It was just a six-page letter from one federal official to another. But it raised questions about the legality of a common physician recruitment strategy and revealed the clout of its author, D. McCarty "Mac" Thornton, chief counsel to HHS Inspector General June Gibbs Brown.
In the letter, sent to Internal Revenue Service official T. J. Sullivan in 1992, Thornton asked whether it was legal for hospitals to buy physician practices, a common practice then.
Sullivan, now a tax lawyer with the Washington office of Gardner, Carton & Douglas, said the letter created a furor among healthcare providers. "It terrified them," he said.
Thornton, who formulates and interprets healthcare fraud and abuse policy, heard the public comment, took the hits and re-examined and changed his position, Sullivan said. "It was a defining moment and one that has really lived on."
Today when Thornton, 51, speaks or writes, healthcare listens.
His ability to see through the latest patient-referral schemes and his fierce commitment to protecting Medicare have earned him high marks from consumer advocates.
Healthcare providers, however, have responded to increased enforcement with fear and even panic, Thornton said. "We think most of the providers are honest and trying to do the right thing," he said. "We're not trying to malign them, but (we're trying to) get them to pay attention to the rules and put in a quality compliance plan."
Thornton is known for instructing providers about appropriate business practices through his fraud alerts, advisory opinions and definitions of "safe harbors"-practices that do not violate federal anti-kickback laws.
When he communicates with the industry, Thornton makes it clear that if providers and their lawyers play by the rules, his office won't take them to court.
While his peers in healthcare branches of the Federal Trade Commission and the IRS typically leave office for greener pastures within five years, Thornton has been in his position since 1990 and with the agency for 16 years.
Such a combination of power and longevity inevitably draws controversy, as did his ruling on physician gain-sharing in July. It sent providers scrambling to ensure that their physician incentive programs comply with the ruling.
Gary Eiland, a healthcare lawyer at the Houston office of Vinson & Elkins, has butted heads with Thornton and shared the stage with him at industry conferences.
Eiland credited Thornton with educating providers and lawyers at conferences. "That's made him more aware of how this industry operates," he said.
But Eiland said anyone logging that much time in government bureaucracy is "attempting to regulate from an ivory tower. That has concerned me for a number of years. He doesn't have large numbers of people on his staff with experience in how the healthcare industry operates."
Eiland said the inspector general's office uses too many of its resources to enforce the law and too few to clarify regulations, such as those related to the Stark II law and updated safe harbor rules.
Some critics have been less even-handed than Eiland. They have stung Thornton by describing him as a "jack-booted thug" and a "rabid zealot," said Lewis Morris, assistant inspector general for legal affairs.
Such criticism doesn't just roll off Thornton's back. "The reason it bothers him is he's coming to this with a genuine commitment to search for truth," Morris said. "And while he knows there are people who disagree with him, it's unfortunate when lobbyists and industry officials attribute negative connotations to what we're doing."
Morris said attacking Thornton and his office "sells memberships and business. But it stifles dialogue, too."
Said Inspector General Brown: "There's always criticism when you're in an area where there hasn't been enforcement."
She said her office takes legitimate criticism of its policies seriously.
"In some cases we've tried to modify our approach," she said. "We can't expect everybody to love us or like what we're doing. But they'll see an effort to be balanced and fair."
Consider some facts from Thornton's tenure:
* Whistleblower lawsuits mushroomed to 283 in fiscal 1998 from 17 in fiscal 1992.
* Exclusions from Medicare and Medicaid expanded to more than 3,000 in 1998 from 1,375 in 1996.
* The government has recovered more than $2 billion from fraud cases.
* Improper payments by Medicare, including those stemming from fraud and abuse, dropped to $12.6 billion in 1998 from $23 billion in 1996.
The decrease in improper Medicare payments is "an important indicator that providers are paying better attention to how they file and document claims," Thornton said.
Mary Grealy, who recently resigned as the American Hospital Association's chief Washington counsel, said she hasn't always agreed with Thornton but has watched him grow.
"He's a tough opponent, but he's not intransigent," she said. "He's very serious about protecting the Medicare program and its beneficiaries. That's what he puts first."