The multitudes of private and public entities that comprise the American healthcare system offer countless opportunities for fraud, as well as practices that may deceive or mislead consumers. While we undoubtedly have a highly advanced system providing a high quality of service, many people continue to have difficulty obtaining access to health care, and many suffer because of fraudulent or deceptive marketing of healthcare products or services, health insurance scams, or deceptive practices by healthcare providers. A patchwork of federal and state laws protect consumers from many of these acts, and the country is still discovering the ways that the Affordable Care Act (ACA) helps.
The Healthcare Industry
The FDA regulates many, but not all, healthcare devices and medications.
An extreme oversimplification of the American healthcare industry might divide it into three groups: medical products, health insurance, and healthcare providers. The first group includes pharmaceutical companies, medical device manufacturers, and companies that manufacture, market, and sell a vast array of medical supplies. The U.S. Food and Drug Administration (FDA) regulates many of these companies, prohibiting them from making specific claims about their products without obtaining prior approval or including various disclaimers. This should be familiar to anyone who has seen television commercials for prescription drugs. The FDA does not regulate over-the-counter medications, or “alternative” or “supplemental” healthcare products like vitamins, nutritional supplements, and homeopathic remedies. These products may be subject to state laws regarding deceptive advertising.
Health insurance is the primary means of financing health care in the U.S. The ACA has made health insurance available to more people, in part by prohibiting health insurance providers from increasing premiums or denying coverage in various circumstances. Government programs like Medicare and Medicaid also play a major role in healthcare finance.
Healthcare providers include medical professionals like doctors, nurses, pharmacists, and medical technicians, as well as hospitals and other business entities. State laws typically regulate healthcare businesses, while medical professionals are bound by ethical rules enforced by state medical boards. Other practitioners associated with health care may be subject to state regulation as well, such as chiropractors and acupuncturists.
Deceptive Healthcare Marketing
Medical products, including pharmaceuticals, medical devices, and dietary supplements may be the subject of deceptive, fraudulent, or false advertising. The FDA has authority to investigate false or misleading claims about controlled drugs and medical devices. The Federal Trade Commission (FTC) and state attorneys general may pursue companies that make deceptive or misleading claims about a medical or health product under false advertising laws. Additionally, laws regulating dangerous or defective products may allow consumers injured by a fraudulently marketed drug or medical device to recover damages.
Health Insurance Practices
Health insurance providers must cover the costs of the insured’s health care in accordance with the insurance policy, but many companies take an expansive view of what is not covered by their policies. State regulators may seek to penalize health insurance providers that decline claims for coverage fraudulently or in bad faith, and some states allow civil claims by the insured or others making claims on a policy.
Insurance Bad Faith
An insurer that breaches their duty of good faith and fair dealing, such as by deliberately misinterpreting their policy language to avoid paying a claim, may be found liable to their insured in a bad-faith lawsuit. The help of a consumer lawyer experienced with bad-faith lawsuits may be necessary, since these types of claims can become complicated.
Consumers may also fall prey to policies that are themselves fraudulent, meaning that they pay premiums to an individual or business that is not a legitimate insurance provider. One type of scheme involves selling fake “discount cards” based on claims that consumers may use them to pay for prescription medication or to obtain health care services.
Access to Health Care
While health insurance, Medicare, Medicaid, and other programs assist consumers in paying for health care, state and federal laws require healthcare providers to render assistance to people in certain circumstances regardless of their financial condition. Texas, for example, requires private non-profit hospitals to provide free health care, up to a point, to people who do not have health insurance and cannot otherwise afford a hospital stay. This law does not apply to private for-profit and public hospitals. Hospitals covered by the law may require applicants to establish financial need, but they must also provide services consistently and fairly. Under the federal Emergency Medical Treatment & Labor Act (EMTALA), hospitals may not turn away any person seeking emergency medical care, regardless of their ability to pay. The Texas law covers a rather broad range of medical services, but EMTALA is generally limited to emergency, life-saving care.
Consumers who reside in long-term care facilities, such as elderly residents of nursing homes, are particularly vulnerable to fraudulent, negligent and even abusive practices. Many state and local governments have established “bills of rights” for nursing home residents.