Liar! Liar! Pants On Fire!

The young man sitting in my office faced charges of marijuana possession.  The police had noticed the weed in his car during a routine traffic stop.  My client insisted that the weed wasn’t his and that he had no idea how it had gotten in his car.

“Is the car titled in your name?” I asked.

“Yes, it’s my car and I don’t let anyone else drive it,” he asserted.

“Do you keep it locked when you’re not driving it?”

“Yes, and nobody has the keys but me.”

“Do any of your friends smoke pot?”

“Absolutely NOT!”

“Well, now, Mr. Jones.  I believe you when you say the pot wasn’t yours, but do you think we have much of a chance selling this to the court?  I mean, it’s your car. You don’t let anyone else drive it and you keep it locked when you’re not driving it.  None of your friends smoke pot.  How’re you gonna explain how the pot got in the car?”

On due reflection, my client decided that even he didn’t believe his story.  Just moments earlier, he was ready to place his hand on the Bible and swear that it wasn’t his pot.  In the end, it wasn’t his concern about the morality of lying that slowed him down. It was the realization that no one would believe his lie.  If requiring a witness to take an oath doesn’t deter him from lying, why administer oaths?

Until 1985, North Carolina law defined an oath as a “token of the engagement to speak the truth and  . . . that if (the witness) should swerve from the truth, he may be made liable to that vengeance which he has imprecated on his own head.”  In addition to swearing oaths in court, our laws also require notaries to obtain an oath when they notarize certain important documents.  Affidavits, petitions, and other such documents contain the language “sworn to and subscribed before me.”

In a 1970 Fayetteville case, a patient sued her psychiatrist for false imprisonment when he had her committed to a mental hospital.  The court ruled that the doctor’s failure to actually take an oath when he signed the commitment petition was a violation of the patient’s right to due process and subjected the doctor to liability for false imprisonment. 

A few weeks ago, our appellate court again addressed the issue of administering oaths.  The biological mother of a baby boy signed a “relinquishment” placing the baby for adoption.  Later, she changed her mind and wanted to retrieve her son.  She argued that the document must be made under oath and that the notary had failed to administer an oath to her.

While the notary admittedly did not administer an oath, the adoption agency social worker had read the entire document to the mother – including the signature line which stated “I,   . . . being duly sworn hereby sign this document. . . .”  The court held that reading this language out loud to the mother satisfied the mandate that the document be signed under oath.

Despite this ruling, the court cautioned notaries that “the failure to administer an oath  . . . may result in a defective notarization.   Should this occur, the document  . . . may be invalidated and the underlying transaction voided.”  To administer the oath, the notary must require a “vow of truthfulness on penalty of perjury” while invoking a deity or using any form of the word “swear” or “affirm.”

So why does the law require oaths in connection with important documents and courtroom testimony?  Researchers have found that in a 10 minute conversation most of us will tell about three lies.  Children begin lying by the age of 2 or 3.  Six year old kids typically lie every 90 minutes.  Clearly, we’ve become a “generation of liars.”  Just as clearly, the court can’t throw all of us in jail.  Lawmakers have decided to reserve that punishment – and the jail cell – for those who lie under oath.

 The law defines “perjury” as giving a false statement “under oath” concerning a material fact.  Perjury is a felony punishable by a fine and imprisonment.  Many rich and famous people have been convicted of perjury.  Martha Stewart, head of the “It’s A Good Thing” empire ; Marion Jones, world famous runner; L’il Kim, popular rap star; Michael Deaver, aide to President Reagan; and John Mitchell, U.S. Attorney General under Richard Nixon all endured fines or imprisonment for lying under oath. 

Scientists are exploring ways of using MRI’s and other equipment to detect the liars amongst us.  Most certainly, other geniuses will work just as diligently to “beat” any technology devised to identify falsehoods.  Meanwhile, I probably need to confess that in my dealings with my pothead client, I was less than honest.  The truth is that I didn’t believe him when he denied the pot was his.  I think that was the only lie I told during that 10 minute conversation.  Thankfully, I wasn’t under oath at the time.

