Protecting Your Reputation in the New Year: a Healthcare Provider’s Guide to choosing Counsel.

Protecting Your Reputation in the New Year: a Healthcare Provider’s Guide to choosing Counsel.

By M. Dylan McClelland*

Perhaps you are an Out of Network physician, maybe a surgeon? Or you run a surgery center or hospital. Odds are that you refer your patients to and advise them to seek out not only the most knowledgeable and talented professionals, but also those with the best reputations? In healthcare, specialty knowledge and capabilities reign supreme. No one refers a patient with a terminal brain tumor to a family physician, no matter who talented the family physician. But even more so, no sensible provider refers a patient to a surgeon known for operating while intoxicated, or a facility known for rampant MRSA infections. How many top-flight, “star” physicians choose to work at such locations or with such notorious professionals? Now at the dawn of a new year full of possibilities, it’s time for healthcare providers to ask “do I choose my lawyer with the same degree of care and responsibility as I do my patients’ referrals?”

This article hopes to guide providers in choosing appropriate counsel. But your first question may be “Why should I care; aren’t all lawyers bottom-feeding scum of the same ilk?” Yes, we are.:) But we are not all of the same skill and reputation. The Untied States government concluded 2015 with several notable healthcare fraud cases, criminally charging providers with healthcare fraud. See e.g.; or The stakes have never been higher for providers in America.

Unfortunately, unlike medicine where board certification can attest to a provider’s specialization and at least competency, the number of “healthcare” lawyers in the United States probably exceeds the number of providers, particularly in the years since the passage of the Affordable Care Act. Not all are built the same; not all provide their clients with the conscientiousness required. Beyond the customary questions concerning experience and results, here are some helpful questions to ask in choosing your healthcare counsel.

  1. Do you want to be my lawyer? Lawyers in private practice run businesses, subject to the same incentives and detriments as any other. Most lawyers take cases to pay the bills without reference to the underlying relationship. “Yes, I’ll represent you,” is not the same as “I’d like to be your lawyer.” Ideally, you want an attorney with the neutral dispassion to advise you well, but who is invested in your relationship. A lawyer who sees your issues as an ongoing relationship is your best asset – unlikely to overbill, unlikely to recommend actions not in your best interests.   Key Question – Can I have your cell phone number? No client calls his/her lawyer to speak to the receptionist. In a busy world, you will likely call your lawyer only when you need him or her. Will you reach your lawyer, his receptionist, his associate or paralegal, or his voicemail, when you need him? If you ever take call at night or on weekends, shouldn’t you have a lawyer who will do the same?
  2. What is your strategy concerning litigation? In many cases, particularly reimbursement suits over claims by Out Of Network providers, a providers’ bills, charting and coding procedures, and contracts are at issue. You may wish to keep these documents confidential, but by litigating your claim, you place them at issue. Will your lawyer play games in discovery to avoid producing these things? If the answer is yes, hit the brakes and think. Many providers are surprised when they begin to litigate a reimbursement claim and the payer countersues for overpayment or fraud. If you retain a lawyer with a history of playing these games, trying to conceal the un-concealable, you should expect to raise the suspicion of the payer. If you are one of the 99% of providers who participate in the Medicare or Medicaid programs, the payer is often using federal dollars and, hence, you raise the specter of False Claims Act violations. Too many lawyers use these “tough guy tactics” to convince providers to hire them. But are you really wiling to put your own criminal and civil liability at issue to service your lawyer’s ego or marketing plan? Moreover, do you want the reputation of using a lawyer known for assisting the cheats in the system?
  1. Alternative billing arrangements. Every lawyer on Earth is willing to take every case on an hourly basis. But is your lawyer willing to, in the appropriate cases, consider alternative arrangements? For example, will the lawyer do a reimbursement case on a contingency basis, or on an hourly plus bonus fee structure? Note this goes back to the first question you should ask, is the lawyer building a relationship with you. You are willing to bet your practice on your services and fees, is your counsel willing to similarly trust you?
  2. ERISA.  An increasing amount of healthcare coverage is insured through employer health plans. This typically triggers the federal ERISA law. ERISA litigation is similar to many reimbursement cases, but contains landmines for the unfamiliar practitioner. Particularly in the areas of administrative appeals and exhaustion of remedies, assignability of claims, and preemption, ERISA can be a tough hurdle to climb. Ask your lawyer about his experience in ERISA. A healthcare lawyer with insufficient ERSA experience should not be ruled out for all purposes, but it’s not where you send your ERISA claims.
  3. False assurances of compliance. Beware the attorney who tells you they can make your practice 100% compliant. Such a claim is made by a salesman hustling your business, a fool, or both. Healthcare is probably the most regulated industry in the country. HIPAA, ERISA, ACA, ERISA, FCA. These are just a few of the federal laws governing healthcare.   Add in state managed care and provider licensing laws to name but two and state and federal regulations, you have millions of pages of mandates, restrictions and pre-conditions. No lawyer, including one specializing in healthcare law, can know all of them with sufficient expertise. The treatises summarizing just one of these bodies of laws arte often so long as to be unreadable.   The only 100% compliant healthcare entity is one that’s out of business or soon to be. What you should be looking for is a healthcare lawyer who will keep you from stepping on the most common and largest landmines, and who can mitigate the impact of the occasional misstep.

