Neil Caesar, J.D.
MANAGED CARE December 1997. ©1997 Stezzi Communications

Neil Caesar, J.D.

This month we conclude our exploration of how you can use attorney-client privilege to protect certain confidential information and documents from scrutiny by the government or private litigants, particularly when conduct governed by federal or state fraud and abuse rules is at issue.

When you discover possible reimbursement or fraud violations, or identify internal problems that may have led to past billing or contracting irregularities, it is essential that you retain the legal latitude to investigate issues, analyze strengths and weaknesses, identify courses of action and engage in any necessary dialogue to do so. Without the protections of the attorney-client privilege, most of this internal analysis and strategic planning can be scrutinized by federal or state investigators or by litigants.

The government now has an unprecedented ability — and willingness — to impose substantial fines and penalties for billing errors, questionable contracting activities and other violations of today's complex maze of fraud-and-abuse and reimbursement rules. Your ability to invoke attorney-client privilege for certain confidential documents can be an important protection as you bring your activities into compliance with the law and watch for potential internal problems without helping government investigators establish their claim against you.

When internal analyses are conducted under the direction of a health lawyer — who may use the services of other professionals qualified to help evaluate claim submissions, billing policies and contracts — most, if not all, of the team's findings can remain confidential. Steps taken to structure and implement a preventive compliance program can be kept confidential as well.

Label, label, label

The attorney-client privilege is fragile. It requires careful monitoring to ensure that crucial elements remain in place. Let's look at a few ways to preserve that privilege.

Our first protection involves labeling. In theory, it makes sense to label all privileged documents and other materials "Confidential Attorney-Client Work Product — Do Not Distribute," or words to that effect. But if documents that can be made privileged are left unlabeled, the fact that some documents include this wording may render the ones without it vulnerable to challenge.

How can this problem be fixed? To avoid inconsistency, should nothing be labeled? In my opinion, no. Most physicians are not used to working within the confines of the attorney-client privilege; labels, if nothing else, can provide them guidance. Unlabeled documents are probably unavoidable. But give extra care to try to apply the label to all privileged documents. A written memorandum reminding key personnel of this is useful.

Mentioning names

A related danger involves titles. It is generally helpful for privileged documents to address key persons by their full names and titles. For example, a document that states that it was prepared for "our counsel, Neil Caesar, in connection with specific legal advice" is less vulnerable to challenge than one that says, "Neil, here is the material you requested." Remember, this material may be sought months or even years later, when fading memories may obscure the identities and roles of those whose names appear in these documents.

Loose lips...

Any project involving regulatory compliance should be combined with the creation of a policy delineating how to respond to government inquiries. This is important to the attorney-client privilege because of "waiver." The attorney-client privilege (like most legal rights) can be waived. Inadvertent waivers often occur when an employee allows government investigators to look at privileged documents. It is essential that nothing be turned over to the government without first being read by a designated officer, so that documents subject to privilege can be removed.

But do not rely too extensively on the privilege. Attorney-client privilege can only be maintained against sustained government challenge with care. Slip-ups occur, despite best efforts. Therefore, keep written communications about sensitive points to a minimum. When written material is necessary, it should be prepared with the idea that it may be read by others. To avoid misinterpretation or unnecessary disclosure, make wording precise. When I provide legal reviews, compliance assessments and suggestions, I try to structure my reports to the client as oral presentations, limiting written materials as much as practical.

Some readers have expressed cynicism about the value of the attorney-client privilege. The government's powers and aggressiveness are so extensive these days, they reason, that the government will obtain anything it wants. Why bother with burdensome or expensive efforts to wage a losing battle against the inevitable?

I agree that the government or a private litigant will challenge a claim of privilege when a particular protected document or other information seems to be important to its case. I also acknowledge that successful application of privilege may anger investigators, creating further tension. But there are many instances where the protection is essential to withhold damaging information.

Trump card

Even when this is not the case, the privilege can be a valuable bargaining chip: something to be conceded to yield a more conciliatory attitude towards settlement. In other words, if the government cannot easily obtain certain documents or other information without your willingness to waive the attorney-client privilege, then you may be able to persuade investigators to conclude their probe as long as the information in the documents does not provide them with new legal ammunition. The attorney-client privilege may also be used as a way to leverage reasonable settlements.

Further, I believe that any effort by a physician or medical practice to communicate carefully — in order to stay within the scope of the privilege — will often result in communication that is more focused, reasoned and productive than if confidentiality were not an issue. In my experience, efforts to stay within the confines of the attorney-client privilege often foster internal action more quickly and less expensively than would otherwise occur. This, too, is an important consideration.

In the end, what matters is the correction of problems, the implementation of systems to avoid future errors, and an attorney's written confirmation that a provider has established carefully planned, effective procedures. This "stamp of approval" will be valuable when responding to any further government inquiries that may occur.

Neil Caesar is president of The Health Law Center (Neil B. Caesar Law Associates, PA), a national health law consulting practice in Greenville, S.C.

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