I’m expecting ALL ORIGINAL work like always. Please follow the
directions below.
Case Study & Critical Thinking: Never Events, Medical Apologies, and Healthcare
In addition to consulting resources provided in the course readings list(I included some slides
from course) you may consult any other source(s) that you wish for information regarding never
events, medical apologies, and certain aspects of healthcare legislation. In all instances, please
be sure to provide APA style references, including in-text citations,
Question 1
Point Value: 5
Which of the following would NOT be considered a “never event”?
1) An infant that has been discharged by the hospital to the right family is kidnapped in the
parking lot of a grocery store shortly after leaving the hospital.
2) Artificial insemination with the wrong donor sperm or donor egg
3) Surgery performed on the wrong patient.
4) A patient dies or becomes disabled, the cause associated with the use of restraints or bedrails
while being cared for in a healthcare facility.
Question 2
Point Value: 5
According to the article, “To Err is Human: Building a Safer Health System,” what are the four
types of errors? Additionally, provide an explicit example of each of these errors.
Question 3
Point Value: 20
A well-respected advocacy group for improved transparency, quality, and safety in hospitals has
asked hospitals to commit to 4 actions in the event of a “never” event: 1) apologize to the patient,
2) report the event, 3) perform a root cause analysis, and 4) waive costs directly related to the
event. Providing your references, and in 500 words or less, please describe WHY you think this
group has selected these four measures.
Question 4
Point Value: 10
Among other sources, your textbook talks about the “moral hazard” argument from the
perspective of a consumer. Think again to an earlier assessment question about training residents
to be more cost conscious. Citing your references if you’re able and in 250 words or less, how
can knowing, or at least being exposed to the cost of an entire formulary help residents make
better decisions when evaluated from a cost-benefit perspective? To help you formulate your
thoughts, try to think about things such as: function of the formulary, variations of the formulary,
e.g., “open” or “closed”, etc.
Question 5
Point Value: 5
In our course materials, we’ve briefly discussed healthcare-associated infections, sometimes
referred to as HAI. One such HAI is a Central Line-Associated Bloodstream Infections
(CLABSI). The U.S. National Benchmark for CLABSI is “1” (the units aren’t so important). If I
told you that one hospital had a CLABSI ratio of 0.762, and another had a ratio of 0.716:
1. How is each hospital performing when compared to the national benchmark? (2.5 points)
2. Providing some type of justification, explain which of the hospitals is performing better than
the other. (2.5 points)
Question 6
Point Value: 7.5
In 150 words or less (I’m not looking for an essay here, and feel free to use bullet points), and
providing your sources, tell me the following information about Dennis Quaid’s medical error
Why were his twins re-admitted to the hospital? (2.5 points)
What drug were they given and what does it do? (2.5 points)
In the simplest terms, what was the error? (2.5 points)
Question 7
Point Value: 5
We’ll go very easy on the calculated numeric for this case study. Based on the Dennis Quaid
twins case, how much more concentrated was the dose of drug they received vs. the dose of drug
they were supposed to receive?
Question 8
Point Value: 5
True or false: Safety/Rx check protocols weren’t followed at multiple hand-off locations within
Cedars Sinai Hospital?
Question 9
Point Value: 7.5
Providing your sources and in 150 words or less, list where (if it’s easier, “who”) each of the
errors happened within Cedar Sinai that led to the eventual incorrect dosing.
Question 10
Point Value: 15
Please answer the following questions in no more than 500 words total, being sure to provide
your sources:
Who did Dennis Quaid eventually end up litigating, and why? (2.5 points)
What was Quaid’s overall demeanor towards the nurses that administered the wrong
dose? (2.5 points)
Did Cedars Sinai follow any of the 4 suggested actions listed in Question #3?
