Beware — On July 1st, Your Professional License Will Be At Greater Risk!

Posted by Donna Craig in May, 2014

On July 1, 2014 four new laws will go into effect in Michigan that will significantly impact how more than 30 categories of licensed and registered professionals (physicians, acupuncturists, massage therapists, dentists, nurses, social workers, etc.) will be investigated and disciplined under the public health code. Most concerning is that these new provisions may not ensure those professionals’ rights to due process.

What’s Changing?

Under the current process, Michigan Department of Licensing and Regulatory Affairs’ (“LARA”) investigators present their initial findings to the respective board chairs who then decide whether a full investigation should be initiated. Beginning July 1, 2014, a written submission alleging a professional’s violation of the public health code will be received and reviewed by LARA, and if LARA officials determine that there is a reasonable basis for the allegation, the following procedures will apply:

If LARA obtains the authorization of three members of the respective board or task force (one member must be the chair), LARA will be required to move forward and investigate the violation, even if the remaining board or task force members do not believe an investigation is warranted.
If a board or task force fails to respond within seven days to LARA’s request to authorize an investigation, LARA will have full authority to move forward with the investigation.
LARA will also have authority to move forward with an investigation if it believes the public’s safety, health and welfare are in immediate jeopardy, and then subsequently notify the board or task force chair within two business days. The law will not require LARA to get subsequent approval, but it will only be required to notify the chair after the fact. There is no provision for LARA to justify what constitutes “immediate jeopardy” to the safety, health and welfare of the public, or subject LARA’s decisions and actions to a higher review.

In addition to the above, LARA will also have authority to investigate a new allegation if the professional already had one substantiated allegation or two or more written investigated allegations (which may be unsubstantiated) from two or more different individuals or entities within the previous four years. To allow LARA to act when allegations are not substantiated should be a concern of all professionals.

If an allegation is filed more than four years after the date of the incident, LARA may but is not required to conduct an investigation. Again, the decision is within the discretion of LARA, with no oversight or review by any other agency or forum.

LARA also had the authority to review a final decision of a disciplinary subcommittee within 30 days of the decision. If LARA determines the disciplinary subcommittee’s action does not protect the health, safety and welfare of the public, LARA, with only the approval of the board or task force’s chair, may set aside the decision and issue a different final decision.

One of the new laws addresses potential conflicts of interest that participating board and task force members may have with the professional. Under the new provision, if LARA determines a board or task force member is determined to have a “sufficient conflict to raise a reasonable doubt,” any prior vote taken on whether to investigate or discipline a professional must be reconsidered. Because the term “sufficient conflict” is not clearly defined, nor is there any provision in the law to oversee or review LARA’s determination and subsequent recommendation of an investigation or disciplinary action vote, LARA’s unfettered authority raises serious concerns among professionals and attorneys that seek to ensure due process protections of those targeted by investigatory and disciplinary actions.

Under the new conflict of interest laws, it appears that any person can raise a challenge to a disciplinary action within one year after such disciplinary action is taken. A challenge may be based on the failure of a board or disciplinary subcommittee’s member to disclose an interest or an interest may impact an impartial decision. This raises some serious questions. May LARA challenge the disciplinary action up to one year after the disciplinary action is taken? Does this mean that a disciplinary action is not final until one year after it is imposed, thus allowing for a period of challenge by anyone? How would a professional know there was a basis to challenge a disciplinary action, if conflict of interest determinations are made by LARA, and the professional is not aware of who may be partial when deciding a disciplinary action? To discover if a professional has a basis to challenge a disciplinary action would appear to require court intervention to discover interests and possible conflicts of interests held by persons who decided the disciplinary action. To do this would dramatically increase the cost to the professional because the professional would incur court costs and expenses of a litigator to determine if there was a right to challenge the disciplinary action. As with other aspects of these laws, this is just another example of vagueness in the laws. And vagueness in laws means courts need to interpret what the intent of the laws were, requiring professionals to expend more money to defend themselves.

