If you're a healthcare dealmaker, the legal outlook for this year is clear skies ahead. The historic triple threat of antitrust challenges, tax revocations and fraud investigations are paper tigers-regardless of what your attorney says.
After a year of lax enforcement efforts and changes in enforcement policies in all three areas in 1995, it seems apparent that only the most egregious provider behavior this year will attract the attention of agents from the Justice Department, Federal Trade Commission, Internal Revenue Service or HHS' inspector general's office.
The frail enforcement activities stem from several factors. Topping the list are political considerations: None of the federal enforcement agencies wants to look like it's standing in the way of innovations in healthcare delivery, lest its budget be cut or legal turf taken away. All will claim to be simply adapting to the marketplace.
Despite that, government mouthpieces will continue to talk tough about enforcement efforts in numerous public appearance this year, hoping to scare providers into compliance.
You also may see a few more "fraud alerts" or maybe another billing probe in which the government threatens providers with false-claims lawsuits. The IRS may issue additional guidance on physician recruitment. And the two antitrust agencies may announce a more lenient enforcement policy regarding certain physician networks.
Where will the real legal risks come from this year? Private parties and state attorney general offices.
Some insurers are being virtually locked out of markets by dominant provider groups. And some provider groups are being blocked in other markets by dominant insurers.
Expect more Marshfield-like antitrust litigation. In that case, Blue Cross and Blue Shield of Wisconsin sued 400-physician Marshfield Clinic, alleging it illegally monopolized healthcare in north-central Wisconsin. A jury verdict in favor of the Blues was partially overturned on appeal, and the Blues has asked the U.S. Supreme Court to consider the case.
Also in the antitrust area, state law enforcement officials are beginning to crack down on hospital acquisitions of physician practices that eliminate competition.
On the fraud front, anticipate even more "whistleblower" lawsuits, in which a private party sues a provider in receipt of Medicare or Medicaid monies on behalf of the government.
As for tax litigation, cash-hungry municipalities aren't going to fade away. They'll continue to challenge the property-tax exemptions of wealthy not-for-profit hospitals and other providers. In addition, more states will begin making not-for-profits declare in publicly available reports how much uncompensated care and other benefits they provide to their communities.