say-so | by edward rucker

Needed: Stop Signs for Health Care Regulation

That first year of law school, the professors taught us there were two kinds of crimes - "malum in se" and "malum prohibitum" crimes. The first, "malum in se," were simply bad, in and of themselves. They were the moral outrages - murder, rape, kidnapping. No one had to tell you these were illegal. Those crimes which were "malum prohibitum" were a little more fun. They were running stop signs and speeding. To be guilty of a stop sign violation, you had to have a sign posted. "Malum prohibitum" crimes were not bad by themselves, but they were behaviors society had decided to restrict.

As the prosecution of health care fraud proceeds in our community, weary observers find that there are an awful lot of "malum prohibitum" crimes that no one knew existed. Last month's article by Jack Cashill describing the plight of Dennis McClatchey was a fascinating description of the government's attempt to manage health care costs through a system of bureaucratic regulations and criminal penalties. Those criminal penalties are for acts which are "malum prohibitum." As reported everywhere, Dennis McClatchey did not make any money on the contract which he negotiated for Baptist Hospital. It's hard for casual observers to understand the criminal nature of criminal conduct which does not personally benefit the individual accused.

But health care financing is a very odd business. First, remember that health care has a very inelastic demand curve. It doesn't matter whether Dad's heart operation will be $15,000 or $50,000, I don't want the old man to die. Therefore, I (Oops, Medicare) will pay whatever it takes. And as the costs of health care have risen, Congress's answer to controlling those costs was not to confront the demand side of the problem (and all of us, the offending voters), but through complex regulations and criminal penalties. But while the criminal penalties were clear, the law was vague. The very vagueness of these laws comes close to offending the right of due process. You have a right to pass a sign announcing the speed limit is 55 mph before the trooper writes you a ticket for going 75 mph in that zone. No jury would consider it fair play to write speeding tickets by surprise. But that is close to what is happening in health care.

The newly elected Congress will face continued pressure to control health care costs while responding to voters who want the best care for their loved ones regardless of the price. In an effort to have it both ways, they are likely to continue the casual habit of passing legislation against "bad things" without specifying what those bad things are. The health care industry needs clear speed limit signs and Congress has failed to erect them.

There should be a way in such a technically complicated environment to allow health care delivery organizations and doctors to screen their contractual arrangements before they are exposed to criminal liability. Such a plan might work like a private letter ruling from the IRS. A proposed contract is submitted by the parties to the HFCA (or some other agency). The agency has a specific amount of time to review and comment. Plans receiving a passing grade would allow the principals and the provider organizations to receive immunity from criminal liability for future actions. All contracts would be held as confidential until approved, with trade secrets and confidential profit and pricing information being protected.

In an era of uncertainty in health care concerning the nature of business relationships and what is and is not criminal conduct, if the goal is to regulate the industry for the benefit of the patients and the taxpayers, a system of preventative legal scrutiny may be just what the doctor ordered.

Edward Rucker is an attorney in private practice in Kansas City, Missouri. He can be reached at 816.471.1300, or at erucker@paxway.com.