Medicare's 'Never Events' Should Never Be Mentioned in Court

In 2002, Medicare started using the concept of the “never event” ' events that occur in a medical facility that are considered preventable and of concern to the public. As the idea evolved and expanded, Medicare decided that it would not pay for care and treatment related to never events. The concept has since found its way into the Affordable Care Act and related legislation.

Now, medical malpractice practitioners are questioning whether the presence or absence of never events, and their related payment issues, is admissible into evidence at trial. What is the current state of the law, and what issues can we anticipate will come up in the future?

The 'Never Event' Idea

The concept of a never event was first implemented in 2002 following a study conducted by the National Quality Forum (NQF), a national patient advocacy group. The study originally identified 27 serious reportable events in health care that it characterized as preventable and of concern to the public and health-care providers. Never events include medical errors like wrong-site surgery and the development of stage III or IV decubitus ulcers during a hospital admission. (For a full list, see http://tinyurl.com/25t2ts7.) The NQF definition of never events has expanded over time and now includes adverse events that are: 1) unambiguous (clearly identifiable and measurable); 2) serious (resulting in death or significant disability); and 3) usually preventable. Currently, there are 29 never events, which are divided into seven categories: 1) surgical; 2) product or device; 3) patient protection; 4) care management; 5) environmental; 6) radiologic; and 7) criminal.

Following the publication of the NQF study, the Centers for Medicare and Medicaid Services (CMS) created its own list of hospital-acquired conditions it characterized as “never events.” This list mirrors many of the conditions originally identified by NQF. CMS deemed these never events to be reasonably preventable, and determined that when hospitals and staff engaged in good medical practice, these events should normally never occur. Rowland, Hudson T. (2009): “When Never Happens: Implications of Medicare's Never-Event Policy,” Marquette Elder's Advisor: Vol. 10: Iss. 2, Article 7. Available at http://tinyurl.com/l9a3b55.

CMS's increased focus on promoting quality health care set the stage for a new policy of declining to reimburse facilities upon the occurrence of certain never events. In 2008, Congress directed that the Medicare program would no longer pay for additional costs associated with preventable errors, including eight non-reimbursable never events. Since 2008, CMS has doubled this number of non-reimbursable events. See http://tinyurl.com/ln3qy9d.

Litigation Impact: The Standard of Proof

The government's aim in limiting reimbursement payments for health care related to treating and remedying the effects of never events was to improve the quality of American health care. However, the non-reimbursement policy has produced some unintended, and potentially far-reaching, implications for health care-related litigation. A primary concern is that Medicare's reimbursement guidelines have created a new standard of care and proof of liability for malpractice against a facility.

In traditional medical malpractice cases, liability requires a finding of negligence; i.e., by showing proof of a duty, breach of that duty, causation and damages. However, under the prohibition by Medicare against paying for never events, there is a palpable danger that evidence of Medicare's refusal to reimburse for certain health-care results will be used in court to show that a medical provider was negligent. Moreover, the strong language in the definitions of never events could turn the traditional negligence standard into a strict liability standard.”'

Consider the example of a Medicare patient who develops a decubitus ulcer while in a nursing home following surgery. Under traditional malpractice standards, the patient must prove that she developed the decubitus ulcer as a result of a deviation from the applicable standard of care. In general, res ipsa locquitor (the presumption of liability if the defendant exercised complete control over the care situation and the injury is one that usually does not occur absent negligence) does not apply in malpractice or health-care negligence cases; instead, recovery is based on affirmative proof of negligence.'

By comparison, under the never events paradigm, a patient may claim that Medicare's refusal to reimburse the facility for the decubitus ulcer care is proof of the facility's negligence. Under this scenario, the patient would conceivably circumvent the need to prove the applicable standard of care with expert witness testimony or a deviation from that standard of care. As a result, the reimbursement guidelines become a de facto strict liability standard, greatly reducing the patient's burden of proof at trial.'

