Saturday, December 10, 2011
I had intended to address Douglas next, as it is a nice gateway for discussing Florida v. HHS, but a defense of the coercion argument just published in the New England Journal of Medicine Online inspired me to address the latter first. I will begin by discussing why I think the Court granted the petition for certiorari then turn to the Medicaid coercion question.
The Rehnquist Court excluded the Spending Clause from its federalism revolution inasmuch as that would have meant limiting the power to spend by the Tenth Amendment. When Chief Justice Rehnquist authored South Dakota v. Dole, the evidence is that he believed it was an easy and relatively inconsequential case. For those sane enough not to engage in the reading of tea leaves that is deciphering the spending power, a quick review. Dole articulates typical Rehnquist categories for evaluating the constitutionality of conditions placed on federal spending: the spending must be for the general welfare; the conditions must be clear and unambiguous (as modified by Arlington Central School District Board of Education v. Murphy); the conditions must have a nexus with the federal spending (“germaneness”); and the conditions cannot themselves be unconstitutional. After providing this test, Rehnquist noted that “in some circumstances the financial inducement offered by Congress might be so coercive as to pass the point at which ‘pressure turns into compulsion.’” No theory or constitutional provision was cited, but the opinion indicated that coercion would depend on the amount of money or percentage of money withheld if the state violates the conditions. It seems that the Court meant that coercion would be a Tenth Amendment, state sovereignty problem. But, Dole also explicitly stated that the Tenth Amendment was not implicated in the bar on unconstitutional conditions. So, while Dole provides the test for conditional spending, it is undertheorized and a bit self-contradictory. Nevertheless, the Rehnquist Court reiterated that the Spending Clause is not limited by the Tenth Amendment in New York v. U.S. and held to that position in subsequent cases, disappointing many who believed spending to be the next front in judicially-enforced federalism.
The Roberts Court has given hints now as to its approach to spending as well as federalism, and members of the Court have signaled interest in revisiting both topics. For example, Justice Kennedy’s concurrence in Comstock stated: “The limits upon the spending power have not been much discussed, but if the relevant standard is parallel to the Commerce Clause cases, then the limits and the analytic approach in those precedents should be respected.” Justice Kennedy also addressed broader federalism concerns in that concurrence, which were given free rein in his opinion for the Court in Bond v. U.S. as well. Likewise, Justice Alito’s opinion in Arlington was written as a spending power decision rather than a limited statutory interpretation, which I have written elsewhere resulted in a narrower clear statement rule for the second element of the Dole test.
Additionally, even though the Court seems to dislike hearing both spending and healthcare cases, it already has heard Douglas this term, so spending, federalism, and Medicaid are fresh in the justices’ minds. And, what could be a better vehicle for considering coercion than the largest grant-in-aid program that also constitutes the second largest portion of states’ budgets? (Education is first.) Further, numerous lower federal courts have attempted to construe coercion, but none have struck down federal legislation under the doctrine, making the issue ripe for the Court’s consideration.
Despite the idea of coercion arising repeatedly in federalism cases over the last thirty-ish years, its contours are unknown. At what point is the money being offered too much? And is the offer really the issue, or is the problem the amount or percent of money a state stands to lose if it does not comply with the conditions? (Dole indicated the latter, as South Dakota was not coerced because it would lose only 5% of its federal highway funding if it refused to comply with the minimum drinking age that the federal government sought to impose.) Can coercion only apply to an existing conditional spending program that a state could not leave because it has become dependent on the program? Or is there some federal program that would offer so much money that no state could turn it down, even at the outset, such that the new program would be coercive? If it is the former, then clear statement rules also need to be revisited, because they seem to assume some kind of regular restatement of the rules of the program to which a state actively agrees. That simply does not occur in a long-standing program like Medicaid, making me think that clear statement rules are almost meaningless in that context. Additionally, states inherently relinquish some sovereignty when they agree to the terms of a cooperative federalism program, highlighting tensions between dual sovereignty and cooperative federalism.