2016 is a new year, a perfect time for new choices. Your reputation is the only thing you own which, once given away, cannot be reclaimed. As a provider, you have earned a skill deserving of respect and fairness. Make sure your counsel is equally committed to ensuring your integrity.


* M. Dylan McClelland is the President of McClelland Advocacy, a Sacramento-based law firm with expertise in healthcare litigation public policy and Constitutional litigation and challenges to state and local government actions. He regularly represents healthcare providers, managed care groups, and physicians and facilities including hospitals and Ambulatory Surgery Centers.



The American people and the States control the ACA’s future, not a repeal vote: the law as passed can be gutted, avoided, and hog-tied.

The Affordable Care Act from inception to today has been marked by controversy and, for conservatives and the law’s objectors, a tumultuous debate over whether Obamacare can be repealed, repaired, or replaced. The 2014 midterm results reignited the debate as many saw a repeal vote as now achievable. Attempting to repeal the ACA and replace it with something better is a healthy debate Congress and the nation ought to have.   Yet the near inevitability of a presidential veto makes the exercise a healthy political action, but one unlikely to help the nation. Fortunately, regardless of the laws demise, there exists a blueprint to mitigate its damage. What follows are strategies which lie not within Washington DC’s tortured, ineffective landscape, but in our homes, small businesses and state capitols.

As some of you may have heard, the ACA, the one passed into law; not the one existing after numerous administrative and executive delays and rewrites, imposes two mandates: the first on all individuals, the second on employers of more than 50 employees. The mandate requires all persons to have minimal health coverage, a requirement satisfied by purchasing a health plan which meets the Essential Health Benefits’ (“EHB”) requirements established under the law, or by meeting an exception such as being incarcerated, or having coverage through an employer plan.

Small businesses may establish ERISA plans.


The federal Employee Retirement Income Security Act provides for and extensively regulates employer-sponsored benefits plans such as 401ks and employer health and welfare plans. Large employers with thousands of employees have long used ERISA plans to manage healthcare costs. But ERISA does not require a large employer. Rather, the law applies to any employee benefits plan set up, managed, and funded at least in part by the employer. Notably, ERISA plans are not synonymous with insurance, a distinction Congress apparently missed. The Administration has issued Regulations to define the employer-sponsored plan exception to the mandate to include only those ERISA plans which are insurance, however, the propriety of those Regulations in light of the statute’s text is highly questionable, and maybe more so after the Supreme Court rules on King v. Burwell.  Because employer plans are an exception to the ACA mandates, i.e., they exist outside it, the more Americans covered by ERISA plans, the less saddled with the higher costs and mandates of the ACA.