One State Imposes Limits

While the intended result of the directive not to pay for never event consequences was obviously geared at encouraging medical providers to improve patient care by reducing the occurrence of events deemed preventable, the use and admissibility of references to never events in court was less clear, and raised concern among many. In response to this unknown, the State of Georgia recently enacted a statute that purports to limit and potentially prevent reliance on the never event categorization at trial. It appears that Georgia is the first state to enact such a statute, although similar legislation has been considered in other states.'

According to the preamble to the Georgia act, the purpose of the statute is “to provide that payor guidelines and criteria under federal law shall not establish a legal basis for negligence or a standard of care for medical malpractice or product liability[.]” The statute, O.C.G.A. ' 51-1-52, provides in pertinent part that “ [t]he development, recognition, or implementation of any guideline to any public or private payor or the establishment of any payment standard or reimbursement criteria under any federal laws or regulations related to health care shall not be construed, without competent expert testimony establishing the appropriate standard of care, to establish a legal basis for negligence or the standard of care or duty of care owed by a health-care provider to a patient in any civil action for medical malpractice or product liability.” The statute goes on to state, “Nor shall compliance with such a guidance, standard, or criteria establish a health care provider's compliance with the standard of care or duty of care owed by a health care provider ' without competent expert testimony establishing the appropriate standard of care.””

The Georgia statute confirms that expert witness testimony will continue to be required in order to establish a violation of the standard of care, thereby alleviating the concern that a negligence per se or strict liability concept will develop based solely on the occurrence of a never event. However, the statute does not, on its face, prohibit evidence regarding Medicare classification of never events, nor does it ensure that the standard of care for medical providers will remain constant as treatment protocols change as a result of the never events policy. Under the Georgia statute, this evidence can still potentially be mentioned at trial in support of a negligence claim ' which may be quite damaging to the defense in a medical malpractice case. Additionally, experts can still opine as to the standard of care, which may mirror the Medicare never events policies.'

Consider our hypothetical decubitus ulcer patient. If this plaintiff retains an expert who opines that the development of decubitus ulcers violates the standard of care, the plaintiff's expert could also arguably mention and discuss that Medicare has classified decubitus ulcers as a never event.

The Defense Counters

The defense has tools at its disposal to counter proffered evidence of never events policies. For example, in Georgia, the collateral source rule prohibits the parties from introducing evidence that a third party paid for the expenses incurred due to an injury. Georgia courts have routinely employed the collateral source rule to excluded evidence of Medicare payments. But for an expert to explain what a never event is would require a discussion of third-party reimbursement schemes and how they work, thus opening the door to a discussion of insurance. In Georgia, the mention of insurance coverage for either party at trial typically results in a mistrial; thus, it remains to be seen whether claimants are willing to risk a mistrial just to put in some evidence of a never event.'

Defendants may also argue that evidence that an occurrence was a never event or non-reimbursable due to a policy is prejudicial, and amounts to unfair opinion bolstering ' and possibly even peer review. Since the intent of the never events policy is to improve the quality of care, not to determine fault of individual providers, evidence that Medicare has classified something as a never event is arguably irrelevant to proving negligence. Any low probative value is likely outweighed by the potential prejudicial effect because the policy is derived from the study of large numbers of patients over years at many different institutions, as opposed to the care provided to a particular patient under specific circumstance. If this type of discussion is allowed at trial, it opens the door to a discussion of policy considerations, which is not what medical malpractice trials are supposed to be.

Conclusion

The ultimate impact of classifications of certain health care outcomes as never events on medical malpractice litigation remains somewhat unclear. We can expect that there will be additional legislation on this topic in the days ahead. In the meantime, medical malpractice practitioners will have to tune up their motions in limine and response briefs to address this interesting and evolving issue.

Kim M. Ruder is Of Counsel with Carlock, Copeland & Stair, LLP, in Atlanta. Her practice is focused primarily on medical malpractice, general liability, premises liability and trucking and transportation. Andrew W. Countryman is an associate in the firm, who focuses his practice on general liability, health care and professional liability defense. Alexandra Saber is a 3L at the University of South Carolina School of Law, where she serves as Assistant Editor in Chief of the South Carolina Law Review, Volume 65.

