HEALTH

LAW
REPORT
A Newsletter from the Health Care Law Practice Group SPRING 2005

Editor’s Note… Compliance with HIPAA Security Rule

Once again, HIPAA
takes top billing in
Mandated by April 20th
this issue of our
Health Law Report. BY DOUGLAS S. STANGER
Doug Stanger’s arti- April 20, 2005 is the deadline for compliance with the Security
cle focuses on the Standards promulgated pursuant to the Health Insurance Portability
HIPAA Security Rule and Accountability Act of 1996 (“HIPAA”.) Two years ago, physician
which takes effect practices and other “covered entities” were required to initiate policies
Stephen M. Greenberg on April 20, 2005, and procedures in order to comply with the HIPAA Privacy Rule.
requiring covered entities — including all Compliance focused on the confidentiality of protected health informa-
physician practices — to evaluate their tion (“PHI”.) The final regulations adopting the Security Standards
procedures and take corrective measures (the “Security Rule”) focus on electronic protected health information (“EPHI”.)
where necessary to protect electronic
patient health information. In many The Security Rule requires that all covered entities must:
cases, practices’ information technology 1. Ensure the confidentiality, integrity, and availability of all EPHI the entity
vendors will help in this endeavor, but creates, receives, maintains or transmits.
we stand ready, willing and able to lend
our assistance. 2. Protect against any reasonably anticipated threats or hazards to the security or
integrity of such information.
In addition to the information con-
tained in this issue, practitioners should 3. Protect against any reasonably anticipated uses or disclosures of such information
be aware that the U.S. Department of that are not permitted under the Privacy Rule.
Health and Human Services’ Office of 4. Ensure compliance by all employees.
Inspector (“OIG”) has issued six
Advisory Opinions already this year Compliance with the Security Rule will require a complete analysis of how health care
approving so-called “Gainsharing providers utilize computers. What computer hardware and software is utilized by the practice?
Arrangements” between hospitals and Who has access to computer terminals? What password protections exist? Is there a data
physicians. Under limited circumstances recovery plan in effect? These are just a few of the issues that will require analysis. The final
intended to provide safeguards for Security Rule contains 18 standards with 41 specific implementation specifications under
patient safety, the OIG has blessed the three categories: administrative, physical and technical. The specifications are either
concept of providing financial incentives required or “addressable”. However, addressable does not mean optional. A medical practice
to physicians to help hospitals cut costs. can elect not to comply with an addressable standard only in the event a documented risk
It appears that this will be a very hot area analysis supports the decision.
and will be covered in an expanded arti- While the security standards are comprehensive, they are technologically neutral, meaning
cle in a future Health Law Report. If that the Security Rule does not mandate the use of any particular hardware or software in
you would like additional details about
order to comply. Furthermore, they specifically set forth that entities can take into account
this or any item found in the Health
their size, capabilities, technical infrastructure and even the cost of procedures in developing
Law Report, please do not hesitate to
their policies and procedures. Clearly, smaller practices are not expected to devote the level
contact me or another attorney in our
of resources to security protection that large practices, hospitals and other institutions are
Health Care Practice Group.
expected to apply.
This report is for general use and information, and
the content should not be interpreted as rendering In order to assist our clients in their efforts to comply, Flaster/Greenberg P.C. has
legal advice on any matter. Specific situations may raise developed a Privacy and Security Plan. It provides the necessary checklist and forms to
additional or different issues and such information ensure compliance. To obtain a Privacy and Security Plan, or for further information, please
should be coordinated with professional legal advice.
contact one of the attorneys in our Health Care Practice Group. ◆

Copyright © 2005 Health Law Report • Flaster/Greenberg P.C.

 2

New Jersey Physicians and Podiatrists Should Review

Profiles in Data Bank
ALMA L. SARAVIA arbitration awards and settlements.” Therefore, even if a physician
or podiatrist has no medical malpractice claims, the data bank will
On June 23, 2003, legislation was enacted still contain a statement that “the number of medical malpractice
to create a physician and podiatrist data bank. payments on behalf of this practitioner within the past five years is
According to the Legislature, the data bank below average for this specialty.”
allows consumers to learn more about the
education in New Jersey, experience and The data bank contains a statement that “settlement of a claim
professional-conduct of New Jersey’s physicians. and, in particular, the dollar amount of the settlement may occur
The “New Jersey Health Care Consumer for a variety of reasons, which do not necessarily reflect negatively
Information Act” requires the state Division of Consumer Affairs on the professional competence or conduct of the physician (or
(“Division”) to maintain informational files on all physicians and podiatrist). A payment in settlement of a medical malpractice action
podiatrists licensed by the New Jersey State Board of Medical or claim should not be construed as creating a presumption that
Examiners (“BME”). The licensee’s profiles are posted on the medical malpractice has occurred.” A consumer can click onto the
Internet at www.state.nj.us/lps/ca/ or a consumer may call section to obtain information on the manner in which the medical
1-888-654-2701 toll-free. malpractice information was calculated.

