In Your Own Words (IYOW) Activity

Basic Concepts of Healthcare Law

The healthcare industry is one of the most heavily regulated industries in the United States. Those who provide, receive, pay for, and regulate healthcare services are affected by the law (Miller, 2006). Law is a body of rules for the conduct of individuals and organizations. Law is created so there is a minimal standard of action required by individuals and organizations. Public law enforces relationships between entities and the government, and private law deals with issues among individual. Public law is created by federal, state, and local governments. As the judicial system interprets previous legal decisions regarding a case, judges are creating common law (Pozgar, 2014). The minimal standard for action is federal law, although state law may be more stringent. Legislative bodies such as the U.S. Congress create laws that are called statutes. Both common law and statutes are then interpreted by administrative agencies by developing rules and regulations.

There are civil and criminal laws that affect the healthcare industry. Civil law, an example of private law, focuses on wrongful acts against individuals and organizations based on contractual violations. Torts, derived from the French word for wrong, is a category of wrongful acts, in civil law, which may not have a preexisting contract. To prove a civil infraction, you do not need as much evidence as in a criminal case. Criminal law, an example of public law, is concerned with actions that are illegal based on court decisions. In order to convict someone of a criminal activity, guilt must be proved beyond a reasonable doubt. The most common types of criminal law infractions in the healthcare field are Medicare and Medicaid fraud (Miller 2006).

As stated earlier, torts are wrongdoings inflicted on individuals or organizations regardless of whether a contract is in place. There are several different types of violations that can apply to health care. There are two basic healthcare torts: (1) negligence, which involves the unintentional omission of an act that would contribute to the positive health of a patient; and (2) intentional torts, such as assault and battery or invasion of privacy (Pozgar, 2014).

An example of negligence would be if a provider does not give appropriate care or withholds care and injury to the patient results. In the healthcare industry, an intentional tort such as assault and battery would be a surgeon performing surgery on a patient without his or her consent (Bal, 2009). Invasion of privacy would be the release of patients’ health records. Privacy issues relating to patient information is a major issue in the healthcare industry. These activities are categorized under the term medical malpractice.

According to the American Heritage Dictionary (2000), medical malpractice is the “improper or negligent treatment of a patient by a provider which results in injury, damage or loss” (p. 1060). According to the Institute of Medicine’s (IOM) landmark report To Err Is Human, medical malpractice has resulted in approximately 80,000–100,000 deaths per year. Unfortunately, recent research indicates that this data is low. Preventable medical errors are the third leading cause of death in the United States, and the estimates are over 400,000 even though there have been many patient safety standards implemented to lower this amount (McCann, 2014). Disputes over improper care of a patient have hurt both providers and patients. Patients have sued physicians because they feel their provider has not provided them the proper level of care compared to the standard of care in the industry.

To prove negligence, four legal elements must be proved: (1) a professional duty owed to the patient as determined by the standard of care, (2) breach of such duty, (3) injury caused by the breach, and (4) proven causation between the action and the injury. There are four types of damages considered: (1) economic damages are a fixed price based on a loss of an object; (2) noneconomic damages are not a fixed amount and include pain and suffering from the negligence; (3) compensatory damages include both economic and noneconomic damages; and (4) punitive damages, which are uncommon, are intended to punish the defendant (Pozgar, 2014).

▶ Tort Reform

As a result of the number of medical malpractice claims in the United States, malpractice insurance premiums have increased. This has resulted in the concept of defensive medicine, which means that providers often order more tests and provide more services than necessary to protect themselves from malpractice lawsuits. Surveys of physicians over the years reveal over 70% of physicians admit to defensive medicine practices because they are afraid of litigation (Sekhar & Vyas, 2013). Historically, there have been malpractice insurance crises during the 1970s, 1980s, and, most recently, the beginning of this century (Danzon, 1995). The issues in the 1970s led to joint underwriting measures that required insurance companies to offer medical malpractice if the physician purchased other insurance. In some states, compensation funds were established to offset large award settlements. The number of malpractice suits lessened but the dollar amounts of awards were still huge. During the mid-1980s, the premiums were rising again—nearly 75%. It was determined that any initiatives established in the 1970s were not effective (Rosenbach & Stone, 1990). A third malpractice insurance crisis occurred in the 2000s. Issues with obtaining medical malpractice insurance in several states have increased, forcing physicians to join underwriting associations, which can charge exorbitant premiums.

As a result of the recent malpractice insurance crisis, more states have adopted statutory caps on the monetary damages that a plaintiff can recover in malpractice claims. State officials felt that a cap on monetary damages would have the most impact on malpractice insurance premiums because the less an insurance company has paid out in insurance claims, the less the insurance company would have to raise insurance rates. Over half of the states have established caps on awards. For example, Florida, Kansas, Maryland, Massachusetts, Michigan, North Carolina, and Texas have established noneconomic damages caps for different medical cases. An example of a noneconomic damage policy is that of Texas, which has implemented the following:

■ A per-claimant $250,000 cap on noneconomic damages in medical malpractice cases against a physician or health care provider;

■ For a single healthcare institution, a per-claimant $250,000 cap on noneconomic damages; and

■ For multiple healthcare institutions, an overall cap of $500,000 per claimant for noneconomic damages, and no single institution can be on the hook for more than $250,000 in noneconomic damages, per claimant.

As stated earlier, noneconomic damages include compensation for things like pain and suffering and emotional distress. Noneconomic damages are said to be more “subjective,” which is why many states have focused on caps for this type of damage (NOLO, 2016).

Many legal factors have contributed to the increase in claims. Voluntary hospitals are no longer exempt from malpractice suits. The fact that employers now have to take responsibility for their employees’ wrongdoing has also increased claims. The concept of informed consent for the patient has expanded and therefore increased claims. The acceptable standard of care, which used to be strictly based on a locality rule, has now become a state or national standard, which has also resulted in increased claims (Pozgar, 2014). Statutes specifying the acceptable standard of care in a malpractice suit in a local setting were replaced by a national or state standard. This increased the ability to locate expert witnesses who would testify at a trial regarding the standard of care given to the plaintiff.

Some physicians are leaving private practice because they can no longer afford the premiums—they are now in administrative positions at all levels of government, are academicians, or are teaching at medical schools. The malpractice insurance issues have forced many states to review their malpractice guidelines. Some states’ tort reform, which has imposed limits on the amount awarded, continues to cause controversy. However, recent federal studies have indicated that imposing caps on awards may be an effective method to reduce malpractice costs and to discourage frivolous lawsuits. In addition, the U.S. Supreme Court ruled that any awards must be included in an individual’s taxed income (Miller, 2006).

▶ The Legal Relationship between the Provider and Consumer

The most important relationship in the healthcare system is the relationship between the patient—the healthcare consumer—and his or her provider, which could be a physician or an organization such as a clinic or hospital where the physician has a relationship. This relationship can be considered a contract: an agreement, either oral or written, between two or more parties that designates legally enforceable activities (Pozgar, 2016). A physician can establish a contractual relationship with a patient in three ways: (1) establishing a contractual relationship to care for a designated population, (2) establishing an express contract with a patient under mutual agreement, or (3) establishing a relationship under an implied contract (Laws, 2016).

In order for a contract to exist, there must be four components: (1) agreement between two parties, (2) both parties must be competent to consent to the agreement, (3) the agreement must be of value, and (4) the agreement must be legally enforceable. If any of these components are missing, the parties are not bound by the agreement to comply with the terms (Buchbinder & Shanks, 2007). This chapter will discuss several types of contracts as they pertain to health care.

A contract to care for a designated population is indicative of a health maintenance organization (HMO) or managed care contract. A physician is contractually required to care for those member patients of a managed care organization. They may sign contracts to provide care for hospitals, schools, or long-term care facilities that have designated populations (Miller, 2006).

An express contract is a simple contract—merely a mutual agreement of care between the physician and patient. The physician may define the limitations of the contract, including the parameters of care. The physician may decide to practice only in a certain geographic area or, if a specialist, to provide services only in that area of specialty. An implied contract can be implied from a physician’s actions. If a physician gives advice regarding medical treatment, there is an implied contract (Laws, 2016). The relationship between a patient and hospital, a contractual right to admission, can be considered a contract if a hospital has contracted to treat certain members of an organization, like a managed care organization; if so, the hospital is required to treat those members. A second example of this type of contractual right to admission is if governmental hospitals, such as county hospitals, are required to provide care for patients regardless of ability to pay (Miller, 2006).

How Does a Relationship with a Provider End?