Suing for the King - Whistleblower Lawsuits

A few weeks ago, one of our state’s largest hospitals agreed to pay $1 million to settle charges that it had defrauded Medicare, Medicaid and TriCare.  A former bill coder at the hospital alleged that the hospital used physicians’ assistants (PAs) to work as surgical assistants during coronary by-pass operations.  The government does not pay for work done by surgical assistants but it does pay for services required to be performed by licensed PAs.  As a whistleblower, the bill coder may be entitled to a share of the $1 million penalty.  Because she has accused the hospital of retaliating against her for blowing the whistle on the illegal practices, she may be pursuing additional damages as well. 

Both federal and state laws allow people who witness government fraud to file lawsuits on behalf of the government.  In certain cases, the government will join in the suit.  The whistleblower is entitled to 15%-25% of fines assessed and the defendant must also pay the whistleblower’s attorney fees.  As the fines and penalties are extreme, multi-million dollar cases often result. 

Typically, the whistleblower is a former employee.  For example, in 2011, a national pharmacy chain agreed to pay $17.5 million when one of its pharmacists sued alleging that the chain overcharged Medicaid for prescriptions.  The pharmacist received $2,595, 460 of the money in addition to attorney fees.

Today’s cellphones can make an employee’s claims of fraud stick.  In a recent Florida case against Polliwog Dental, an employee used her cell phone to videotape a dentist altering dental charts that had been subpoenaed by the Florida Department of Health. 

Frustrated employers who take disciplinary action against whistleblowing employees can also face fines.  In a Maine case, a dentist fired one hygienist and placed another one on administrative leave after they complained that the dentist did not follow required infection prevention protocols.  OSHA required the dentist to pay the whistleblowers $72,000.

Employers who discover fraud committed by employees often blow the whistle on the employees to avoid being implicated in the scheme.  The owners of Kool Smiles Dental in Abilene, Texas learned that one of their dentists had fraudulently billed the government for work he had not performed.  The dentist hoped to earn bonuses by exceeding daily target production goals set by the practice.  His employer cooperated with the government investigation of the fraud.  In February of this year, the dentist received an 18 month prison sentence and must pay $58,000 in restitution to his employer. 

In some instances, colleagues have filed whistleblower charges.  In a North Carolina case, one dentist reported to the Dental Board that her co-worker subjected several of his inmate patients to physical abuse.  She later sued her employer for retaliating against her in connection with her report. 

Laws and ethical codes require many health care professionals to report colleagues who commit fraud or negligence.  For example, the American Dental Association’s Code of Ethics requires dentists to report “instances of gross or continual faulty treatment by other dentists.”  Dentists must also report colleagues who practice while impaired.  Similarly, the American Nurses Association Code of Ethics requires nurses to report “incompetent, unethical, illegal, or impaired practice.”  In addition, state law requires nurses to report “misconduct or incapacity” of a nurse. 

Finally, patients can initiate whistleblower claims.  If the patient discovers fraudulent billing or other illegal practices, he can consult with an attorney specializing in whistleblower litigation.  Although the complaining patient’s damages may be insignificant, the patient’s report may trigger an investigation into whether the defendant treated others in the same manner as it treated the complainant.  As we’ve seen, if the defendant is a national pharmacy chain or large hospital, those penalties can surpass the million dollar mark.

A review of these cases shows that fighting for the government in court can certainly be safer and more profitable than fighting for it on the battlefield.

Fines And The Cost of Health Care

I was sure that the pharmacist had made an error when he charged me over $200 for those few pills. Perhaps he had inadvertently added a zero to the bill. But he double-checked and insisted that the price was accurate.

Wondering how the cost of medicine had gotten so high, I remembered a recent case  involving a particular pharmacy chain. The Drug Enforcement Agency alleges that this company “lost” 37,000 hydrocodone pills. The street value of the pills is $370,000.00. But the lost profits on the drugs are the least of the chain’s worries. It also faces fines of $29 million for violations of federal controlled substance laws. In addition the state Board of Pharmacy is taking action against it. This makes the $169,000 that OSHA wants from the chain for safety hazards in a separate case look like chump change.

This pharmacy chain seems to repeatedly run into problems with governmental agencies. Just last year it paid $11 million in connection with another DEA investigation. In that case, the pharmacy’s employees created fake DEA numbers on dispensing records, filled prescriptions for unlicensed doctors, and improperly labeled medications. In another case, it paid $658,000 for failing to offer patients consultations regarding their medications. The company also saw a $57,305.50 fine for price scanner inaccuracies, a $650,000 fine for dispensing the wrong medications to patients, and a $250,000 fine for selling out-of-date products and violating patient privacy.  OSHA leveled a $40,000 fine against it for lack of an emergency action plan.  One thing this chain certainly needs is an emergency action plan. 