So, what is the upshot for the Medicaid expansion? [more after the jump]
Friday, December 9, 2011
Nicole Huberfeld is guesting this month over at Concurring Opinions and is writing a very interesting series about the Medicaid cases pending before the United States Supreme Court this term. This is Professor Huberfeld's first post in the series:
Many were watching this morning’s conference to see if the petition for certiorari would be granted in Blackstone Medical, Inc. v. U.S. ex rel. Hutcheson, but it was not. The issue in Blackstone was whether a medical device company that paid illegal kickbacks to prescribing physicians could be liable under the False Claims Act (FCA) for causing false claims to be submitted to Medicare. The FCA is the rare statute that is what it sounds like – basically, if you submit claims for federal monies, the claims cannot be false or fraudulent. If they are, the federal government can recover large fines for each false claim as well as treble damages. The statute includes a qui tam relator provision that encourages whistleblowers to come forward with information about false claims; if they are successful, they share in the government’s bounty. The civil FCA has become the DOJ weapon of choice for fighting healthcare fraud, and circuit splits abound regarding the interpretive details of this statute. In part, this is because whistleblowers tend to push the envelope of false claims theory. To wit, in this case, the claim is not “factually false” (which would indicate that the services were not actually provided), it is “legally false,” which means the services are provided as claimed, but another law for which the filer has certified compliance is being violated.
A grant in Blackstone would have been notable, as the Roberts Court has decided five False Claims Act cases in five terms (October Term 2006-2010), as compared to four such decisions in the eleven years of the natural Rehnquist Court, making this potentially the sixth in seven terms. It is hard to say if the Court is hearing so many FCA cases organically, or if something more is afoot. But, the FCA decisions illustrate at least four big picture issues.
First, separation of powers. The Court is having a conversation with Congress that seems to further a clear statement rule project. The Court has consistently read the FCA narrowly, forcing Congress to include the language it wants to see in the statute. Twice Congress has responded, and quickly, by re-expanding the scope of the FCA, and in a third case, PPACA had already addressed the issue. (Seems fraud is one of the few things Congress can agree on these days…) The problem is that such rules are lost on whistleblowers, who dominate FCA prosecutions. Second, the cases seem to support the theory that the Roberts Court is business-friendly, as a glance at the amicus briefs reveals. The problem is that “business friendly” does not necessarily inform meaningfully or even predict outcomes. For instance, the Chamber of Commerce often sides with healthcare providers, and it advocated for narrowing the scope of the FCA in the cases before the Court, which keeps whistleblowers out of court. But in Douglas v. ILC (to which I’ll return in my next post) the Chamber advocated for hospitals, which would keep the courthouse doors open. Third, the five cases reveal a docket clearing exercise that is consistent with the theory that the courthouse doors are being closed by the Roberts Court, irrespective of the business-friendly question. Fourth, the Court’s interpretation of the FCA, and Congress’s response to the Court, will likely facilitate an increase rather than a decrease in the number of whistleblower actions brought under the FCA. PPACA will increase the number of claims flowing through federal healthcare programs, and federal money flowing into the state insurance exchanges will be subject to the FCA too.
So, even if the Court does not grant the petition in the other FCA case on the docket (Amgen, Inc. v. New York), it’s a safe bet the Roberts Court will be telling us more about the FCA soon.
Thursday, December 8, 2011
Robert Kuttner has an excellent article on the Local 6 Union's health plan in the American Prospect. The plan's success at reducing costs and improving quality may make it a good model for those who claim we need to go beyond ACO's to integrate delivery. A few quotes from the piece:
Insurance costs generally are increasing at 9 percent to 10 percent a year, according to the Kaiser Foundation. By contrast, the costs of the hotel workers’ plan have been increasing at about 1 percent a year for the outpatient services that it provides directly and about 10 percent per year for inpatient services that are contracted with area hospitals. So the plan’s overall costs have been going up at about 3.5 percent a year. . . .
