUpload/OFRData/2010-17207_PI.pdf#page=221.

Eligible professionals and hospitals must also report on clinical quality measures. Eligible professionals must report on a total of six clinical quality measures using certified EHR technology. Hospitals must report on all 15 clinical quality measures, both for Medicare and Medicaid. Those clinical quality measures for eligible professionals and hospitals may be reviewed at the following website pages:  http://www.ofr.gov/OFRUpload/OFRData/2010-17207_PI.pdf#page=287 and http://www.ofr.gov/OFRUpload/OFRData/2010-17207_PI.pdf#page=303, respectively.

E-Prescribing – To establish meaningful use of EHR, 40 percent of all permissible prescriptions written by an eligible professional must be electronically transmitted using certified EHR technology.

Certification Standards Rule – The final certification standards are very similar to the interim standards published on January 13, 2010. EHR vendors can now evaluate their technology to determine if it meets the certification requirements for Stage I implementation, and ultimately governmental incentive payments.

Registration for Receipt of Incentive Payments, for Medicaid providers, should begin in January 2011, with incentive payments being issued in May 2011. As for the states Medicaid incentive payments, CMS expects the states to launch their programs by the summer of 2011.

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HITECH – Notice of Proposed Rulemaking

On July 14, 2010, the Health and Human Services Office of Civil Rights published a Notice of Proposed Rulemaking (“Proposed Rule”) to modify the HIPAA Privacy, Security and Enforcement Rules, and implement various provisions of the HITECH Act. The Proposed Rule can be reviewed at http://edocket.access.gpo.gov/2010/pdf/2010-16718.pdf For background information on how HITECH impacts and clarifies HIPAA please review the Healthcare Posting of April 2009. The highlights of the Proposed Rule are as follows:

Business Associate Definition Is Expanded to included subcontractors and any agent or other person who acts on behalf of a Business Associate in handling PHI, even if no contract exists between the parties. The Proposed Rule also revises the definition of “workforce member” to include employees, volunteers, trainees, and other persons whose work performance is directly controlled by the Business Associate.

Privacy, Security, and Enforcement Rules will apply to Business Associates (and Subcontractors) in the same way they apply to Covered Entities. This means that Business Associates shall by civilly and criminally liable for violations of the Privacy and Security Rules.

Business Associate Agreements are revised by the Proposed Rule to require Business Associates: 1. Comply with the Security Rule with regard to electronic PHI; 2. Report breaches of unsecured PHI to Covered Entities; and 3. Ensure that any Subcontractors that create or receive PHI on behalf of the Business Associate agree to the same restrictions and conditions that apply to the Business Associate.

Reporting Noncompliance is modified by the Proposed Rule. Covered Entities would no longer be required to report to HHS when they are aware of noncompliance by a Business Entity. However, if a Business Associate becomes aware that a Subcontractor is noncompliant, the Business Associate must take reasonable steps to cure the breach, and if such steps are unsuccessful, terminate the contract with the Subcontractor, if feasible. The Proposed Rule also emphasizes that in addition to having direct liability for civil monetary penalties, Business Associates are still contractually liable to Covered Entities through the Business Associate Agreements.

Decedents’ PHI, under the Proposed Rule would exclude from the definition of PHI, individually identifiable health information of a person deceased for more than 50 years. Also proposed would be to allow decedent’s information released to family members and others who were involved in their care or payment for care prior to death, unless a contrary expressed preference is known by the Covered Entity. This change would allow family members to access needed patient information without having to go to court to be named personal representative of the decedent’s estate.

Postponement of Compliance Date - Until final regulations are published, it will be difficult for Covered Entities and Business Associates to comply with the law. Given that, the Office of Civil Rights intends to allow 180 days after the effective date of the final rule for Covered Entities and Business Associates to come into compliance. Also, for those Covered Entities and Business Associates who have existing Business Associate Agreements in place prior to the final rule, they would be “grandfathered” in and have up to one year after the compliance date (18 months after the effective date of the final rule) to come into compliance with the final regulations.

Oral Arguments In Virginia’s Suit Challenging The Patient Protection and Affordable Care Act Are Set For July 1, 2010. Virginia’s landmark suit against the Patient Protection and Affordable Care Act contends that the federal government exceeded its authority under the Constitution by mandating that individuals purchase health insurance or pay a fine. This mandate goes into effect in 2014. This alleged illegal mandate creates a conflict between state and federal law, and Virginia is compelled to defend its state law according to Virginia’s Attorney General Ken Cuccinelli.