(Granted, this was a preventable errors case, not a never event) If so – which ones did
the hospital follow? (10 points)
For these final sets of questions, there’s no need for you to be a legal expert. However, it is
important to be familiar with a few legal and legislative concepts, particularly if they are tied into
our healthcare system.
Question 11
Point Value: 15
1) Citing your source(s), briefly describe the intentions behind antitrust laws, and provide one
(1) federal regulation that governs antitrust related activities. (2.5 points)
2) Citing your source(s), provide two (2) documented cases of antitrust in an industry other than
healthcare, and explain how these cases specifically violated antitrust laws (5 points)
3) Citing your source(s), provide two (2) document cases of antitrust within the healthcare
industry, and explain how these cases specifically violated antitrust laws (5 points)
4) How might your discussion of answer 3 above conflict directly with, or not mesh well with,
one (1) current quality initiative? As a reminder, please be explicit and provide citations
and/or references as appropriate. (2.5 points)
Question 12
Point Value: 20
In the same manner that students may struggle differentiating between aspects of Medicare and
Medicaid, they may also find the differences between the Anti-Kickback Statute and the Stark
Law to be problematic. Providing proper citations, please compare and contrast the following
parameters of these two regulations:
1) What are the explicit prohibitions of each regulation? (2.5 points)
2) What types, or if it’s easier, “who can give” a referral that would be subject to each
regulation? (2.5 points)
3) What types of items or services are subject to each regulation? (2.5 points)
4) What does each regulation say about intent? If there have been amendments to intent clauses
after recent legislation, please be sure to include those. (2.5 points)
5) What type(s) of penalties can be assessed for those who violate each regulation? (2.5 points)
6) Are there exceptions to each regulation, and if so – describe at least two (2) for each
regulation. (5 points)
7) Which Federal Health program(s) does each regulation cover? (2.5 points)
Question 13
Point Value: 5 points
I happen to be general internalist who among other duties, has a steady stream of family practice
patients. Looking into the future and trying to be as careful as possible, I decide to invest in an
imaging center, specifically one where I don’t refer my Medicare and Medicaid patients. I have a
longtime friend who’s an orthopedist and one day I find out that he ordered an MRI from the
imaging center.
1) Does this violate Stark? (2.5 points)
2) Why or why not? (2.5 points)
Question 14
Point Value: 5
I’ve changed careers now, and am now a physical therapist. I’ve opened up my own office inside
a building that houses multiple specialties, including family physicians. As part of my lease
conditions, I’m only in the building when the family physicians have patients for me to evaluate
and/or provide physical therapy.
1) Does this agreement violate the Stark Law? (2.5 points)
2) Why or why not? (2.5 points)
Question 15
Point Value: 10 points
I’m a physician again, and now I focus on family practice. For years I’ve tried to convince my
sister, who happens to be a hospital laboratory service expert, to move to my city. Luckily, one
of the three groups in town that performs pathology services has an opening, and my sister gets a
job. She also becomes a shareholder in the group. I refer my Medicare and Medicaid patients to
the hospital services group where my sister works, and the pathologists, including my sister, bill
Medicare for their own services.
1) Does this arrangement violate the Stark Law? (2.5 points)
2) Why or why not? (2.5 points)
3) If this arrange does violate the Stark Law, what are two (2) options that I can take to remedy
the situation? (5 points)
• Administrative and Reminders
• Open Forum for Logistical/Course Questions
• Healthcare Fraud and Enforcement
• Selected regulations and their impacts on the
healthcare industry
• For early planning purposes, the second of your
case studies and critical thinking exercises is due
at the end of Week 8.
• Questions or comments about course
• Ripple effects of PPACA Provisions