According to the American Medical Association (AMA), once a patient and physician relationship has started, the physician is legally and ethically obligated to continue the relationship until the patient no longer requires the physician’s care. There may be practical reason for a relationship to end, such as geographic relocation or change of healthcare insurance. If a patient becomes noncompliant and abusive, the physician has the right to end a relationship. However, to protect the physician from being accused of “patient abandonment,” the physician must take steps to properly end the relationship. If a patient withdraws from the relationship with the provider, then the physician no longer has a duty to provide follow up. Also, if medical care is no longer needed, the relationship naturally is completed. If a patient is transferred to another provider, the provider then establishes a relationship with the new patient. However, a physician could withdraw from a relationship by giving sufficient notice or providing the patient with a referral. However, if a physician withdraws from a relationship without sufficient reason, the provider may be liable for breach of contract or patient abandonment. The AMA (2016) provides the following five steps for a physician to terminate a relationship:

Giving the patient written notice, preferably certified mail;

Providing the patient with a specific reason for termination;

Continuing to provide care for a reasonable period of time so the patient can find other care;

Providing assistance to the patient to find other care; and

Offering to transfer all medical records with patient permission.

▶ Healthcare-Related Legislation

Healthcare Consumer Laws

Other legislative acts will be discussed thoroughly throughout the text; however, these acts directly impact how health care is provided to consumers.

Hill-Burton Act

The Hill-Burton Act of 1946, also known as the Hospital Survey and Construction Act, was passed because the federal government recognized the lack of hospitals in the United States during the 1940s. Federal grants were provided to states for hospital construction to ensure there were 4.5 beds per 1,000 people (Shi & Singh, 2008). This act had a huge influence on creating more hospitals nationally. If a hospital received federal funds because of the Hill-Burton Act, it agreed to a community service requirement, so any person residing in the area of the hospital cannot be denied treatment in the portion of the hospital financed by the Hill-Burton Act. (There are exceptions, for lack of needed services, unavailability of the services needed, or the patient’s ability to pay.) The program stopped providing funds in 1997, but approximately 150 healthcare facilities nationwide are still obligated to provide free or reduced-cost care. Since 1980, more than $6 billion in uncompensated services have been provided to eligible patients through Hill-Burton. Hospitals that are under the Hill-Burton Act are required to post notices about the program in their admitting area. These notices must be easy to read and in languages appropriate to the community (HRSA, 2016).

Emergency Medical Treatment and Active Labor Act

The Emergency Medical Treatment and Active Labor Act (EMTALA) of 1986, enforced by the Centers for Medicare and Medicaid Services (CMS) and the Office of Inspector General (OIG), requires Medicare participants to receive emergency care from a hospital or medical entity that provides dedicated emergency services. This was passed as part of the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA). This requirement is a type of fiduciary duty that means the healthcare provider or organization is obligated to provide care to someone who has placed his or her trust in them (CMS, 2016). This law is also called the “antidumping” statute because, prior to the enactment of this law, many hospitals dumped Medicare patients. Penalties for violating EMTALA include the following:

A hospital can be fined between $25,000 and $50,000 per violation.

Hospitals can be excluded from the Medicare program.

Physicians can be fined up to $50,000 per violation.

Physicians can be excluded from Medicare and Medicaid.

The original act was amended in 2000 and 2006 to strengthen the law. The CMS issued guidelines that further explained the act. This legislation protects consumers to ensure they receive appropriate emergency care when they present themselves to regulated hospitals and medical organizations (CMS, 2016).

Children’s Health Insurance Program

The Children’s Health Insurance Program (CHIP) was enacted under the Balanced Budget Act of 1997, is Title XXI of the Social Security Act, and is jointly financed by federal and state funding and administered by the states and the CMS. The purpose of this program is to provide coverage for low-income children (younger than age 19) whose family income exceeds the income-level requirements of Medicaid. As an incentive for states to expand their coverage programs for children, Congress created an “enhanced” federal matching rate for CHIP that is generally about 15 percentage points higher than the Medicaid rate—averaging 71% nationally. For example, if a state has a 50% match rate for Medicaid, they may have a 65% match rate for CHIP (Financing, 2016). Children who are eligible for Medicaid or covered by private health insurance cannot participate in CHIP (National Health Law Program, 2016). Approximately 8 million children who are uninsured and ineligible for public assistance have been positively impacted by this program. Children who are eligible for state health benefit plans are not eligible for CHIP. Studies have indicated that this program has improved access to health insurance for children (Kaiser Family Foundation, 2016).

Benefits Improvement and Protection Act

The Benefits Improvement and Protection Act of 2000 (BIPA), formally called the Medicare, Medicaid, and CHIP Benefits Improvement and Protection Act, modifies Medicare payment rates for many services. It also adds coverage for preventive and therapeutic services. It increases federal funding to state programs. From a healthcare consumer perspective, it protects Medicare beneficiaries by granting them the ability to appeal providers’ terminations of services (BIPA, 2016). It requires providers to issue a written notice to the patient that coverage has been terminated, giving an end date for the termination. The patient has the right to appeal the decision.

The HIPAA National Standards of 2002 or Privacy Rule is intended to further protect patient’s personal medical records and other personal health information maintained by healthcare providers, hospitals, insurance companies, and health plans. It gives patients new rights to access of their records, restricts the amount of patient information released, and establishes new restrictions on researchers’ access (U.S. Department of Health & Human Services, 2016a).

Antitrust Laws

The purpose of antitrust law is to protect the consumer by ensuring there is a market driven by competition so the consumer has a choice for health care. In a sense, antitrust laws protect competition so the consumer has a choice. Antitrust laws apply to most healthcare organizations. There are both federal and state antitrust laws. There are four main antitrust federal laws that will be discussed in this chapter: the Sherman Antitrust Act, the Clayton Act, the Federal Trade Commission Act, and the Robinson-Patman Act (the amendment to the Clayton Act). These acts are important to know because they were developed to ultimately protect the healthcare consumer and those who provide healthcare services.

The Sherman Act of 1890 focuses on eliminating monopolies, which are healthcare organizations that control a market so that the consumer has no choice in health care. It also targets price fixing among competitors; price fixing prevents consumers from paying a fair price because competitors establish a certain price (by either increasing or lowering prices) among themselves to stabilize the market. Healthcare facilities may also have an agreement on market division. This illegal action occurs when one or more health organizations decide which type of services will be offered at each organization. Tying refers to healthcare providers that will only sell a product to a consumer who will also buy a second product from them. Boycotts are also illegal according to this act. When healthcare providers have an agreement to not deal with anyone outside their group, that is considered interfering with the consumers’ rights to choose. Price information exchange of services between providers can also be illegal (Miller, 2006). Healthcare providers are protected under the act if it has been determined that hospitals have exclusive contracts with certain providers, which excludes other providers from use of the hospital. This could be a violation of the act. Violations of the act are considered federal crimes.

The Clayton Act of 1914 was passed to supplement the Sherman Act, as amended by the Robinson-Patman Act, which issues further restrictions on mergers and acquisitions. With the increasing development of hospital chains, this act has focused on hospitals. There are no criminal penalties for violations of this act, unlike the Sherman Act. Any organization considering a merger or acquisition above a certain size must notify both the Antitrust Division of the U.S. Department of Justice (DOJ) and the Federal Trade Commission (FTC). The act also prohibits other business practices that, under certain circumstances, may harm competition. The act also allows individuals to sue for three times their actual damages plus legal costs.

The Hart-Scott-Rodino Antitrust Improvement Act of 1976, an amendment to the Clayton Act, ensures those hospitals and other entities that entered mergers, acquisitions, and joint ventures must notify the DOJ and the FTC before any final decisions are made. This is a requirement for any hospitals with greater than $100 million in assets acquiring a hospital with more than $10 million in assets (Buchbinder & Shanks, 2007). The DOJ and the FTC will make the final decision on these proposals. This ensures there will not be any type of monopoly within a certain geographic area.

There are two federal agencies that enforce antitrust violations: the Federal Trade Commission (FTC) and the Department of Justice (DOJ). The FTC, established in 1914 by the Federal Trade Commission Act, is one of the oldest federal agencies and is charged with the oversight of commercial acts and practices. Two major activities of the FTC are to maintain free and fair competition in the economy and to protect consumers from misleading practices. The FTC may issue “cease and desist orders” to companies to ensure they stop their practices until a court decides what the company may do (Carroll & Buchholtz, 2015). The DOJ, headed by the U.S. Attorney General, was established in 1870 to handle U.S. legal issues, including the enforcement of federal laws. The DOJ and the FTC collaborate on antitrust law enforcement (FTC, 2016).

