The Attorney-Client Privilege: What It Does and Doesn't Cover
Neil Caesar, J.D.
Neil Caesar, J.D.
Our last two columns discussed ways physicians may share information among themselves and with purchasers without running afoul of antitrust law and other legal rules. This month we explore how to keep shared information confidential.
The attorney-client privilege protects certain communications between an attorney and his or her clients. When it is in place, no one can be compelled to testify about what was discussed between the lawyer and the client, even when potential violations of various laws were discussed.
A pair of scenarios
Without this protection, dangers frequently arise. To illustrate this, let's compare two scenarios. First, let's say a number of physicians meet to structure a mutually acceptable alliance. In the course of their discussion, one suggests that loyalty among them could be encouraged by promising to pay to a referring network physician five percent of revenues generated from referred patients. The others think this is an interesting idea, worth considering. The physicians also discuss their interest in establishing a unified fee schedule to present to HMOs. They set a tentative time frame for sharing their fee information and for coming up with a common fee schedule.
Sensitive to legal concerns, the group next discusses these issues with a competent health care lawyer, who promptly alerts them that their five-percent referral fee idea would violate the federal fraud-and-abuse laws. Also, he warns them that their method for developing a common fee schedule would create serious price-fixing concerns under antitrust law. The attorney works with the physicians to accomplish their goals more prudently, and some time later the physicians implement their network.
Six months later, a managed care organization becomes frustrated with its inability to negotiate as aggressive a contract with the network physicians as it previously negotiated when dealing with the physicians individually. The plan concludes that the physicians have banded together to collaborate on pricing in a way that creates antitrust violations, and files suit under antitrust laws. In the course of discovery, the managed care organization asks for all information regarding discussions among the physicians about price collaboration. The physicians do not want to disclose their initial, misguided plan to develop a common fee schedule based on shared fee information, so they cite attorney-client privilege to protect that information.
They lose. No privilege was in place at the time that information was shared. Subsequent discussions with the attorney do not retroactively create a protected relationship.
Bloodied but not beaten, the physicians then argue that their early, misguided discussion about price fixing must be viewed in context of their later discussions with their attorney. They recapitulate all their attorney's reasons why their new plan would pass price-fixing scrutiny. "Aha!" replies the plan's representative. "Now would you please share with us all details of your discussions with your attorney?"
"Of course not," reply the physicians. "Here, at least, we are sure we are protected by the attorney-client privilege."
They probably lose again, at least in Ohio. According to a March 14, 1996, decision by the U.S. Court of Appeals for the Sixth Circuit, the U.S. District Court for the Northern District of Ohio was correct when it held that an attorney who advised a laboratory's president on a marketing plan to secure business from nursing homes was required to testify before a grand jury about some of her legal advice. The court held that the lab waived its attorney-client privilege by revealing the substance of the attorney's advice and by telling government investigators the attorney had no problem with key elements of the plan.
The court also held that, by waiving their privilege with respect to specific elements of the marketing plan, the president waived the attorney-client privilege with respect to the attorney's advice on the entire marketing plan, even though the lab disclosed nothing to the government about the legal advice on the plan's remaining elements. The court of appeals reversed this part of the district court ruling, but agreed with the district court that the remaining legal advice would need to be disclosed to the extent that it involved the same subject matter as those specific points of the plan for which the laboratory waived the attorney-client protection because of its discussion with the government. The court noted that the president did not merely assert that the lab's attorney had looked into the matter, but described the specific programs in detail and revealed the attorney's legal conclusions and the facts on which those conclusions were based. Thus, the court concluded, the president waived the privilege because he disclosed once-privileged information to third parties.
Let's compare this sorry state of affairs with a new scenario. Here, the physicians establish a relationship with competent health care counsel before they have their first detailed session. The attorney counsels them to treat the meeting as an idea-generating discussion for the purpose of organizing their thoughts for review and advice by the attorney. The physicians come up with the same ideas at their meeting as in the first example. They write down these ideas in their minutes from the meeting, and note at the top of this document that they prepared it at the request of the attorney, for delivery to the attorney.
The attorney gives the same advice as in the prior example. The physicians set up the same network. The managed care organization has the same frustrations, and files suit against the network, as before. The physicians again cite the attorney-client privilege.
A different result
This time, they probably prevail. When the government later asks whether there was ever discussion about paying referral fees, the physicians again cite the privilege. Again, they probably prevail. Also this time, when the doctors cite the fact of their attorney's review and advice, they do not go into detail about the information they presented to the attorney and the attorney's advice in response. Again, this time, the attorney-client privilege is probably preserved — even in Ohio.
The appropriate scope of the attorney-client privilege is a confused and confusing area of the law. But it is crucial to remember that inappropriate comments or illegal offers or solicitations for referrals can return to haunt you. Your use of a competent health care lawyer only protects your more sensitive information when the information is developed and shared after careful coordination with the lawyer.
Neil B. Caesar is president of The Health Law Center (Neil B. Caesar Law Associates, PA), a national health law/consulting practice in Greenville, S.C.