The Right Prescription

The Criminal Intent of ObamaCare

PPACA undermines a core principle of the American justice system.

By 10.8.10

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A couple of weeks ago the President and his allies in the press made much of ObamaCare's six-month anniversary, using the occasion to tout a selective list of minor provisions that went into effect on September 23. We heard a lot about dastardly insurance industry practices, such as the fiendish refusal to insure people against maladies they have already contracted, from which we are now shielded by the Patient Protection and Affordable Care Act (PPACA). There was no mention, however, of a more important provision that has also gone into effect. This obscure provision of PPACA, buried deep in Section 6402, has received little attention from health policy wonks and even less from the "news" media. Nonetheless, it has very serious implications for the legal rights of health care providers, the American justice system and ability of many patients to access medical care.

A fundamental principle of our justice system holds that a person cannot be convicted of a felony unless it has been proven that he acted with "criminal intent." It must be shown, in other words, that he intentionally engaged in conduct he knew to be illegal. This is a venerable legal principle whose pedigree reaches back to the beginnings of Western Civilization, and it was an important element of the English common law upon which the American justice system is based. The requirement to prove criminal intent has, however, been something of a nuisance to Beltway bureaucrats seeking to bend private industry to their will. And it has been particularly inconvenient for federal prosecutors trying to throw doctors and hospital executives in jail for violating hopelessly obscure and Byzantine regulatory statutes. But that pebble has been removed from the federal shoe by ObamaCare.

Specifically, Section 6402(f)(2) revises existing law so that the government can ignore the criminal intent principle in violations of the Anti-Kickback Statute (AKB). AKB prohibits the payment or receipt of remuneration in exchange for referrals or the purchase of goods and services paid for by a federal health care program. It is a criminal statute, the violation of which is punishable by imprisonment for up to five years. Prior to last March, the government could not obtain a conviction under AKB unless it proved that a defendant knew about the law and intentionally ignored it. The authors of PPACA used the health care bill to revise the statute such that "a person need not have actual knowledge of [AKB] or specific intent to commit a violation." The "person" who will most likely be prosecuted regardless of "actual knowledge" or "intent" is, of course, your doctor or someone with whom he does business.

As ominous as this surreptitious revision is for physicians and other health care providers, it has even scarier implications for our justice system in general. PPACA's reduction of the prosecutorial burden for AKB is part of a broad legislative pattern that has been gaining momentum in recent years. Congress has ignored the principle of criminal intent in an increasing number of statutes covering a wide variety issues and industries. As Edwin Meese III and Norman L. Reimer put it in their Foreword to the recently published Heritage Foundation report, "Without Intent: How Congress is Eroding the Criminal Intent Requirement in Federal Law," this pattern has "dangerously impaired the justification for criminal punishment that has for centuries been based on an individual's intent to commit a wrongful act. This trend undermines confidence in government and risks pervasive injustice."

"OK," you're thinking, "The erosion of the criminal intent principle is troubling. But, as a practical matter, how can a doctor or some other health care provider violate the statute without knowing it?" With frightening ease, as it happens. The line separating legal and illegal business practices under AKB is not easy to see. A provider's guilt or innocence in an anti-kickback prosecution, to paraphrase a former President, depends on what the meaning of "remuneration" is. And AKB is written in such impenetrable bureaucratese that a generally accepted legal definition of that word has been elusive. "Remuneration" means obvious things like kickbacks and bribes, of course, but it can also mean "payment in kind" made "directly or indirectly, overtly or covertly." Interpreted broadly, such language can cover virtually every transaction that occurs in the health care industry.

Predictably, the Beltway bureaucrats have interpreted the "R" word very broadly indeed: "[T]he government has invoked the broad prohibition against 'remuneration' to target common business arrangements, such as product discounts, marketing agreements and home health-management deals." The latter example has produced a number of weird advisories from the Department of Health and Human Services (HHS), including one in which a home health agency was told that providing free educational videos "could potentially generate prohibited remuneration under the anti-kickback statute." HHS has also issued warnings to charitable organizations wishing to assist financially needy patients with Medicare deductibles, and a particularly perverse HHS advisory warned that AKB could be invoked pursuant to a hospital's desire to provide "free oral nutritional supplements to malnourished end-stage renal patients."

Even a practice as common and necessary as physician credentialing by hospitals has been associated with "remuneration" by HHS. A hospital is required by law, industry standards, and its general health care mission to verify physician credentials and assure the clinical proficiency of its medical staff. Indeed, HHS itself admonishes hospitals to monitor quality "by appropriately overseeing the credentialing … of their medical staffs." Yet the very HHS notice in which this quote appears also warns that, under certain vaguely-defined circumstances, "medical staff credentialing practices may implicate the anti-kickback statute." This would be amusing and ironic except that, due to PPACA's evisceration of the intent requirement, the wrong judgment call could well cause doctors (i.e. the people receiving the alleged remuneration) and hospital executives (i.e. the people "paying" it) to go to jail.

Would a sensible federal prosecutor go after obviously innocent people? Probably not. But the good sense of government lawyers is a very thin reed upon which to lean. The application of federal statutes under the current administration has been so irrational that the Department of Justice recently prosecuted a group of physicians for "price-fixing" because they had refused to accept a price-fixing scheme. A group of Idaho orthopedists declined to work for the low payment rates arbitrarily dictated by the state's industrial commission and, in typically Orwellian fashion, the Obama administration "unambiguously stated that refusal to accept government price controls is a form of illegal 'price fixing.'" In the hands of an administration so hostile to the remaining vestiges of free market health care and so disconnected from common sense, the prosecutorial discretion created by PPACA is a very dangerous weapon.

In addition to undermining the legal rights of health care providers and eroding a core principle of our justice system, Section 6402 will also have an adverse effect on the ability of many patients to access care. The only sure way for a doctor, hospital, ambulatory surgery center, etc. to avoid being sucked under by this dangerous legal quicksand is avoid Medicare, Medicaid and SCHIP patients like the plague. If a doctor simply declines to treat patients whose care is paid for by the government, he need not worry about landing in the penitentiary for unintentionally violating a law about which he knows little or nothing. Because none of these programs pay enough to cover costs, providers are already reconsidering the wisdom of treating government-covered patients. PPACA's revision to the intent language of the AKB may provide the impetus for a mass exodus of providers out of all government health care programs.

The primary victims of such an exodus would, of course, be the most vulnerable patients -- seniors, poor people and children. Section 6402's potential impact on these patients, combined with its corrosive effect on the legal rights of providers and our justice system in general, makes it one of the most important provisions of PPACA. And yet it was conspicuously absent from the list of provisions touted by the White House and the media on ObamaCare's six-month anniversary. Nancy Pelosi famously said that we would have wait until Congress had passed "reform" before we could see what was actually in the bill. Well, now we have read it. And it is abundantly clear that she, her congressional accomplices and the President intentionally engaged in conduct they knew to be, if not technically unlawful, wrong.

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About the Author

David Catron is a health care revenue cycle expert who has spent more than twenty years working for and consulting with hospitals and medical practices. He has an MBA from the University of Georgia and blogs at Health Care BS.