Informed Consent

The concept of informed consent is based on the patient’s right to make an informed decision regarding medical treatment. It is a legal requirement in all 50 states. It is more than a patient signing an informed consent form—it is the communication between the provider and patient regarding a specific medical treatment. The provider is responsible for discussing the following information with the patient: the diagnosis, if it has been established; the nature of a proposed treatment or operation, including the risks and benefits, any alternatives, and the risks and benefits of the alternatives; and the risks and benefits of not agreeing to the procedure or treatment (AMA, 2016). If a patient did not provide informed consent for a procedure or treatment, it is considered a case of negligence. It is the duty of the physician to provide sufficient information to the patient to enable the patient to evaluate the proposed treatment before giving consent. If the patient does not understand the information, the consent is not considered an informed consent.

A medical emergency may eliminate the need for an informed consent. If a patient cannot clinically give consent to a lifesaving medical treatment, statutory consent may be considered, which presumes a reasonable person would give consent to the lifesaving procedure. Consent may be implied in nonemergency situations. If a patient volunteers for a procedure, implying consent, without an oral or written verification, the patient might be considered to have given an informed consent (Pozgar, 2016).

Informed consent is a basic patient right. It is important that the physician provides information that the patient clearly understands so the patient can evaluate the risks and benefits of the intervention.

▶ Patient Bill of Rights

The Patient Self-Determination Act of 1990 requires hospitals, nursing homes, home health providers, hospices, and managed care organizations that provide services to Medicare- and Medicaid-eligible patients to supply information on patient rights to patients upon admission. It applies to almost every type of healthcare facility. The facility must provide adult patients with written information, under state law, about making healthcare decisions. Based on the concept of informed consent, in 1972 the Board of Trustees of the American Hospital Association developed a Patient Bill of Rights. The Patient Bill of Rights states that the patient has the right to all information from this provider regarding any testing, diagnoses, and treatments. This information must be provided to the patient in terms that the patient will be able to understand (Rosner, 2004). Eligible health organizations will have the Patient Bill of Rights displayed.

▶ Healthcare Fraud

The most common criminal violation in the healthcare industry is healthcare fraud, which typically involves illegal acts for financial gain. Fraud can be perpetrated by a variety of healthcare stakeholders: multistate organized-crime rings that improperly bill Medicare for $40 million dollars of home health care, a single physician who brings in an extra $20,000 per year by regularly “up-coding” office procedures (upgrading simple procedures to a more complicated procedure to increase billing), or healthcare systems that systematically defraud Medicare of hundreds of millions of dollars (Mahar, 2016). Increases in healthcare costs that have impacted public health insurance programs, such as Medicare and Medicaid, have emphasized the need to combat fraud and abuse of the healthcare system. Healthcare fraud costs the healthcare system and its stakeholders $80 billion annually. The FBI is responsible for investigating healthcare fraud. The Department of Justice and Human Services Medicare Fraud Strike Force is designed to combat fraud (OIG, 2016). The centerpiece for fraud recovery is the False Claims Act.

The False Claims Act, also known as the Lincoln law, enacted in 1863, was originally passed to protect the federal government against defense contractors during the Civil War. The False Claims Act has been amended several times throughout the years, and, in the 1990s, was amended with a focus on healthcare fraud, most notably Medicare and Medicaid fraud. The False Claims Act of 1995 imposes criminal penalties on anyone who tries to present fictitious claims for payment to the federal government. It is one of the most powerful governmental tools to combat health care fraud. This act also provides financial incentives for whistleblowers—allowing employees to blow the whistle about contractor fraud against the federal government. Private plaintiffs fulfill this role pursuant to the qui tam provisions of the act. The Deficit Reduction Act of 2005 encouraged states to crack down on healthcare fraud by giving the states additional incentives under their own fraud law. The qui tam provisions allow whistle blowers to receive between 15% and 25% of proceeds in the case. As a result of the financial incentive program, the federal government has received billions in returned funds (Carroll & Buchholtz, 2015).

The Fraud Enforcement and Recovery Act of 2009 (FERA) and the Affordable Care Act (ACA) of 2010 further strengthened the False Claims Act. The FERA expanded potential liability for false claims by applying the FCA to a broader range of transactions, reducing the proof required to establish illegal activities, and expanding the pool of potential whistleblowers that may bring retaliation claims. The Affordable Care Act provided an additional $350 million over 10 years to help fund new initiatives to effectively fight fraud. It also called for more stringent Federal Sentencing Guidelines for healthcare fraud (Mahar, 2016).

Medicare Fraud Strike Force

Established in 2007, this task force uses both federal and local law enforcement agencies to combat healthcare fraud. As of September 2015, the task force had indicted nearly 2,000 people and recouped $1.8 billion. In September 2015, it caught 200 people who defrauded Medicare and Medicaid by more than $700 million. In 2016, the task force has recouped over $200 million from nine different fraud schemes (OIG, 2016).

Ethics in Patient Referral Act of 1989

The Stark laws (named after Representative Pete Stark who authored the legislation), also known as the Physician Self-Referral Laws or the Ethics in Patient Referral Act of 1989, prohibit physicians, including dentists and chiropractors, from referring Medicare and Medicaid patients to other providers for designated health services in which they have a financial interest. These laws directly prohibit many referrals that may increase a provider’s or family members’ financial interest. Designated health services include clinical laboratory services, outpatient prescription drug services, physical and occupational therapy, and imaging services such as magnetic resonance imaging (MRI), and the like. The statute became effective on January 1, 1995, but the regulations interpreting the statute were not released until January 4, 2001 (Gosfield, 2003). Additional Stark amendments expanded the types of services for which a physician cannot refer Medicare and Medicaid patients if the physician or a family member has a financial interest in the service. These regulations protect consumers by ensuring they will receive objective referrals for health services.

FIGURE 11-1 Patient Bill of Rights

Fraud in the healthcare industry is easy to commit for several reasons. The governmental system assumes providers are trustworthy, it is easy to obtain a government-issued provider number for Medicare and Medicaid, and perpetrators might think it is easy to escape notice when committing fraud. Also, the penalties historically were low. As a result of these factors, there were Medicare providers who would sell access to their program ID number. The ACA antifraud initiatives should help to reduce these fraudulent activities (Mahar, 2016).

▶ Employment-Related Legislation

As part of healthcare law, it is important to be familiar with the impact on employees of employment-related healthcare legislation. Employment-related legislation is enacted to ensure protection of employers’ and employees’ rights in the workplace. The following section outlines major employment-related legislation that influences the healthcare industry.

Title VII of the Civil Rights Act of 1964

This landmark act prohibits discrimination based on race, sex, color, religion, and national origin. Discrimination means treating people differently. This legislation is the key legal piece to equal opportunity employment. Two components to this legislation, which will be discussed later, are disparate treatment and disparate impact. It applies to employers with 15 or more employees. This act is enforced by the U.S. Equal Employment Opportunity Commission (EEOC).

The Civil Rights Act of 1964, Title VII, created a concept of protected classes to protect these groups from employment discrimination in compensation and conditions or privileges of employment. The protected classes include sex, age, national origin, race, and religion. A current major issue within the purview of discrimination legislation is sexual harassment. According to the EEOC, sexual harassment is defined as unwelcome sexual conduct that has a negative impact on the employee. There are two major categories of sexual harassment: (1) quid pro quo sexual harassment, which occurs when sexual activities occur in return for an employment benefit; and (2) hostile work environment, which occurs when the behavior of coworkers is sexual in nature and creates an uncomfortable work atmosphere. The creation of a hostile work environment is the more common type of sexual harassment. Several court decisions indicate that repeated suggestive joke telling and lewd photos on display can be legally considered to be a hostile work environment. In the healthcare industry, nurses sometimes experience sexual harassment from colleagues, physicians, and patients. There might also be discrimination against LGBTQ individuals.

Examples of LGBTQ-Related Sex Discrimination Claims

Some examples of LGBTQ-related claims that the EEOC views as unlawful sex discrimination include:

■ Failing to hire an applicant because she is a transgender woman.

■ Firing an employee because he is planning or has made a gender transition.

■ Denying an employee equal access to a common restroom corresponding to the employee’s gender identity.

■ Harassing an employee because of a gender transition, such as by intentionally and persistently failing to use the name and gender pronoun that correspond to the gender identity with which the employee identifies, and which the employee has communicated to management and employees.

■ Denying an employee a promotion because he is gay or straight.

