Health Care
MARCH 2003
Some Thoughts and Strategies for Hospitals
Relating to the Upcoming Pennsylvania Physician Strike
The Pennsylvania Medical Society (PMS) has
announced that it is calling for a work
stoppage by Pennsylvania physicians to draw
legislators’ attention to the lack of progress
on malpractice reform. The first of what
might be several work stoppages has been set
for April 28th . Other stoppages may occur in
May and possibly in July. It is not clear
whether any stoppage will last longer than
one day.
PMS believes that a work stoppage will
dramatize the fact that malpractice reform
efforts have stalled. Similar efforts in other
states have prompted legislatures to consider
and, in some instances, enact favorable
malpractice reforms.
Physicians face antitrust risks when they act
in a concerted manner if the purpose of the
joint action is to influence prices or to
achieve some other favorable economic result.
A work stoppage several years ago in
Washington, D.C. by public defenders who
sought higher payment for representing
indigent clients led to a finding by the D.C.
Circuit that the work stoppage was an illegal
concerted action (a boycott) and per se a
violation of the antitrust laws.
An exception to the prohibition on joint
conduct exists if the conduct is undertaken to
influence legislation. PMS has said that this
is what it hopes its members will accomplish,
thus bringing the conduct under the umbrella
of the exception.
What is the downside to the hospital
affirmatively supporting the physician work
stoppage?
1. Assuming that physicians qualify for the
exception mentioned above, there is no
major antitrust risk to verbally supporting
the stoppage. As a rule, tax-exempt
501(c)(3) entities cannot undertake more
than an insubstantial amount of lobbying.
However, supporting lobbying efforts of
others by verbal statements is not lobbying
and would not likely jeopardize the exempt
status of the hospital.
2. The stoppage will produce added expense
to the hospital, depending upon its length
or frequency. Hospitals will still have to
pay employed physicians who do not report
to work and pay their office staff who may
have nothing to do if the stoppage extends
past several days. Additionally, the
hospital may experience some volume dips
Kirkpatrick & Lockhart LLP
ge
e
as admissions, procedures, and diagnostic
tests are deferred.
and hospitals may be busier with the overflow
from physicians’ offices.
3. In any kind of large, joint undertaking of
this sort, there is always the risk of
multiple objectives or unanticipated
conduct. In other words, although the
sponsors (e.g., PMS) may declare at the
outset that the objective is to influence
legislation, the effort could become a
“runaway” if different individuals or
factions take control of the process or
otherwise change its purpose or tactics.
Lending support publicly to a process too
early carries some risk because the
objective or tactics could change materially
between the announcement of public
support and the event.
Physician work stoppages seem to be
effective. After the highly publicized
stoppage in West Virginia, the West Virginia
legislature enacted meaningful malpractice
and insurance reform legislation. The
reforms include caps on non-economic
damages (from $250,000 to $500,000),
elimination of double recoveries for disability
and lost wages, and elimination of joint and
several liability. In addition, the legislature
allocated $20,000,000 from the tobacco
settlement to assist in creating a physician
insurer vehicle.
4. Assuming that the stoppage proceeds as
planned under PMS’s leadership, the risk to
the hospital is largely, if not solely, a
public relations and image risk: Is the
hospital endangering its image by
supporting a work stoppage? If so, is the
benefit that could accrue from the success
of the physicians’ effort sufficiently
important enough that it is worth taking
that risk?
As to the latter, how can the hospital be
faulted for taking advantage of the physicians’
access to the legislature on an issue that
affects its financial viability and its ability to
recruit and retain physicians for the
community? Some could argue that a
hospital’s failure to act aggressively on this
issue actually hurts the public because of the
negative impact on physician retention and
recruitment. Undoubtedly, someone will argue
that patients are being held hostage. In
reality, patients needing care are still going to
receive it. The only loss appears to be that
elective procedures are going to be deferred
2
Was there a public relations downside to West
Virginia hospitals supporting the stoppage?
Maybe. Was there a substantial, meaningful,
and long-term improvement in the
malpractice insurance climate? Absolutely.
What should hospitals do between now and
April 28th ?
■
Determine NOW whether the hospital
intends to verbally support the physicians’
work stoppage. The hospital can wait until
shortly before the event to publicly
announce its support, but it should engage
now in internal contingency planning.
■
Talk to the physicians on the staff who are
tied-in to PMS and the work stoppage
effort so that you can stay abreast of PMS’s
planning efforts.
■
Meet with medical staff leadership to
determine which physicians in key
specialties intend to strike. Ironically, the
specialties which may be needed the most
to cover at the hospital are among those
with the highest malpractice rates (e.g.,
anesthesia, OB, orthopedics).
KIRKPATRICK & LOCKHART LLP HEALTH CARE ALERT
■
Ask the medical staff leadership for an
indication by April 18th of who intends to
strike, so that you have adequate planning
time.
■
Determine what your coverage levels will
need to be at the hospital. For instance,
will your house-based physicians be
providing sufficient coverage? Your
contracts with these groups should require
adequate daily coverage. Then move to the
specialists. Will there be OB coverage,
orthopedics coverage, general surgery
coverage, ICU/CCU coverage?
■
Convey to your staff that the hospital is an
ally and that the hospital needs to be
covered. If it is left uncovered, public
reaction will be unfavorable.
■
Have your PR department draft position
statements. Include how difficult it is for
the hospital to recruit and retain
physicians, how the hospital’s premiums
have increased, how one of Pennsylvania’s
largest hospital carriers (PHICO) has gone
bankrupt, how self-retention amounts are
increasing, etc. You may want to be out in
front of this wave and affirmatively seek
publicity. If there is going to be media
attention, you want to take full advantage
of this event to get your message out.
Remember, the trial lawyers (not a shy
bunch) will be countering this event with a
barrage of their own. If hospitals take too
low a profile, the trial lawyers will carry
the day.
ED WEISGERBER
eweisgerber@kl.com
412-355-8980
FOR MORE INFORMATION, please contact the author or one of the following K&L lawyers:
Boston
R. Bruce Allensworth
Edward J. Brennan, Jr.
ballensworth@kl.com
ebrennan@kl.com
617.261.3119
617.951.9143
Harrisburg
Ruth E. Granfors
Raymond P. Pepe
rgranfors@kl.com
rpepe@kl.com
717.231.5835
717.231.5988
Miami
Marc H. Auerbach
William J. Spratt, Jr.
mauerbach@kl.com
wspratt@kl.com
305.539.3304
305.539.3320
Newark
Stephen A. Timoni
stimoni@kl.com
973.848.4020
Pittsburgh
Judy J. Hlafcsak
Edward V. Weisgerber
jhlafcsak@kl.com
eweisgerber@kl.com
412.355.8920
412.355.8980
Washington
Alan J. Berkeley
aberkeley@kl.com
202.778.9050
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This bulletin is for informational purposes and does not contain or convey legal advice. The information herein
should not be used or relied upon in regard to any particular facts or circumstances without first consulting a lawyer.
MARCH 2003
© 2003 KIRKPATRICK & LOCKHART LLP.
ALL RIGHTS RESERVED.
Kirkpatrick & Lockhart LLP