The Government on the other hand defends the Patient Protection and Affordable Care Act on two grounds. First, the federal government contends that Virginia has no standing to sue on behalf of individuals in the Commonwealth of Virginia. Second, the federal government has the authority to regulate interstate commerce. Oral arguments by both sides will be held before Judge Henry Hudson on July 1, 2010.

As a result of the settlement, Dr. Fry will be awarded $23.5 million. Since the Christ Hospital declined to enter into a Corporate Integrity Agreement acceptable to the OIG, the OIG will continue to evaluate the case, including the possibility of imposing administrative exclusion sanctions. Since 2009, the Justice Department, including this recovery, has cited total recoveries on behalf of the federal government to more than $3.7 billion.

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Red Flags Rule

Federal Trade Commission Delays Red Flags Rule Again – Once more the Federal Trade Commission (“FTC”) has delayed the enforcement of the Red Flags Rule. Instead of enforcement to take effect on June 1, 2010, the FTC has delayed enforcement until December 31, 2010. The FTC has cited the reason for the adjournment as Congress’ need to fix the unintended consequences of the legislation.

This adjournment comes on the heels of legal action taken by the American Medical Association, American Osteopathic Association and the Medical Society for the District of Columbia. The legal action asserts that physicians should not be deemed to be “creditors” under the Red Flags Rule, and applying the Rule to physicians exceeded the FTC’s statutory authority. The complaint also alleges that the FTC failed to follow the required notice and comment procedures under the Administrative Procedures Act. Finally, the action references the recent American Bar Association’s ruling in the District of Columbia that resulting in the ruling that the Red Flags Rule did not apply to lawyers.

What is Mediation?  Nearly ten years ago Michigan Court Rules 2.411 was adopted.  MCR 2.411 defines mediation as “a process in which a neutral third party facilitates communication between parties, assists in identifying issues, and helps explore solutions to promote a mutually acceptable settlement. A mediator has no authoritative decision-making power.” During mediation, the mediator facilitates the discussion by assisting parties in “peeling the onion” in order to get past the positions of the parties to identifying each party’s needs. The mediator actively works to assist parties in identifying areas of mutual agreement, building consensus on those points, and encouraging the parties to examine possible ways of resolving their dispute. At points in the mediation, the mediator may decide to separate the parties and talk to them individually. This is called a “caucus”. Unless otherwise agreed to by the caucusing party, everything discussed in the caucus remains confidential and is not shared with the other party. While the mediator has no authority to impose a resolution, the mediator actively works to get the parties to the point of resolution. In this type of mediation model, the mediator, while always remaining neutral, uses a number of tools in his/her tool bag to move the parties from point “A” to point “B”.

What is Transformative Mediation?  Transformative mediation is premised on the theory that individuals in conflict have an innate ability to resolve their own disputes provided they are empowered throughout the process and they recognize the other party’s needs, interests, values and points of view. Like the mediation process defined above, transformative mediation involves a third party neutral mediator. But unlike the mediation process described above, the mediator takes a less directive role in the mediation, allowing the parties to decide how the mediation process will proceed. Transformative mediation allows parties to openly discuss the issues they believe are important to their dispute in a manner that can “transform” their relationship. This open discussion often helps the parties recognize each other’s point of view. The parties, rather than the mediator, have the power to decide whether and how issues will be resolved. The parties also decide if and when they wish to have a caucus with the mediator. The mediator’s job is not to even the table, but to support the parties.

In transformative mediation the mediator listens to the parties, follows the conversation (not leads it), focuses on the interactions of the parties, and offers reflection and summarization to clarify what is being said by the other party. The ultimate goals for the mediator are to support the parties so they continue to have a sense of empowerment and also provide reflection of the conversation so that each party truly recognizes the dispute from the other party’s point of view. When party empowerment and recognition of the other’s point of view exist, the parties are able to resolve their dispute.

