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(1)

False Claims Act Violations

and Corporate Compliance

False

 

Claims

 

Act

 

Violations

31 U.S.C. §3729

31 U.S.C. §3729

The

 

Players

1) Department of Justice (DOJ) 

enforces civil and criminal law 2) Office of Inspector General (OIG)

t t t

– cannot go to court

– has authority to administratively 

exclude a provider from a federal 

health care program

The

 

Players

3)  Qui TamRelators

– private party – must be original  source of admissible information

– case brought in federal court

– DOJ may join or may decline

– receives a % of recovery

Violation occurs when a 

person knowingly presents

person knowingly presents 

false or fraudulent claims.

“Reckless

 

disregard

 

of

 

the

 

truth”

 

is

 

sufficient

 

to

 

establish

 

“knowing”

 

violation

 

— do

 

not

 

need

 

to

 

prove

 

specific

 

intent.

However, innocent 

mistakes, even negligence, 

do not constitute a violation 

(2)

False Claims Act Violations

and Corporate Compliance

Intentional Act

Reckless

Reckless

Mistake

Mistake

Reckless

Disregard?

Reckless

Disregard?

False Claims Act Penalties:

Civil money penalties of $5,500 ‐ $11,000/claim

3x the amount of damage sustained by  Government

Possible exclusion from Medicare and  Medicaid Programs

6 year statute of limitations

+

+

=

=

Settlement

Settlement

U.S. v. Krizek, 111 F.3d 934 (D.C.  Cir. 1997)

Physiciany  held liable for claims  submitted on his behalf.

Ohio Hospital Association v. Shalala

(September 25, 1997)

Government policy of demanding 

penalty in lieu of false claims suit is 

“heavy handed” …  but legal!

June 3, 1998 Memorandum from  Eric H. Holder Jr., Deputy Attorney  General, will help providers — but  will not eliminate the use of the will not eliminate the use of the 

False Claims Act in health care  investigations.

(Appendix K) (Appendix K)

However, be aware of Qui Tam

Relators Ex US ex rel. Kosenske v. 

Carlisle HMA, Inc., 2007  WL31490537 (Nov. 14, 2007)

(3)

False Claims Act Violations

and Corporate Compliance

Best

 

means

 

of

 

complying

 

with

 

False Claims Act is an effecti e

Tip:

Tip:

False

 

Claims

 

Act

 

is

 

an

 

effective

 

compliance

 

program.

Corporate Compliance

(Appendix L) (Appendix L)

The OIG has told health care providers  what it thinks they should be doing by:

–Publishing a model Compliance Guidance for 

various providersp  includingg p y physicians

–OIG has published Final Supplemental 

Compliance Guidance for Hospitals on 

January 31, 2005

(Appendix P) (Appendix P)

Result:

Many

 

providers

 

have

 

adopted,

 

or

 

i th

f d

ti

are

 

in

 

the

 

process

 

of

 

adopting,

 

a

 

corporate

 

compliance

 

process

September 25, 2000 —

OIG published its Final Compliance 

Program Guidance for Individual and 

S ll G Ph i i P ti Small Group Physician Practices

(Appendix P) (Appendix P)

“OIG

 

believes

 

that

 

the

 

majority

 

of

 

physicians

 

are

 

honest.”

  

However,

 

“all

 

health

 

care

 

providers

 

have

 

a

 

duty

y

 

to

 

ensure

 

that

 

the

 

claims

 

submitted

 

to

 

Federal

 

Health

 

Plans

 

are

 

true

 

and

 

accurate.”

(4)

False Claims Act Violations

and Corporate Compliance

• Sets forth the fundamental components of  a Compliance Program, but is guidance  only — not a “Model Compliance  Program”

• Analogizes corporate compliance toAnalogizes corporate compliance to  “preventative medicine”

• Urges physicians to adopt a compliance  policy regardless of the size of the practice

•Recognizes that one size does  not fit all and the policy must  be tailored to the needs of be tailored to the needs of  each particular organization

• Must be more than a policy that 

sits in a binder on a shelf

• Must be dynamic and change as 

circumstances dictate circumstances dictate

• Thus, prepare to call it a 

“Compliance Process”

• Stresses importance of training staff 

and fostering open lines of 

communication within the practice communication within the practice

• Have a mechanism to review your 

coding and billing systems coding and billing systems

• The Appendices to the OIG’s Compliance  Guidance to Physicians Groups are an  excellent summary of the law (but must  be updated to reflect current legal  developments such as the most recent  Stark regulations)

Stark regulations).

• OIG’s 1‐31‐05 Supplemental Compliance  Guidance to Hospitals is more up‐to‐date  and is very helpful.

(5)

False Claims Act Violations

and Corporate Compliance

Advantages of a corporate compliance  process:

Evidences organization’s intent to comply with

–Evidences organization s intent to comply with 

the law

Advantages of a corporate compliance process:

–Establishes an institutional memory that will:

•Minimize mistakes that are due to a failure  to document

•Establish a resource within the institution  that can be used to address compliance‐ related questions as they arise

January 31, 2005 Final Compliance Guidance for Hospitals (Appendix O) January 31, 2005 Final Compliance Guidance for Hospitals (Appendix O)

Advantages of a corporate compliance  process:

–Can also help in the defense of a 

i t l i

qui tamclaim

–Will be a mitigating factor if  provider is found liable under the  False Claims Act

Advantages of a corporate compliance  process:

–Improved documentation may enhance 

patient care: p

•minimize billing mistakes

•lessen the chance of an audit

•avoid conflicts with Stark and 

Antikickback Statutes

•May result in ↑in reimbursement

Intentional  Conduct

Advantages of a corporate compliance process:

Advantages of a corporate compliance process:

Mistake Mistake

*Avoids allegation raised in U.S. ex rel  Hefner v. Hackensack University  Medical Center(D.NJ. Aug. 13, 2003) 

that failure to implement an effective that failure to implement an effective 

compliance process is evidence of 

reckless disregard or deliberate 

(6)

False Claims Act Violations

and Corporate Compliance

When examining your internal  processes, do so with the assistance processes, do so with the assistance 

of legal counsel

What to do now?

• Return money to Fiscal Intermediary (FI) 

Part A or Carrier (Part B) or

• Make voluntary disclosure to the OIG 

and/or approach the Department of 

Justice (DOJ)

• What is the difference ‐$$$$, but 

obtain finality

However,

 

you

 

can

 

still

 

correct

 

mistakes

 

without

 

raising

g

 

suspicion

Bottom line – when required,

voluntary disclosure will

Bottom line – when required,

voluntary disclosure will

result in lower repayment

and peace of mind

result in lower repayment

and peace of mind

Problems

 

in

 

contracts...

Consider:

• State law

• Breach can end up in court andBreach can end up in court and 

documents become public

• Stark law is very detail‐oriented 

Ex Kosenskecase

Corporate compliance does not  need to be:

Complicated

Complicated

Disruptive,

 

or

(7)

False Claims Act Violations

and Corporate Compliance

What is needed to make a 

corporate compliance process 

work are:

• Appropriately trained individuals

• Applying common sense in a 

positive environment that is 

institutionally committed to 

References

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