All physicians and podiatrists should access the data bank The law required the Division to provide physicians and
to determine if the information is complete and accurate. The podiatrists with copies of their respective profiles before they were
physician and podiatrist profile includes: publicly released and they had 30 days to fix inaccurate information.
However, now that the actual information has been posted,
• Educational history
licensees should review it to correct or supplement the data.
• Board certification In some instances, the profiles contain a statement that no infor-
• Field of medicine mation was reported and this may result in a misleading impression
• Location of physician’s offices about the licensee’s practice or qualifications. ◆

• Languages spoken other than English

• Health plans
• Hospital privileges
• Criminal convictions
The Institute for Nursing to
• Disciplinary actions imposed by the BME during the last
10 years
Honor Alma L. Saravia
• Restrictions of privileges based on competence by a health Alma L. Saravia, an attorney in the Health Care Law Practice
care facility during the last 10 years at Flaster/Greenberg, has been selected by the Institute for
Nursing to receive one of the Nursing 2005 EPIC Awards. This
• Medical malpractice court judgments and any arbitration
honor is given each year at the request of nurses across New
awards for the last 5 years.
Jersey to a select group of Exceptional People Impacting the
In addition, the new law mandates that all medical malpractice Community (EPIC). The award presentation will take place at
court judgments or arbitration awards, as well as any settlements to the EPIC Luncheon at the Sheraton Hotel, Raritan Center
the complaining party in the past five years, must be reported to Parkway, Edison, New Jersey on Monday, May 16, 2005.
the BME. The medical malpractice section of the data bank
The Institute for Nursing is the foundation of the New Jersey
also includes: the field of medicine; specialty areas; number of
State Nurses Association providing scholarships, continuing
physicians reporting in this specialty; number of physicians in this
education and research to support and enrich nurses in the state.
specialty who made medical malpractice payments within the past
The Institute recognizes exceptional individuals for their
five years; and total number of medical malpractice payments made
contribution to New Jersey communities, the advancement of
by physicians within this specialty within the past five years.
health care and the profession of nursing at its annual event. For
The context in which the payment of the medical malpractice information about this event and the Institute for Nursing, the
claim occurred is identified into three graduated categories of web site address is: www.njsna.org. ◆
“average, above average and below average number of judgments,

Health Law Report • Flaster/Greenberg P.C.

 3

Limited Liability Companies

and Healthcare Practice in
New Jersey
BY MARKLEY S. RODERICK
The limited liability company is in many
respects the perfect entity for doing business—
which is not surprising, given that the New
Jersey Limited Liability Company Act was
enacted with precisely that goal in mind. Now,
more than a decade after enactment of the
statute, it appears that LLCs are about to be
added to the list of accepted practice formats in official New Jersey
Board of Medical Examiners (“BME”) regulations.
New Jersey’s limited liability company statute was adopted in
1994. Three years later, in 1997, the New Jersey Attorney
General’s Office and the BME indicated in writing that the limited
liability company was an acceptable entity through which to
practice medicine. The BME and the Attorney General’s Office
have continued to take that position ever since. Notwithstanding
this clear written advice from the licensing board with jurisdiction,
some insurance carriers, hoping to reap a financial windfall under
the Orthopedic Evaluations rationale, claimed that the LLC
format was improper.
Last August, the BME issued proposed regulations officially
approving the LLC as an acceptable form of medical practice. In
the preamble to the proposed regulations, the BME made very
clear that LLCs were already permitted and that the new regulation
is intended merely to clarify existing law. Be that as it may, the
proposal and anticipated adoption of these regulations (likely to be
this summer) are welcome developments for many healthcare
providers if only because they should finally bring an end to
frivolous claims by insurance carriers. ◆

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HEALTH CARE LAW PRACTICE GROUP

Richard J. Flaster Stephen M. Greenberg
856-661-2260 856-661-2261
[email protected] [email protected]
Kenneth S. Goodkind Markley S. Roderick
856-661-2273 856-661-2265
[email protected] [email protected]
Vincent J. Nolan III Laura B. Wallenstein
856-661-2275 856-661-2263
[email protected] [email protected]
Alma L. Saravia Alan H. Zuckerman
856-661-2290 856-661-2266
[email protected] [email protected]
Thomas D. Scholtes Douglas S. Stanger
856-382-2227 609-645-1881
[email protected] [email protected]

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