Recent Enforcement Action and Whistleblower Activity Under the Federal False Claims Act.

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Recent Enforcement Action and

Whistleblower Activity Under the

Federal False Claims Act.

HCCA 2011 Mid Central Compliance Conference

Presented by Robert J. Benvenuti III

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Program Agenda

I. The Current Fraud and Abuse Enforcement Environment and the federal False Claims Act

II. What Can be Learned from Recent Cases and Enforcement Trends

III. Practical Observations and Prevention and Response Strategies

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The Current Fraud and Abuse

Enforcement Environment and the

Federal False Claims Act

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The Federal False Claims Act

• A person acts “knowingly” if he or she has actual knowledge of the falsity of the submitted information, or acts in “deliberate ignorance” or “recklessly disregards” the truth or falsity of the information.

• Penalties of between $5,500 and $11,000 per claim, plus

damages of up to three times the amount of the payments falsely received, plus the costs of the legal action brought to recover the money improperly paid.

• Criminal and administrative penalties (such as exclusion) may also apply to the underlying conduct for which the FCA action was brought.

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Public Statements Regarding Fraud and

Abuse Enforcement

• Attorney General Eric Holder stated “DOJ has taken [the government’s] fight against health care fraud to a new level.” • Secretary Sebelius stated “[t]oday, we are turning up the heat

on perpetrators who steal from the taxpayers and threaten the future of Medicare and Medicaid.”

• Assistant Attorney General Tony West stated “[f]rom day one, President Obama and Attorney General Eric Holder has been focused like a laser beam on tracking health care fraud in all of its many forms.”

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Public Statements Regarding Fraud and

Abuse Enforcement

• President Obama stated “[n]ow, covering more Americans will obviously cost a good deal of money at a time where we don't have extra to spend. That's why I have already promised that reform will not add to our deficit over the next ten years. To make that happen, we have already identified hundreds of billions worth of savings in our budget - savings that will come from steps like reducing Medicare overpayments to insurance companies and rooting out waste, fraud and abuse in both Medicare and Medicaid.

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Public Statements Regarding Fraud and

Abuse Enforcement

• Len Nichols, a former senior health policy adviser in the Clinton administration stated, “[w]aste, fraud and abuse have been the favorite thing to promise first because it’s a way of promising cost control while not doing any of the painful stuff … this method is “as old as the Bible.”

• Beth Swanson stated that “every doctor, nurse and assistant” she encountered remarked on how her speech abilities had been left entirely unaffected. Even the speech therapist told me, ‘You don’t need me,’ after stopping in for just a few seconds.”

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2010 – 2011 Fraud and Abuse Enforcement

• Federal prosecutors opened 1,116 criminal health care fraud investigations as of the end of FY 2010, and filed criminal charges in 488 cases involving 931 defendants. A total of 726 defendants were convicted for health care fraud-related crimes during the year.

• HHS OIG recently stated that in the last fiscal year IG investigations have led to the arrest and prosecution of 723 individuals and pulled in more than $4.6 billion to health care programs.

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2010-2011 Fraud and Abuse Enforcement

• The government’s health care fraud prevention and enforcement efforts recovered more than $4 billion in taxpayer dollars in Fiscal Year (FY) 2010 – the highest annual amount ever recovered.

• 2010 was a record year for recoveries obtained in civil health care matters brought under the False Claims Act - more than $2.5 billion, which is the largest in the history of the Department of Justice.

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2010-2011 Fraud and Abuse Enforcement

• Each of the 10 largest FCA recoveries in FY 2010 involved health care.

• During FY 2010 HHS-OIG excluded a total of 3,340 individuals and organizations.

• President Obama’s 2011 budget devotes more than $1.8 billion for program integrity - an increase of $225 million (or 14 percent) over 2010 - to combat waste, fraud, and abuse in the Medicare, Medicaid, and CHIP programs.

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What Can be Learned From Recent

Cases and Enforcement Trends?

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Provider v. Provider

• Ven-A-Care

• Key West pharmacy to professional whistle-blower

• Since 2000, 19 cases resolved (18 through settlement and 1 by trial).

• $2.2 billion recovered for state and federal governments and more than $380 million in whistle-blower fees for the four partners involved in Ven-A-Care's litigation. • Medical necessity and various drug pricing issues

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Playing Doctor

• St. John’s Mercy Health Care and St. John’s

Health System, St. Louis, Missouri

• December 2010, $2.2 million settlement regarding allegations that hospital foot clinics overbilled Medicare for podiatry services.

• Allegations were based on issues of medical necessity and that certain physician services were in fact carried out by nurses and other hospital employees.

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Hospital/Physician Relationships

• St. Joseph Medical Center, Towson, Maryland

• November 2010, agreed to a $22 million settlement under the FCA stemming from allegations that it paid kickbacks and violated the Stark law when it entered into a professional services contract with MidAtlantic Cardiovascular Associates.

• Case revolved around allegations of unnecessary stenting procedures.

• Demonstrates the various levels of financial interplay between hospitals and physicians.

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Hospital/Physician Relationships

• Detroit Medical Center, Detroit, Michigan

• January 2001, $30 million settlement after self-disclosure

• Internal investigation raises questions about the appropriateness of the hospital’s relationship with more than 250 physicians

• Issues included non-FMV leases, free advertising and tickets to events and seminars from 2004-2010

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Misrepresenting the Service Provider

• Joseph Kubacki, MD, former chairperson of the ophthalmology department at the Temple University School of Medicine

• Indicted in 2011 on 114 counts of health care fraud and making false statements in health care matters.

