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As a healthcare provider, you have been in the thick of the COVID-19 pandemic simply by the nature of your profession. You’ve been subject to a constant flow of rules and regulations from CMS, HHS-OIG, and state agencies on handling and preventing Coronavirus.
Now, a new executive order from the Biden-Harris Administration is adding a lot more elements to the mix. These include COVID-19 vaccination requirements for healthcare employees, and fines of up to $14,000 per violation for not complying.
According to Ronald W. Chapman II, chair of Chapman Law Group’s White Collar Defense & Government Investigations practice group, a mandate of this magnitude means a host of potential litigation — most likely at the U.S. Supreme Court level — and legislative actions will certainly follow.
So what should you, a healthcare practitioner or worker in the medical field, look out for as these presidential orders — which Ron says “happened basically overnight without warning” — make their way to your workplace?
On his recent appearance (link below) on Sean M. Weiss’s The Compliance Guy podcast, Ron broke down some of the complexities of Biden’s order, discussed the authority a U.S. president actually has to police the public, and explained why Biden’s mandate is problematic, as it is based on “a statute that is unclear.” Ron and Sean also analyzed what the U.S. Attorney General’s recent memo means for how agencies — like CMS — interpret their own regulations, and what the Supreme Court has said about them.
Highlights of the podcast follow.
Sean Weiss: On September 9 of this year, President Biden issued a series of executive orders that expanded mandatory vaccination requirements for COVID-19 and will apply to over 100 million U.S. workers. This includes vaccine mandates for federal workers and contractors, employees or employers in the health sector, and all employers with over 100 employees. The federal government will implement this mandate through the new OSHA rule, and I will talk about that with Ron as we get going.
So, a couple of things. The executive order[s] provide a broad outline of what employers and employees can expect including the following: employers with over 100 employees will need to implement policies requiring employees to obtain COVID-19 vaccines or undergo weekly testing for the virus. Failure — and listen to this, folks — failure to comply with the mandate will result in significant fines for employers potentially up to $14,000 per violation. Employers will be required to pay for weekly testing for unvaccinated employees, although the administration has indicated that such costs may be passed on to the employees. And, finally, the last one that I want to talk about is that employees will be entitled to paid time off to obtain vaccinations.
So I think just getting us started, out of the gate, there’s a ton to talk about before I even get into what the impact is for healthcare workers. So, Ron thanks for giving me about four minutes to give that introduction and for being patient with me as I run through some of this, but let me go ahead and pause and get your takes as an attorney.
Ron Chapman II: So first I have to say it’s a pleasure to be on with “the Joe Rogan of Compliance.” Wonderful to be here, and thanks for inviting me to talk about this topic.
We’ve got a lot to unpack here. Just starting off, I think it’s important for us to have a conversation about executive power, and as we’ve gone through the Coronavirus pandemic, we’ve seen many attempts by the government to expand its power through these sorts of authorities. But for the most part, because the Trump Administration wasn’t really getting involved at the federal level, this was left to the states. It was the states who were enacting mask mandates and other issues related to employers. And that’s really the realm in which the federal scheme and the constitutional scheme allows that stuff to happen.
So let’s talk about let’s talk about executive power for a second here. Biden as the president is appointed or elected to execute the laws of the United States. That’s his primary function. So what are the laws of the United States? Well, we have the Constitution, right, and then we have other statutes that have been voted on by the Legislature and become law that’s signed by the president. Those are really the two sources of authority; there’s a couple of others but we need not talk about those right now. And the separation of powers is incredibly important, because once we allow the executive to start making laws, we don’t have the checks and balances and the voice of the people that the Constitution mandates. So when we look at a vax mandate, like what has occurred with President Biden, we need to look for his source of authority.
Now there’s a couple of them. You mentioned OSHA, and then Medicare regulations is another vehicle that this is being put through, and there are a few other minor regulations. But just those two things right there account for, I think, over 100 million people. So President Biden, through an executive order, has made a decision for 100 million people, and we need to look for what statutes allow him to do that.
Well, the interesting thing about OSHA regulations is that they’re really inspection regulations when you look at them at their heart. OSHA was designed to make sure that workplaces are safe, and workplaces with more than 100 employees are required to abide by a heightened regulatory scheme. And so, President Biden has said we’re going to look to OSHA regulations to have them create a rule that would allow this vax mandate to go into effect. Well, when OSHA creates a rule, they’re bound, just like the president is, to create a rule based on existing authority that Congress has given them.