Interpretation of “State” for Health Insurance Exchanges (HIX, not
to be confused with HIE) subsidies: King vs Burwell decided June 25,
2015 (1)

Contraceptive Insurance Exception for Individuals: Wieland v. HHS
Court of Appeals for the 8th Circuit filing on July 20, 2015 (2)
• Fraud & Abuse Enforcement: Qui Tam and HEAT

Qui Tam: “Who also sues on behalf of the king also sues on behalf of
• Department of Justice Healthcare Fraud Unit (HEAT) (3)

Antitrust (Sherman Act, Federal Trade Commission, Clayton Act)

Non healthcare examples

Healthcare examples

The road to litigation hell could be paved with good intentions?
• Anti-Kickback Statute, nested within the Social Security Act

Who/what does it cover?

Safe Harbor Regulations

Stark Law, or “Physician Self-Referral Law”, section 1877 of the Social Security Act.

Who/what does it cover?


False Claims Act (FCA)
• For individuals and families
who procure insurance via a
health insurance exchange
(HIX), subsidies on the
premiums are given to those
with a household income
between 133% and 400% of
the poverty line (1). There
are 4 “flavors” of HIX
variations (see right) (2)
• Subsidies are calculated in
part, by a share of income
based on percent of the
federal poverty level, i.e., the

State based marketplace, e.g. Vermont: States
responsible for all functions; consumers apply for
and enroll through state-maintained websites. 14

Federally-supported State-based marketplace, e.g.,
Nevada: States responsible for all functions, but rely
on Federally-facilitated marketplace IT platform;
consumers apply and enroll through
3 total

State-partnership marketplace, e.g., Illinois: states
administer in-person consumer assistance, HHS
performs remaining functions; consumers apply and
enroll through 7 total

Federally-facilitated marketplace, e.g., Louisiana:
HHS performs all marketplace functions, consumers
apply and enroll through 27 total
Let’s talk semantics: IRS Code section 36B(a)(b)(2)(A), which is part of
PPACA states:
“The premium assistance amount
under this subsection with respect to
any coverage month is the amount
equal to the lesser of – the monthly
premiums for such month for 1 or
more qualified health plans offered in
the individual market within a
State…and which were enrolled in
through an Exchange by the State…”
Why did the plaintiffs care about this

Without subsidies, they might have been
exempt from the individual mandate
because the cheapest insurance plan
would have exceeded 8% of their
income, but with the subsidies, the
subsidized cost was low enough to
require them to purchase insurance
through an exchange or pay a penalty.

The wording of the statute is
ambiguous, “…Exchanges established by
the State.” How many of the 4 flavors of
HIX does the wording apply to?
Full text of SCOTUS Opinion:
• Decision: Roberts with the pen stated two over-arching concepts: (a)
the text of the IRS statute for PPACA is indeed ambiguous, so (b) to
resolve the ambiguity, they looked at the purpose of the statute, and
finding that the IRS has a broader definition of the word “Exchange”
elsewhere that includes those set by the Federal government, upheld
that the subsidies the IRS gives are ok, regardless of which flavor of
HIX consumers are part of.
• Dissent: Thomas and Alito = sour grapes, “SCOTUScare.”

Paul Wieland is a member of the Missouri
House of Representatives with the State of
Missouri as his employer; he and his families
are devout Catholics

The State of Missouri’s healthcare plan
previously allowed Wieland to opt out of
contraceptive coverage under state law, but
under PPACA, the option was removed for
conflicting reasons (Missouri Insurance
Coalition vs. Huff).

The Wieland family contends that under
their current plan, they are being forced to
provide their dependent daughters with
coverage for contraceptives, and that the
State is discriminating against them.

After the Huff case, SCOTUS held that the Religious Freedom
Restoration Act prohibited the government from enforcing
PPACA and its implementing regulations that require “closely
held corporations to provide health-insurance coverage for
methods of contraception that violate the sincerely held religious
beliefs of the companies’ owners.” (Wieland vs HHS actually predates the now-famous Hobby Lobby case)

US Court of Appeals for the 8th district has remanded the case
back to the District Court. (1)

