I have an article in this month's Directors & Boards, E-Briefing. The article discusses the benefits of ADR for business and how Directors can facilitate adoption of efficient dispute management programs.

Two weeks before President Obama signed health reform into law, I gave a 45 minute talk about the reform plan at a local synagogue.  My purpose was to provide an overview of the reform plan, explain its structure, and debunk some of the myths and misinformation circulated by plan opponents.  A video of the talk is posted below.

Also, here are some links to good summaries of the health reform law from around the web.

1.  Kaiser Family Foundation: the "Consumers Guide to Health Reform"

2.  CNN:  Timeline of Reform Changes

3.  Kaiser Family Foundation: Detail Timeline of Final HCR Bill

In a case that has be watched by hospitals around the county,  the Illinois Supreme in a 3-2 ruling today upheld revocation of the Provenza Hospital System's state tax exemption.

The court noted, among other factors:

PCMC patients under the facility’s charity care program was modest. The hospital waived $1,758,940 in charges, representing an actual cost to it of only $831,724. This was equivalent to only 0.723% of PCMC’s revenues for that year and was $268,276 less than the $1.1 million in tax benefits which Provena stood to receive if its claim for a property tax exemption were granted.  The number of patients benefitting from the charitable care program was similarly small. During 2002, only 302 of PCMC’s 10,000 inpatient and 100,000 outpatient admissions were granted reductions in their bills under the charitable care program. That figure is equivalent to just 0.27% of the hospital’s total annual patient census.

In finding that the hospital system failed to satisfy its burden of proving it met the criteria for tax exemption, the

With very limited exception, the property was devoted to the care and treatment of patients in exchange for compensation through private insurance, Medicare and Medicaid, or direct payment from the patient or the patient’s family. To be sure, Provena Hospitals did not condition the receipt of care on a patient’s financial circumstances. Treatment was offered to all who requested it, and no one was turned away by PCMC based on their inability to demonstrate how the costs of their care would be covered. ...  Hospital charges were discounted or waived only after it was determined that a patient had no insurance coverage, was not eligible for Medicare or Medicaid, lacked the resources to pay the bill directly, and could document that he or she qualified for participation in the institution’s charitable care program. As a practical matter, there was little to distinguish the way in which Provena Hospitals dispensed its “charity” from the way in which a for-profit institution would write off bad debt.

In reaching its conclusion, the Court was careful to distinguish between the requirements for a property tax exemption under Illinios law, other state exemptions, and federal tax exemption.  With respect to the federal exemption, the Court noted:

Illinois’ charity requirements distinguish our property tax exemption standards from the requirements a hospital must meet in order to qualify for tax-exempt status under the Internal Revenue Code. When the Medicare
and Medicaid programs were being established in the late 1960s, there was concern that many hospitals would lose their federal tax exempt status because there would no longer be sufficient demand for charity care to
satisfy IRS requirements. In response, the IRS loosened its previous standards, under which hospitals were required to provide financial assistance to those who could not afford to pay for services, and began to
measure a hospital’s eligibility for tax exemption by utilizing other “community benefit” factors. Adoption of this community benefit standard “abandoned charity care as the touchstone of exemption at the federal
level.” See 37 Loy. U. Chi. L.J. at 497. Illinois has not adopted this approach. Although our General Assembly now requires certain hospitals in Illinois to file annual “community benefits plans” with the Illinois
Attorney General’s office (see 210 ILCS 76/1 et seq (West 2006)) that requirement is not part of the Property Tax Code and does not purport to alter Illinois law with respect to property tax exemptions.

The Illinois decision, it should be noted, rested on legal principles that may vary significantly from state to state.  For example, the Illinois Supreme Court held that each tax-exempt parcel must independently meet the criteria for the state property tax exemption.  In a 2007 decision,Alliance Home of Carlisle, PA, v. Board of Assessment Appeals, 591 Pa. 436, 465, 919 A.2d 206, 224 (2007), the Pennsylvania Supreme Court reached the opposite conclusion.

In any event, questions about the tax-exemption status of hospitals will continue to arise.  In 2009, for example, the IRS issued an extensive (but inconclusive) report about the standards applied to hospitals for federal tax-exemption.  The summary to the report noted:

"Both the community benefit and reasonable compensation standards have proved difficult for the IRS to administer. Both involve application of imprecise legal standards to complex, varied and evolving fact patterns. Some
have suggested that these standards need to be revised. As these discussions occur, and despite the limitations described above, the study provides important information.

In essence, the IRS threw up its hand it left the issue on the table for others.

A copy of the Illinois Court's opinion can be download from the link below.

The Slaughter proposal is a bad idea, as it would offer a pretty thin veil of political cover while inviting still more rightist complaints about the procedures adopted for health reform. Worse, given the present make-up of the Supreme Court, it is not hard to imagine a politically motivated decision declaring the process, and therefore, any resulting reforms to be unconstitutional.

