Case Studies

Epstein Becker Green Convinces Plan Review Committee to Overturn Termination of Participating Physician Group Services Agreement

On April 29, 2013, Epstein Becker Green achieved a major victory when the Plan Review Committee of L.A. Care Health Plan ("L.A. Care") found that L.A. Care's termination of the Participating Physician Group Services Agreement ("Agreement") with Epstein Becker Green client Accountable Health Care ("AHC") was procedurally unfair.

L.A. Care terminated the Agreement under a "without cause" provision and did not contend that AHC was in breach of the Agreement. Under Potvin v. Metropolitan Life Ins. Co., 22 Cal.4th 1060 (2000), California provides a common law fair hearing right to health care providers even in the event of a "without cause" termination. Arbitrary decisions and the denial of fair procedure are prohibited by Potvin. Contractual provisions allowing termination "without cause" are unenforceable to the extent that they do not provide fair procedure. Under Potvin, the termination of a provider's agreement must be both substantively rational and procedurally fair.

Epstein Becker Green argued on behalf of AHC that L.A. Care acted contrary to its own Fair Hearing Procedure and the legal principles of Potvin by issuing a notice of termination of the Agreement prior to the fair hearing and a decision by the Plan Review Committee, even though, at the hearing, L.A. Care argued that its decision was based on a cease-and-desist order against AHC that was filed by the California Department of Managed Health Care. Although the Fair Hearing Procedure provides that the hearing process must precede any issuance of a notice of termination under a provider contract, the termination notice and related correspondence made clear that L.A. Care had already reached a decision to terminate the Agreement at the time that the notice was provided to AHC. In addition, the notice failed to include the specific reasons for the termination, a description of any policies and procedures, or any other criteria used in making the determination, as required by the Fair Hearing Procedure.

The Plan Review Committee voted unanimously in finding that the L.A. Care termination notice was procedurally unfair because it was inconsistent with the requirements of the Fair Hearing Procedure and had been issued prior to the completion of the fair hearing process.

The Epstein Becker Green team representing AHC included Los Angeles attorneys David Jacobs, Paul C. Burkholder, and J. Susan Graham.

Epstein Becker Green Successfully Represents Industry in Halting Anticompetitive Regulation Proposals in Texas

Attorneys from the Antitrust Counseling and Defense practice at Epstein Becker Green (“EBG”) recently coordinated with the Federal Trade Commission (“FTC”) to help an industry client block anti-competitive state board regulations.The client,a holding company that operates dental service practices, opposed regulations proposed by the Texas State Board of Dental Examiners that would have restricted dentists’ ability to contract with dental service organizations (“DSOs”) and ultimately hamper business competition.

The Texas board, largely composed of individual practitioners appointed by the governor of Texas, attempted to promulgate several regulations that would have imposed new restrictions on a dentist’s ability to enter into arrangements with DSOs for administrative and non-clinical services. This threat engendered a massive DSO industry response, as the regulatory effort imperiled the operations of scores of interstate businesses. EBG was among a number of law firms, lobbying firms, and public relations firms that were commissioned to thwart the effort.

While the Texas board’s proposals were in contention, the Supreme Court of the United States was hearing arguments in a very similar case brought by the FTC against the North Carolina State Board of Dental Examiners. The FTC alleges that the North Carolina board’s exclusive regulation is an anticompetitive effort that violates federal antitrust laws.

Noting this, the Antitrust Counseling and Defense practice at EBG consulted regularly with North Carolina counsel and the FTC and successfully prompted the FTC to make a submission in the Texas rulemaking proceeding, condemning the proposed regulations there. FTC staff, in response to a notice requesting public comments, urged the Texas board to reject two proposed rules that impose new restrictions on the ability of Texas dentists to enter into contracts with non-dentists, including DSOs, for the provision of nonclinical, administrative services.