For a more casual op-ed read, consult this blog entry from Think
“Qui Tam”: Loosely translated from the Latin phrase, “who sues on behalf of the King as
well as for himself.”
• When you hear the phrase or term in the healthcare industry, it generally means that
an action has been filed under the False Claim Act’s whistleblower provisions, (1) and
that the government intends to recover Federal money or property.
• Current, under the Medicare Incentive Reward program (separate from the False
Claims Act), CMS pays whistleblowers 10 percent of the amount recovered or
$1,000, whichever is less (2), but regulations have been proposed to increase this
amount to 15% of the first $66,000,000 (yes, 66 million).
• The National Law Review periodically publishes recently unsealed Qui Tam cases. See,
e.g., this entry:
Health Care Fraud Prevention and Enforcement Action Team (HEAT):
• Since 2007, Strike Force teams have charged more than 2,300 defendants
with defrauding Medicare of more than $7 billion, and convicted
approximately 1,800 defendants of felony health care fraud offenses.
• In 2015, HEAT coordinated the largest-ever national healthcare fraud
takedown involving $712 million in fraudulent billing.
• Between 2008 and 2011, HEAT actions led to a 75% increase in individuals
charged with criminal health fraud
• The source for these statistics, and further reading, can be found on
HEAT’s web page:
Section 1:
Section 2:
“Every contract, combination
in the form of trust or
otherwise, or conspiracy, in
restraint of trade or
commerce among the several
States, or with foreign nations,
is declared to be illegal…”1
“Every person who shall
monopolize, or attempt to
monopolize, or combine or
conspire with any other
person or persons, to
monopolize any part of the
trade or commerce among
the several States, or with
foreign nations, shall be
deemed guilty of a felony…”2
• The Sherman Act led to two other core antitrust laws:

Federal Trade Commission (FTC) Act1, which bans unfair methods of
competition and unfair or deceptive acts or practices. SCOTUS has
ruled that all violations of the Sherman Act are also violations of the
FTC Act.
• The Clayton Act2, which addresses specific practices that the
Sherman Act does not clearly prohibit, such as mergers and
interlocking directorates (same person making decisions for
competing companies)
• AT&T and Bell Operating

AT&T was a natural monopoly (first
in the market, cost advantage, little
to no competition) for a lonngggggg
time (~1907 – 1982)

In 1982, AT&T agreed to break up
the Bell Operating Companies into
~22 companies, and then into 7
“Baby Bells”, who were later
acquired or went on to form
Verizon, AT&T Inc, and Century
• Aluminum Company of America

First and only producer of aluminum
in the United States between 1907
and post WWII.

Protective patents + exclusive
rights to bauxite mines + land rights
to build exclusive refinement sites =
no other entrants to market.

1944, Judge Learned Hand ruling:
Congress did not “condone good
trusts and condemn bad ones, it
forbad all.”
• Kodak
• 1921: Consent decree orders that Kodak cannot sell film under any other
label but its own, overturned in 1995.1
• 1954: Consent decree orders Kodak to license color finishing process to
third parties for its Kodacolor films, i.e., “tying” of services.2
• Microsoft
• IE tied to Windows
• Other browsers difficult to use (haha, poor Netscape…)
• Settlement, Findings, Judgment, Appeals Opinion, Modified Judgment
between 1999 and 20073

1984: Jefferson Parish Hospital District No. 2 vs Hyde1

Hyde, a board-certified anesthesiologist, applied for admission as medical staff at East Jefferson Hospital.