So then we need to look at what authority Congress is given, and when you actually look at the authority granted to OSHA, there is no authority that comes even close to allowing a rule that doesn’t just regulate inspections for safety in the federal workplace, but regulates what employees put into their body before going to the workplace. And that’s important for us to look at.
I don’t want to get my predictor hat on here and determine what’s going to happen with this regulation, but we’re going to see, and we’ve already seen, unions file suit, we’ve already seen companies file suit, the courts in the United States are going to be backed up severely with litigation related to this. [Note: On September 14, 2021, Arizona became the first to file suit over the mandate.] We’re going to see multidistrict litigation being combined where a number of these cases will be combined together, and we’re going to see them go up to the court.
And I don’t want to get too far ahead of ourselves here, but there’s going to be a day where the [U.S.] Supreme Court is going to have to sit down and say, “OK, what authority did President Biden have in order to create this, or expand his executive power in this way,” and they’re going to look to see whether or not it was properly applied. And the construct of the court right now is not going to be friendly to expansion of executive authority. I can think of at least six votes right now that I would imagine would be squarely against any sort of expansion like this.
Here’s another issue that we have, and I think we’re going to talk about this in more depth later, but back in 1905 there was a case, Jacobson v. Massachusetts, where a man, Jacobson, was from Sweden, I believe, and there was a smallpox vaccination requirement in Sweden. He went and got the vaccine, and he had a very, very terrible side effect from the vaccine, and I think his kids did as well. He immigrated to the United States, probably not because of smallpox [but] for some other reason. He lands in Massachusetts. Massachusetts around that time — 1905, I believe — created a law that mandated the smallpox vaccine, and he respectfully declined to follow that law, and I think at that point in time the fine for violating that law was $5. And now we have in this case a $14,000 fine per violation on the employer, and we also have, and we’ll talk about this later, Medicare denial of payment and civil monetary penalties associated with not complying with the Medicare side of things here.
So Jacobson refuses the vaccine, gets his $5 fine, the case trickles up to the Supreme Court. And I’m always amazed at how quickly cases got to the Supreme Court back in like 1905. It seemed like we had pretty good access to the courts. Now you need about $1 million and a whole team of attorneys to get you there, which the unions can do but individual people can’t these days.
Sean Weiss: Or just one Ron Chapman.
Ron Chapman II: There you go. I mean, yeah, we’re up there, too. So [Jacobson], I can’t recall if he went to prison or not, but then the Supreme Court takes a look at the case. Now let’s talk about the differences between Jacobson v. Massachusetts and the Biden executive order.
Ron Chapman II: In Jacobson v. Massachusetts, Massachusetts has a police power. The states have been given authority by the Constitution to regulate the people and to make decisions for the people, and the reason why is because we’re not just one big republic. We have a collection of states that are able to make decisions for people, and they can make better decisions than the federal government. That’s traditionally what the Constitution has told us is the right way to do things. So the justice who ultimately wrote the opinion determined that the states have a police power, and that police power may include requiring vaccinations for the citizens, and the 14th Amendment won’t disrupt that police power, OK.
Here’s the difference: Joe Biden is the president of the United States, he’s acting based on a statute that is unclear and doesn’t include any clear vax mandate, and he’s acting without police power. The federal government has no police power to regulate the citizens. Primarily, its power relates to federal matters and things that would impact multiple states at the same time, but it’s not given a general police power over the citizens of the United States. So [the] Supreme Court ruled in favor of Massachusetts in Jacobson v. Massachusetts. Jacobson’s conviction for violating the vax mandate stands, and I’ve seen that trickle up through some of the pundits as the case that protects President Biden’s decision here. But I think that that’s a misapplication because this was a state case. This was a state law that was enacted by the state legislature, so we’re even further removed from Joe Biden’s executive authority.
Now, let’s ask ourselves, had Joe went to Congress and said, “Hey, Congress we’d like you to make a law for a vax mandate,” would they have done so? And I think we were talking about this before the show started, and it’s very clear that one of the reasons he didn’t do that is because he knew that he wouldn’t get support from Congress. So we have to ask ourselves: is it OK for a president who knows that he’s not going to get support from the recently and more closely elected people, Congress, who are elected to make decisions on behalf of us, if he can’t get support of those people, does he then have the ability to make such a sweeping executive order that impacts well over 100 million people?
