Whistleblowers: What You Need to Know To Protect Your Agency

Whistleblowers:

Whistleblowers:

What You Need to Know

What You Need to Know

To Protect Your Agency

To Protect Your Agency

Presented by: Denise Bonn Deputy Director Center for Health Care Law

National Association for Home Care & Hospice Denise-Bonn@nahc.org

(202) 547-5262

Whistleblower Actions

„ DOJ collected $3.1 Billion from fraud actions in 2006

„ 72% from health care; only 20% from defense contractors

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Do you think that you don’t have

to be concerned?

1. You are a small agency

2. Whistleblower suits have not been filed against HHAs or Hospices

3. You are not filing false claims

YOU ARE WRONG

What is a Whistleblower suit?

„ Private person files lawsuit against Provider

ƒ alleging provider filed false claims with U.S.

ƒ with right to recover part of the proceeds if suit is successful

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Suit authorized by federal Civil

False Claims Act, 31 U.S.C. § 3730

“Qui Tam”

What is a False Claim under the

FCA?

„ knowingly present false or fraudulent claim for payment

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What is “knowingly” under FCA?

„ actual knowledge

„ acts in deliberate ignorance (ostrich)

„ acts in reckless disregard

„ Government does NOT have to prove specific intent to defraud

What is Defendant’s potential

liability?

„ 3X damages

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Why is the person called a

whistleblower?

„ Individual must have direct and

independent knowledge of alleged false claims

„ Usually disgruntled employee

„ Sometimes a spurned spouse or lover

„ Sometimes a competitor

Does an employee have to bring

the problem to your attention

BEFORE filing suit?

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How can you find out about

problem before suit is filed?

„ Hotline

„ Exit interview with employee

„ Employees believe you will do something about alleged fraud

Risk Areas

HHA and Hospice:

„ Claims

ƒ

Billing for services not rendered

ƒ

Furnishing services which are not

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Risk Areas

(cont’d)

HHA and Hospice:

„ Claims

ƒ

Furnishing services which were not ordered by a physician

ƒ

Furnishing services by unlicensed personnel

ƒ

Furnishing services supported by falsified documentation

„ Marketing: improper payments to referral sources

Home Health Risk Areas

„ Furnishing services to patients who are not homebound

„ Always billing 5 therapy visits to avoid LUPA

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Hospice Risk Areas

„ Certifying patients who have more than six months to live

Risk Areas – Medicaid

State Medicaid False Claims Acts

„ DRA incentives for States to adopt Medicaid False Claims Acts

„ Reward: states keep 10% more

„ OIG must review state law

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Providers with $5 Million or More

Medicaid Revenues

„ Must establish written policies for your employees and contractors about:

ƒstate and Federal FCAs

ƒwhistleblower protections

ƒyour policies for detecting and preventing fraud and abuse

„ Provider non-compliance = Non-payment (DRA 2005)

„ FAQs:

http://www.cms.hhs.gov/smdl/downloads/SMD03 2207Att1.pdf

What should you do if employee

comes to you with alleged

improper activity?

„ Investigate

„ Report results back to employee

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Should you fire the employee or

threaten termination if he discloses

his concerns to the government?

NO!

Employment protections for

whistleblower

„ Protected for investigation, initiation, assistance in suit

„ If discharged, demoted, suspended, threatened, harassed, or discriminated against for above is entitled to:

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Employment protections for

whistleblower

(cont’d)

„ If discharged, demoted, suspended, threatened, harassed, or discriminated against for above is entitled to:

ƒ

2X back pay

ƒ

Interest

ƒ

Special damages, including attorneys’ fees and costs

How can you DETER whistleblower

suits?

„ Hotline

„ Compliance Plan

„ Review billing

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Whistleblower Procedure

„ Whistleblower observes what he/she believes is illegal activity

ƒ

false billing, false cost report, kickback, Stark violation

ƒ

gathers information and evidence to support his/her allegations

ƒ

may or may not confront employer with alleged illegal activity

ƒ

brings information and evidence to a lawyer

Whistleblower files suit in

Federal Court

„ Suit is brought in the name of U.S.

„ Suit filed “under seal”

„ Not filed upon Defendant until court so orders

„ Whistleblower’s lawyer gives U.S. copy of all information and evidence

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Government may:

„ Take over the case

ƒ

Can choose to proceed with administrative remedy for CMP, rather than court proceeding

ƒ

Can choose to file criminal action as well as

civil action

„ Dismiss the case

„ Decline to proceed with case

ƒ

Whistleblower may then proceed with the case

„ Settle case with Defendant

Other Potential Liability:

„Stark

„Anti-Kickback

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If suit is successful, what can

whistleblower get?

