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Secondary Income from Recommended Treatment: Should Fiduciary Principles Constrain Physician Behavior?
Pages 153-170

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From page 153...
... Although it may be difD~cult~for the average patient to question the physician's judgment, patients must lay their innermost selves bare, both physically and emotionally, if their doctors are to understand the true nature and origin of their problems. Without trust, and therefore vulnerability, the candor necessary to the therapeutic relationship is impossible to achieve.
From page 154...
... In tracing the development of the concept, issues have been analyzed for their potential impact on physician involvement in profit-making medical enterprises. A broad perspective was deemed useful to understand the subtle way in which fiduciary notions surround the physician-patient relationship with constraints on behavior not found in ordinary commercial transactions.
From page 155...
... Secondary Income and Fiduciary Principles 155
From page 156...
... Fiduciary remedies originally sprang from courts of equity rather than courts of law, because the law provided no redress for breaches of trusty The label "fiduciary" need not necessarily be reserved for situations in which equitable rather than legal relief is requested, but the standard of care governing recovery in certain kinds of common law actions, such as for medical malpractice, may be heavily influenced by professional ethics with an "equity" origin. Fiduciary terminology thus appears in cases that allege violation of ordinary legal duty as well as less well defined fiduciary obligation.
From page 157...
... Kickback Cases Courts have not hesitated to condemn practices whereby physicians accept kickbacks for breach of fiduciary obligation to their patients. Thus, when a physician agreed with a lawyer to refer personal injury claimants in return for a kickback equal to the difference between the medical bill and one half of the combined medical and legal fees, the Massachusetts Supreme Judicial Court was characteristically acerbic in finding that the state licensing board had jurisdiction to revoke his license.
From page 158...
... had received in addition to his medical bill a further sum out of the patient's money for no service rendered to the patient."~° Similarly, a federal Court of Appeals strongly condemned the practice whereby optical companies kicked back one-third of the retail price of eyeglasses to referring eye specialists. Labeling the arrangements as "unconscionable and reprehensible contracts for secret kickbacks to a doctor," the court specifically found that they corrupted the fiduciary relationship between physician and patient.
From page 159...
... If one were to accept the trust analogy as appropriately applied to physician ownership of health care organizations, one would have to insulate physicians from any secondary income generated by their medical advice. Gift and Contract Cases Gift and contract cases involving physicians and patients fit neatly into the lay understanding of fiduciary
From page 161...
... Certainly, when the terms of the contract appear unduly advantageous to the physician, courts ought to be particularly alert to possible breach of fiduciary duty. Physician as Advisor The second general category of fiduciaries concerns people who act as advisors and who are therefore in a position to exercise undue influence over what their charges do.
From page 162...
... For example, equity can redress the mental distress and damage to a marital relationship that often accompany unauthorized disclosure of medical information, whereas damages for breach of contract would not.~7 Moreover, when physicians seek to disclose confidential medical information, courts can enjoin their behavior by citing fiduciary principles. Thus, when a psychiatrist published a book based on a thinly disguised account of a particular patient's therapy, a New York Supreme Court had no trouble enjoining its further distribution, as well as awarding damages, on the basis of a breach of fiduciary obligation.
From page 163...
... Informed Consent Cases Fiduciary aspects of the physician-patient relationship can also be seen in informed consent cases. The early informed consent opinions granted recovery to plaintiffs for unauthorized medical treatment on a battery rationale.
From page 164...
... Justice Cardozo: "Every human being of adult years and sound mind has a right to determine what shall be done with his own body...."20 In other words, the decision maker is the patient not the physician. Unfortunately for this rationale, the physician usually understands the implications of medical information much better than the average patient.
From page 165...
... It may be difficult to characterize some of these latter situations as involving the potential for conflict of interest in anything but an attenuated sense, but the use of fiduciary terminology to support the results reinforces the notion that the special societal status accorded physicians is accompanied by special responsibilities imposed by the judiciary. Legislatures can also impose special responsibilities, and one of the purposes of this paper is to stimulate thinking about whether that might be an advisable method for dealing with the conflict of interest presented by physician involvement in for-profit medical enterprises.
From page 166...
... The Supreme Court has recently delivered several opinions facilitating antitrust litigation against the medical profession. By implication, these opinions damage the public perception of physicians as fiduciaries.
From page 167...
... Perhaps a more stringent application of fiduciary principles to physician behavior might be in the best interests of the medical profession. In the long run, physicians might prefer to forego secondary income from the ancillary services they order for their patients if it reduces their overall exposure to liability.
From page 168...
... A company or military physician occupies a unique position of divided loyalty in the corporate hierarchy, but legal doctrine acknowledges the conflict and defines appropriate behavior toward patients by focusing on the reason for the physician-patient interaction.
From page 169...
... 21. Meisel, Alan, "The Exceptions to the Informed Consent Doctrine: Striking a Balance Between Competing Values in Medical Decisionmaking," Wisconsin Law Review (1979)


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