Bum rush the Exchanges.

A second strategy might be for some or all of the 36 states that did not create a State Exchange to do so, but to use those Exchanges in a better way. Under the ACA, the State Exchanges’ purpose is to provide a marketplace for the sale of federally subsidized policies meeting EHB requirements. It is those EHB requirements which, along with many other things such as the elimination of individual underwriting, which drove the cost of policies through the roof in most states.

But suppose for a moment that officials in those red states that did not set up an exchange now did so, but allowed policies which peopled liked and could afford? Notably, this could include those policies which were cancelled for more than 5 million Americans, and the more slimmed down and less expensive true catastrophic policies for the young and healthy.

Now the Administration or its successor may well maintain that such policies, because they are not do not meet the literal EHB requirements of federal law (both the statute and the Regulations) are ACA non-compliant and, hence, do not meet the mandate nor are subsidy-eligible. However, in light of the Obama administration’s numerous instances of disregard of the law, e.g., delaying the employer mandate, subsidies for the federal exchange, “you can keep your plan,” make such an argument of dubious policy, political and even legal credence.   Further, in light of the 2014 election results, it is arguable whether a subsequent Administration would seek to oppose such state exchange policies. And the Congress could propose legislation amending, not repealing, the ACA to allow such nonconformity policies.

Ultimately, allowing the sale of such policies on the state exchanges would decimate the ACA. The central tenet of the ACA is that everyone is n the same insurance pool with the exact same plan. Allowing large numbers outside the pool through already existing loopholes, as demonstrated above, will undermine the pool causing dramatic premium increases and/or insurer bailouts in the public view. At that point the anti-ACA electorate has real power to push for repeal and replacement, ort simply by voting with their feet and power of the purse, to simply not participate, allowing the ACA to shrivel and wither away.

Direct Primary Care +

Direct Primary Care is a form of healthcare, not insurance, growing rapidly across the nation. DPC involves paying your primary care physician directly and on a monthly or yearly basis instead of fee for service and instead of paying through a health insurance policy. DPC reflects, and remedies what’s wrong with the existing healthcare system – the third party payer system has largely disrupted the normal incentives and detriments in functioning economic system. In other words, the healthcare system we have, both pre and post-ACA, is largely determined by the fact that since the 19320’s most Americans have largely paid for their healthcare with third party insurance, paid for by an employer or the government (e.g., Medicare). Stated differently, the consumer of the healthcare service is not its purchaser. This dislocates the normal economic transaction. Your grocery store provides good products in a clean environment, your cable or internet provider provides reasonably good service, the auto dealer sells cars that work, precisely because if they don’t, you won’t pay for it. The quality and price of goods and services in most economic sectors therefore reflects the highest quality for the lowest price which purchasers will pay. In healthcare however, an insurer is motivated by cost. An insurer contracts with a physician to provide care at the best price for the insurer because the insurer doesn’t really care if you wait an hour in the waiting room for an appointment.

DPC upends that system. Because the patient pays for the care, he or she is motivated to shop for the best care at the lowest price. To obtain their business, the physician is motivated to offer better customer service. By charging anywhere from $49-$139/month DPC physicians eliminate the estimated 40% of overhead spent seeking reimbursement from third parties, which boosts profit margins and permits the physician to see fewer patients, and for longer appointments than he or she otherwise would.   Physicians with DPC practices report high professional satisfaction and higher patient satisfaction exactly because if they do not keep the customer satisfied the patient will go elsewhere.

The ACA explicitly permits the combination of a Direct Primary Care plan with a catastrophic plan to satisfy the EHB requirements and, further, allows the sale of such combined DPC + catastrophic policies on state exchanges. Recent reports from around the nation reflect narrower insurance networks, longer wait times to access care, and increasing physician shortages for both Medicaid and exchange plans. DPC practices, because they are market-responsive, will flourish in such an environment. As more Americans who can afford it do in fact move to DPC practices, the physician and access shortages will be exacerbated. The exchange system and its pools will break because of adverse selection (those who can afford a better system will choose one). Chaos in the ACA system will drive reform much as the perceived and actual detriments of the pre-ACA system drove that issue.