■ Discriminating in terms, conditions, or privileges of employment, such as providing a lower salary to an employee because of sexual orientation, or denying spousal health insurance benefits to a female employee because her legal spouse is a woman, while providing spousal health insurance to a male employee whose legal spouse is a woman.

■ Harassing an employee because of his or her sexual orientation, for example, by derogatory terms, sexually oriented comments, or disparaging remarks for associating with a person of the same or opposite sex.

■ Discriminating against or harassing an employee because of his or her sexual orientation or gender identity, in combination with another unlawful reason, for example, on the basis of transgender status and race, or sexual orientation and disability (What you should know about the EEOC, 2016).

Civil Rights Act of 1991

Title VII only allowed damages for back pay. This act enables individuals to receive both punitive damages, which are damages that punish the defendant, and compensatory damages for financial or psychological harm. This act applies to employers with 15 or more employees. The upper limit to damages is based on the size of the company: $50,000 for employers with 15 to 100 employees; $100,000 for companies with 101 to 200 employees; $200,000 for employers with 201 to 500 employers; and $300,000 for employers with more than 500 employees. This act is enforced by the EEOC.

The 1991 law extended the possibility of individuals collecting damages related to sex, religious, or disability-related discrimination. Some organizations had developed a policy of adjusting scores on employment tests so a certain percentage of a protected class would be hired. This amendment to Title VII specifically prohibits quotas, which are diversity goals to increase the number of protected class members in a work force (Gomez-Mejia, Balkin & Cardy, 2012).

Age Discrimination in Employment Act (ADEA) of 1967

This act protects employees and job applicants 40 years old and older from discrimination as it applies to hiring, firing, promotion, layoffs, training, assignments, and benefits. Older employees file lawsuits for age discrimination in job termination. It applies to employers with 20 or more employees and is enforced by the EEOC.

During difficult economic times, older employees might have a greater tendency to file complaints with the EEOC because of their termination. Many older workers tend to have higher salaries and businesses may lay them off illegally. In November 2010, Hawaii Professional Homecare Services was sued by the EEOC because the owner fired a 54-year-old employee, referring to her as a “bag of old bones” and claiming that because she sounded old over the phone, the owner did not want her representing the company (U.S. EEOC, 2010).

Older Workers Benefit Protection Act of 1990

This act amended the ADEA. Its goal is to ensure that older workers’ employee benefits are protected and that organizations provide the same benefits to both younger and older workers. The act also gives employees time to decide if they would accept early retirement options and allows employees to change their mind if they have signed a waiver of their right to sue. The act is enforced by the EEOC.

Rehabilitation Act of 1973

This law applies to organizations that receive financial assistance from federal organizations, including the U.S. Department of Health and Human Services, and forbids discriminating against individuals with disabilities in terms of employee benefits and job opportunities. These organizations and employers include many hospitals, nursing homes, mental health centers, and human services programs. Employers with 50 or more employees and federal contracts of $50,000 or more must submit written affirmative action plans. The PPACA amends this act by requiring all healthcare manufacturers to redesign medical equipment so healthcare providers can accommodate individuals with disabilities. Healthcare provider locations must also be accessible to those with disabilities. This act is enforced by the Office of Federal Contract Compliance Programs (OFCCP).

Equal Pay Act of 1963

This act, which amended the Fair Labor Standards Act and is enforced by the U.S. Department of Labor, mandates that all employers award pay fairly to men and women if it is determined their jobs have equal responsibilities and require the same skills. It can be difficult to assess whether two employees are performing exactly the same job. One employee may have additional duties, which would affect pay. The current trend in business is pay for performance, so some employees may earn more if they perform better. However, research consistently states that women earn less than men. An individual who alleges pay discrimination may file a lawsuit without informing the EEOC.

Executive Orders 11246 (1965), 11375 (1967), and 11478 (1969)

The President of the United States, for federal agency directions, writes executive orders, some of which focus on discrimination issues, and require affirmative action based on these factors. These orders affect both federal contractors and employers with 50 or more employees.

An affirmative action plan is a strategy that encourages employers to increase the diversity of their workforce by hiring individuals based on race, sex, and age. These potential employees must be qualified for the job. Although an affirmative action plan encourages hiring protected-class candidates, an employer cannot set quotas for this process. They can develop strategies to encourage applications from diverse candidates.

An employer who develops an affirmative action plan must perform an analysis of the demographics of the current workforce compared to the eligible pool of qualified applicants. The employer must also calculate the percentage of those protected classes in the qualified applicants. The percentages are compared to determine if there was an underrepresentation of diverse employees in the organization. If it is determined the current workforce is not diverse, then an employer develops a timetable to hire diverse employees that also includes a recruitment plan.

Pregnancy Discrimination Act of 1978

The Pregnancy Discrimination Act of 1978 was an amendment to Title VII of the Civil Rights Act of 1964. This act protects female employees who are discriminated against based on pregnancy-related conditions, which constitutes illegal sex discrimination. A pregnant woman must be treated like anyone with a medical condition. For example, an organization must allow sick leave for pregnant women with morning sickness if the organization also allows sick leave for other nausea-causing illnesses (Gomez-Mejia, Balking, & Cardy, 2012). This act applies to employers with at least 15 employees and is enforced by EEOC.

Americans with Disabilities Act of 1990 (ADA)

The ADA focuses on individuals in the workplace who are considered disabled. There are three sections: Section I contains employment limitations, while Section II and Section III target local government organizations, hotels, restaurants, and grocery stores. This act applies to employers who have 15 employees or more and is enforced by the EEOC. According to the law, a disabled person is someone who has a physical or mental impairment that limits the ability to hear, see, speak, or walk. The act was passed to ensure that those individuals who have a disability but can perform primary job functions are not discriminated against. According to the act, disabilities included learning, mental, epilepsy, cancer, arthritis, mental retardation, AIDS, asthma, and traumatic brain injury. A nursing home cannot refuse to admit a person with AIDS who requires a nursing service if the facility has that type of service available (DOL, 2016). Individuals with alcohol and other drug abuse are not covered under the ADA. Individuals who are morbidly obese can be considered disabled if the obesity was related to a physical cause.

Title I of the ADA states that employment discrimination is prohibited against individuals with disabilities who can perform essential functions of a job with or without reasonable accommodation. Essential functions are job duties that must be performed to be a satisfactory employee. Reasonable accommodation is an employer’s reasonable action to accommodate a disabled individual, such as providing special computer equipment or furniture to accommodate a physical limitation. The reasonable accommodation should not cause undue financial hardship to the employer.

Individuals with disabilities have mental or physical limitations in areas such as walking, speaking, breathing, sitting, seeing, and hearing. Individuals with intellectual disabilities have an IQ less than 70–75 and problems with social skills, and the disability must have begun before the person turned 18 years of age. Intellectual disabilities must significantly limit major life activities such as walking, seeing, hearing, thinking, speaking, learning, concentrating, and working. The ADA amendments of 2008 expanded living activities to include bodily functions such as bladder, circulatory, neurological, and digestive functions.

Role of Equal Employment Opportunity Commission (EEOC)

The EEOC, created by Title VII of the Civil Rights Act of 1964, is responsible for processing complaints, issuing regulations, and collecting information from employers.

Processing Complaints

An individual who thinks he or she is being discriminated against can file a complaint with the EEOC, which notifies the employer. The employer is responsible for safeguarding any written information regarding the complaint. The EEOC then investigates the complaint to determine if the employer did violate any laws. If a violation is found, the EEOC uses conciliation or negotiation to attempt to resolve the issue without going to court. If conciliation is not successful, litigation or going to trial is the next step. Most employers prefer to avoid litigation because it is costly and might damage their reputation. Most cases are resolved by conciliation.

Issuing Regulations

The EEOC is responsible for developing regulations for any EEOC law and its amendments. It has written regulations for the ADA, the ADEA, and the Equal Pay Act. It also issues guidelines on other issues, such as sexual harassment and affirmative action.

Information and Education

The EEOC acquires information from employers regarding their practices. Employers with 100 or more employees must file an EEO-1 report that reflects the number of women and minorities who hold positions. This report is used to assess any potential discrimination trends. The EEOC also provides employers with written and electronic media education on discrimination. It sends this information to human resources departments, which disseminate the information with training classes.