In fact, I don’t know that I believe those estimates; I think everybody in the United States is basically impacted. I mean, in order to not fall into this, you would have to not work in a workplace over 100 people; you would have to not be an employee of the federal government or a contractor with the federal government; and then you would have to not be an employee of any hospital or medical facility that accepts Medicare. I will say that most of your constituents listening to the show right now qualify for this vax mandate simply because they work in the health care industry and it’s heavily regulated.
Sean Weiss: So, obviously, keep in mind, right now there’s still a lot of speculation on what’s going to happen in the healthcare sector with respect to the Centers for Medicare and Medicaid Services [CMS], or, as we call it, Medicare. There is an interim final rule that will be coming out in early October, so we don’t have an interim rule right now, there’s been no comment period. My guess is, once we get this it’ll be somewhere between 30 to 60 days, which is the usual amount of time before Medicare moves with something. But let me just go through real quick, Ron, the four bullet points that are tied to health care and get your take on these.
First, the mandate will likely apply to hospitals, nursing facilities and long-term care facilities, dialysis facilities, ambulatory surgery centers, home health agencies, hospice, clinical labs, ambulance providers, among other providers, and they stop short to say “among other providers.” Now, folks, this is coming directly from the Biden-Harris executive order. This is how it’s written. This is not me or some other pundit who’s adding these words in here. It literally says, “among other providers who receive Medicare and Medicaid reimbursement as a condition for participating in the Medicare and Medicaid programs.”
Second, the expanded vaccination mandate is expected to cover over 50,000 healthcare organizations and over 17 million healthcare workers across the United States. Really interesting, in New York, I don’t know if you saw this the other day, two or three days ago, one of the hospitals had to shut down their labor and delivery department, and they could handle no cases because all of their L&D nurses quit over the mandate that was being pushed out, and we’re seeing this. I did a podcast yesterday with Dr. Matthew Kalinski, and he’s an internist pediatrician, but he also is an entrepreneur; he owns staffing agencies. And the number of people coming to his staffing agencies [are] looking for work because they’ve walked away or they ended their employment with their current employer. So they’re flooded.
So two more points and then, Ron, I want you to talk about these. The mandate will cover direct care staff and staff who are not involved in direct patient, resident, or clinical care. And, finally, the mandate will apply broadly [to] the workforce of covered settings, including employees, contractors, volunteers, and other staff of such institutions, so that was right to your point.
Ron Chapman II: Yeah I think we can assume that “among others” is going to mean anybody who accepts Medicare, Medicaid, and really anybody who works with those people and enters their facilities. I honestly think that’s how this is going to be implemented. We can expect a final rule at some point in October. It’s being drafted right now, it will be circulated for comment. You and I know very well that the notice and comment rulemaking procedures are largely a circus; it’s just for show, it doesn’t result in any meaningful change of the rule. And so the rule will be put through by CMS as it’s enacted, and it will apply broadly to a lot of people.
I don’t want to digress here, but let me just go back to your comments about the concerns that some people have about this. In getting ready for the show I was talking with somebody who works in my office who I respect a lot, and she was literally in tears as I was telling her that I don’t believe the vax mandate will stand, because she and her husband desperately want to have kids, and the lack of research about the long-term effects of a first, second, or third vaccine really aren’t that clear and people are very, very concerned about making that decision to get the vaccination. I feel like we’re sidestepping a lot of those concerns, and I think that those concerns are very real.
I got the vaccine, but I’m 38 years old, I have three kids, I’m not too worried about any long-term complications, I’ve lived a decent life so far. But there’s a lot of people out there who aren’t me and who aren’t in my position, who have very real fears and concerns. And so we have to make mention of the lack of available information about the efficacy of the vaccine, about its long-term implications. And as I was listening to a law professor from NYU, [Richard] Epstein, talk about this morning, we’ve also sort of assumed that the vaccine is really the best way to attack Coronavirus, which remains to be seen, and these issues will be litigated at the federal level. The lawsuits that will come out of this won’t just focus on executive authority, but they will also focus on the fact that the federal government is making a decision with a lack of clear available information while this is still an evolving issue.
And one thing we know about the Supreme Court is that they don’t like to make cases on a moving record. What I mean by that is, when information is still rapidly becoming available — this is one reason why the Supreme Court takes a long time to make a decision; we have to filter up through the courts — they need to be able to sit down and digest all of the available information.
The Supreme Court is going to be asked in this case, very quickly, to make a difficult decision based on a lack of solid scientific information. And that’s what President Biden has put them in the position to have to do so quickly, with executive orders. Congress didn’t sit down and debate this. There weren’t experts and committee hearings about this efficacy. There’s not a very full record developed. There’s only a two-page executive order, and what Epstein was talking about this morning as well was, the president was kind of putting the Supreme Court and other courts in a bad position by not creating a position paper discussing exactly why this was necessary.