Medicaid expansion

Much has been made about the expansion of Medicaid into the middle class under Obamacare. Many such as Sen. Ted Cruz argue that free government healthcare will guarantee a liberal voting electorate. Fair criticism except for two things. One, coverage is not care. The non-poor who are now covered by Medicaid will encounter difficulties in accessing care, accessing specific providers, and getting care they are used to receiving. Second, not everyone will choose free and low quality over paying for better care. For example, the city of Detroit will give you a house for free. Yet there’s not a line to become a Detroit homeowner. Instead Michigan residents appear to prefer paying for housing in other places. As the economy recovers, with better economic policies hopefully getting more Americans back in the workforce, many in the middle class will reject their experiment with the ACA’s pseudo-single payer experience.

Nothing herein suggests that repeal, or repeal and replace are not important and worthy objectives. Rather, using the above strategies to precipitate the need to repeal and replace the ACA should help narrow the areas actually needing real reform and focus the future on a healthcare system which is patient-driven and responsive to ordinary economic principles.

* M. Dylan McClelland is the President of McClelland Advocacy, a Sacramento-based law firm with expertise in healthcare litigation public policy and Constitutional litigation and challenges to state and local government actions.

Corporate Wellness plan unde rfire from the EEOC

EEOC goes on offense against corporate wellness plans

            The American Bar Journal yesterday noted an interesting new lawsuit brought by the federal government.

The Equal Employment Opportunity Commission filed a lawsuit in United States District Court in Minnesota against Honeywell Corporation alleging that the Corporation’s wellness program violates the Americans with Disabilities Act.

According to several press accounts, the lawsuit seeks an order putting a halt to a biometric testing program that could reveal lifestyle and health issues of employees and their spouses, such as smoking and diabetes, and imposing a financial penalty on those who don’t participate, according to the Associated Press and the Minneapolis Star Tribune.

The lawsuit, while technically probably within the reach of the ADA, marks a significant step by the EEOC, potentially at odds with other federal policy. The Affordable Care Act, also known as Obama Care, places significant emphasis on transitioning health care payments away from paying for the “sick” to “investing in health and prevention.” Corporate wellness programs, smoking cessation, and weight management programs re often widely touted as examples of the transition to preventative care. Indeed, former Obama Chief of Staff Rahm Emanuel and current Mayor of Chicago quickly implemented, shortly after becoming mayor, a wellness program for City employees whereby non-participating employees pay an additional $50/month towards their healthcare.

Since the passage of the ACA, there has been an explosion in the healthcare provider sector, of employer offerings, everything from physician and even non-physician led wellness programs, healthy choices programs, smoking and obesity cessation programs, to onsite clinics. This niche has attracted the attention and investment of the likes of physicians, nutritionists, physical trainers and lifestyle coaches, and insurers such as Aetna and Cigna.

The EEOC’s Honeywell lawsuit may cause a backlash against such providers. However, it may also cause employers to rethink the terms of their ERISA self-funded benefit plans. Whether the EEOC’s interpretation can be reconciled with the ACA remains to be seen, but Honeywell, responding to the lawsuit, noted that its program complied with both HIPAA and the ACA.

California employers may find the issue familiar. Beginning in the late 1990’s, California’s Fair Employment and Housing Commission began enforcing the California Fair Employment and Housing Act’s s disability discrimination provisions against employers using pre-employment physicals.

* McClelland Advocacy is a Sacramento-based law firm with expertise in healthcare litigation and corporate disputes, and in public policy and Constitutional litigation and challenges to state and local government actions.

Round One goes to Sen. Gaines


Round One goes to Sen. Gaines.