Does Transformative Mediation Work?  Absolutely! This form of mediation has been used by the United States Postal Service (REDRESS® – Resolve Employment Disputes Reach Equitable Solutions Swiftly) since 1994. Because the movement of mail through the postal service requires everyone to do his/her job with precision and in a timely manner, disputes and conflicts between postal workers can interfere with the movement of mail. As an approved mediator in the REDRESS program, I have been impressed with the interdependence of the postal workers in performing their jobs. In serving as a mediator I have also witnessed disputing parties resolve their issues and go back to the job, being more productive than prior to the dispute.

What Does the United States Postal Service Have in Common with the Health Care Setting?  Both environments require the workforce to work cooperatively and collaboratively to either deliver the mail or deliver quality health care. Delivering quality care is premised on each person in the chain of care doing their job, from the physician, to the other healthcare providers and support staff. These interdependent relationships can be disrupted if a conflict arises anywhere along the chain of care. Transformative mediation would be very useful in not only resolving the dispute, but re-establishing or redefining the relationship between the two disputing parties, so that the delivery of health care can again flow smoothly.

Examples of disputes that could be resolved through a transformative mediation process include:

– Disputes between management and the medical staff over program development

– Conflicts over reallocation of resources between units

– Medical staff and nursing unit “turf wars”

– Conflicts over work expectations between shifts on the nursing unit

– Dealing with disruptive personnel

– General conflicts arising out of “doing more with less”

– Workplace conflicts seen in non-healthcare settings

These are only a few examples of conflicts seen in the healthcare setting. Using the transformative mediation model is not only helpful in resolving the conflict, but assists in restoring or at least improving the communication between the disputants. Working in such an interdependent environment as healthcare, restoration of communication is imperative to the delivery of quality health care.

House Passes H.R. 3590: The U.S. House of Representatives voted 219 to 212 on Sunday March 21, 2010, to pass Senate Bill H.R. 3590, which was passed by the U.S. Senate on December 24, 2010. A summary of the Senate’s bill was posted in the January 2010’s Special Edition posting on this website.

As the legislation now stands, it would be phased in over a ten year period. The highlights of Senate Bill 3590 are as follows:

2010 – Adults with pre-existing conditions who have been uninsured for at least six months can enroll in temporary high risk health insurance pools. The pools would end when insurance exchanges are implemented in 2014.

- All health insurance plans are to offer dependent coverage for children through the age of 26.

- Insurance companies can no longer put lifetime dollar limits on coverage or cancel policies, except in cases of fraud.

- Tax credits will be provided to help small businesses with 25 employers or less to get and keep health care coverage for their employees.

- The Medicare “doughnut hole”, in which Medicare beneficiaries have to pay the full cost of their prescription drugs, begins to close by providing a $250 rebate in 2010.

2011 – Medicare beneficiaries will be allowed a 50% discount on brand name drugs, further narrowing the doughnut hole.

- A 10% Medicare bonus will be provided to primary care physicians and general surgeons practicing in underserved areas.

- Medicare Advantage plans would begin to have their payments frozen, then lowered in 2012.

- A voluntary long term care insurance program would be made available to cover nursing home costs and assisting disabled individuals to stay in their homes. Benefits would start five years after people begin paying a fee for coverage.

- Community health centers funding would increase so more low income and uninsured people could be covered.

- Employers would be required to report the value of healthcare benefits on employees’ W2 tax statements.

2012 – Nonprofit insurance co-ops would be created to compete with commercial insurers.

- Hospital with high rates of preventable readmissions would face reduced Medicare payments.

2013 – Individuals making more than $200,000 and couples more than $250,000 would have a Medicare payroll tax of 2.35% (up from the current 1.45%)

- Tax sheltered flexible spending accounts would be limited to $2,500 a year, with yearly inflation indexing in the following years.

- Medical devices maker would have a 2.3 % sales tax on medical devices. Devices such as eyeglasses, contact lenses and hearing aids would be exempt.

2014 – State health insurance exchanges would be created.

- Medicaid would be expanded to cover low income individuals up to 133% of the federal poverty level.

- Insurance companies would be prohibited from denying coverage to people with pre-existing conditions, or charging higher rates to those with poor or chronic health conditions. Premiums could only vary by age, place of residence, family size, and tobacco use.

- Insurer would be required to cover maternity care as they do other medical procedures.

- All legal residents would be required to have health insurance, except in cases of financial hardship, or pay a fine to the IRS. The individual penalty starts at $95 in 2014 and rises to $695 in 2016. Family penalties would be capped at $2,250.

