There used to be a saying, “As California goes, so goes the nation.”

This may need to be updated to “As Colorado goes, so goes the nation.”

Colorado was the first state to legalize recreational marijuana. Now, 23 states plus D.C. are in that category.

The Colorado legislature proposed a bill that was signed into law and took effect July 1, 2019. It provides a separate path to resolve disputes between doctors and patients related to adverse events.

One of the long-term stumbling blocks to moving to closure is the National Practitioner Data Bank. If a carrier settles a written demand for payment for a physician, that payment is reportable to the Data Bank. It does not matter if the claim was for $1 or $1 million.

Doctors fight tooth and nail to avoid such a report.

There is at least one exception to such reporting. If there was never a written demand for payment, no reporting is required.

Enter the Colorado Candor Act.

The Act creates a process initiated by the doctor within 180 days of a perceived adverse event. The doctor provides written notice he wishes to enter into an open discussion under the Colorado Candor Act. That notice must include specific rights afforded to the patient and the nature of the communications and discussions under the Act.

The health care provider/facility that agrees to engage in an open discussion may:

• Investigate how the incident occurred and gather information regarding medical care.
• Disclose the results of the investigation to the patient.
• Communicate to the patient the steps that will take place to prevent future occurrences of the incident.

So far, so good.

As part of their assessment, healthcare providers and facilities can determine whether or not an offer of compensation is warranted.

If no offer of compensation is warranted, the provider or facility shall orally communicate that decision with the patient.

If the provider or facility determines that an offer of compensation is warranted, the provider or facility shall provide the patient with a written offer of compensation.

• If an offer is made and the patient is not represented by legal counsel, the provider or facility is required to:
  • Advise the patient of the patient’s right to seek legal counsel regarding the offer of compensation; and
  • Provide notice that the patient may be legally required to repay medical and other expenses that were paid by a third party, including private health insurance, Medicare, or Medicaid.
  • A healthcare provider/facility may require the patient, as a condition of an offer for compensation, to execute all documents and obtain any necessary court approval to resolve an adverse healthcare incident.

So, how is any of this beneficial to the physician who kicked off the process?

Read on.

To facilitate open communication under the Colorado Candor Act, discussions and offers of compensation under the Act are privileged and confidential.

• Open discussion communications and offers of compensation made under the statute:
  • Do not constitute an admission of liability;
  • Are privileged and confidential and shall not be disclosed; and
  • Are not admissible as evidence in any subsequent judicial, administrative, or arbitration proceeding arising directly out of the adverse health care incident.
• Communications, memoranda, work products, documents, and other materials that are otherwise subject to discovery and not prepared specifically for use in an open discussion are not confidential.
• The limitations on disclosure include disclosure during any discovery conducted as part of a subsequent adjudicatory proceeding arising directly out of the adverse health care incident, and a court or other adjudicatory body shall not compel a person who engages in an open discussion under the Act to disclose confidential communications or agreements made as part of the open discussion.
• The Act does not affect any other law, rule, or requirement with respect to confidentiality.

Because no payments are made as a result of a written complaint or claim demanding payment, incidents handled through the Candor process are not required to be reported to the National Practitioner Data Bank.

Further, the Colorado Candor Act notes that any such payment is NOT a payment resulting from

• A final judgment, settlement, or arbitration award against a health care professional or health care institution for medical malpractice for purposes of Colorado reporting requirement Section 13-64-303;
• A malpractice claim settled or in which judgment is rendered against a professional for purposes of reporting by malpractice insurance companies under Section 10-1-120, 10-1-121, 10-1-124, 10-1-125, or 10-1-125.5;
• A final judgment against, settlement entered into by, or arbitration award paid on behalf of an applicant for malpractice under section 24-34-110 (4)(h); or
• A judgment, administrative action, settlement, or arbitration award involving malpractice under Sections 12-29.5-104 (5)(a), 12-29.9-104 (5), 12-32-108.3 (2)(b)(III), 12-33-117 (1)(j), 12-35-129 (1)(q) OR (1)(r), 12-35.5-111 (1)(i), 12-36-118 (4)(b)(III), 12-37.3-114.5, 12-38-116.5 (3)(b)(II), 12-40-118 (1)(r) OR (1)(y), 12-40-127, 12-41-115 (1)(o), 12-41-120 (1)(a), 12-41-210 (1)(k), 12-41-215 (1)(a), 12-42.5-109 (1), or 12-43-224 (8).

There are details.

Patients can still file their own complaints to the Medical Board (which they could otherwise still do).

And states outside of Colorado may require notification of incidents where there is compensation under the Candor process for providers who are licensed in those states, including through the Interstate Medical Licensure Compact.

So, the Colorado Candor Act is a clever process that makes it easier to have a back-and-forth discussion with the patient and their attorney in a reasonably safe environment. If payment is made, reporting requirements are limited, given that payment was not made in response to demand in writing.

So, Colorado codified its interpretation of what is reportable to the federal National Practitioner Data Bank, in a way that ostensibly complies with the Data Bank’s own reporting regulations.

For recreational marijuana, there are state and federal regulations regarding the law. Colorado says it’s OK, within limits. Federal law says otherwise, though federal law exercises enforcement discretion, limiting its actions in Colorado to addressing trafficking.

Reporting to the National Practitioner Data Bank is a federal law. Will the federal Data Bank respect Colorado’s interpretation as to what it deems as reportable?  Probably. That means there could be fewer line items for Colorado physicians compared to other states.

Iowa and Utah have recently implemented their own Candor Acts. “As Colorado goes, so goes the nation.”

What do you think?

Medical Justice provides free consultations to doctors facing medico-legal obstacles. We have solutions for doctor-patient conflicts, unwarranted demands for refunds, online defamation (patient review mischief), meritless litigation, and a gazillion other issues. If you are navigating a medico-legal obstacle, visit our booking page to schedule a free consultation – or use the tool shared below.

Jeffrey Segal, MD, JD

Chief Executive Officer and Founder

Dr. Jeffrey Segal, Chief Executive Officer and Founder of Medical Justice, is a board-certified neurosurgeon. Dr. Segal is a Fellow of the American College of Surgeons; the American College of Legal Medicine; and the American Association of Neurological Surgeons. He is also a member of the North American Spine Society. In the process of conceiving, funding, developing, and growing Medical Justice, Dr. Segal has established himself as one of the country’s leading authorities on medical malpractice issues, counterclaims, and internet-based assaults on reputation.

Dr. Segal was a practicing neurosurgeon for approximately ten years, during which time he also played an active role as a participant on various state-sanctioned medical review panels designed to decrease the incidence of meritless medical malpractice cases.

Dr. Segal holds a M.D. from Baylor College of Medicine, where he also completed a neurosurgical residency. Dr. Segal served as a Spinal Surgery Fellow at The University of South Florida Medical School. He is a member of Phi Beta Kappa as well as the AOA Medical Honor Society. Dr. Segal received his B.A. from the University of Texas and graduated with a J.D. from Concord Law School with highest honors.

In 2000, he co-founded and served as CEO of DarPharma, Inc, a biotechnology company in Chapel Hill, NC, focused on the discovery and development of first-of-class pharmaceuticals for neuropsychiatric disorders.

Dr. Segal is also a partner at Byrd Adatto, a national business and health care law firm. Byrd Adatto was selected as a Best Law Firm in the 2023 edition of the “Best Law Firms” list by U.S. News – Best Lawyers. With over 50 combined years of experience in serving doctors, dentists, and other providers, Byrd Adatto has a national pedigree to address most legal issues that arise in the business and practice of medicine.