I implore all of the people out here listening to pull open the executive order and read those words yourself, and you’ll realize, sure, it’s easily digestible for the public. People can see it. But in it contains a lot of assumptions and decisions that are being made for you that don’t have the corresponding research associated with it, and that’s what I’m a little concerned about.
So going back to Medicare and the rule, I assume this is going to be something that impacts everybody who works in the healthcare field. And here’s the other thing, and this is important for everybody out there to understand: Medicare’s way of punishing you for not complying with conditions of participation is prepayment review, withholding funds from your facility, civil monetary penalties that can range in the millions and millions and millions of dollars. They almost have unfettered ability to fine you for violating these regulations, and all it really takes is a collection of staff members who refuse, that you don’t fire, to implicate that rule and cause penalties.
So very quickly, the hospitals, the large facilities, and institutions are going to have to be making very, very difficult employment decisions in order to not get slapped by Medicare and stay compliant but keep their employees happy.
We’re going to see a revolt of the nurses’ unions and the other unions that are in these sorts of facilities as they’re fighting to protect their employees from getting discharged, while the hospitals are fighting to prevent the excessive fines that are associated with violating Medicare regulations. And all of this happened basically overnight without warning, and that’s what we’re left with. This is going to be an issue that you and I are going to be talking about for months and months, and this is not going to go away quietly.
Sean Weiss: And as you were talking, one of the things that I started thinking about were the other lawsuits that could potentially be filed for individuals that suffer injury or long-term effects. It was interesting, I was listening to a virologist talking the other day and then I was listening to another physician talking about, at this point right now, they say there’s been no evidence of a link between the vaccine and infertility or birth defects. But the caveat to that was, “But we don’t know what could happen five years from now.” And that’s the scary part about this thing.
So again, there’s a lot of potential different type of lawsuits that could be filed that could come out of this executive order. And I think, to your point, this thing is not as clear-cut as people want it to appear to be. There’s a lot of complexities to this and there’s a lot of potential things that could go sideways for the administration, for Congress, for the American workers and employers around our country.
Sean Weiss: So we were talking about OSHA and their potential role, and I think it’s really interesting. Because what’s anticipated is that the emergency temporary standard — so anytime you see a term called an ETS, it’s referred to as an emergency temporary standard — and what they’re saying is, they’re expecting this ETS to go into effect between 30 and 60 days. Now, the interesting thing to keep in mind about an ETS is that it can only be in effect for six months. This is the trick on this. So it’s only able to be in effect for six months, and after the six months it has to be replaced by a permanent OSHA standard, [and] an OSHA standard is required to undergo a formal rulemaking process. So it has to be promulgated into the law. So there is a very short window of opportunity for this ETS to be mandated to get 100 million American workers vaccinated under this executive order, if they’re able to carry it out, right?
Ron Chapman II: Yeah, and I think as you mentioned before the show started, these ETSes don’t have the best track record.
Sean Weiss: Let me speak to that real quick. So according to the Congressional Research Service, in the nine times OSHA has issued an ETS prior to its COVID-19 healthcare ETS, the courts have fully vacated or stayed the ETS in four cases and partially vacated the ETS in one case. So 60% of the cases in total were either completely vacated or partially vacated. That’s not a great track record for these.
Ron Chapman II: That is a terrible track record for any administrative body, honestly. Usually when an administrative body makes a rule, they have to go through great pains to make sure that they have the authority to make the rule and it’s backed by actual lawful authority. They’ve got teams of lawyers at OSHA poring over regulations to make sure that they have the proper authority.
I will say that one of the reasons why they don’t have the best track record is, because unlike other areas of the law or administrative regulations, labor unions have incredible power in this country to litigate and they have access to the courts. But that’s that that’s a not a compliment to labor unions; it’s sort of a criticism of our system. Because other administrative regulations, where there isn’t this big body with the capability to file quick lawsuits, they get passed through and they don’t face the same scrutiny. And this is this is one reason why, and I know we’ll talk about the [Attorney General Merrick] Garland memo later, but one reason why we need to be very careful any time we see the executive expanding their authority without the lawful authority to do so.
Agencies are given a tremendous amount of deference to their rulemaking powers as long as that is tied to an actual statute. If it’s not, they don’t get any deference whatsoever. Now, thankfully, I think the court is uniquely poised to answer these questions and to rein in the administrative powers so we can get back to a country where Congress is making decisions. Regardless of if that Congress is red, blue or purple, it doesn’t matter to me, they need to be the one sitting in the chair casting votes on our behalf, because they are more closely associated with the people than the executive.