Additional Grounds For Discipline

While clarify existing guidelines for taking action against a professional, the new laws add further triggers for investigations and disciplinary actions:

Any conduct that is sexual or may “reasonably be interpreted” as sexual, such as sexual intercourse, kissing in a sexual manner, or touching of a body part for any purpose other than appropriate examination, treatment or comfort, even if the patient consents to the conduct or initiates the conduct, if done so while acting within the profession. The law does not define “reasonable interpretation,” to whom the standard applies, or what body or officials will render the interpretation. Professionals should be concerned that what may be reasonably interpreted by one person can differ from one person to the next.
Offering to provide practice-related services, such as drugs, in exchange for sexual favors.
Failure to notify LARA of disciplinary action or a criminal conviction taken by another state within 30 days after the date of action will result in administrative action by LARA.
Referring uninsured and Medicaid patients to purchase any procedure, drug, service or treatment by an entity in which the licensee or registrant has a financial interest.

Changes to Sanctions & Fines

The new laws will eliminate the imposition of community service as a sanction for public health code violations. This change is not surprising given that in the many years I have been representing professionals, community service has never been offered as a disciplinary sanction.

If a professional is found to be in violation of one of fourteen specified grounds, significant fines may be imposed. For example, a fine of up to $250,000 can be imposed if it is determined that the professional, for example:

Breaches a general duty, including negligence or failure to exercise due care, including negligent delegation to or supervision of employees or others
Demonstrates incompetence
Exhibits a substance disorder, or a mental or physical inability to practice safely
Is convicted of certain criminal actions
Receives an adverse administrative action in another state, or
Lacks good moral character

If a violation is based on one of the fourteen specified grounds and results in the death of an individual, any fine imposed must be at least $25,000 – a sanction that might easily bankrupt the professional individual, and compound the cost of legal representation to defend the disciplinary action.

Impact On Professionals

These dramatic changes in the law will have sweeping consequences, for which professionals will need to prepare:

There will be more investigations and disciplinary actions of licensed and registered professionals after July 1, 2014. Where respective boards and task forces (with clinical expertise) previously determined the merits of allegations, LARA’s reach will short-circuit their authority. Since 2004 disciplinary actions have nearly doubled. This trend is expected to continue.
The cost of defending professionals in investigations and disciplinary actions will increase substantially due to a more convoluted process and the possible need to seek court intervention. I have seen in the past ten years that the costs to represent clients from the initial meeting to resolution of the matter have doubled. With the vagueness of the laws and possible need for court intervention, the cost to professionals will continue to increase.
LARA will wield more authority and discretion to pursue investigations and disciplinary actions – with far less input from boards and task forces, and at the expense of suspected professionals’ due process rights.

What Should Professionals Do?

The reality is that even the most professional and competent providers will be investigated.

It will only take one person (a disgruntled client or patient, a jealous co-worker or competing professional, etc.) to file an allegation, and though you may have done nothing wrong, you will be forced to defend yourself. Along with the economic burden, there is always an emotional toll that weighs on professionals being investigated or defending a disciplinary action.

So just how should you protect yourself?

Maintain your own malpractice and licensure insurance coverage. Even though you may have coverage through your employer, it will not cover you in the event your professional license or registration is investigated or disciplined. Two companion companies, Nurses Service Organization (for nurses) and Health Professionals Service Organization (for other health care providers) provide malpractice and licensure defense insurance at very reasonable premiums. If you have insurance with other companies check to make sure they have licensure defense coverage and determine if the policy limits are sufficient. Do not be forced to accept a sanction because you cannot afford to fight the matter due to lack of funds. Remember any sanction imposed on your license or registration is reportable to a national databank and will remain a permanent part of your record.

Practice safely and within the scope of your profession. It should go without saying, but following health care facilities’ policies and procedures and adhering to accepted professional standards is your best defense.

Document, document, document. Clearly and accurately record the care and services you provide for each client or patient, your response to their complaints, the treatment instituted to address the issue or complaint, and the results of that treatment and resolution of the problem.

Consult an attorney at the earliest stage. If you are contacted by a LARA representative or investigator or one from the Bureau of Health Care Services (“BHCS”), a LARA division, you should immediately seek counsel from an attorney who specializes in professional licensure matters before you respond to the agency. Never go it alone!

Professional licensing investigations and disciplinary actions are serious and can have long-term effects. Despite the many years of education and training you’ve amassed, professionals should never try to defend themselves. There’s an age-old saying in the legal profession that a lawyer who represents himself has a fool for a client, and that same adage holds true with other professionals.

If you find yourself in this difficult and serious circumstance, please feel free to give me a call. I’ve had many years of experience representing health care providers in administrative, regulatory, and disciplinary matters, and will be happy to help you as well.