Firm News

SettlePou Welcomes New Attorneys

Now celebrating our 30th anniversary, SettlePou believes we have consistently achieved our clients’ unique goals throughout our history because of the quality of our people. Our highly skilled and service oriented attorneys and qualified support staff enable the firm to deliver superior legal services to our clients with an unusual blend of big-firm expertise and small-firm attention. With that in mind, SettlePou is proud to announce that we have now grown to 30 attorneys with the addition of our newest associates, Byron L. Kelley and Jay D. Reyero.

Byron L. Kelley joined the firm’s Commercial Litigation Section effective August 19, 2008. Mr. Kelley is a 2008 cum laude graduate of the SMU Dedman School of Law, and earned his B.S. in Communication Studies from the University of Texas at Austin in 2002, where he was a recipient of the LBJ Fellowship. During law school, Byron served as an Articles Editor for the International Law Review Association. In his free time, Byron enjoys playing golf and is an avid college football fan.

Jay D. Reyero joined the firm’s Business Counsel Services Section effective August 18, 2008. Mr. Reyero is also a 2008 cum laude graduate of the SMU Dedman School of Law, and earned his B.A. with High Honors in Management of Information Systems from the University of Texas at Austin in 2004. While in law school, Jay competed in the John Marshall Moot Court competition, participated in the SMU Small Business Clinic, and was the Executive Editor for the SMU Science and Technology Law Review. Jay is married to Katie Reyero.

Byron and Jay successfully completed the July 2008 Texas Bar Exam and were licensed to practice law in Texas in November of 2008. SettlePou is excited to welcome our newest attorneys to the team.

Business Counsel Services

Health Law Update 2009: How the New Anti-Markup Rule Attempts to Make Things Simpler

Another year, another modification in a physician’s ability to bill and collect. As explained in last year’s news article, the government is attempting to limit ancillary income of physicians. With anti-referral and antikickback laws well established in prohibiting certain physician joint ventures, the new modified Anti-Markup Rule continues to add extra layers in confirming if a physician’s ancillary transaction will be profitable.

Introduction Section 1842(n)(1) of the Social Security Act prohibits a markup on the technical component of certain diagnostic tests if the test was not personally performed or supervised by the billing physician or another physician whom the billing physician “shares a practice with.” Over the past few years there have been changes made to the Anti-Markup Rule in an attempt to prevent the potential overutilization of the technical and professional componentsof diagnostic tests. The latest amendments are an attempt to address the potential overutilization while reducing the complexity associated with prior proposed rules.

Prior Version

In November 2007, Centers for Medicare and Medicaid Services (“CMS”) proposed a new Anti-Markup Rule aimed to be more restrictive. In general, the rule applied when a physician or other supplier billed for the technical or professional component of a diagnostic test that was ordered by the physician or other supplier (or related party),and the test was either 1) purchased from an outside supplier, or 2) performed at a site other than “offices of the billing physician or supplier.” As initially worded, the proposed rule was headed for a collision course with the federal anti-referral law (a.k.a. “Stark II”). Parties could be in compliance with Stark II but still unable to bill and collect federal payors without being in compliance with the Anti-Markup Rule.

Immediately CMS received feedback regarding concerns about the proposed rule. As a result, CMS delayed the effective date of the new rule until January 1, 2009.

New Version

In November 2008, CMS amended the Anti-Markup Rule to attempt to simplify its application and interpretation. The new rule basically has two alternative methods that, if met, will result in the Anti-Markup Rule not applying. Each alternative is independent of the other, meaning that each must be separately evaluated under the circumstances.

First, where the performing physician provides “substantially all” of his or her professional services for the billing physician or other supplier, the Anti-Markup Rule will not apply. The performing physician is one who supervises the technical component or performs the professional component. To meet the “substantially all” test, the physician must provide at least 75% of professional services for the billing physician or supplier.

Second, where the performing physician supervises or performs in the “same office building” as the billing physician, the performing physician is deemed to share a practice with the billing physician or other supplier, and the Anti-Markup Rule will not apply. The “same office building” is the same definition used under Stark II.

An arrangement must meet only one of the two alternatives. If an arrangement fails to meet either alternative, the Anti-Markup Rule will apply. If the Rule applies, payment to the billing physician or supplier for the technical or professional component must be the lowest of: 1) the performing supplier’s Net Charge to the billing physician or supplier; 2) the billing physician’s or supplier’s actual charge; or 3) the fee schedule amount for the test allowed if the performing supplier billed Medicare directly.

It is important to note that the amended Anti-Markup Rule is effective January 1, 2009, and there are no extensions or delays on its application. Beginning in 2009, arrangements must meet one of the two alternatives in order for the Anti-Markup Rule not to apply.

Independent Diagnostic Testing Facility

In July 2008, CMS proposed to require physicians and nonphysician practitioner (“NPP”) organizations furnishing diagnostic testing services to enroll as Independent Diagnostic Testing Facilities (“IDTF”) for each practice location furnishing these services. The concern was that certain physician entities could avoid the IDTF standards, resulting in beneficiaries receiving an inferior quality of care contemplated by the standards.

In November 2008, CMS delayed adopting the proposed requirement, citing the enactment of Section 135 of the Medicare Improvements for Patients and Providers Act of 2008 (“MIPPA”). Section 135 of MIPPA imposes upon the Secretary the task of establishing an accreditation process by January 1, 2012, for entities furnishing advanced diagnostic testing procedures. CMS does not indicate whether physicians or NPPs will have to follow the accreditation process. CMS will continue reviewing public comments and evaluating the situation in order to determine if their proposed requirement is necessary.