Credentials committee and medical staff recommended approval, hospital board denied because the hospital
was party to a contract providing that all anesthesiological services required by hospital’s patients would be
provided by a group called Roux & Associates. Hyde sought relief, citing that this contract was unlawful.
District Court denied, noting that the anticompetitive consequences of the Roux contract were minimal and
outweighed by benefits in the form of improved patient care. Court of Appeals reversed noting that contract
was illegal per se (needs no justification because it’s a tied service and by default, illegal)

SCOTUS reversed the reversal, i.e., the exclusive contract between Jefferson Hospital and Roux & Associates
does NOT violate the Sherman Act. In judgment: “There is no evidence that the price, quality, or the supply
or demand for either the tying product or the tied product involved in this case has been adversely affected
by the exclusive contract between Roux and the hospital.” (other hospitals let patients bring in their own
anesthesiologists, etc)

St. Luke’s Health System Acquisition of Saltzer Medical Group1

St. Luke’s was probably seeking to do the right things under PPACA with the acquisition: gain cost efficiencies,
i.e., lower cost (or not make them rise); and, improve care for members in the community

Federal Appeals Court affirmed a District Court’s opinion that St. Luke’s did not clearly demonstrate that the
efficiencies resulting from the merger would have a positive effect on competition.
ProMedica Merger with St. Luke’s Hospital2 (Ohio, different St. Luke’s)

5 year battle with various levels of court

ProMedica acquired St. Luke’s in Maumee, FTC found that it was anti competitive, ProMedica appealed to a 3panel judge Circuit Court and lost, then asked all 12 of the Circuit Court to hear the case and got denied, and
then filed a petition with SCOTUS, who declined to hear the case.
• Prohibits: Offering, paying, soliciting, or receiving anything of value to
induce or reward referrals or generate Federal healthcare program
• Referrals: Referrals from anyone
• Types of Items/Services:Any items or services
• Intent: Prior to PPACA, intent might have needed to be proven (willing
and knowing). Post-PPACA, the government no longer needs to prove
that a defendant intended to violate the AKS itself, just that the
defendant intended to violate the law
• Penalties: Criminal (25k per violation and up to 5 years in prison per
violation) and Civil
• Exceptions: Safe Harbors2
• Federal Health Care Programs Covered:All

Amedisys1 lawsuit alleged that the company (provider of home health services) submitted improper claims
to Medicare for reimbursement from 2008 – 2010 for therapy and nursing services that were medically
unnecessary or provided to patients who were not home-bound. The lawsuit also alleged that the company
violated AK and Stark law by engaging in improper financial relationships with referring physicians, including
providing patient care coordination services at below market value. Payouts: $150 million total, $26 million
went to whistleblower

US DOJ vs. Novartis Pharmaceuticals: Kickbacks to doctors in exchange for more Rx2

Omnicare, double trouble: Financial incentives to nursing facilities in return for continued selection of
Omnicare to supply drugs3 and Omnicare also accepted kickbacks from Abbott Labs in exchange for pushing
Depakote to control behavioral disturbances in dementia patients, for which the drug is not yet purposecleared.4 $124 million for the nursing facilities case, Abbott case not yet disclosed

Walgreens settled for $7.9 million for offering 25$ gift cards to health care beneficiaries to transfer Rx.5
• Prohibits: A physician from referring Medicare patients for
designated health services to an entity with which the physician,
or an immediate family member, has a financial relationship (unless
an exception applies); also prohibits the designated health services
entity from submitting claims to Medicare for those services
resulting form a prohibited referral
• Referrals: Referrals from a physician
• Types of Items/Services: Designated health services2
• Intent: No intent standard for overpayment, but intent required
for civil monetary penalties for knowing violations
• Penalties: Civil only
• Exceptions: Mandatory Exceptions3
• Federal Health Care Programs Covered: Medicaid/Medicare
• Proposed Revisions: Intended to reduce burden and facilitate
• 31 US Code Sections 3729 – 3733 (1), often times referred to as the “Lincoln Law.”
Yes, that’s for Abraham Lincoln (his administration passed the original version). There
was some type of concern because during the Civil War, contractors sold the Union
Army all TYPES of faulty products, like sick horses, rancid food, etc.
• These days, the FCA is the Federal government’s primary enforcement vehicle for
combating fraud (for example, Qui Tam). Certain states have their own false claims
• No need to memorize what the amendments to the FCA are, but here’s a
supplemental slide deck for your reading pleasure:

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