Ezra Klein describes the essential elements of the Slaughter proposal—use of a “self-executing rule”—as follows:

Here's how that will work: Rather than passing the Senate bill and then passing the fixes, the House will pass the fixes under a rule that says the House "deems" the Senate bill passed after the House passes the fixes.

The virtue of this, for Pelosi's members, is that they don't actually vote on the Senate bill. They only vote on the reconciliation package. But their vote on the reconciliation package functions as a vote on the Senate bill. The difference is semantic, but the bottom line is this: When the House votes on the reconciliation fixes, the Senate bill is passed, even if the Senate hasn't voted on the reconciliation fixes, and even though the House never specifically voted on the Senate bill.

The conservative arguments against the proposal were neatly summarized in op ed in yesterday's WSJ by Stanford Professor and Hoover Institute Fellow Michael McConnell.

Prof. McConnell's analysis, though, is far from compelling. However much Prof. McConnell desires to find a duty for both houses to pass identical texts, the constitution actually says no such thing. All the Constitution actually says about the subject is that "Every bill which shall have passed the House of Representatives and the Senate, shall, before it become a law, be presented to the President of the United States." It is no more consistent with the text of the Constitution to interpret it as requiring each house to pass the same text or as requiring one house to pass a bill and the other to pass a statement declaring "we agree"--in either case the "same text" has been approved by both houses.

In addition, while citing the Supreme Court’s 1998 decision in Clinton v. City of New York, he fails to mention that the case concerned the constitutionality of a Presidential line item veto and rested on its conclusion that "procedures authorized by the Line Item Veto Act," which effectively permitted the President to change the text of legislation, "are not authorized by the Constitution." No question of congressional procedure was before the court and, as Prof. McConnell acknowledges, Congress is authorized to establish its own rules.

Professor McConnell, of course, also fails to mention the numerous times that self-executing rules have been used for prior legislation. A 2006 report of the Congressional Research Service both describes the origins of the “deemed passed” approach and recent uses by both Republicans and Democrats.

Finally, McConnell makes no mention of the 2007 decision of D.C Circuit holding that separation of powers prohibits the court from reviewing the means by which each house of Congress chooses to pass legislation.  In Public Citizen v. United States, explained that

"The District Court held that Public Citizen's bicameralism claim is foreclosed by the Supreme Court's decision in Marshall Field & Co. v. Clark, 143 U.S. 649 (1892). See Public Citizen v. Clerk, U.S. Dist. Ct. for D.C., 451 F. Supp. 2d 109 (D.D.C. 2006). In that case, the Court held that the judiciary must treat the attestations of "the two houses, through their presiding officers" as "conclusive evidence that [a bill] was passed by Congress." Marshall Field, 143 U.S. 672-73. Under Marshall Field, a bill signed by the leaders of the House and Senate – an attested "enrolled bill" – establishes that Congress passed the text included therein "according to the forms of the Constitution," and it "should be deemed complete and unimpeachable." Id. at 672-73. Recognizing that Marshall Field's "enrolled bill rule" prohibited it from questioning the congressional pedigree of the bill signed by the Speaker and President pro tempore, the District Court dismissed Public Citizen’s complaint and denied its motion for summary judgment. … We agree with the District Court that the enrolled bill rule of Marshall Field controls the disposition of this case.

Indeed, a stronger case can be made that the 60 vote filibuster “cloture” rule, which led to this mess, is unconstitutional. As explained by Senator Lieberman in 1995, before discovering the joys of threatening a filibuster to protect the insurance industry, the constitution specifies 5 instances in which more than a majority is required for congressional action, and a filibuster isn’t one of them. This issue is discussed in a prior post and more fully in a recent post on the blog of the Nieman Foundation for Journalism at Harvard.

If the Slaughter proposal is not plainly unconstitutional as complained by the Right, then why is it a bad idea? Simply because the benefit is not worth the risk and, in fact, it may be counter-productive for congressional representatives looking for political cover. First, although the public may generally have only a vague understanding of the health reform proposals, a refusal to vote on the merits will plainly—and not entirely inaccurately—be seen as a dereliction of responsibility. Second, enactment of reform through the Slaughter proposal will put a darker cloud over passage than the the reconciliation process alone. Third, and most frighteningly, it is far more likely to put the future of reform in the hands of the activist conservative judges of the Supreme Court than a clear-cut vote. At the end of the day, the constitution means whatever the Supreme Court says it does. Most of the constitutional arguments raised by the right about health reform over the past few months border on frivolous. This one, however, is not, and it is not hard to imagine the Supreme Court using this issue as a means to snatch victory on health reform away from the Democrats (and regardless of the chaos that such a decision would cause).