The Anti-Markup Rule is a billing and collection rule. Failing to satisfy either of the two alternatives will implicate the False Claims Act if the physician bills in violation of the new rules. This rule increases
exponentially the multiple regulations a physician must consider before entering into any business venture. Therefore, it is important that physicians and suppliers that work with diagnostic tests should examine their business arrangements to confirm that they meet one of the two alternatives.

By: Michael S. Byrd and Bradford E. Adatto

Business Counsel Services

Asset Protection Planning

The Business Counsel Services Section of SettlePou is pleased to continue its three-part physicians’ series covering the following topics:

Attack on malpractice damage law caps (See SettlePou Newsletter Volume 4, Issue 3); (2) increasing the physician’s professional protection; and, (3) increasing the physician’s personal protection.

Part 2 – Increasing the Physician’s Professional Protection. The words “asset protection planning” has been thrown around so often that the actual meaning may have been diluted. This article is designed to detail the “What,” “Why,” “Who,” “When,” “How” and “Where” of asset protection plans. It will also provide information on exempt and non-exempt assets. Finally, it will detail the professional protections that can be provided to physicians.


What is asset protection planning? Proper asset protection planning is the orderly organization and structure of one’s assets and affairs (business and personal) in advance of potential liability, risk, judgment or other creditors’ claims to protect resources. Figuring out techniques that protect your assets is an extremely important and personal process.


Why would someone develop an asset protection plan? (1) To deter potential creditors from going after your assets; (2) to frustrate the collection process making it difficult or impossible for future creditors to grab hold of your assets or collect judgments against you; and (3) to form an estate plan (as will be detailed in the next article).


Who really needs asset protection planning? Most people think that asset protection plans are for extremely wealthy individuals. Asset protection plans are not just for the extremely wealthy individuals, but are for persons who have exposed assets and conduct activities that could create catastrophic liability. Based on judgment creditors’ rights, a person with more than $60,000 in net nonexempt assets should consider implementing an asset protection plan.

An example of a catastrophic event which could affect a physician is a malpractice claim in which a young professional is injured and can never work again. As explained in our last newsletter, the new Texas malpractice damage caps only non-economic damages, but economic damages are not capped. Such a catastrophic event would cause the economic damages to fall outside of the scope of the protection of the malpractice damage caps and most likely the physician’s insurance limits. This could leave the physician obligated to pay the remainder of a potentially large judgment.


When is it the proper time to begin asset protection planning? The best time to begin is now, but definitely before a claim is filed or made; otherwise, it may be considered a “fraudulent transfer.” A fraudulent transfer may occur when a person transfers property, in effect, to stop legitimate creditors from taking assets in order to satisfy a legitimate debt. Asset protection planning is not a means of defrauding creditors or even evading taxes. It’s a means to figure out and apply a series of lawful techniques that protect your assets from claims of future creditors.


How does one go about developing an asset protection plan? The physician should sit down with his or her professionals and conduct a risk assessment. This risk assessment will determine the likelihood and extent of the exposure, the activities that could create liability, the nature and extent of the physician’s assets (exempt vs. non-exempt assets), the family situation for future estate planning, and the personal wishes of that particular person. It is important when a physician is developing an asset protection plan to coordinate multiple professionals to ensure a solid plan. A good asset protection plan is like a custom-built chair. It has four solid legs and a sturdy back, but it still must be comfortable for you to sit in. At the end of the day, an asset protection plan must fit your needs. The professionals who should be a part of designing your plan are your CPA, financial planner, insurance agent and attorney. Each one of these individuals is a key ingredient in establishing your personal plan (or handcrafted chair).


Where do these assets go? The non-exempt assets can be properly moved and placed into structured trusts or other entities.

Protection of Assets – Exempt vs. Non-exempt

The first level of protection an asset receives is being deemed by the Government to be an exempt asset. There are five main categories of exempt assets: (1) homestead exemption; (2) personal property exemption; (3) annuities; (4) life insurance and (5) retirement benefits. Generally, anything that falls outside of these exempt asset categories is considered a non-exempt asset and is subject to the claims of creditors. The homestead exemption is considered judgment proof. But it is important to note that you can have only one home qualify for the homestead exemption.

Professional Protection

For an individual there are certain levels of protection that can provide some type of asset protection. (1) The Government – The first level of protection comes from the Government. For physicians, the protection is Tort Reform. The malpractice caps limit non-economic damages and wrongful death. (2) General/ Professional Insurance – The next level of protection is to be properly insured. The problem with relying strictly on insurance is that it might not cover all possible risks; it might be insufficient; or your claim might be denied and/or the exclusions in the policy do not cover the activity.

(3) Corporate Structures – The third level of professional protection is corporate structures. Corporate structures allow you to move nonexempt assets into entities establishing certain levels of protections that an individual would not be able to receive. The main drawback is a potential loss of control after assets are moved. Depending on the need, the corporate structure could be a professional association, professional limited liability company or other types of affiliated entities.

Planning to protect one’s assets is important in light of the many risks in practicing medicine. Proper coordination, proactive planning and implementation can go a long way to achieve the desired results. In our next newsletter, we will present the final installment of our three-part series, Physician’s Personal Protection. This article will address the personal protection plans available to individuals. In addition, it will address estate planning aspects that can be incorporated into an asset protection plan.


By Michael S. Byrd and Bradford E. Adatto