The FTC comment, submitted by staff of the FTC’s Office of Policy Planning, Bureau of Competition, and Bureau of Economics, on October 6, 2014, stated that the rules (proposed 22 Tex. Admin. Code § 108.70 and § 108.74) seemed likely to discourage dentists from affiliating with DSOs by mandating that dentists assume responsibility for the types of functions that DSOs typically provide and by expanding the Texas board’s authority to take disciplinary action against dentists who enter into these prohibited agreements. By contrast, under the current regulations, such service agreements for many business functions—such as accounting and bookkeeping—are presumed not to violate the Texas Dental Practice Act. The comment explains that such restrictions may reduce competition, likely resulting in higher prices and reduced access to dental services, especially for underserved populations. The FTC’s comment is part of ongoing efforts to promote competition in the health care sector, which benefits consumers through lower costs, better care, and more innovation. As the FTC stated:

We have consistently maintained that the choice of business model is an important dimension of the competitive process that should not be restricted by regulation or private agreement but based on reliable evidence that regulation is reasonably necessary to achieve an important public purpose.

On November 21, 2014, the Texas board withdrew the regulatory proposals. EBG’s leadership position in this effort ultimately saved the day for its clients and others in the DSO industry.

The EBG team included Stuart M. Gerson and Patricia M. Wagner.

Epstein Becker Green Successfully Represents Children’s National Medical Center in Establishment of Children’s Pediatric Associates, P.C. LLC, and in the Acquisition of Five Pediatric Physician Practices That Became Nucleus of Children’s Pediatric Associates

In February of 1997, Children’s National Medical Center established Children’s Pediatric Associates to house its affiliated community physicians’ initiative. Over a period between February 1998 and July 1999, Children’s Pediatric Associates acquired the following practices: Drs. Smith and Guarinello, P.C.; Drs. Shapiro and Perez, P.A.; Drs. Berkowitz, Feldman, and Burgin, P.A.; Drs. Crawford and Hudson, P.C.; Drs. Feroli, Mella, Pedreira, and Wollschlaeger, P.A.

The Epstein Becker Green team was led by Clifford E. Barnes and included Brian Gradle and Regina MacAdam.

Epstein Becker Green Advises Physician Group on Affiliation with Pediatric Medical Center

Epstein Becker Green (EBG) represented Children’s & Women’s Physicians of Westchester, LLP (“CWPW”), a group of 276 physicians across 57 locations serving families throughout the New York metropolitan area, the Hudson Valley, Connecticut, and New Jersey, in a transaction that made CWPW the newest member of Boston Children’s Hospital integrated network. CWPW will continue providing care to its patients and families. In addition, CWPW’s physicians will remain on the faculty of New York Medical College, continue to staff 10 area neonatal intensive care units, and maintain their current affiliations across the region.

Since April 2014, EBG attorneys have been advising CWPW on the corporate transactional, health regulatory, tax, employment law, and employee benefits aspects of the transaction.

The EBG team included Jeffrey H. Becker, Wendy G. Marcari, and Benjamin M. Zegarelli, as well as Steven A. Ruskin and Christopher M. Locke. Also providing invaluable advice were James P. Flynn, Patricia M. Wagner, Gretchen Harders, Susan Gross Sholinsky, Jeffrey M. Landes, David E. Weiss, Emily E. Bajcsi, Arthur J. Fried, Katherine R. Lofft, Carrie Valiant, and Jason E. Christ.

Epstein Becker Green Advises Health System on Forming First-of-Its-Kind Direct-to-Employer Health Care Network and Alliance in California

Epstein Becker Green provided health care transactional and regulatory advice to MemorialCare Health System (“MemorialCare”) pertaining to structuring and developing a five-year arrangement involving a direct contract to provide medical care to Southern California employees of The Boeing Company (“Boeing”) and their families (approximately 37,000 people). The arrangement has been described as the first such customized health plan option in California between a large employer and a health care provider.

The network with MemorialCare for Boeing’s employees includes 2,400 primary care doctors and specialists, nine hospitals, and 71 community-based ambulatory surgery, medical imaging, urgent care, and dialysis centers, among others. The hospitals involved include MemorialCare’s five hospitals that span parts of Los Angeles and Orange Counties in addition to hospitals, physicians, and other facilities through MemorialCare’s related network contracts with UC Irvine Medical Center, Torrance Memorial Medical Center, PIH Health Hospital-Whittier, PIH Health Hospital-Downey, and PIH Health Physicians.

The arrangement is designed to improve health, enhance patient experience, and make health care more affordable for Boeing and those employees who choose it. Also, the arrangement allows MemorialCare direct access to clinical data to better customize and coordinate employees’ health needs.

The Epstein Becker Green team was led by Paul A. Gomez and included Leonard Lipsky and Patricia M. Wagner.