These pieces of legislation focus on equal employment opportunity in the workplace. These laws ensure that protected classes, as outlined in the Civil Rights Act of 1964, are provided opportunities for equal employment without bias or discrimination. In addition to this landmark legislation, the ADEA, the Older Workers Benefit Protection Act, and the ADA establish standards for treating individuals who are older than 40 years and those individuals who have a disability are also treated fairly in their terms of employment. Both the ADEA and the ADA were further strengthened by passage of the Lilly Ledbetter Fair Pay Act regarding pay discrimination. In addition, the Pregnancy Discrimination Act and the Equal Pay Act target discrimination against women. Despite the amount of antidiscrimination legislation, discrimination continues to exist in the work environment.

Occupational Safety and Health Act of 1970

This act is also important to the healthcare industry because of the high incidence of employee injury. In healthcare jobs, there is a higher risk of exposure to workplace hazards such as airborne and blood-borne infectious diseases, physical injuries from lifting patients, and needle stick injuries. This law was passed to ensure that employers have a general duty to provide a safe and healthy work environment for their employees, which is very important for the healthcare industry because of potential exposure to bacteria, viruses, and contaminated fluids.

Employers are also required to inform employees of potential hazardous conditions and Occupational Safety and Health Administration (OSHA) standards. Posters and other materials are displayed for employees’ education. OSHA is responsible for enforcing these provisions. The National Institute for Occupational Safety and Health (NIOSH) was also established as part of this act to provide research to support the standards. OSHA enforces the Hazard Communication Standard that requires companies to label hazardous materials. Information is contained on Material Safety Data Sheets (MSDSs), which are provided to employees via the Internet or on site. OSHA has also issued a standard for exposure to human immunodeficiency virus (HIV), hepatitis B virus (HBV), and other blood-borne pathogens. This standard is crucial to the healthcare industry because of increased risk of exposure by nurses and laboratory workers.

OSHA has also developed standards for personal protective equipment (PPE), required when employees might be exposed to hazardous materials or working conditions. Companies must also maintain records of employee accidents. OSHA provides workers with the rights to receive training, keep a copy of their medical records, and request OSHA inspections of their workplace (Occupational Safety & Health Administration, U.S. Department of Labor, 2016a).

OSHA has also developed standards for ergonomics, which is the study of working conditions that affect the physical condition of employees. Studies indicate that repetitive motion can create employee injuries. A common disorder is carpal tunnel syndrome, a wrist injury that often occurs from repetitive hand motions in jobs such as grocery cashiers and computer users. Employers can provide ergonomic-friendly equipment and guidelines for ergonomic actions to eliminate these types of injuries. Ergonomic equipment and actions are important to the healthcare industry because many workers often lift patients to and from beds, operating tables, and wheelchairs (Occupational Safety & Health Administration, U.S. Department of Labor, 2016b).

Immigration Reform and Control Act (1988)

The Immigration Reform and Control Act of 1988 (IRCA) requires employers with one or more employees to verify that all job applicants are U.S. citizens or authorized to work in the United States. Most employees are only aware of this legislation because of the I-9 form all new employees must complete. There are three categories, A, B, and C, on the form. Category A establishes identity and eligibility to work, such as a passport, a Permanent Resident Card, or a Permanent Alien Registration Receipt Card. Category B establishes the individual’s identity. Acceptable proof of identity includes a driver’s license and different types of identification cards with photographs. Category C focuses on eligibility of an employee to work. Documentation includes a Social Security card or a birth certificate. If an employee cannot provide this information, he or she must provide documentation in both Category B and Category C. This prohibits any company from hiring illegal aliens and penalizes employers who hire illegal aliens. However, immigrants with special skill sets or those who can satisfy a labor shortage in the United States, such as nurses, will be permitted to work in the United States. This act is enforced by the U.S. Department of Labor.

▶ Other Employment-Related Legislation

Consumer Credit Protection Act (Title III) of 1968

This act prohibits employers from terminating an employee if the individual’s earnings are subject to garnishment due to debt issues. This act also limits the weekly garnishment amount from employees’ pay and is enforced by the Federal Deposit Insurance Corporation (FDIC).

Drug Free Workplace Act of 1988

This act requires any employers that receive federal grants or have a federal contract of $25,000 or greater to certify that they operate a drug-free workplace. They must provide education to their employees about drug abuse. Many employers now offer drug testing. The act is enforced by the U.S. Department of Labor.

Worker Adjustment and Retraining Notification Act of 1989

Employers with 100 employees or more must give their employees 60 days’ notice of layoffs and business closings. This act is enforced by the U.S. Department of Labor.

Employee Retirement Income Security Act of 1974 (ERISA)

ERISA regulates pension and benefit plans for employees, including medical and disability benefits. It protects employees because it forbids employers from firing an employee to prevent the employee from receiving health benefits. Employees may change the benefits provided under their plans, but employers cannot force an employee to leave so that the employer does not have to pay the employee’s medical coverage.

Consolidated Omnibus Budget Reconciliation Act of 1986 (COBRA)

COBRA, an amendment to ERISA, was passed to protect employees who lost or changed employers so they could keep their health insurance if they paid 102% of the full premium (Anderson, Rice, & Kominski 2007). The act was passed because, at the time, people were afraid to change jobs, resulting in the concept of job lock (Emanuel, 2008). With the establishment of the Healthcare Insurance Marketplace, individuals may find more affordable health insurance plan options rather than using the COBRA option.

Health Insurance Portability and Accountability Act of 1996 (HIPAA)

HIPAA was passed to promote patient information and confidentiality in a secure environment. The Standards for Privacy of Individually Identifiable Health Information (the Privacy Rule) established the first set of national standards for the protection of certain health information. The major goal of the Privacy Rule is to ensure that individuals’ health information is properly protected while allowing the flow of health information needed to provide and promote high-quality health care for patients and to protect the public’s health and well-being. There are two exceptions to the Privacy Rule: if the patient requests the disclosure of their information or there is an investigation. This act is enforced by the Department of Health and Human Services’ Office for Civil Rights and the U.S. Department of Justice.

It is vitally important that patient information is protected in accordance with HIPAA. With the increased use of technology in healthcare, patient information may be more at risk.

Releasing patient information is more complex because of the introduction of information technology to the healthcare industry. For example, patient information may be faxed, as long as only necessary information is transmitted and safeguards are implemented. Physicians may also communicate via email as long as safeguards are implemented.

Health Information Technology for Economic and Clinical Health Act of 2009

Effective September 23, 2009, this act amends HIPAA by requiring stricter notification protocols for breach of any patient information. The notification must occur within 60 days of the breach, and the media must also be informed of the breach. These new rules apply to any associates of the health organizations. In addition to the Privacy Rule, the Security Rule was implemented; it applies to e-PHI or electronic patient information. The Security Rule was developed because of the increased use of electronic patient records. These new rules also apply to any associates of the health plans. It also increased HIPAA’s civil and criminal penalties for violating consumers’ privacy regarding health information. Civil penalties were increased to $1.5 million per calendar year, which was a huge increase in the original penalty cap of $25,000. The criminal penalties of up to $50,000–$250,000 and 10 years’ incarceration remained the same.

Releasing patient information is more complex because of the introduction of information technology to the healthcare industry. For example, patient information may be faxed as long as only necessary information is transmitted and safeguards are implemented. Physicians may also communicate via email as long as safeguards are implemented.

Employee wellness programs, which can include promotion of exercise, health risk appraisals, disease management, and healthcare coaching, have become a popular employee benefit. However, there have been legal issues surrounding the implementation of wellness programs in the workplace because they discriminate based on the health conditions of employees. HIPAA states that wellness programs that are part of a group health plan must be designed to promote health and cannot be a subterfuge that discriminates against an employee based on a health condition. Many wellness programs also offer incentives for wellness program performance. The incentive program must be designed so that all employees may participate in the incentive program regardless of health conditions, which means the incentive–rewards program must be flexible to adapt to employees who want to participate but may be restricted based on a health condition (DOL, 2016).

Family and Medical Leave Act of 1993 (FMLA)

The FMLA requires employers with 50 or more employees within a 75-mile radius who work more than 25 hours per week and who have been employed more than 1 year to provide up to 12 weeks of unpaid leave, during any 12-month period, to provide care for a family member or the employee himself or herself. This benefit can also include post childbirth or adoption. Employers must provide healthcare benefits, although they are not required to provide wages during the leave. Individuals who are among the organization’s highest paid 10% of all employees are not covered by the act. The employer is also supposed to provide the same job or a comparable position upon the employee’s return. The U.S. Department of Labor announced a final rule in 2015 to amend the term “spouse” to include legal-same-sex-marriage spouses (DOL, 2016).

