Health Revolution Heats Legal Environment

Article excerpt

WASHINGTON _ For lawyers who specialize in health care and related issues, business is booming, largely as a result of the wholesale restructuring of the health care industry.

Doctors, hospitals, insurance companies, clinics, laboratories and drug manufacturers are repositioning themselves to make money in a brave new world of joint ventures and managed care that continues to evolve amid the ashes of national health care legislation.

The new business arrangements and transactions all require lawyers: experts who understand antitrust law, tax law, insurance law, medical malpractice, bioethics and patients' rights, securities law, the regulation of employee benefits and reimbursement under Medicare and Medicaid, including laws that prohibit kickbacks, false claims and self-dealing by doctors.

"We're in the midst of one of the largest industrial reorganizations in history, and it's a viciously competitive environment," said Gerald Peters, a health care lawyer at Latham

Watkins in San Francisco.

Lawyers often serve as police officers, telling clients what they can and cannot legally do, Peters said.

In the health care field, lawyers also help minimize the financial risks and the potential for civil and criminal liability as investigators from the Department of Health and Human Services, the Justice Department, the Federal Trade Commission and the IRS train their sights on this trillion-dollar industry.

Nonprofit hospitals, for example, are often tempted to offer lavish bonuses, gifts, interest-free loans and other incentives to doctors whom they are trying to recruit or retain. The doctors generate business, but if the IRS concludes that the incentives are excessive, it may revoke a hospital's tax-exempt status, a severe penalty. The hospital may also be legally unable to issue tax-exempt bonds to pay for construction and for new high-tech equipment.

This is a far cry from what health law once was, said Lynn Shapiro Snyder, a lawyer at the Washington office of Epstein, Becker Green, whose clients include doctors and hospitals, ambulance companies, kidney dialysis centers and retail pharmacies.

"Fifteen years ago, when I started in this field," she said, "I would tell people I was a health lawyer. They would say, `You must do malpractice.' I said, `I do everything but malpractice.' They would say, `What else is there?' I would explain that I help create HMOs. And I had to spell out health maintenance organizations. But now, with all the talk about health care reform, my friends and relatives and neighbors have a little more understanding of what I do for a living."

President Clinton and his wife, Hillary, both have law degrees and understood the complexities of federal-state health programs, like Medicaid, for the poor. But the health plan devised for them by Ira Magaziner, the coordinator of the President's Task Force on National Health Care Reform, did not mesh with the edifice of health care laws built over the last century.

That edifice includes the English common law of trusts, which defined the concept of charity; the Social Security Act, passed in 1935 and amended 30 years later to create Medicare and Medicaid, and the Employee Retirement Income Security Act of 1974, which regulates benefits provided to employees by employers.

The lawyers who drafted Clinton's health bill had difficulty translating his bold, abstract concepts into the concrete specifics needed for laws and legislation. …