2012 was another landmark year for this company. It paid $77.6 million for failing to monitor sales of pseudoephedrine. In another case, the federal government called two of the company’s Florida pharmacies an “imminent danger” to the public. It banned the stores from selling controlled substances.

In 2010 this company paid $13.75 million to resolve illegal hazardous waste disposal charges. 2009 brought more fines. The company paid $2.5 million in connection with throwing patient records in dumpsters and $2.8 million for making “unsubstantiated” claims regarding a product that allegedly boosted the immune system.

The above fines total almost $139 million. This does not include the costs of attorney fees, investigation expenses, and employees’ lost time. Moreover, I’m sure this is not a complete list of the fines assessed by state and local governments against this pharmacy chain over the past few years.  Also, it doesn't include the thousands of cases filed by state Pharmacy Boards.

The litany of government actions against this one pharmacy chain raises three important questions. First, isn’t the company simply passing these fines on to the consumer by raising the cost of medications? Second, are these fines having any impact on this company? And third, if the fines are not protecting the public and are increasing the cost of health care, should the government consider other options?

I guess I was lucky that the price of the pills was a mere $200.00. If these fines keep on coming, that price will probably soon double.  Like many people, I can no longer afford to get sick.

How To Get Arrested Without Really Trying

A few months ago, a Florida dentist found himself sitting in the back of a police car in handcuffs facing felony charges.  The State accused him of using an unlicensed person to provide dental hygiene services to 71 Medicaid patients.  He could receive 15 years in prison and a fine of $30,000.  His attorney argues that the dentist is innocent because he did not know that his employee was unlicensed.  In North Carolina, he would not get very far with that defense.

In 1998, our state’s Dental Board suspended a dentist’s license because he had hired an unlicensed dentist.  He argued that he reasonably thought the man he had hired was licensed.  He pointed out that no one suffered any harm at the hands of the unlicensed dentist.  Finally, he stated that traditionally, North Carolina law requires intent to violate the law as a condition of imposing criminal sanctions. 

The North Carolina Court of Appeals disagreed.  It held that the Dental Practice Act is designed to protect the public welfare.  It ruled that in such cases, the Board does not need to prove that the defendant intended to violate the law.  It is up to the dentist to verify the licensure status of all employees required by law to be licensed.

Failing to check the licensure status of potential employees, partners, and agents can also trigger civil liability.  A 2008 New York case involved claims against a man who allegedly provided dental care to patients in his wife’s dental office after hours.  The plaintiff claimed that this unlicensed person had permanently damaged his teeth.  He argued that the man had breached his implied contract to properly treat the damaged teeth.  

Had the fake dentist been licensed, he would have been protected by a New York law outlawing breach of contract claims against physicians or dentists unless those claims are based on “a special promise to effect a cure.” Since he was not licensed, the laws designed to protect dentists from such lawsuits did not protect him.

The North Carolina Legislature has enacted similar laws to protect health care providers from lawsuits.  For example, to be enforceable, any doctor’s promise of a cure must be in writing.  Before filing suit against a doctor, the patient must obtain an expert witness who states that the doctor failed to provide appropriate care.  That witness must meet stringent statutory requirements.  Finally, the legislature has limited the amount of damages available in malpractice cases.  If North Carolina follows the rationale of the New York case, those protections may not be available if the provider does not hold a current license.  This could seriously impact the provider’s employer or partners.

Finally, most malpractice policies only insure for actions carried out by licensed providers.  It is entirely possible that an insurer would refuse to pay damages awarded in cases where the provider does not have a current license.

Licensing agencies make it simple and quick for anyone to check the licensure status of a health care provider.  Generally, the information can be checked on-line in a matter of minutes.  It is important to verify licensure prior to hiring a new employee.  As most health care providers must regularly renew their licenses, it is also important for employers to routinely update the licensure status of employees.

While it may seem like a lot of trouble to remember to check licenses of employees, I’m sure the Florida dentist wishes he had taken the time to check out the hygienist before he hired her.  It may be that the dentist will soon have a lot of time on his hands to check things out.