Sean Weiss: Because the people were who put them there.
Ron Chapman II: Exactly.
Sean Weiss: So a couple a couple of quick things, and we’ll keep moving through this. One thing that stood out to me is, under the Fair Labor Standard Act, employers must pay non-exempt employees for their time spent undergoing testing during the workday. This likely includes required testing occurring on employees’ days off, if such testing is necessary to perform their jobs safely and effectively during the pandemic. Second is religious objections, and this one’s really interesting, because we talked about the state of New York and we could quickly talk about that. But under federal law, religious objections are protected, even when they are not supported by a formal religious group, and employers need to be able to seek further verification only in rare circumstances if there is a specific reason to doubt that the employee’s objection is religion-based. And it says, notably, political and philosophical objections are not protected by federal anti-discrimination law.
Ron Chapman II: So this is worded very carefully because we have a large body of conscientious-objector litigation and case law to look at. And I think, I can’t remember the exact words that the court used, but in order to have a valid religious objection, this needs to be a deeply held belief by a religion that the government essentially recognizes as being a religion. Now, that doesn’t mean that it has to have a certain number of members, an actual church, an actual book, right. It can be less formal than that. But they want to make sure, and I understand this, that when a religious objection is being made, it’s not purely philosophical or political [that is] couched as some form of religious objection. So you’d want to see if that person had been a member of that religion prior to raising the objection, whether that religion actually holds that belief, and whether that religion is a religion.
So political objections to a mandate just really will never be considered, because if the law says you have to do it, you have to do it regardless. We don’t just get to say, I want to drive 50 mph on a 25 mph road, because politically I believe that I should be able to do that. That’s why we need to have laws in place that we actually respect and are based on good science. So looking at those conscientious-objector type cases, we see that the courts have done a pretty good job of recognizing what is actually a deeply held religious belief and what might not be somebody maybe just trying to escape the draft because they want to escape the draft.
In this case, I think that the state of New York, as you mentioned before, actually did away with religious objections. I don’t think that that survives a First Amendment challenge, and I think that this carveout in the OSHA regulations is probably narrowly tailored enough to avoid a First Amendment challenge. But again, I expect those First Amendment challenges to bubble up in the courts. I expect that religious bodies and organizations will be filing that aspect of the cases. And I think we’re going to meet in the middle right at the Supreme Court for a pretty heavy oral argument that I will be tuning into. Perhaps we should be live while this thing is going on so we can talk about it. It’s going to be interesting.
Sean Weiss: Absolutely, because I know we would be giving the facts as opposed to opinions.
Sean Weiss: Now I want to tie this into what the state of New York has done, because this picks up on the religious aspect and it picks up on some other things. So this is how it was worded by the state of New York. The emergency regulations are premised on the view that, within healthcare settings, unvaccinated personnel pose an unacceptably high risk of both acquiring COVID-19 and transmitting the disease to colleagues, vulnerable patients, and residents, thereby exacerbating the risk of complications and staffing shortages. So this is this is the position that the state of New York has taken, and they actually overrode the local government in New York City in a certain respect.
Real quick, two points that I want to make and then obviously, Ron, I want to get your take on these. The first one is no testing-out option, is what they call it. So [in July], New York City had announced that employees at city-run healthcare facilities would be required to submit proof of vaccination or, in the alternative, have the ability to opt out and submit to weekly COVID-19 testing and provide proof of a negative test. In consideration of the new state mandate in emergency regulations, New York City’s regulations, according to the state of New York, appear to be outdated, and the opt-out testing alternative to vaccination will no longer be allowed. So they said, “Sorry.”
Ron Chapman II: I think that it’s clear that the legislature in New York read Jacobson v. Massachusetts and has realized that, likely, the court would make a similar decision and protect them, or at least they’re protected by existing precedent. And in Jacobson, the law didn’t have a religious exemption and they think that that will survive scrutiny by the courts. In Jacobson, there was no testing-out option; it was a mandatory smallpox vaccination for everybody.
So the challenge to the New York law is not likely to be an improper use of police power. What it’s likely to be is focused on the difference between a smallpox vaccine in 1905 and the limited information that we have about the coronavirus vaccine in 2020 and 2021. And I expect that’s where challengers will launch their challenge, because they’re not likely to be successful taking on, in light of Jacobson, the police power of the state to be able to enact this rule.