- Employers with more than 50 workers would be penalized if any of their workers get health care coverage through the insurance exchange and receive a tax credit. The penalty would be $2,000 times the total number of workers employed at the company. The employer could deduct the first 30 employees however.

2018 – A tax would be imposed on employer sponsored heath insurance worth more than $10,200 for individual coverage, and $27,500 for a family plan. The tax would be 40% of the value of the plan above the thresholds, indexed for inflation.

2020 – The doughnut hole coverage gap in Medicare prescription benefits would be phased out. Seniors would continue to pay the standard 25% of their drug costs until they reach the threshold for Medicare catastrophic coverage.

H.R. 4872, Reconciliation Act of 2010:   Following the passage of H.R. 3590, the House passed by a vote of 220 to 211 a reconciliation package (“Reconciliation Act of 2010”) which reflects various compromises between the U.S. House and Senate. These “fixes” in the reconciliation package were taken up by the Senate on March 23, 2010. Meanwhile the Republican parties have introduced more than a hundred amendments to the Reconciliation Act of 2010.

Congressional Budget Office:  Over the past few days, the CBO has issued various estimates regarding the Patient Protection and Affordable Care Act (H.R. 3590) and the Reconciliation Act of 2010 (H.R. 4872). These can be reviewed at:

H.R. 3590 – http://www.cbo.gov/doc.cfm?index+11307

H.R. 4872 – http://www.cbo.gov/doc.cfm?index=11355, http://www.cbo.gov/doc.cfm?index=11376, http://www.cbo.gov/doc.cfm?index=11378, and http://www.cbo.gov/doc.cfm?index=11379

States’ Reaction:   Attorneys general from 13 states, including Michigan, Florida, South Carolina, Nebraska, Texas, Utah, Pennsylvania, Alabama, South Dakota, Louisiana, Idaho, Washington and Colorado, moved in opposition to the legislation, filing suits to stop the historic healthcare overhaul. Their lawsuits are based on constitutional grounds, in which mandates are imposed on states to fund such legislation, and on behalf of individuals who are mandated to purchase health insurance coverage. Additional states are expected to join in on such litigation.

This is the first time a researcher has been criminally charged with falsifying research data that did not involve federal research grants or a FDA Investigational New Drug approval. The funding in this case came from private pharmaceutical companies.

Dr. Reuben has filed a plea agreement in which he agrees to pay restitution of $361,932 to the Merck and Pfizer, along with the forfeiture of $50,000 and a fine of $5,000. He has agreed to future disqualification as a clinical investigator for the U.S. Food and Drug Administration. Dr. Reuben will also be incarcerated for a period of time, for a term yet to be determined.

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Dismissal of Qui Tam Case Based on Recent Supreme Court Decision – In United States ex rel. Haight v. Catholic Healthcare West, No. 07-16857 (9th Cir. Feb. 4, 2010), plaintiffs filed their notice of appeal 51 days after a qui tam action under the False Claims Act was dismissed. The plaintiffs relied on an earlier Ninth Circuit precedent holding that ruled that the United States was a “party” to a qui tam action even if it declined to intervene, and therefore the time frame for plaintiff’s to file an appeal would be 60 days after entry of judgment. [Haycock v. Hughes Aircraft Co, 98 F.3d 1100 (9th Cir. 1996)]

Unfortunately, in United States ex rel. Eisenstein v. City of New York, 129 S. Ct. 2230 (2009) decided less than a year earlier, the Supreme Court ruled that when the United States declines to intervene in a qui tam action, it is not a party to the litigation and the 30 day filing deadline (Fed. R. App. P. 4 (a) (1) applies instead of the 60 day period allowed when the federal government is a party to the action.

In light of the Supreme Court’s decision in Eisenstein, the Ninth Circuit in Haight lacked jurisdiction, and plaintiff’s appeal was dismissed.

Healthcare Summit:  In advance of the bipartisan healthcare summit, scheduled for February 25, 2010, President Obama met with leaders from both parties on February 9, 2010 to discuss how to move forward with healthcare reform. In a press conference after the February 9th meeting, President Obama revealed that he was looking forward to constructive debate that would address:

• Bringing down the costs for all Americans as well as the federal government?
• Providing adequate protection against abuses by the insurance industry?
• Making coverage affordable and available to those who currently don’t have insurance coverage?
• Providing for a path of fiscal sustainability?