In 2002, Medicare started using the concept of the “never event” ' events that occur in a medical facility that are considered preventable and of concern to the public. As the idea evolved and expanded, Medicare decided that it would not pay for care and treatment related to never events. The concept has since found its way into the Affordable Care Act and related legislation.

Now, medical malpractice practitioners are questioning whether the presence or absence of never events, and their related payment issues, is admissible into evidence at trial. What is the current state of the law, and what issues can we anticipate will come up in the future?

The 'Never Event' Idea

The concept of a never event was first implemented in 2002 following a study conducted by the National Quality Forum (NQF), a national patient advocacy group. The study originally identified 27 serious reportable events in health care that it characterized as preventable and of concern to the public and health-care providers. Never events include medical errors like wrong-site surgery and the development of stage III or IV decubitus ulcers during a hospital admission. (For a full list, see http://tinyurl.com/25t2ts7.) The NQF definition of never events has expanded over time and now includes adverse events that are: 1) unambiguous (clearly identifiable and measurable); 2) serious (resulting in death or significant disability); and 3) usually preventable. Currently, there are 29 never events, which are divided into seven categories: 1) surgical; 2) product or device; 3) patient protection; 4) care management; 5) environmental; 6) radiologic; and 7) criminal.

Following the publication of the NQF study, the Centers for Medicare and Medicaid Services (CMS) created its own list of hospital-acquired conditions it characterized as “never events.” This list mirrors many of the conditions originally identified by NQF. CMS deemed these never events to be reasonably preventable, and determined that when hospitals and staff engaged in good medical practice, these events should normally never occur. Rowland, Hudson T. (2009): “When Never Happens: Implications of Medicare's Never-Event Policy,” Marquette Elder's Advisor: Vol. 10: Iss. 2, Article 7. Available at http://tinyurl.com/l9a3b55.

CMS's increased focus on promoting quality health care set the stage for a new policy of declining to reimburse facilities upon the occurrence of certain never events. In 2008, Congress directed that the Medicare program would no longer pay for additional costs associated with preventable errors, including eight non-reimbursable never events. Since 2008, CMS has doubled this number of non-reimbursable events. See http://tinyurl.com/ln3qy9d.

Litigation Impact: The Standard of Proof

The government's aim in limiting reimbursement payments for health care related to treating and remedying the effects of never events was to improve the quality of American health care. However, the non-reimbursement policy has produced some unintended, and potentially far-reaching, implications for health care-related litigation. A primary concern is that Medicare's reimbursement guidelines have created a new standard of care and proof of liability for malpractice against a facility.

In traditional medical malpractice cases, liability requires a finding of negligence; i.e., by showing proof of a duty, breach of that duty, causation and damages. However, under the prohibition by Medicare against paying for never events, there is a palpable danger that evidence of Medicare's refusal to reimburse for certain health-care results will be used in court to show that a medical provider was negligent. Moreover, the strong language in the definitions of never events could turn the traditional negligence standard into a strict liability standard.”'

Consider the example of a Medicare patient who develops a decubitus ulcer while in a nursing home following surgery. Under traditional malpractice standards, the patient must prove that she developed the decubitus ulcer as a result of a deviation from the applicable standard of care. In general, res ipsa locquitor (the presumption of liability if the defendant exercised complete control over the care situation and the injury is one that usually does not occur absent negligence) does not apply in malpractice or health-care negligence cases; instead, recovery is based on affirmative proof of negligence.'

By comparison, under the never events paradigm, a patient may claim that Medicare's refusal to reimburse the facility for the decubitus ulcer care is proof of the facility's negligence. Under this scenario, the patient would conceivably circumvent the need to prove the applicable standard of care with expert witness testimony or a deviation from that standard of care. As a result, the reimbursement guidelines become a de facto strict liability standard, greatly reducing the patient's burden of proof at trial.'