Sen. Ted Gaines won the first round in his lawsuit challenging Covered California’s decision to force the cancellations of more than one million Californians healthcare policies. On August 26, 2014, Los Angeles Superior Court Judge James Chalfant denied Covered California’s attempt to transfer the case from Los Angeles to Sacramento. The Court rejected Covered Californian’s motion to change venue on several grounds and authorized the Plaintiffs to begin pre-trial discovery into Covered California’s expenditures.

            In what some termed “the lawsuit he couldn’t win,” Sen. Gaines has performed above expectation in his efforts to protect Californians. Only after the Senator filed suit did the Legislature agree to a Joint Legislative Audit Committee to review Covered Californian’s practices and SB 1446 was introduced and passed to protect small employers from future cancellations. Although SB 1446 marks a positive step forward it doesn’t cover the universe of past or potential future cancellations, making the lawsuit not just a galvanizing force for change, but still necessary.

            The majority of Covered California signups were from LA County, and the impact of cancellations was largest felt in the state’s largest county. Covered California’s cynical attempt to seek a perceived more favorable forum in Sacramento was resoundingly rejected by the Court. Stay tuned for future developments….    


* McClelland Advocacy is a Sacramento-based law firm with expertise in healthcare litigation and corporate disputes, and in public policy and Constitutional litigation and challenges to state and local government actions.                                 







Healthcare Hot List – July 2014



McClelland Advocacy Healthcare Hot List

July 2014

 As the healthcare industry continues to reverberate with change, we take a look at the companies and individuals making waves in the healthcare world, who’s hot and who’s not:[1]


  • Anthem Blue Cross of California: biggest winner in the Covered California open enrollment and recently obtained a highly favorable appellate court ruling regarding UCR reimbursements to non-contracted providers under California’s notoriously uncertain managed car laws.
  • Dr. Samir Qamar – pioneering physician-CEO continues to push his MedLion Direct Primary Care to new heights while founding a new physician led professional association for DPC physicians and co-founding MedWand, a remote diagnostic tool permitting telemedicine physicians to practice with real time data.
  • Sylvia Burwell – confirmed without real controversy, the new Secretary of HHS takes the helm in a challenging time
  • Dr. Kris Held – in a notoriously moribund and conservative profession, the San Antonio physician and Director at American Doctors 4 Truth continues to fight for her profession in a time when physicians cry out for real leadership.  In a leadership vacuum, Held is one to watch.
  • Sutter Health: Hospital arm ranks among the biggest non-profit health systems nationally as it inaugurates its second go round with its own HMO.  Sutter continues to engage everywhere it needs to be despite widespread criticism and settlement of a false claims case by CA’s Insurance Commissioner.
  •  Dr. Michael Patmas: Hard-charging CEO of Rockwood Health System in Spokane continues to be a strong voice for realigning physician payment models and improved patient care.  He and his organization performed brilliantly after a shooting tragedy at a Rockwood facility earlier this month.
  • Venture capital: billions continue to pour into e-health and telemedicine ventures as rumors surface Apple will incorporate e-health into its next iPhone and the iWatch.


  • Cal. Dept of Managed Health Care: Governor Jerry Brown’s Administration continues to demonstrate a deaf ear to healthcare as he appoints a journalist to the #2 slot at the nation’s only HMO regulator, amidst allegations of insufficient networks and rising consumer complaints in the Covered CA marketplace.
  • DaVita Health Care Partners: following a much celebrated merger between outpatient dialysis provider DaVita and Los Angeles’ medical group Health Care Partners once hailed as the next Cleveland Clinic or Mayo, the group withdrew from Medicare’s Pioneer ACO program and HCP founder Bob Margolis’ transitioned out.  The Company’s stock continues to perform well, though Zack’s Investment Research downgraded it to a sell this month,  however, almost no one is referring to the combined venture as the next big thing.
  • ObamaCare: following a brief lift in the polls after open enrollment numbers were released, the controversial law has settled back into a state of perpetual ineffectiveness as HHS admits that it can’t validate a third of enrollees, and CBO declares the law’s budgetary impact can no longer be scored.  As the federal and state exchanges seek to pressure insurers to keep premium increase down while broadening their networks, watch for the bailout.  The only way insurers can broaden networks and limit premium increases will be to access the federal risk corridors, which the Administration quietly increased.