In a recent interview of HHS Secretary Sebelius, she asserted that “President Obama plans to use the already passed House and Senate bills as a starting point for next week’s healthcare summit with Republican leaders”. And as Secretary Sebelius was touting the House and Senate bills, a recently released Zogby poll showed that 57% of Americans do not support either of the competing Senate or House bills.

On February 22, 2010, President Obama will meet with Governors from around the country to discuss major points of healthcare reform. Also today, the White House will post a plan that brings together the major points of the bills passed by the House and Senate Democrats last year. This plan may be viewed by going to http://www.whitehouse.gov/issues/health-care

States’ Activities:   Meanwhile while Washington prepares for the healthcare summit, individual states are taking matters into their own hands. In the Utah legislature, HB 67 would require the Utah legislature and governor to sign off on any federal healthcare programs before they would be implemented in Utah.

In Georgia, legislation has been introduced into the Senate which would allow small businesses to band together to insure their workers as one group. The legislation would: remove annual and lifetime benefit caps; allow children up to the age of 25 to stay on their parent’s policies, even if not in school; and would prevent insurers from canceling policies based on misstatements or innocent omissions.

Finally, in Ohio a health insurance co-operative, Benefits Unlimited, Inc., is drawing interest from individuals and employers due to their low co-op annual dues. Benefits Unlimited seeks to provide medical, dental and optical coverage, and hopes to sign up 35,000 people nationally within a year, in order to generate money needed to become a health-insurance company in Ohio.

OIG Special Fraud Alert - On January 13, 2010, the Office of Inspector General (“OIG”) issued a Special Fraud Alert, reminding durable medical equipment (“DME”) suppliers that federal law prohibits DME suppliers from making unsolicited telephone calls to Medicare beneficiaries. Under Medicare, any submitted claim generated by improper telemarketing, may subject the DME supplier to criminal, civil, and administrative penalties.

DME suppliers may only make unsolicited telephone calls to Medicare beneficiaries if:

• the beneficiary has given express written permission to the supplier to contact him by phone;
• the contact is about a covered item that the supplier has already furnished to the beneficiary; or
• the supplier has furnished at least one covered item to the beneficiary during the preceding 15 months.

False Claims Act –  Additional fraud prosecutions and settlement agreements have come to light during the last month.

• On December 21, 2009, St. Joseph Mercy Oakland Hospital in Michigan agreed to pay the federal government $205,000 to settle allegations that it improperly overbilled Medicare for medical services purportedly billed by either a neonatologist or an oncologist, when the services were actually performed by nurse practitioners, clinical nurse specialists, and physicians’ assistants. The case was initiated as a qui tam lawsuit, filed by the former director of physician billing at another one of Trinity’s hospitals.
• On December 22, 2009, an Oklahoma hospital and health system entered into a settlement agreement with the Department of Justice (“DOJ”) in the amount of $13.2 million. St. John Health System self disclosed to the OIG that arrangements with twenty-three physicians violated the Stark Law and potentially the anti-kickback statute. The DOJ alleged that the health system made payments to these physicians to induce referrals for medical services. It appears that St. John Health System was not required to enter into a corporate integrity agreement as a condition of settlement.
• On December 24, 2009 it was reported that Boston Scientific, a heart device manufacturer agreed to pay $22 million to resolve allegations that its Guidant division paid kickbacks to doctors to get them to use its heart devices. Physicians received between $1,000 and $1,500 each to participate in four studies designed to assess the performance of pacemakers and defibrillators. The DOJ asserted that payments were really made to induce physicians to use the Guidant devices. Boston Scientific will also enter into a corporate integrity agreement with the Department of Health and Human Services.
• On December 28, 2009, the U.S. Attorney for the Eastern District of Michigan announced that Genesys Health System would pay $669,413 to settle a lawsuit alleging the healthcare system violated the False Claims Act by billing Medicare for higher levels of services than were actually provided to patients. The case was initiated by a whistleblower as a qui tam suit.
• On December 29, 2009, Spectranetics, a Colorado based medical device manufacturer agreed to pay $4.9 million in civil damages to resolve allegations that it illegally imported unapproved medical devices and provided them to physicians for use with patients, causing false claims to be submitted to Medicare. The company will not be criminally prosecuted, but will enter into a corporate integrity agreement with Department of Health and Human Services.