One State Imposes Limits

While the intended result of the directive not to pay for never event consequences was obviously geared at encouraging medical providers to improve patient care by reducing the occurrence of events deemed preventable, the use and admissibility of references to never events in court was less clear, and raised concern among many. In response to this unknown, the State of Georgia recently enacted a statute that purports to limit and potentially prevent reliance on the never event categorization at trial. It appears that Georgia is the first state to enact such a statute, although similar legislation has been considered in other states.'

According to the preamble to the Georgia act, the purpose of the statute is “to provide that payor guidelines and criteria under federal law shall not establish a legal basis for negligence or a standard of care for medical malpractice or product liability[.]” The statute, O.C.G.A. ' 51-1-52, provides in pertinent part that “ [t]he development, recognition, or implementation of any guideline to any public or private payor or the establishment of any payment standard or reimbursement criteria under any federal laws or regulations related to health care shall not be construed, without competent expert testimony establishing the appropriate standard of care, to establish a legal basis for negligence or the standard of care or duty of care owed by a health-care provider to a patient in any civil action for medical malpractice or product liability.” The statute goes on to state, “Nor shall compliance with such a guidance, standard, or criteria establish a health care provider's compliance with the standard of care or duty of care owed by a health care provider ' without competent expert testimony establishing the appropriate standard of care.””

The Georgia statute confirms that expert witness testimony will continue to be required in order to establish a violation of the standard of care, thereby alleviating the concern that a negligence per se or strict liability concept will develop based solely on the occurrence of a never event. However, the statute does not, on its face, prohibit evidence regarding Medicare classification of never events, nor does it ensure that the standard of care for medical providers will remain constant as treatment protocols change as a result of the never events policy. Under the Georgia statute, this evidence can still potentially be mentioned at trial in support of a negligence claim ' which may be quite damaging to the defense in a medical malpractice case. Additionally, experts can still opine as to the standard of care, which may mirror the Medicare never events policies.'

Consider our hypothetical decubitus ulcer patient. If this plaintiff retains an expert who opines that the development of decubitus ulcers violates the standard of care, the plaintiff's expert could also arguably mention and discuss that Medicare has classified decubitus ulcers as a never event.

The Defense Counters

The defense has tools at its disposal to counter proffered evidence of never events policies. For example, in Georgia, the collateral source rule prohibits the parties from introducing evidence that a third party paid for the expenses incurred due to an injury. Georgia courts have routinely employed the collateral source rule to excluded evidence of Medicare payments. But for an expert to explain what a never event is would require a discussion of third-party reimbursement schemes and how they work, thus opening the door to a discussion of insurance. In Georgia, the mention of insurance coverage for either party at trial typically results in a mistrial; thus, it remains to be seen whether claimants are willing to risk a mistrial just to put in some evidence of a never event.'

Defendants may also argue that evidence that an occurrence was a never event or non-reimbursable due to a policy is prejudicial, and amounts to unfair opinion bolstering ' and possibly even peer review. Since the intent of the never events policy is to improve the quality of care, not to determine fault of individual providers, evidence that Medicare has classified something as a never event is arguably irrelevant to proving negligence. Any low probative value is likely outweighed by the potential prejudicial effect because the policy is derived from the study of large numbers of patients over years at many different institutions, as opposed to the care provided to a particular patient under specific circumstance. If this type of discussion is allowed at trial, it opens the door to a discussion of policy considerations, which is not what medical malpractice trials are supposed to be.

Conclusion

The ultimate impact of classifications of certain health care outcomes as never events on medical malpractice litigation remains somewhat unclear. We can expect that there will be additional legislation on this topic in the days ahead. In the meantime, medical malpractice practitioners will have to tune up their motions in limine and response briefs to address this interesting and evolving issue.

Kim M. Ruder is Of Counsel with Carlock, Copeland & Stair, LLP, in Atlanta. Her practice is focused primarily on medical malpractice, general liability, premises liability and trucking and transportation. Andrew W. Countryman is an associate in the firm, who focuses his practice on general liability, health care and professional liability defense. Alexandra Saber is a 3L at the University of South Carolina School of Law, where she serves as Assistant Editor in Chief of the South Carolina Law Review, Volume 65.