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North Carolina Healthcare Legislative Update


Email Alert

By William R. Forstner*

July 14, 2009

North Carolina Medical Board Activities

The North Carolina Medical Board (Board) has been active in 2008-2009. The state adopted a law that allows the Board to publish physician malpractice awards, payments, and settlements on its public website. Such public information is available in several states but is new to North Carolina. The Board now will publish awards, settlements, and payments more than $75,000 for seven years following payment by the doctor. The Board had previously sought a rule allowing publication for any payment more than $25,000. Physician groups lobbied to prevent publication of relatively low settlements paid to avoid the expense of litigation. Patient advocates argued that lower settlements should be available to allow more information for patients to select providers.

Additionally, the Board has been involved in a series of legal battles surrounding the death penalty in North Carolina. State law requires that a physician or surgeon be "present" at the execution. In 2007, the Board published a position statement explaining that it might discipline a doctor that actively participated in the State's lethal injection program. The Board acknowledged that a physician would not be disciplined for being present, but any action that "facilitates the execution" could result in discipline. As a result, the death penalty was subject to a de facto moratorium for more than a year while the issue was addressed by the Council of State and the North Carolina court system. A recent ruling from the state Supreme Court held that discipline for participation in an execution—as required by State law—remains outside the regulatory authority of the Board. Bills were introduced in both the state House and Senate that would remove participation in an execution from the reach of the Board's governance of the practice of medicine.

Private Insurance Overpayment Demands

In 2008, the state limited the look-back period for collection of overpayments by private insurance companies. Private companies have been demanding overpayments from healthcare providers that often cover claims filed and paid over a period of six or more years. The claims involve amounts that the insurer contends should not have been paid after adjudication and payment of the claims. Often, this process entails medical necessity determinations made several years after the service was provided and payment received. This overpayment demand can be a serious financial burden on providers when retroactive repayment of claims paid over several years is sought in a short period of time. The law only applies to services provided after January 1, 2008. Further, the law allows an insurer to demand repayment beyond two years whenever there is a reasonable belief of fraud or other intentional misconduct.

Elimination of Contributory Negligence

A bill introduced in the state House and Senate would eliminate contributory negligence in favor of a blended system of comparative negligence. North Carolina is one of very few states to continue to enforce contributory negligence as a complete bar to a party's recovery if he or she was found to be negligent in any respect. The bill passed in the House would prevent recovery if a party's negligence is equal to or more than the combined negligence of all other tortfeasors—meaning a fifty-fifty allocation would not allow recovery. The pending Senate bill would allow recovery under a fifty-fifty fault allocation, but no greater. If recovery is permitted, the claimant's share is reduced by his or her percentage fault.

North Carolina also has long recognized joint and several liability among tortfeasors. The bill would maintain general rules regarding joint and several liability while eliminating contributory negligence, permitting the trial court to redistribute shares when collection is not reasonably likely. Whenever one or more of a group of jointly liable parties cannot pay the judgment, the House Bill requires the liability of the insolvent
defendant(s) to be shared among all parties based on each party's respective percentage fault, including the successful plaintiff and any released parties. The bill would limit the redistribution of fault to defendants with an equal or higher percentage fault as the claimant. Finally, the bill would permit contribution claims among tortfeasors whenever one tortfeasor pays more than his or her share.

Consideration of New Ethics Opinion Governing Hospital Counsel

North Carolina court rulings have prevented counsel for hospitals and other healthcare providers from speaking with a treating physician regarding a pending case outside of a deposition or trial without patient-plaintiff consent or a court order. This ruling has been interpreted to mean that legal counsel for a hospital may not speak with independent contractor physicians on its medical staff about a lawsuit, even though the hospital may be held liable for negligence under apparent agency principles. An attorney requested a state bar ethics opinion to extend this prohibition to hospital counsel wishing to speak with an employed physician regarding care provided at the hospital, in which case the hospital would face the risk of liability under a respondeat superior theory. The state bar ethics opinion request was declined by the state bar, but this represents attempts by certain members of the state bar to limit hospital counsel's informal communications with caregivers in malpractice cases.

Changes to Medicaid Community Support System

The North Carolina Division of Medical Assistance (DMA), the division of the State Department of Health and Human Services (HHS) that administers the Medicaid program, identified financial concerns with the community support program. This program provides in-home assistance to individuals with mental health problems, both adults and children. The state concluded that the system was being abused and used county oversight agencies to perform post-payment reviews of the documentation supporting community support claims throughout the state. The post-payment review was to determine whether providers in the state took advantage of the reimbursement system and provided care that was inappropriate or not covered by the service definition. The result was a demand for repayment from hundreds of agencies, often demanding 90% or more of the monies paid to the providers for services rendered.

Many agencies appealed to the administrative court system to prevent immediate withholding of payments and recoupment of amounts due from expected future payments. The legislature abolished jurisdiction for these appeals from the administrative court system and reassigned all pending appeals by providers. The law established jurisdiction within the HHS Hearing Office to render determinations on these repayment actions, even though a division of HHS was a party. Medicaid beneficiary claims were left unaffected by the new law. In the same law, the legislature adopted mandatory national accreditation deadlines for these providers.

Hospital Illness/Injury Reporting for Children

Hospitals and physicians now are required to report to law enforcement any illness or injuries that, in the physician's judgment, appears to be the result of non-accidental trauma for any person less than eighteen years old. This is an expansion of the former requirement to report injuries from guns and knives. The report must be made as soon as feasible. Such a report would be in addition to any required report to the local social services department.

*AHLA wishes to thank William R. Forstner, Esquire (Smith Moore Leatherwood LLP, Raleigh, NC) for providing this alert.

For summaries of other state healthcare initiatives, please visit the Healthcare Reform Educational Task Force's website and click on Email Alerts in the left-hand navigation menu.

The Healthcare Reform Educational Task Force is a joint endeavor of the Healthcare Liability and Litigation; Hospitals and Health Systems; In-House Counsel; Payors, Plans, and Managed Care; Physician Organizations; Regulation, Accreditation, and Payment; and Teaching Hospitals and Academic Medical Centers Practice Groups.

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