Mental Health Parity Act of 1996

This act requires the equality or parity of lifetime and annual limits of health insurance reimbursements for mental health care. Unfortunately, the act did not require employers to offer mental health coverage, it did not impose limits on deductibles or coinsurance payments, and it did not cover substance abuse. This federal legislation spurred several states to implement their own parity legislation (Anderson, Rice, & Kominski, 2007). The Wellstone Act or the Mental Health Parity and Addiction Equity Act of 2008 amends the Mental Health Parity Act of 1996 to include substance abuse treatment plans as part of group health plans.

Genetic Information Nondiscrimination Act of 2008

This act prohibits U.S. insurance companies and employers from discriminating based on information derived from genetic tests. Genetic information includes information about an individual’s genetic tests and the genetic tests of an individual’s family members, as well as information about the manifestation of a disease or disorder in an individual’s family members (i.e., family medical history). Family medical history is included in the definition of genetic information because it is often used to determine whether someone has an increased risk of getting a disease, disorder, or condition in the future. Genetic information also includes an individual’s request for, or receipt of, genetic services, or the participation in clinical research that includes genetic services by the individual or a family member of the individual, and the genetic information of a fetus carried by an individual or by a pregnant woman who is a family member of the individual and the genetic information of any embryo legally held by the individual or family member using an assisted reproductive method. Specifically, it forbids insurance companies from discriminating through reduced coverage or price increases. It also prohibits employers from making adverse employment decisions based on a person’s genetic factors (EEOC, 2016a)

Lilly Ledbetter Fair Pay Act of 2009 (FPA)

This act, an amendment to Title VII of the Civil Rights Act of 1964, also applies to claims under the Age Discrimination Act of 1967 and the ADA, provides protection against unlawful employment practices related to compensation discrimination. This act was named after Lilly Ledbetter, an employee of Goodyear Tire and Rubber Company who found out near her retirement that her male colleagues were paid more than she was and then brought suit. The U.S. Supreme Court ruled that she should have filed a suit within 180 days of the date that Goodyear paid her less than her peers. This act allows the statute of limitations to restart every 180 days from the time the worker receives a paycheck (EEOC, 2016b).

To avoid litigation, Sedhom (2009) suggests the implementation of a program coordinated by senior management and human resources to help protect employers from being accused of unfair employment practices. The following summarizes the steps of the program:

Establish compensation criteria.

Develop pay audits and document these audits for several years.

Document retention processes related to pay.

Train managers on providing objective performance evaluations.

Develop and implement a rigorous statistical analysis of pay distributions.

Patient Protection and Affordable Care Act or Affordable Care Act of 2010 (ACA)

This act has had a major impact on the U.S. healthcare system; therefore, a separate chapter has been devoted to the act and its mandates. A brief summary of the ACA is included in this chapter because it is considered landmark legislation and should be mentioned.

The Patient Protection and Affordable Care Act (PPACA) or, as it is commonly called, the Affordable Care Act (ACA), and its amendment, the Healthcare and Education Affordability Reconciliation Act of 2010, was signed into law on March 23, 2010, by President Barack Obama. The goal of the act is to improve the accessibility and quality of the U.S. healthcare system. There are nearly 50 healthcare reform initiatives that are being implemented during 2010–2017 and beyond. The passage of this complex landmark legislation has been very controversial and continues to be contentious today.

There were national public protests and a huge division among the political parties regarding the components of the legislation. People, in general, agreed that the healthcare system needed some type of reform, but it was difficult to develop common recommendations that had majority support. Criticism, in part, focused on the increased role of government in implementing and monitoring the healthcare system. Proponents of healthcare reform reminded people that Medicare is a federal government entitlement program because when individuals reach 65 years of age, they can receive their health insurance from this program. Millions of individuals are enrolled in Medicare. Medicaid is a state-established public welfare program that provides health care benefits to millions of income-eligible individuals, including children.

On October 1, 2013, the federal government was shut down because some elected officials did not want the Affordable Care Act to proceed further. These politicians refused to approve a bill that would continue financial operations of the U.S. government. They attempted to include provisions defunding portions of the Affordable Care Act as part of the federal government funding bill. Governmental functions resumed on October 17, 2013, after the Continuing Appropriations Act of 2014 was enacted by Congress. Poll results indicated that public approval ratings of Congress declined significantly during the shutdown (Newport, 2013).

One ACA provision that has been generally supported is raising to age 26 the cut-off for health insurance coverage of dependents, even if the child is not living with his or her parents, is not declared a dependent on the parents’ tax return, or is no longer a student. This would not apply to individuals who have employer-based coverage (DOL, 2013). Another positive mandate, also implemented in July 2010, was the establishment of a web portal, www.healthcare.gov, to increase consumers’ awareness about their eligibility for specific healthcare insurance.

In addition to the two reforms discussed in the previous paragraphs, the following are selected major reforms that were also implemented in 2010:

■ Elimination of lifetime and annual caps on healthcare reimbursement;

■ Granting assistance for the uninsured with preexisting conditions; and

■ Creation of a temporary reinsurance program for early retirees.

In the past, health insurance companies would establish an annual or lifetime cap on reimbursement for the use of healthcare insurance. These would be eliminated. Unlike the past, health insurance companies would also be prohibited from dropping individuals and children with certain conditions or not providing insurance to those individuals with preexisting conditions. The government would provide assistance to securing health insurance for these high-risk individuals.

The following are selected major reforms that have been implemented:

■ Insurance companies are prohibited from setting insurance rates based on health status, medical condition, genetic information, or other related factors.

■ A Health Insurance Marketplace Exchange, which is a marketplace where consumers can obtain information and buy health insurance, has been established. If the state opts not to establish a marketplace, individuals can use the federal marketplace website to obtain insurance.

■ Most individuals must maintain minimum essential healthcare coverage or pay a fine.

In the past, there were issues with health insurance companies denying coverage based on health status or other conditions. Premiums now will be based on family type, geography, tobacco use, and age. In addition, states can establish Health Insurance Marketplace Exchanges to assist consumers with obtaining health insurance. If the state chooses not to establish a state-run operation, residents of the state will use the federal government website. Information is provided to consumers in a standardized format so they can compare the plans. Plans and cost will vary based on level of coverage. There are exceptions based on certain circumstances. By 2014, most consumers were responsible for obtaining health insurance or paying a penalty, which will increase each year they do not obtain health insurance coverage (Niles, 2010). According to an analysis by the Kaiser Family Foundation, as of the end of the third open enrollment under the ACA (2016), 12.7 million people had signed up for coverage in the health insurance marketplaces, up from 11.7 million in 2015 and 8.0 million in 2014. Recent data indicates that there will be attrition due to people paying their premiums, having their coverage terminated due to inconsistencies on their applications, or receiving health insurance through an employer. Actual enrollment may be closer to 10 million, which meets the HHS target (Levitt, Claxton, Demico, & Cos, 2016).

▶ Conclusion

To be an effective healthcare manager, it is important to understand basic legal principles that influence the work environment, including the legal relationship between the organization and the consumer—the healthcare provider and the patient and the employer and the employee. As both a healthcare manager and healthcare consumer, it is imperative that you are familiar with the different federal and state laws that impact the healthcare organization. It is also important that you understand the differences between civil and criminal law and the penalties that may be imposed for breaking those laws. Federal and state laws have been enacted and policies have been implemented to protect both the healthcare provider and the healthcare consumer. New laws have been passed and older laws have been amended to reflect needed changes regarding health care, to continue to protect participants from both a patient and an employee or employer perspective.