Senior Medicare Patrol –  The Centers for Medicare and Medicaid Services (“CMS”) announced that a senior citizen volunteer group, formed to prevent Medicare fraud, has been credited with saving taxpayers more than $100 million since 1997. The Senior Medicare Patrol consists of 4,700 senior citizen volunteers who serve as the government’s “eyes and ears”. The group informs CMS where fraud is occurring and where problems are arising.

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Electronic Health Record (“EHR”)

On December 30, 2009, CMS posted a proposed “Meaningful Use Rule”, which defines the “meaningful use” of electronic health records, and implements the Medicare and Medicaid EHR Incentive Program as part of the American Recovery and Reinvestment Act of 2009 (“ARRA”). See the April 2009 posting on this website for an overview of the ARRA. In addition to the Meaningful Use Rule, the Office of the National Coordinator for Health Information Technology (“ONC”) also posted its interim final rule, which sets the initial standards, implementation specifications, and certification criteria for EHR technology (referred to as the “Standards Rule”). The proposed rule and interim final rule were published in the Federal Register on January 13, 2010 [See 75 FR 1843]. The Standards Rule will become effective on February 12, 2010, while it is anticipated that a final Meaningful Use Rule will be published after March 2010.

In order for physicians and hospitals to be eligible to receive ARRA incentive payments, they must be able to demonstrate “meaningful use” of a certified EHR system. CMS proposes a phased approach to “meaningful use” starting with Stage 1. Stage 2 criteria will be proposed by the end of 2011, and Stage 3 criteria will be proposed by the end of 2013.

For hospitals, “meaningful use” criteria for Stage 1 includes, but is not limited to the following:

• At least 80% of patients admitted have at least one entry of an active medication list.
• At least 80% of patients admitted have demographics recorded as structured data.
• At least 80% of patients admitted have insurance eligibility checked electronically.
• At least 80% of transitions of care and patient referrals contain a summary of care record.

For physicians, “meaningful use” criteria for Stage 1, includes, but is not limited to the following:

• At least 75% of all prescriptions are transmitted electronically using certified EHR technology.
• At least 80% of all claims are filed electronically
• Clinical summaries are provided to at least 80% of patients seen for office visits
• Record smoking status for at least 80% of patients 13 years or older

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HIPAA and HITECH

HIPAA Business Associate Amendment – In less than a month, covered entities must have in place amended Business Associate Agreements, addressing the changes set forth in HITECH. Unfortunately we all are still waiting for guidance and clarifying regulations from HHS. The regulations are meant to provide guidance as to a Business Associate’s obligation to maintain the privacy and security of protected health information, and sanctions for breaching such standards. For a review of the HITECH Act, see the April and July 2009 postings on this website.

First Action by a State Attorney General to Enforce HIPAA - Connecticut’s attorney general recently sued Health Net for failing to secure 446,000 patient medical records and financial information. This marks the first action by a state attorney general, since HITECH authorized state attorneys general to enforce HIPAA violations. In May 2009, Health Net learned that one of its portable disk drives disappeared, containing the patient information. Despite it own policies and federal law requirements, Health Net failed to encrypt the patient information, and failed to timely notify authorities or the patients involved.

You often hear plaintiffs say “It’s not about the money”, or “I just want some answers”. Meanwhile, as the litigation drags on, the anger grows for these patients. As for healthcare professionals, they too experience frustration and anger for being sued, for having their professional care critiqued — and they may even start to second guess themselves. A standoff begins, and once in litigation, the parties never have the opportunity to have a dialogue.

Fortunately we have learned that “keeping it to oneself” is not the way to go. Over the last seven years, thirty-four states (not Michigan) have enacted “apology laws or court rules”, enabling healthcare providers and patients to have these much needed discussions without fear that such expressions would be used against them in a court of law. While the statutes vary, they all have the common goal of encouraging people to talk and express empathy for another person’s situation.

Apology laws are really a misnomer, as there are no apologies of wrongdoing, but rather expressions of empathy for the patient’s situation. Regardless of what you call it, studies show that when there is a sincere expression of empathy on the part of the healthcare provider, cases settle quicker and there is more satisfaction on the part of the plaintiffs with those settlements.