But I think that they have pretty good footing on the differences between the smallpox vaccination and Coronavirus. Smallpox is basically the same disease then as it is today; we still see it floating around today. [With] Coronavirus, we’re in many different iterations of this virus, and many of them have been resistant to vaccines, so there’s a very real open question as to whether or not one Coronavirus vaccine actually prevents further spread of the virus and is the way to satisfy this public health emergency that we have.
Government regulations need to be narrowly tailored to a compelling government interest under this standard of scrutiny that we have here. And a wide-sweeping vaccination program that is not based on the best research available, where information is still evolving, may not be narrowly tailored to achieve in a compelling government interest, because the government may not have a compelling government interest in forcing a vaccine that may not be effective. And that’s really where the challenge will lie, and I expect that we shall see that probably bubble up a little bit earlier than we get the Supreme Court to act on the vaccination mandate for the executive order.
Sean Weiss: And right now, the latest count [shows] there are 19 variants of the Coronavirus. The latest one that is showing resistance to the vaccine is the Mu, but there are others. So again, I think to your point, very, very well made. I mean, you know this isn’t just a smallpox where it’s been consistent as you know a virus or whatever it is. This is something that continues to mutate and it continues to evolve and that’s part of the concern.
The last thing that I wanted to point out and I want to jump into the Garland memo — because as you said it ties directly into what we’re talking about now with COVID-19 — but the last thing that I wanted to point out about the state of New York is that the emergency regulations permit no exemption based on religious beliefs or practice. Ultimately, covered entities are permitted to terminate covered personnel who are not fully vaccinated and do not have a valid medical exemption, if they are unable to ensure individuals are not engaged in patient resident care or exposed to other personnel.
Ron Chapman II: I think that’s pretty far-reaching. Again I actually think that the New York regulation or law has a better chance of survival than the Biden executive order, just because of that Jacobson case — unless a court determines that a vaccine mandate isn’t a compelling government interest. And I suppose we’ll see how that shakes out. I’m very interested in staying tuned to that fight. But, yeah, let’s talk [about the] Garland memo.
Sean Weiss: It was driving me crazy trying to figure out who actually wrote the opinion for Jacobson v. Massachusetts. It was John Marshall Harlan. Good old John Marshall Harlan.
Ron Chapman II: You know, I wish that we could revive some of these justices and see what their take would be on some of the modern issues, right? When I re-read the Jacobson decision, they just dove straight into the law. They didn’t have to cite 15 different regulations and stack them one on top of another. And it just speaks to a simpler day of United States jurisprudence, where you could really attack the heart of an issue and relate it to the Constitution. They had a much easier job back then, and that’s because they probably had about, I don’t know, 12 billion less laws to analyze during their daily work.
Sean Weiss: You know, it’s interesting. In thinking about this, I wonder if the [Zucht v.] King case from 1922 will also surface as something that people will also want to take a look at.
Ron Chapman II: Yep that was whether a school system could refuse admission to a student who refused a vaccination. Very, very similar result there. I think Jacobson really paved the way for Zucht. I think the Court doubled down on its analysis. It is a more recent case. You know, they teach us in law school that if you’re relying on something from 1905, you should probably continue your research. 1922 doesn’t really get you any better.
Sean Weiss: Because we’re talking about the impact of the executive orders and the might of the pen, and it seems that Attorney General Garland produced a memorandum on the Justice Department communications with the White House, and this was released on Wednesday, July 1, 2021, and what it basically says is: “The success of the Department of Justice depends on the trust of the American people. … That trust must be earned every day and we can do so only through our adherence and the long-standing departmental norms of independence from inappropriate influences, the principled exercise of discretion, and the treatment of like cases alike.” So I don’t mean to smirk or chuckle through some of that, but I’m going to stop because I really want your position and I want folks to hear your analysis on this.
Ron Chapman II: Let’s lay the groundwork here, please, so that everybody can understand how important this is to their daily operations. And I’ll go back through it just like I did with executive power. So, agencies like CMS and departments have the ability to create rules that bind private organizations, public organizations, and specifically, in the healthcare context, we have rules that are promulgated, meaning they go through their formal rulemaking process. And that’s the way that an agency can address a matter of importance, using its specified knowledge that it has as an agency. And this makes sense; we can’t have Congress getting together every time a Medicare rule needs to be changed. Nothing would ever get done in our society, and we wouldn’t be able to have an effective system of laws.