McClelland Advocacy is a Sacramento-based law firm with expertise in healthcare litigation and corporate disputes, and in public policy and Constitutional litigation and challenges to state and local government actions.






[1] The Hot List constitutes the editorial opinion of the author and is not a representation of fact.  The Hot List is not compiled  through any quantifiable metric or survey.

Reigniting Rational Basis Review

Rational Basis Reignited: a roadmap for judicial engagement emerges.


            For years the entrepreneurial community has lamented both judicial activism and over-regulation.  The problem has been particularly acute in states seen as unfriendly to business, for example, CA, IL, NY, NJ.  Caught between a spate of unfriendly laws and an ideological reluctance to pursue judicial remedies, a host of innovators and entrepreneurs languished in the regulatory wasteland.  Recent developments, however, illuminate a path forward.  First, as many scholars have noted, particularly Professor Randy Barnett at Georgetown University Law Center, judicial engagement – attacking unconstitutional laws with the Constitution, is neither activist nor controversial.  Indeed, the progressive Left has and continues to, use the courts to defeat popularly enacted laws.  Two recent decisions, one a prime example of the latter strategy, mark the starting line in the new wave of public policy litigation.


            Bloomington Illinois refused to permit Julie Owen to operate a late night ride service, its City Council concluding the vehicle hiring market was saturated.  Ms. Owen sued, and a State Court agreed the City’s actions were arbitrary and unconstitutional.  (  Particularly, the Court noted “A city cannot enact a law for the sole purpose of protecting a special-interest group from competition.”  Simply, cronyism is not a rational basis for government action.

            In Florida, the State Supreme Court declared the State law capping non-economic damages in medical malpractice cases unconstitutional, but the “why” is infinitely more intriguing than the outcome.  (  The Court based its Equal Protection finding on the state’s failure to demonstrate a rational basis for the law.  Particularly, the Court examined the law’s purported legislative business and concluded that the law [capping damages] had no rational relation to the purported medical malpractice insurance crisis which the law sought to correct.  While this author disagrees with the decision, excessive medical malpractice awards are a factor in physician flight from certain states such as Nevada, and damages caps are a reasonable policy election to combat that effect, the Court’s decision brightly marks a new opportunity for economic. liberty litigation.

            Although the Illinois and Florida cases were based on State constitutions, state courts typically follow the federal courts in interpreting constitutional questions.  For more than half-century, constitutional challenges to economic legislation have been tasked with rational basis review, entitling the legislature to deference in its policymaking.  (See, Williamson v. Lee Optical348 U.S. 483 (1955).  The Florida decision, in particular, opens a new front in the war against the regulatory state.  In other words, many local ordinances and actions, as well as state laws and administrative actions, are the product of special interest lobbying, not rational or prudent legislative deliberation.  If the courts, as demonstrated in IL and FL, are open to constitutional challenges which measure the ends and means of legislation without overarching deference to legislative bodies, then you have a whole new ball game. 

            Consider, for example, state gasoline taxes which do not actually provide revenues for infrastructure improvements, professional licensing laws for a multitude of jobs, environmental and zoning laws which neither produce cleaner environments nor better housing, or FDA regulation of cancer drugs which kills thousands.  Moreover, such litigation evinces its own political accountability.  Legislators who know their laws will be subject to a rigorous ends/means test will be compelled to produce better laws, or forfeit the rewards cronyism currently provides. 

            Particularly, entrepreneurs and innovators trapped in blue-state regulatory schemes should take note.  Revolutionary ideas and business models need no longer fear the bureaucratic leviathan.          

McClelland Advocacy is a Sacramento-based law firm with expertise in public policy and Constitutional litigation and challenges to state and local government actions.