[B]y dispensing with insurance-company middlemen, the plan eliminates a whole layer of costs. A doctor treats the patient according to his or her best medical judgment. There is no army of staffers dealing with patient billing, claims, and insurance reimbursement; no arguing with insurance--company case reviewers. Second, doctors are all on salary. So there is no incentive to undertreat or overtreat . . . .
Further, the plan’s core principle is unlimited access to primary care, with all of the prevention and early--detection benefits that approach brings. . . .All doctors are salaried, with general practitioners being paid slightly more than specialists, in order to reward primary care. The scale for GPs ranges from $85 to $115 an hour, or around $200,000 a year or more. The plan has no trouble enlisting good doctors, since the conditions of medical practice elsewhere have been deteriorating under relentless pressure from insurers to cut costs and justify their medical decisions. . . .
The article also mentions tense negotiations with the RAPER specialties (Radiologists, Anesthesiologists, Pathologists, and ER doctors), which apparently have a good deal of bargaining power:
Most New York hospitals now contract out these services to specialists’ groups who charge whatever the market will bear. In recent bargaining with one of its hospitals over a proposed rate increase, the hotel workers were told that the increase partly reflected higher charges billed by anesthesiologists. Greenspan [a union negotiator] requested the hospital to push back. Not our problem, the hospital contended; we don’t control these costs. “We told them, OK, next week our members stop using your hospital,” Greenspan says. The costs came down.
The plan's success may be complete when robots can reduce the cost of radiology and pathology.
Wednesday, December 7, 2011
Even in science-friendly administrations, politics can override the assessment of medical experts. Today, HHS Secretary Kathleen Sebelius announced her decison to reject the FDA's view that the morning-after pill can be purchased by minors without a prescription. (Thanks to Maurice Bernstein for flagging this.)
Monday, December 5, 2011
University of Cincinnati Law Prof. Jim O'Reilly has authored 45 texts and 180 articles over 32 years of teaching. His work has been quoted as "The expert" by the Supreme Court and many federal and state appellate courts. His most recent text, West's Healthcare Rulemaking Guide, will be followed in 2012 with a text on the impacts of PPACA healthcare reform on medical malpractice.
By Thomas L. Hafemeister, J.D., Ph.D. Assoc. Professor, University of Virginia School of Law
On July 18, 2008, in Largo (Pinellas County), Florida, at about 2 a.m., a motorcycle driven by John Prado, 21, collided with a pickup truck, the driver of which had run a stop sign. On the back of the motorcycle was Heather Lynn Cook, 20. Prado was killed instantly, while Cook was thrown from the motorcycle and badly injured, with her leg ultimately amputated. A police officer at the scene of the crash said cans of Icehouse beer came tumbling out of the pickup onto the street. The driver of the pickup was subsequently arrested and charged with DUI manslaughter. It appears the driver ultimately was convicted of a felony and given a prison sentence. An account of the accident and subsequent criminal proceedings involving the driver of the pickup are here, while access to the germane court records can be gained here.
However, apparently the driver of the pickup was not the only person involved in this accident who had previously been drinking. Cook filed a related suit against the Estate of Prado and Millercoors, LLC, which manufactured, marketed, and sold “Sparks,” an alcoholic beverage containing caffeine and other stimulants. [For a brief history of Sparks, its unique marketing history, and its cult following prior to its purchase by Millercoors, see here.]
Cook argued that alcoholic beverages such as Sparks contained stimulants that are “uniquely dangerous” and appeal to younger drinkers. Further, while the addition of caffeine enables one to drink more alcohol without feeling as intoxicated as one normally would, the stimulants do not reduce alcohol’s negative effects on motor skills and reaction times. She asserted that consumers of these beverages are more likely to “engage in dangerous behavior such as driving,” and that her companion, Mr. Prado, after consuming Sparks, neither felt nor appeared to be impaired, although his blood alcohol level was 0.10 at the time of the crash. [In Florida, at 0.08 the law presumes impairment, see here.]
