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Legal Services

by Richard D. Weber, J.D.
MDA Legal Counsel
Published in the November 1993 issue of the Journal

Question: I have heard that an Appellate Court has sided with the American Dental Association in a favorable ruling regarding Data Bank reporting. Can you explain that case?

Answer: The U.S. Court of Appeals for the District of Columbia reversed a district court decision and unanimously held that the Health and Human Services (HHS) regulation requiring each "person or entity" to report to the Data Bank any malpractice payment violates the clear language of the act so far as it requires individual practitioners to report. The Court held that the act limits reporting of malpractice payments to each "entity", and Congress did not include individuals in the definition of "entity". Prior to this decision, any physician or dentist who paid any money pursuant to a written complaint based upon quality of care would be required to report to the Data Bank or risk a $10,000 fine for each incident.

Question: Will there be an appeal?

Answer: Since the decision of the Court of Appeals was unanimous, it is not likely that HHS will appeal to the Supreme Court. Nevertheless, it is a possibility. It is more likely that HHS will ask Congress to include individual reporting in a statutory amendment, for the reason that the court decision eliminates reporting of large malpractice payments if make directly by a self-insured doctor.

Question: How will this decision affect Michigan dentists?

Answer: Any payment of money pursuant to a written complaint based upon a quality of care issue is no longer required to be reported to the Data Bank if the payment is made directly by the individual dentists. This includes minor out-of-settlements, with patients or insurance companies, in addition to major malpractice case settlements.

Question: How will this affect the MDA?

Answer: It will eliminate the need for an escrow account to handle payments by MDA members through peer review/dental care decisions, so long as the payment is made directly by the individual dentists. Because of the possibility of an appeal to the U.S. Supreme Court, however, the MDA will continue its escrow account arrangement until advice to revise the system is received from the ADA

Question: What if a payment is made by my professional corporation or a clinic where I work, either as an employee or independent contractor?

Answer: Reporting would be required, for the reason that a professional corporation or clinic would be deemed to be an "entity" under statute, just as a malpractice insurance company that paid on a malpractice claim would be required to report an "entity". This means that any exchange of funds by a dentist, either as a result of peer review, malpractice litigation or otherwise, should be made directly by the dentist and not a professional corporation, partnership, limited liability company, clinic or any other separate legal entity.

Question: Has the Clinton health care reform proposal included any recommendations regarding the Data Bank?

Answer: Yes. Unfortunately, the proposal mandates HHS to establish rules for public access to information regarding providers who incur repeated malpractice judgments and settlements. Public access to Data Bank information has always been a major concern of health care professionals, and it appears that the president's proposal is headed in that direction. This makes the Court's decision even more significant in that it will avoid reporting requirements for minor out-of-court settlements such as peer review payments.


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