Wrap-Up

Vocabulary

Affirmative action plan

Age Discrimination in Employment Act of 1967

Americans with Disabilities Act of 1990

Antitrust law

Battery

Benefits Improvement and Protection Act of 2000 (BIPA)

Boycotts

Carpal tunnel syndrome

Children’s Health Insurance Program (CHIP)

Civil law

Civil Rights Act of 1964, Title VII

Civil Rights Act of 1991

Clayton Act of 1914

Common law

Compensatory damages

Consolidated Omnibus Budget Reconciliation Act of 1986 (COBRA)

Consumer Credit Protection Act (Title III) of 1968

Contractual relationship to care for a designated population

Contractual right to admission

Criminal law

Defensive medicine

Department of Justice

Designated health services

Drug Free Workplace Act of 1988

Emergency Medical Treatment and Active Labor Act (EMTALA)

Employee Retirement Income Security Act of 1974 (ERISA)

Employee wellness programs

Equal Pay Act of 1963

Ergonomics

Ethics in Patient Referral Act of 1989

Executive Orders 11246 (1965), 11375 (1967), and 11478 (1969)

Express contract

False Claims Act

Family Medical Leave Act of 1993

Federal Trade Commission

Federal Trade Commission Act

General duty

Genetic Information Nondiscrimination Act of 2008

Hart-Scott-Rodino Antitrust Improvement Act of 1976

Hazard Communication Standard

Healthcare and Education Affordability Reconciliation Act of 2010

Health Information Technology for Economic and Clinical Health Act of 2009

Health Insurance Portability and Accountability Act of 1996 (HIPAA)

Hill-Burton Act

HIPAA National Standards

Immigration Reform and Control Act of 1988

Implied contract

Informed consent

Intellectual disabilities

Intentional torts

Job lock

Law

Lilly Ledbetter Fair Pay Act of 2009

Material Safety Data Sheets (MSDSs)

Market division

Medical malpractice

Mental Health Parity Act of 1996

Mental Health Parity and Addiction Equity Act of 2008

Monopolies

Negligence

Noneconomic damages

Occupational Safety and Health Act of 1970

Older Workers Benefit Protection Act of 1990

Patient abandonment

Patient Bill of Rights

Patient Protection and Affordability Care Act or Affordable Care Act of 2010

Patient Self-Determination Act of 1990

Personal protective equipment (PPE)

Physician Self-Referral Laws

Pregnancy Discrimination Act of 1978

Price fixing

Price information exchange

Privacy rule

Punitive damages

Qui tam

Rehabilitation Act of 1973

Rules and regulations

Security Rule

Sexual harassment

Sherman Act of 1890

Standard of care

Statutes

Statutory consent

Tort

Tort reform

Tying

Worker Adjustment and Retraining Notification Act of 1989

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U.S. Department of Labor (DOL). (2016). Nondiscrimination and wellness programs in health coverage in the group market: Rules and regulations. Retrieved from http://www.dol.gov/ebsa/Regs/fedreg/final/2006009557.htm

U.S. Equal Employment Opportunity Commission (EEOC). (2010). EEOC sues Hawaii healthcare professionals for age discrimination. Retrieved from http://www.eeoc.gov/eeoc/newsroom/release/9-28-10.cfm

What you should know about the EEOC and the LGBTQ worker. (2016). Retrieved from

https://www.eeoc.gov/eeoc/newsroom/wysk/enforcement_protections_lgbtq_workers.cfm

▶ Student Activity 11-1

In Your Own Words

Based on this chapter, please provide an explanation of the following concepts in your own words as they apply to healthcare law. DO NOT RECITE the text.

Criminal law:

Civil law:

Battery:

Defensive medicine:

Torts:

Affirmative action plan:

Qui tam:

Standard of care:

Job lock:

Privacy rule:

▶ Student Activity 11-2

Complete the following case scenarios based on the information provided in the chapter. Your answer must be IN YOUR OWN WORDS.

Real-Life Applications: Case Scenario One

As a new healthcare administrator, you are in charge of orientation for four new employees regarding employment law. One of the employees is a woman, one has a disability, one is African American, and one is a Muslim. You feel it is important to emphasize laws that were passed to protect employees from discrimination.

Activity

Select the laws you feel are the most important to the new employees. Provide a brief description of each law and their impact on the new employees.

Responses

 

Case Scenario Two

Your physician has informed you that she can no longer be your primary care provider. Her office manager called to tell you there would be a letter sent to you confirming that change. You are confused because you did not request this change.

Activity

Perform research on how a physician is required to end a relationship and develop a letter to your physician stating your findings.

Responses

 

Case Scenario Three

Your cousin is involved in a lawsuit. He is the claimant of the case. You were very surprised and you asked him to give you a summary of the problem. He mentioned the words “noneconomic damages,” “standard of care,” and “medical malpractice.” You were not sure what these words meant so you decided to do some research on them.

Activity

Research these three terms and provide specific “real-world” examples of the application of these terms.

Responses

 

Case Scenario Four

You just joined a company and one of the benefits was an employee wellness program. You were not sure what type of program it was and whether you would use the program.

Activity

Perform research on different types of employee wellness programs and discuss the relationship between employee wellness programs and the HIPAA law.

Responses

 

▶ Student Activity 11-3

Internet Exercises

Write your answers in the space provided.

■ Visit each of the websites listed here.

■ Name the organization.

■ Locate the organization’s mission statement on the website.

■ Provide a brief overview of the activities of the organization.

■ How do these organizations participate in the U.S. healthcare system?

Websites

http//:www.justice.gov

Organization Name:

Mission Statement:

Overview of Activities:

Importance of Organization to U.S. Health Care:

http://www.americanbar.org

Organization Name:

Mission Statement:

Overview of Activities:

Importance of Organization to U.S. Health Care:

http://www.healthlaw.org

Organization Name:

Mission Statement:

Overview of Activities:

Importance of Organization to U.S. Health Care:

http://www.eeoc.gov

Organization Name:

Mission Statement:

Overview of Activities:

Importance of Organization to U.S. Health Care:

http://www.medicalmalpractice.com

Organization Name:

Mission Statement:

Overview of Activities:

Importance of Organization to U.S. Health Care:

http://www.hg.org/health-law.html

Organization Name:

Mission Statement:

Overview of Activities:

Importance of Organization to U.S. Health Care:

▶ Student Activity 11-4

Discussion Questions

The following are suggested discussion questions for this chapter.

Discuss the concepts of negligence and intentional torts and give examples of these in the healthcare industry.

What is tort reform? Do you believe tort reform is necessary?

Discuss three employment-related pieces of legislation that you feel are very important and why.

 

What is an affirmative action plan? Research on the Internet and discuss with your classmates the issues regarding this type of plan.

What is defensive medicine? Do you think physicians really do this? Research on the Internet and locate current information on this topic to share with your classmates.

 

▶ Student Activity 11-5

Current Events

Perform an Internet search and find a current events topic over the past three years that is related to this chapter. Provide a summary of the article and the link to the article and why the article relates to the chapter.

CHAPTER 12

Healthcare Ethics

LEARNING OBJECTIVES

The student will be able to:

■ Discuss the concept of ethics and its application to healthcare organizations.

■ Define the four basic models of healthcare provider behavior.

■ Define and discuss the four ethical models of a physician–patient relationship.

■ Apply the concept of stakeholder management to the healthcare industry.

■ Discuss the ethical dilemmas of organ transplants.

■ Describe five different types of genetic testing.

DID YOU KNOW THAT?

■ The concept of bioethics evolved as a result of the Nazis’ human experimentation in the World War II prisoner camps.

■ Eighteen people die daily waiting for an organ transplant.

■ Xenotransplantation, which is transferring organs from one species to another, was first performed in 1984 when Baby Fae, a 5-pound infant, received the heart of a baboon.

■ Euthanasia is from the Greek language, meaning good death.

■ As the cost of U.S. medical procedures has increased, medical tourism is becoming popular as more citizens travel overseas to have medical procedures performed because the procedures are less expensive overseas.

■ Workplace bullying is common in the healthcare industry.

▶ Introduction

Legal standards are the minimal standard of action established for individuals in a society. Ethical standards are considered one level above a legal action because individuals make a choice based on what is the “right thing to do,” not what is required by law. There are many interpretations of the concept of ethics. Ethics has been interpreted as the moral foundation for standards of conduct (Taylor, 1975). The concept of ethical standards applies to actions that are hoped for and expected by individuals. Actions may be considered legal but not ethical. There are many definitions of ethics but, basically, ethics is concerned with what are right and wrong choices as perceived by society and individuals.

The concept of ethics is tightly woven throughout the healthcare industry. It has been dated back to Hippocrates, the father of medicine, in the 4th century BC, and evolved into the Hippocratic Oath, which is the foundation for the ethical guidelines for patient treatment by physicians. In 1847, the American Medical Association (AMA) published a Code of Medical Ethics that provided guidelines for the physician–provider relationship, emphasizing the duty to treat a patient (AMA, 2016a). To this day, physicians’ actions have followed codes of ethics that demand the “duty to treat” (Wynia, 2007).

Applying the concept of ethics to the healthcare industry has created two areas of ethics: medical ethics and bioethics. Medical ethics focuses on the decisions healthcare providers make concerning medical treatment of patients. Euthanasia or physician-assisted suicide would be an example of a medical ethics topic. Advance directives are orders that patients give to providers to ensure that, if they are terminally ill and incompetent to make a decision, certain measures will not be taken to prolong that patient’s life. If advance directives are not provided, the ethical decision of when to withdraw treatment may be placed on the family and provider. These issues are legally defined, although there are ethical ramifications surrounding these decisions.