• Kubacki is accused of submitting false claims totaling more than $3 million for services rendered to patients whom Kubacki did not personally see or evaluate. The DOJ claims that Kubacki instructed his staff to stack patient charts of patients seen by other physicians in front of his office. He would then allegedly make false notations in the charts to make it seem that he had seen the patients personally and sign the charts.

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Worthless Services

• Cathedral Rock Nursing Homes, St. Louis, Mo.

• January 2010 criminal and civil settlement involving allegations of failure to provide adequate care to Medicare and Medicaid residents

• Over $1.6 million paid to resolve civil and criminal allegations • Majority owner enters a deferred prosecution agreement

• Admitted conduct included:

– Failure to maintain staff at a sufficient level to provide adequate care

– Failure to provide appropriate wound care at all times – Failure to provide all medications as prescribed

– Falsifying medical records to indicate services were provided when they had not been provided via “charting parties”

– Submitting claims for worthless services

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Site of Service - Inpatient v. Outpatient

• Pinelake Regional Hospital, LLC. d/b/a Jackson Purchase Medical Center, Mayfield, Kentucky

• August 2011, agreed to pay $998,770 to settle FCA allegations that it improperly billed Medicare relative to certain inpatient admissions.

• Claims related to certain gallbladder and biliary tract procedures that were billed as inpatient procedures, but should have been outpatient.

• Five year CIA requires, among other things, that Board members annually sign a document summarizing the Board’s review and oversight of compliance as well as CIA obligations.

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Overpayments Found, but Not Returned

• Catholic Healthcare West

• February 2011, agreed to pay $9.1 million to settle allegations that seven CHW hospitals submitted false Medicare claims.

• The allegations included that three of the hospitals that had received overpayments did not return the overpaid funds when the related Medicare processing errors were discovered.

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Who, What, When, Why and How

• Government investigations at both the federal and state level are more detailed then ever as enforcement officials seem more focused on the who, what, when, why and how of the alleged non-compliance.

• In particular:

• Leadership responsibility and culpability

• Extensive interviewing of leadership, employees and former employees

• Naming names

• Targeting key wrongdoers

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Increasing Frequency of Parallel Criminal

Investigations, Indictments & Convictions

• Fraud and abuse allegations are increasingly being addressed in a parallel fashion leading to significant criminal exposure.

• Criminal agents from a host of agencies are increasingly being tasked to health care investigations allowing prosecutors to develop very viable cases under a variety of statutes.

– Health Care Fraud, 18 U.S.C. § 1347

– Submitting False Claims, 18 U.S.C. § 287 – False Statements, 18 U.S.C. § 1001

– False Statements Related to Health Care 18 U.S.C. § 1035 – Mail/Wire Fraud, 18 U.S.C. §§ 1341 and 1343

– Obstruction Related to Health Care Offense 18 U.S.C. § 1518 – Conspiracy 18 U.S.C. § 371

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Increasing Frequency of Parallel

Administrative Investigations and Action

• You’re under investigation because you’re under investigation

• Affordable Care Act allows HHS to temporarily stop payments to providers and suppliers in cases of suspected fraud. Under the new rules, if there has been a credible fraud allegation, payments can be suspended while an action or investigation is underway.

• Professional Licensing Boards, National Certification Boards and Credentialing entities

• State Medicaid agencies

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Low Hanging Fruit?

• Service volumes which are unreasonably high (encounter and level of service)

• Practice outside the scope of licensure, training and/or experience

• Billing for non-covered services (including medical necessity) • “Real time” or “prior to treatment” services completed after

the fact

• Lack of appropriate physician supervision • Billing for services not provided

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Continued Debate and Likely Expansion

• Implied Certification versus Express Certification

• Conditions of Participation versus Conditions of

Payment

• Worthless Services

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Considerations Regarding FCA Liability

• Health care fraud and abuse investigations are rarely,

if ever, about a single issue.

• That “other provider’s issue,” could very possibly

become your problem as well.

• Today’s helpful software or revenue generating

consultant may lead to tomorrow’s subpoena.

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Considerations Regarding FCA Liability

• Performing and documenting services does not mean

the services were medically necessary.

• White lies can lead to black boots and criminal

convictions.

• Medicaid and Tricare are government sponsored

health care care programs and should not be ignored.

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Considerations Regarding FCA Liability

• Private health care payors are becoming active players

in identifying and responding to fraudulent conduct

and are partnering with enforcement agencies to

facilitate prosecutions and recoveries.

• Spin off/fan out investigations should make providers

particularly concerned about the integrity of their

relationships.

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Avoiding Potential FCA Liability

1. Having the presence of leadership

2. Understanding transparency

3. Operating intelligently and rationally

4. Responding effectively and efficiently to internal or

external allegations of non-compliance.

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Responding to Potential FCA Liability

1. Having the presence of leadership

2. Understanding transparency

3. Operating intelligently and rationally

4. Responding effectively and efficiently to internal or

external allegations of non-compliance.

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Questions

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Thank you.

Robert J. Benvenuti III

Barnett Benvenuti & Butler PLLC 489 East Main Street, Suite 300

Lexington, Kentucky 40507 Tel 859.226.0312

Fax 859.226.0313

Robert.Benvenuti@BBB-Law.com www.KYHealthLaw.com