Personal injury and medical malpractice litigation will always involve a monetary component, which the parties’ attorneys are equipped to negotiate on behalf of their clients. But there is also the need to address the anger and sense of loss resulting from the plaintiff’s outcome. Plaintiff’s need emotional closure to what they have experienced. A monetary settlement alone will not bring this closure. The best way to facilitate both a monetary settlement and closure for the plaintiff (and in the case of a medical malpractice claim, for the healthcare provider as well) is to provide for dialogue between the parties. Mediation provides an avenue in which to accomplish this.

Mediation also provides a safe environment in which to obtain closure for the parties. Oftentimes, as a mediator, I hear one or both attorneys say that “this is only about the money”. And yet once the mediation begins, intertwined among the monetary discussion, we are addressing the patient’s anger and other non-monetary issues and emotions. Mediation is successful when the parties are able to not only express what they need, but also truly hear what is being said to them. Once that occurs, the parties have a fruitful discussion, and a connection is made. A connection that cannot be replicated in litigation.

Mediation and “apologies” or expressions of empathy go hand-in-hand. For a physician to say, “Mrs. Smith, I am sorry this happened”, is the first step in connecting with the emotions being felt by the patient. No matter how hardened a person may be, for the most part, they still have the ability to express empathy or forgiveness in the right setting. Finding the right setting is where mediation comes in.

Whether or not an expression of empathy should be offered in mediation is a discussion that should start with defense counsel’s assessment of the circumstances, facts, and evidentiary rules, since there are no “apology laws” in Michigan. An expression of empathy should only be initiated or suggested by the healthcare provider, not the mediator. But if defense counsel and client feel it is in order, they can discuss the pros and cons of going forward with the mediator in either a conference call prior to the mediation or during a private caucus during the mediation session. The mediator, without discussing confidences of the other side, can provide defense counsel and his client with some guidance as to whether the expression would be taken in the light it was intended. Saying you’re sorry may not be enough. For there to be true closure for both parties, a discussion about what happened (as guided by the needs of the parties) also needs to occur.

Disclosure: Oftentimes in mediation, patients want to know what happened and want some assurances the same outcome won’t happen to someone else. This calls for a candid discussion in mediation, under terms agreed upon by the parties. I recall one mediation in which the decedent’s family wanted to talk to the unit’s administrator before settling, and without attorneys present! The monetary aspects of the settlement had already been hammered out. The attorneys agreed to allow the parties to talk to one another, in the presence of the mediator. After forty-five minutes the door opened and the plaintiffs announced that they were ready to sign the settlement agreement. They were able to have their say and have their questions answered. The discussion was also valuable for the administrator, who learned how her staff and unit were perceived, which was not in a good light.

Apology vs. Admission of Guilt: Of course in Michigan, since there is no apology law, any expression or apology should be analyzed by defense counsel in terms of whether it will be perceived as an admission of guilt or an admission against the defendant’s interest. But there is a difference between admitting to liability and providing a true expression of sadness and empathy for the patient’s situation. Heartfelt empathy during mediation, from one human being to another, can be a powerful tool to diffuse and lower the anger of the plaintiff and/or family.

Sincerity: Every apology or expression of empathy must be sincere. If there is any chance an apology or expression of empathy will not come across as being sincere, it should not be attempted during a mediation. An insincere expression may be perceived as flippant or patronizing, and only make matters worse. Defense counsel must be the judge of whether her client is truly empathetic and capable of providing a sincere apology.

Closure: Plaintiff’s anger is always present to some degree in all litigation, but particularly in medical malpractice actions. Healthcare providers also feel angry about being sued and angry that their professional judgment was questioned. The mediator serves to identify anger and other emotions in both parties, and creates an atmosphere where a dialogue between the parties can take place. While the mediator is not a therapist, mediations can be very effective in giving the parties, particularly the plaintiff, a process to explore the facts, identify each party’s needs, including resolution of certain emotions, and facilitating the dialogue in the room. By participating in such a process, the parties at least have an opportunity to discuss what really matters to them and come to an emotional closure.

This article will be reprinted, with permission, in the February 8, 2010 edition of Michigan Lawyers Weekly.