„ 15-30% of proceeds

„ Expenses

„ Attorneys’ fees

„ Costs

ALL PAID BY DEFENDANT

What if whistleblower “planned and

initiated” the false claim?

„ Receive reduced amount of proceeds

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What if Defendant wins?

„ Court MAY award Defendant attorneys’ fees and expenses

IF

Defendant WINS, AND

What if Defendant wins?

(cont’d)

„ Court finds U.S. position was not “substantially justified”

ƒ

Size limit

ƒIndividual net worth not more than $2M

ƒBusiness net worth not more than $7M and 500 employees

ƒNon-profit exception

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Hospice Qui Tam Case

„ Odyssey

ƒ Former Regional Clinical Administrator filed qui tam case

ƒ Patients lived longer than 6 months

ƒAllegation that General Managers under pressure to admit patients who did not meet hospice requirements

ƒAllegation that whistleblower recommended that some patients be discharged

ƒClaims 2001-2005

ƒSettled for $13 million

ƒWhistleblower got $2.3 million

ƒU.S. ex rel. Russell v. Odyssey Health Care, Inc., E.D.

Wis., 2:03-cv-00865-AEG

Home Health Qui Tam Cases

„ Perez Case

ƒ

Payroll clerk files qui tam action against

Provident Home Health Care Services, Inc., Tri-Regional Home Health, owner Lourdes Perez, etc. (Los Angeles, CA) in 4/03

„(10/01– 4/03) billing for 1,000’s of visits never

performed

„Sept. 2003 – Medicare suspended payment and seized more than $20M in assets

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Home Health Qui Tam Cases

(cont’d)

ƒCriminal case against Perez –

ƒAllegations

ƒKickbacks to patients, nurses, marketers and physicians

ƒBilling for patients not homebound and no medical necessity for services

ƒBilling Medicare for services not rendered

ƒCreating false records to support false claims

„ Perez pleaded guilty Oct. 2004

„ Agreed to repay $33.9 million

„ Sentenced to 46 months in jail „ RN (DON) also pleaded guilty

„ Whistleblower to get more than 20% of the recovery

„ Government said investigation is continuing

„ U.S. v. Perez, C.D. CA, CR 04-1155 SVW (unsealed 9/6/06)

Home Health Qui Tam Cases

(cont’d)

„ Perez progeny?

ƒ

Employee of Community Home Health filed

qui tam case

ƒ

Medicare suspended payment August 2004

ƒ

Criminal case against owner, Nida Campanille

- She pleaded guilty to scheme (May 2003 – August 2004)

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Home Health Qui Tam Cases

(cont’d)

„forged physician signatures and falsified

medical records to conceal the fraud - 2 years jail

- $600,000 restitution

„(RN also pleaded guilty; LPN admitted to forging physician signatures and

falsifying medical records)

„U.S. ex rel. Shutt v. Community Home

Health Care Services, Inc., C.D. CA, No.

2:04-cv-02075-MMM

Home Health Qui Tam Cases

(cont’d)

„ Aging Care Home Health

ƒ

Two whistleblowers filed qui tam case: former employee of HHA and former employee of physician (2002)

ƒ

Suit against HHA and Government alleged claims were false because referrals violated Stark II and Anti-Kickback

ƒ

Multiple Medical Directors/physicians for HHA Advisory Board

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Home Health Qui Tam Cases

(cont’d)

ƒ

Court decision re: Stark violations (5 physicians) (Feb. 2006)

„Physicians referred to HHA

„Sham contracts

„HHA paid physicians for little or no services OR to perform routine services for physicians’ own patients

„HHA and owner must pay government more than $400,000 for services rendered to patients referred by the 5 physicians during period of prohibited referrals (9/99 – 11/03)

„Government alleged Anti-Kickback violations re:

payments for referrals by Aging Care and owner to 5 physicians plus an additional 6 physicians

U.S. v. Medica-Rents Co., No 4:01-CV-198-Y, 2006 WL 3635416 (N.D. Tex. Dec. 7, 2006)

Court awarded attorneys’ fees to successful Defendant

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U.S. v. Medica-Rents Co.

(cont’d)

ƒ

Government withheld crucial evidence from Medica-Rents

ƒ

Court awarded attorneys fees to Defendant because of Government’s bad faith

ƒ

Defendant was too large a corporation to qualify for attorneys fees under the

“substantially justified” test

What Should You Do?

„ Compliance must be top down

„ Educate your staff and contractors

„ Control and monitor your marketers

„ Review and monitor billing

„ Review all contracts with referral sources