Public Health Law Map - Beta 5 - Medical and Public Health Law Site

Some of these provisions, such as those governing the submission of bills and
discount schedules for prompt payment, have no effect on medical care decision
making. Others have profound effects on physician decision making. The most
benign of these incentives are disallowing or heavily discounting procedures that
the plan wants to discourage. This gives physicians the option to offer the care
and absorb the reduced reimbursement. These become more troubling when they
are coupled with provisions that prevent discounting care. This prevents
physicians from providing the treatment at cost to help needy patients. The most
ethically and legally problematic provisions are those that prohibit the physician
from rendering the necessary care. Some plans attempted to have physicians
contractually agree not to provide routine ultrasound to pregnant women and not
to inform the women that routine ultrasound was available. By preventing women
from knowing about the procedure, the plans hoped to avoid complaints from
women who wanted ultrasound.
These practices violate the physician’s fiduciary duty to the patient, and may
violate state criminal laws, such as commercial bribery laws. Such violations
would be mail and wire fraud, if they involved the telephone or mails, and may
be predicate acts on their own, depending on the wording of the state statute.
Violating a state commercial bribery statute is a predicate act for RICO if the
statute provides for imprisonment for greater than one year. Several states
specifically prohibit physician incentives under their commercial bribery laws and
provide for imprisonment for more than a year. In these states, physician
incentive plans are clearly predicate acts for RICO. Some states do not
specifically mention physicians in their commercial bribery statutes but prohibit
bribing physicians. These states have case law that defines a physician as
fiduciary. Even in states that do not directly criminalize physician incentives
under a commercial bribery statute, a plaintiff can argue that the model penal
code prohibitions on bribing physicians are evidence that incentive plans violate
the physician’s common law fiduciary duty. These breaches of the physician’s
fiduciary duty can be the basis for mail and wire fraud, which are predicate acts
for RICO.
(3) The Pattern of Racketeering
Engaging in one predicate act, such as accepting a bribe, is not enough to trigger
RICO. The defendant must engage in a pattern of racketeering. The risk of
physicians’ being charged with RICO violations was increased by the 1989 ruling
in H. J. Inc. v. Northwestern Bell Telephone Company, [H.J. Inc. v. Northwestern
Bell Tel. Co., 492 U.S. 229 (1989)] in which the Supreme Court completed the
expansion of RICO that began with the 1985 decision in Sedima, S.P.R.L. v.
Imrex Co. [Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479 (1985)] In Sedima, the
Court held that RICO defendants need not be convicted of the underlying
predicate acts that were used to charge a pattern of racketeering. This ruling
greatly simplified criminal prosecutions and private civil actions brought under
RICO because the prosecutors or plaintiffs were no longer compelled to wait
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