We got good news yesterday in Emergency Physicians Integrated Care v. Salt Lake County, in the form of a decision in our favor from the Utah Supreme Court. You can read the decision here in the website library. You can read the article reporting on the case in today's Salt Lake Tribune here. EPIC is a group of ER doctors. Under the federal Emergency Medical Treatment and Active Labor Act (EMTALA), the ER docs must treat to the point of stabilization anyone who shows up at the emergency department regardless of their capacity, or lack, to pay the bill. Salt Lake County, which has over a million people, sends all prisoners of its jails out to receive emergency medical treatment to local hospitals when the need arises. Unless the prisoner has private insurance or the capacity to pay for the services themselves (neither of which is usually the case), the ER docs then bill the County for their services. Problems arose in about 2001 when the County began telling the ER docs that it would not pay their billed charges but would only reimburse them at the state Medicaid fee schedule rates. Those average between 27% and 36% of the billed charges. The ER docs were not happy. But what could they do? Under EMTALA, they had to treat these inmates. They came to our office for help. We pursued a claim against the County based on quantum meruit, or unjust enrichment. We argued that not only did the individual prisoner receive a benefit which triggered an obligation to pay, but the County received a significant benefit from EPIC's services. By outsourcing emergency medical care to EPIC, it discharged a Constitutional duty to provide medically necessary treatment to inmates and was able to avoid the cost of providing emergency medical care personnel and supporting services at the jail on a full time basis. Since there was no contract between the County and EPIC, we argued that the County was responsible to pay the reasonable value of the services rather than the substantially lower Medicaid rates. The trial court rejected these arguments and we appealed. The Supreme Court reversed the trial court and ruled in our favor. The case now goes back to the trial court to determine what is the reasonable value of the EPIC docs services. One interesting question left: there is case law to suggest the measure of what is the "reasonable value" of EPIC's services is the value of the benefit conferred on the county as opposed to the cost to EPIC of providing the services. What if, as is likely, the cost of duplicating the full range of emergency medical services at the jail, the degree to which the County has been unjustly enriched, is more than the EPIC's billed charges? Could the County be required to pay that larger amount?
Brian: Look at Rev. Rul. 85-1 which states, "Section 1.501(c)(3)-1(d)(2) provides that the term 'charitable', and includes the lessening of the burdens of government." "The criteria set out in Rev. Rul. 85-2 for determining whether an organization's activity are lessening the burdens of government are: first, whether the governmental unit considers the organization's activities to be its burden; and second, whether these activities actually lessen the burdens of the governmental unit." Also, look at the 1993 EO CPE Text, which can be found at http://www.irs.gov/pub/irs-tege/eotopicb93.pdf. One of several interesting excerpts, "In sum, the organization must demonstrate that a governmental unit considers the organization to be acting on the government's behalf, thereby freeing up government assets - human, material, and fiscal - that would otherwise have to be devoted to the particular activity." Don Levit
by Don Levit November 17, 2008 at 01:47 PM
Don, the medicaid payment schedules are set by the states rather than the feds. It is just a quirk of the Utah payment schedules that the medicaid rates for the docs is substantially lower than the rates for the hospitals. I think the rates for Utah hospitals are in the 60% to 80% range, high enough that the hospitals aren't as unhappy about their medicaid reimbursements as the docs are. I'm not familiar with the fed code provision you refer to. But it sounds interesting. Do you have a cite? In light of the fact that the payment schedules are set by the states under their medicaid programs, I don't think it would apply in our case but I'd be interested in looking at it.
by Brian S. King November 17, 2008 at 01:47 PM
Brian: Thanks for posting this case. I had no idea that Medicaid pays hospitals a higher percentage of their charges than it does for physicians. Are the hospital reimbursements still below the hospitals' "costs?" Because the County was obligated to pay, I agree that the EPIC physicians provided a benefit, not only by treating the patients, but by saving on the "outsourcing" to EPIC. Are you familiar with the federal code provision of "lessening the burdens of government"? If so, why was this benefit not proposed, at least in the case as published? Don Levit
by Don Levit November 17, 2008 at 01:47 PM
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