Member Update – November 29, 2001:
Update on ALS Lawsuit Challenging Stark II Regulations

As you know, the American Lithotripsy Society [ALS] and the Urology Society of America [USA] filed suit against the Health Care Financing Administration (now the Centers for Medicare and Medicaid Services -CMS) in August, 2001, seeking a timely injunction preventing CMS from enforcing the Stark II regulations. Despite our best efforts, the court has failed, as yet, to rule on our lawsuit. With the January 4, 2002 effective date of the regulations approaching, many members are facing increasing pressure from hospitals to reduce the technical fees they charge. Unfortunately, we expected this pressure; indeed, that is why we filed suit in the first place.

Several ALS members, frustrated by the court's inaction, have asked reasonable questions: could we have filed suit earlier or pressed harder to get a ruling? Since the answers to those questions are not intuitive, we wanted to share our reasoning with you.

Our legal counsel, Winston and Strawn [Washington, DC] believed that filing the lawsuit in March, when we prepared the first draft of the complaint, would create its own set of risks. First, there was concern that the court would consider the suit premature when the regulations were 10 months away from being final and the comment period open until June. Second, the court might question why we did not avail ourselves of the right to submit comments. We therefore decided to file additional comments with CMS and wait until the comment period closed to see whether CMS responded.

Third, we did not have concrete evidence in March of harm caused by the regulations. While hospitals were making noises about price reductions, few members could point to actual financial damage or prove it resulted from the regulations rather than from market forces. We thus would have run the risk that the court would deny our request for an injunction on the grounds that any claim of harm caused by the regulations was speculative. In June and July, the picture was clearer regarding how hospitals were responding to the regulations. In response, we obtained declarations from various ALS members discussing how they were being harmed by the regulations. We attached these declarations to our injunction motion.

Another factor was that we were trying to line up other organizations to join us in our suit. Having them join this effort, as co-plaintiffs, would have added to our credibility. Unfortunately, discussions with the American Urological Association [AUA] and the American Association of Clinical Urologists [AACU] did not bear fruit, although we were pleased to gain a commitment from both the AACU, and the Western Section of the AUA (but not the AUA itself), to make financial contributions to this effort, and to support it in principle, for which ALS is extremely grateful.

Normally, when one files a motion for a preliminary injunction, the judge understands the need for a quick resolution and typically holds a hearing within six weeks of the filing date. When we filed the suit in late August, we expected to have ample time, assuming a diligent judge were assigned to the case, to get a ruling before the regulations became final in January 2002. Unfortunately, the judge assigned to our case marches to his own drummer.

To impress upon the judge the urgency of the situation, we have made repeated phone calls to the judge's chambers requesting an immediate hearing. We also have filed a separate motion for an expedited hearing. The judge has not yet responded.

We, too, are frustrated by the delay. We are considering alternatives, including taking the matter up with higher authorities, but those are extraordinary steps that could backfire. In the meantime, we will press the judge, including giving him more evidence of the harm being caused by the Stark II regulations. If you have information to share in that regard, please send it to us immediately, as one of the arguments CMS is making in opposing our lawsuit is that we have not shown sufficient injury, notwithstanding the declarations we have submitted from ALS members. We are particularly interested in letters from hospitals in which they demand price decreases or other changes to your contracts because of the regulations.

If you have any questions concerning this Member Update, please contact the Executive Director of the American Lithotripsy Society, Wes Harrington at the ALS Headquarters in Waltham, Massachusetts. Watch the ALS Website / Governmental Affairs Updates / for more information regarding this situation in the weeks ahead.

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Visit us again to receive up-to-the-minute reports on major issues such as the Health Care Finance Administration's (HCFA) proposed implementation of the Stark II (Physician Ownership) regulations and HCFA's proposed rates for lithotripsy performed in/out patient and ambulatory surgical center settings.

For additional information contact, Wesley E. Harrington, CAE, Executive Director of ALS at:
American Lithotripsy Society, 305 Second Avenue, Suite 200
Waltham, Massachusetts 02451
Telephone: (781) 895-9098
Fax: (781) 895-9088


American Lithotripsy Society
305 Second Avenue, Suite 200
Waltham, Massachusetts 02451
Telephone: (781) 895-9098
Fax: (781) 895-9088

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