The Hazards of Ignoring Legal Risks
All medical care practitioners know the value of the early detection of chronic medical problems. Whether it is cancer or hypertension, the prognosis is usually better when the disease is dealt with earlier, rather than later. Many legal problems also become more severe and difficult to treat with time. A current example is federal prosecutions for Medicare/Medicaid fraud and abuse. Many hospitals, medical schools, and medical care practitioners have found themselves facing huge fines and potential criminal prosecution for not complying with federal reimbursement rules. In most cases, these problems arise from business arrangements or practices that were clearly in violation of the law, and had been for many years. Yet the legality of the practices was not questioned because federal enforcement was very lax. Providers and their lawyers assumed that since “everyone” was doing it and very few people were being prosecuted, that they did not need to worry about the legal liability.
This all changed in the mid-1990s, when the Office of Inspector General (OIG) at the Department of Health and Human Services (DHHS) and the Department of Justice (DOJ) began to enforce these laws. Suddenly targeted institutions were faced with multimillion- dollar fines and individuals were facing prison. The worst shock came when institutions and individuals realized that they were liable for things they had done up to six years before. This is an example of the legal problem of pipelining: the accumulation of legal liability for past improper actions. Pipelining usually becomes an issue when there is some change in the legal system. For fraud and abuse, the pipeline was created when the federal government shifted from very lax enforcement policy to a very aggressive one. Sometimes pipelining results when otherwise hidden legal risks come to light because of lawsuits or adverse media coverage. A large, well-publicized jury verdict or settlement will cause attorneys to look for more cases against the defendant, perhaps uncovering substantial additional liability. Again, in the false claims area, once the first plaintiffs had been awarded multi- million-dollar fees for bringing false claims lawsuits, attorneys started looking for these claims and employees who had not been able to get their institutions to adopt proper claims practices now had attorneys eager to file a lawsuit on their behalf.