Cook’s complaint asserted that: (1) the combination of alcohol and stimulants created a latent inherent danger and MillerCoors failed to warn Mr. Prado of that inherent danger; (2) the addition of stimulants to the alcoholic beverage constituted a design defect; and (3) MillerCoors negligently manufactured Sparks, knowing that it was unreasonably dangerous and that inexperienced drinkers would be more likely to drink to excess due to the addition of stimulants.
MillerCoors countered that there is no cause of action against a manufacturer of alcoholic beverages for injuries resulting from their consumption because the effects of alcohol consumption are well known. Cook responded that these holdings apply to “conventional” alcoholic beverages, not to an alcoholic beverage mixed with stimulants designed to suppress the consumer’s awareness of alcohol’s well-known effects.
Just over a month ago, a federal district court in Florida granted Millercoors’ motion to dismiss Cook's lawsuit.
With regard to the failure to warn claim, the court found that such a duty only arises with regard to dangers of which consumers are unaware, not to dangers which are obvious or commonly known. The court determined that Cook had not alleged that Prado was unaware that he was drinking alcohol and thus it must be assumed that he did so with knowledge of its potential effects. The court added that other courts have declined to impose a duty to warn on manufacturers of alcoholic beverages based upon a plaintiff’s perception or understanding of the risks involved with a particular product, citing rulings from Texas (regarding a belief that “Lite” beer was less intoxicating) and Tennessee (addressing Everclear grain alcohol), as they have noted the difficulty of devising a warning regarding the particular tolerance of an individual consumer.
The court refused to be swayed by Cook’s evidence that state attorneys general and experts have expressed concern about the marketing and use of alcoholic energy drinks by young people, countering that she had not cited a case imposing related liability and that this was a policy question better left to the elected branches, not the courts.
For the court's treatment of this and the other two counts targeting MillerCoors, as well as Cook's auto negligence claim against Prado, see here.
It should be noted that MillerCoors, under pressure from more than a dozen state attorneys general, agreed in December 2008 to remove the caffeine and other stimulants from these drinks (see here, here, here, and here). However, such products continue to be distributed by other entities (for a November 2009 list compiled by the FDA of manufacturers of caffeinated alcoholic beverages, see here).
Also, for a recent article in Scientific American addressing the dangers of caffeinated alcoholic energy drinks, as well as a discussion of the prohibition of their sale in Michigan and Oklahoma, see here and here. For an article describing the Oklahoma ban, see here.
For a posting containing the concerns of the FDA regarding alcoholic beverages with added caffeine, as well as its November 2010 warning letters to four companies that make these beverages, see here. For a related Fact Sheet published by the CDC in July of 2010, see here. For a report that college students who consume energy-drink cocktails are three times more likely than alcohol-only drinkers to leave a bar drunk, see here.
Relatedly, the Substance Substance Abuse and Mental Health Services Administration (SAMHSA) recently published a report (Nov. 22, 2011) that documented a sharp increase in the number of emergency department visits involving "energy drinks," with a tenfold increase between 2005 and 2009 (see here).
It's been a bittersweet few weeks as I have taught my last few classes at Saint Louis University. Next month I assume the position of Hall Render Professor of Law & Co-Director of the Hall Center for Law and Health at Indiana University Robert H. McKinney School of Law. I am leaving many talented friends behind but am massively excited to be be working with hugely talented Hall Center faculty members such as (fellow blogger and co-Director) David Orentlicher, Emily Morris, Priscilla Keith, and Rob Katz (and, of course, the amazing Eleanor Kinney will remain involved in things). If you have been following the news, here, you will know that this is a law school with great ambition and resources. The opportunities to further expand an already excellent health law program by working with so many talented scholars across a major research institution are almost limitless. It's going to be a lot of fun and we'll be sure to keep you posted! Nic Terry, email@example.com.