So we’ve created administrative regulations, and we’ve delegated creating those regulations to the agencies. And the agencies just have one responsibility to go through, and that is, they have to publish the regulation, they have to allow a notice and comment rule period, and people’s voices can be heard and entities’ voices can be heard about those regulations, in order to make sure that they are sort of forged in at least some fire of due process. And this is really a due process proceeding.
Well, that’s great, but there’s also this other thing that has happened. Agencies have decided to write unofficial guidance documents; the Medicare claims processing manual is probably the one that impacts most of the people that are listening to us today. They write informal guidance documents, and then what they do is they tie them to administrative regulations. Everybody who bills Medicare signs an 855, or some form of it, and agrees to abide by Medicare’s rules and regulations. Medicare’s rules and regulations include, according to agency precedent, the Medicare claims processing manual. So essentially, the Medicare claims processing manual has become a regulation in and of itself, because it’s been tied to a regulation. Now, what we’ve done when we do that is, we require everybody who operates in the health care system to abide by a book that was drafted by people and didn’t go through a formal due process rulemaking proceeding.
There’s a case, Azar v. Allina, and in that case, the Supreme Court very clearly said that these manuals, these books, these papers published by CMS, these things that you and I — compliance professionals — pour over to see how the agency is interpreting its regulations, they can’t be used to bind a private entity. So, no more can a federal prosecutor go into court and say, you violated Section IB 1.1(C), paren 4, of the Medicare claims processing manual, and therefore you owe us $20 billion. And you think I’m joking right now, [but] that’s how it actually how it happens.
So the Supreme Court very clearly said that — and that’s why I like the composition of the court these days, because they’re capable of making the hard decisions — they say, “Listen, an author of a manual that was published by the government does not have any more rulemaking authority than you or I.” So that case comes out, and in order to make sure that federal prosecutors are adhering to that case, Azar v. Allina, [Attorney General] Jeff Sessions and [Associate Attorney General Rachel] Brand … knowing that Azar v. Allina was about to be precedent, they wrote memos. And those memos say — consistent with what President Trump tried to do in cutting bureaucratic red tape — they say that federal prosecutors can’t use documents that didn’t go through the formal rulemaking process in order to bind parties. So in False Claims Act litigation, in healthcare fraud litigation, and even in some of CMS’s own internal administrative proceedings related to exclusion or monetary penalties, you can’t use these unpromulgated documents.
Well, fast-forward to Merrick Garland being the attorney general of the United States and President Biden being the president, we see in August — I think August 21, I think it was originally maybe published August 1 — a memo that comes out that is very, very unclear. Let’s just start there. The memo recognizes Allina, it recognizes the Brand memo, and it recognizes the now long-held precedent that unpromulgated guidance documents do not have the force and effective law. It recognizes that. But it also encourages prosecutors to use those documents to show scienter — meaning knowledge of regulations to show intent that you broke the regulation — to also inform judges as to an agency’s position on how those regulations must be interpreted. I think [Justice Antonin] Scalia once wrote a long time ago [in Auer v. Robbins] that an agency does not have the ability to interpret its own regulations in that context, through unpromulgated documents. But I think Merrick Garland appears to be taking a run at that with his new memo.
So the memo is unclear, but what we do know is that now prosecutors have been given the green light and here’s what this means. Previously, if you violated an LCD [Local Coverage Determination], you wouldn’t expect a health care fraud prosecution based solely on violation of an LCD, or a health care fraud prosecution based solely on violation of some part of the Medicare claims processing manual or the benefit manual. Now federal prosecutors are free to interpret those guidance documents to determine whether or not somebody intended to violate the rules.
And here’s the problem. I’ve often wanted to do this, and one day I will do it, and I will tell you when I do it, Sean, so that you can be there to see it. But many times I argue to a jury, “How in the world could this doctor in a federal criminal case, how in the world could this doctor have had knowledge of every single Medicare rule that is out there, when the government tries to use that rule to say, ‘He knew of the rule, and he decided to break it, and that was fraud’?” I would love to take every single document and put it on a cart; in fact, we’d probably need to take the jury on a field trip to a library somewhere, and say, “These are the amount of rules that every doctor, every healthcare provider, every entity is required to know and follow.” It’s impossible. We could spend a lifetime of reading and research and never really understand these rules. And even after reading these rules, you and I know, and everybody out there in your audience knows, that reading these rules is way more complicated than just reading a book. You have to compare multiple laws, multiple sections against each other, and interpretation is a matter of hundreds of pages of jurisprudence based on one rule, and it’s a very difficult thing to conceptualize.