This chapter will focus primarily on bioethics. This field of study is concerned with the ethical implications of certain biologic and medical procedures and technologies, such as cloning; alternative reproductive methods, such as in vitro fertilization; organ transplants; genetic engineering; and care of the terminally ill (Adelaide Center for Bioethics and Culture, 2016). Additionally, the rapid advances in medicine in these areas raised questions about the influence of technology on the field of medicine (Coleman, Bouesseau, & Reis, 2008).

It is important to understand the impact of ethics in different aspects of providing health care. Ethical dilemmas in health care are situations that test a provider’s belief and what the provider should do professionally. Ethical dilemmas are often a conflict between personal and professional ethics. A healthcare ethical dilemma is a problem, situation, or opportunity that requires an individual, such as a healthcare provider, or an organization, such as a managed care practice, to choose an action that could be unethical. A decision-making model is presented that can help resolve ethical dilemmas in the healthcare field (Niles, 2013). This chapter will discuss ethical theories, codes of healthcare conduct, informed consent, confidentiality, special populations, research ethics, ethics in public health, end-of-life decisions, genetic testing and profiling, and biomedical ethics, which focus on technology use and health care.

▶ Healthcare Stakeholder Management Model

A stakeholder is an individual or group that has an interest in an organization or activity. This term should not be confused with a “shareholder,” who actually has a financial interest in an organization because he or she owns part of the organization. The concept of stakeholder management focuses on the relationship between organizations and all of their constituents, including shareholders, and how management recognizes the different expectations of each group. For example, a customer stakeholder would have a large interest in an organization where he or she purchases a product or a service. For some organizations, the government is an important stakeholder because the government regulates the organization’s activities. Managing the interests of all of the stakeholders is a challenge for management, particularly in the healthcare industry. The pressure that stakeholders may impose on a manager can impact the manager’s ethical decision-making process (Carroll & Buchholtz, 2015).

The basic stakeholder relationship in the healthcare industry is the relationship between the physician–clinician and the patient. However, Oddo (2001) has proposed that there are several other stakeholders that play a role in their relationship. Patients will have relationships that impact their interaction with the physician. The physician also has relationships with other stakeholders who have expectations of the physician. For example, the patient will have family and friends and the health insurance company or the government that is paying for the health procedure. The family and friends have expectations that the physician will cure their friend or family member. They have an emotional relationship. The health insurance company’s relationship with the patient is professional. The company will reimburse standardized treatment procedures.

The physician’s stakeholder relationships are more complex. Physicians may be a part of a managed care facility or have admitting privileges at a hospital so they have the relationship with that entity and the entity might have expectations of how they will treat patients. Physicians are also impacted by health insurance companies, which want them to treat patients according to standardized diagnostic procedures. Drug companies have an interest in the physician because they want the provider to use their products. All of these stakeholders have expectations based on the simple relationship between the patient and the provider. When these stakeholders place undue pressure on this relationship, the decision-making process of the provider may not always place the patient first, although, as stated previously, the provider is ethically bound to treat the patient.

▶ Basic Concepts of Ethics in the Healthcare Workplace

Ethical standards are considered above legal standards because individuals make a choice based on what is the “right thing to do,” not what is required by law. There are many interpretations of the concept of ethics. Ethics has been interpreted as the moral foundation for standards of conduct (Taylor, 1975). The concept of ethical standards applies to actions that are hoped for and expected by individuals. There are many definitions of ethics but, basically, ethics is concerned with what are right and wrong choices as perceived by society and its individuals. Ethical dilemmas are often a conflict between personal and professional ethics. A healthcare ethical dilemma is a problem, situation, or opportunity that requires an individual, such as a healthcare provider, to choose an action between two obligations (Niles, 2011). The dilemma occurs when the ethical reasoning of the decision maker may conflict with the ethical reasoning of the patient and the institution. Dilemmas are often resolved because of the guidelines provided by codes of medical ethics of medical associations or healthcare institutions, ongoing training, and implementing ethical decision-making models.

▶ Healthcare Codes of Ethics

As a result of many public ethical crises that have occurred, particularly in the business world, many organizations have developed written codes of ethics, which are guidelines for industry participants’ actions. Codes of ethics provide a standard for operation so that all participants understand that if they do not adhere to this code, there may be negative consequences. The healthcare industry is no different.

Physicians have been guided by many healthcare codes of ethics. The statement of ethics discussed previously in this chapter is a type of code of ethics; the AMA created a code of ethics for physicians in 1847. This code was revised and adopted in 2001. Each category of healthcare professional has a code of conduct. In 1985, the American Nurses Association (ANA) established a code for nurses, which was revised in 1995 and most recently in 2015 (ANA, 2016). Healthcare executives have a code of ethics that was established in 1941 that discusses the relationship with their stakeholders. The American College of Healthcare Executives (ACHE) represents 30,000 executives internationally who participate in the healthcare system (ACHE, 2016). They also offer ethical policy statements on relevant issues such as creating an ethical culture for employees. In addition, they offer an ethics self-assessment tool that enables employees to target potential areas of ethical weakness. Many hospitals have established a code of ethics, which may help providers when they are dealing with medical situations such as organ donations.

Interestingly, the Advanced Medical Technology Association (AdvaMed), an industry association that represents medical products, has also developed a code of ethics that addresses interactions with healthcare professionals who are potential customers of their products. Their ethical issues are similar to the pharmaceutical industry because they want physicians to use their medical devices and encourage the use by providing physicians with incentives such as gifts or paying for healthcare providers’ travel or medical conferences (Advanced Medical Technology Association, 2016).

How to Develop a Code of Ethics

A code of ethics must be written clearly, because employees at all organizational levels will utilize it. If a certain employee category needs a specific code of ethics, then a written code should be specifically developed for that category. The code must be current in laws and regulations. Driscoll and Hoffman (2000) recommend the following outline for developing a code of ethics:

Memorable Title

Leadership Letter

Table of Contents

Introduction

Core Values of the Organization

Code Provisions

Information and Resources

The code of ethics must be a user-friendly resource for the organization. It should be updated to include current laws and regulations. The language should be specific as to what the organization should expect from its employees and training should be provided on the code of ethics so employees understand the organization’s expectations.

▶ Workplace Bullying

In 1992, Andrea Adams, a BBC journalist, coined the term workplace bullying, describing an ongoing harassing workplace behavior between employees, which results in negative health outcomes for the targeted employees (Adams, 1992). Workplace bullying is receiving increased attention worldwide as a negative organizational issue. It is considered a serious and chronic workplace stressor that can lead to diminished work productivity and work quality (Hoel, Faragher, & Cooper, 2004). This negative behavior is considered bullying if it is repeated over an extended period of time. It can occur between colleagues, supervisors, or supervisees, although the bully is often the supervisor. Definitions also include negative verbal or nonverbal behavior such as snide comments, verbal or physical threats, or items being thrown. Employees have also reported less aggressive behavior, such as demeaning comments about work or continual gossip. The literature has reported an increased incident of bullying reported in healthcare organizations (Ayoko, Callan, & Hartel, 2003; Vartia, 2001; Djurkovic, McCormack, & Casimir, 2008).

Workplace Bullying in Healthcare

The Center for American Nurses, the American Association of Critical-Care Nurses, the International Council of Nurses, and the National Student Nurses Association have all issued statements regarding the need for healthcare organizations to eliminate bullying in the healthcare workplace. Often, verbal abuse also occurs toward nurses by physicians or patients and their families. Lateral violence also occurs, defined as “nurse to nurse” aggression and demonstrated by both verbal and nonverbal behavior (American Nurses Association, 2016). In a 2014 Kaplan Survey of 2,000 nursing graduates, 48% indicated they were concerned about being bullied or working in hostile work environment and 38% knew nurses who were bullied or worked in a hostile work environment (Kaplan, 2014).

Legal Implications of Workplace Bullying

There is no federal legislation in the United States that forbids workplace bullying. Since 2003, 30 states have introduced anti-workplace-bullying bills (WBI, 2016). However, there are two federal laws that can be applied in workplace bullying: the Occupational Safety and Health (OSHA) Act of 1970 and Title VII of the Civil Rights Act of 1964. The OSHA Act of 1970 states that employers must provide a safe and healthful working environment or their employees. Under Title VII of the Civil Rights Act, if an employee in a protected class (e.g., gender, religion, ethnicity) is bullied by another employee, the action might be illegal based on the concept of a hostile work environment