So to the extent that the federal government thinks that it can point to a rule in some government manual that wasn’t published to everybody, and say this is a rule the doctor knew, violated it, interpreted it differently, and that’s the basis of a false claims case or a fraud case, well, that reality is back into existence now based on the Garland memo. And that’s very important for everybody listening out there, because these documents will be used. And given that we’ve seen that President Biden has the ability, and I would say has decided to use the pen in this way, and Merrick Garland and CMS are also going to follow suit, we can see that there’s going to be rapid fire rules coming our way. They’re going to be very difficult to follow, they’re going to be unpromulgated and not published to everybody, and they’re going to be used against the people out there for the government to try to take money back. A lot of money.
So stick close to your compliance, folks. Make sure you get a legal analysis on just about everything. Because the one thing that saves you from all that hassle is a good advice memo written by an attorney after researching the rules and the laws and letting you know that this is an OK thing to do or this is not an OK thing to do. That still remains an affirmative defense to any false claims action or any health care fraud action, and that’s really what you all need to do to protect yourself.
Sean Weiss: Yeah, I think that’s outstanding advice, and, yeah, I definitely want to be there the day that you decide to walk a jury down to the Library of Congress or over to the CMS building. And you know, the funny thing is, if you just say forget about all of the Medicare rules and regulations, and you just tie the rules and regulations that are specific to a specialty, to a provider, they stretch football fields.
Sean Weiss: My new favorite topics.
Ron Chapman II: Your two favorite topics, and your testimony on that is very clear and concise, and you do a great job of boiling that down. I just mentioned, I’m arguing this on behalf of a provider in Kentucky right now who’s facing prosecution related to E/M coding, a study was conducted where they took 600 physicians and gave them the same medical records to code with an E/M code, and then they gave those same records to, I think, seven or eight experts in the field of E/M coding. And the study determined that the physicians only got it right about 48% of the time.
Sean Weiss: That’s right. Is that not unbelievable? And then and then all you have to do is go back to the 2015 OIG study that said greater than 50% of all evaluation and management services were billed between 2010 and 2015 incorrectly. Greater than 50%
Ron Chapman II: So we have the government still seeking indictment against providers for improper selection of E/M coding. But we have the government also admitting that these rules are so complicated that the average physician can’t understand them, and I’m just perplexed. And that’s why I spend my career fighting against this sort of executive expansion and on behalf of providers, and healthcare law has been the appropriate vehicle for me to do that. I mean, it’s the one place where we’re intersecting with the government constantly on novel and complex issues related to regulations. It’s been a joy to work in this profession and obviously to work alongside you. But it’s a shame that we have to be here.
Sean Weiss: All right, so I think at this point we have talked exhaustively about the executive order that was issued by the Biden-Harris Administration. Again, I want to make sure that everybody understands at this point right now, there is still a lot of stuff up in the air with regard to Medicare. We are still waiting for the interim final rule in the comment period; that’s supposed to be coming out early October, we’ll see what happens with that. We’re going to continue to monitor what goes on with the ETS for OSHA and the implementation, if they hold true, for the 30 to 60 days. I think we’re also going to take a harder look at the Garland memo and see what comes out of that from case law and what new cases. Because they didn’t just add an arrow back into the quiver of the prosecutors; they gave them land mines, basically.
Ron Chapman II: Yeah, absolutely, they did. And here’s the other thing that I failed to mention earlier. It’s not that the Garland memo was published with some sort of fanfare. In fact, I don’t even think it appears on the Department of Justice official website. It was something that erased two very important memos for people when looking at compliance, and it was done without any fanfare whatsoever, and provided clear direction to federal prosecutors on how to change the way they see their cases.
It’s almost as if Garland didn’t want people to know that this was happening, and when I realized that and I realized that this memo was put forward in July and I was just seeing it in late August, well, I thought, I’d better call Sean and see what we can do about giving this out to people because it’s a big important development.
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In “Physician Guide to Basic Compliance Concepts,” Chapman Law Group’s national healthcare compliance attorneys cover how to spot and avoid healthcare fraud, handling investigations and audits, and keeping your staff in the right.
In general, a physician or other licensed healthcare provider is prohibited from making any referral to a person or entity that bills Medicare or Medicaid programs, and with which the physician has a financial interest. And there are hefty penalties for doing so.
If a physician is excluded from Medicare/Medicaid because he/she accepted a kickback, does this mean he/she could be denied DEA registration in the future? Not necessarily.