Pain Management Prescribing Practices and Audits


(August 16, 2017):
Earlier this summer, the U.S. Department of Justice (DOJ) executed its most extensive “health care fraud takedown” to date, initially arresting 412 licensed healthcare providers, doctors, and nurses alleged to have engaged in fraudulent conduct.  As Attorney General Jeff Sessions stated at that time, We are sending a clear message to criminals across this country: We will find you. We will bring you to justice. And you will pay a very high price for what you have done.” Of the 412 individuals arrested, approximately 120 of the defendants, including doctors, were charged for their roles in prescribing and distributing opioids and other dangerous narcotics. The charges aggressively targeted pain management providers billing Medicare, Medicaid, and TRICARE for medically unnecessary prescription drugs and compounded medications that often were never even purchased and / or distributed to beneficiaries. Many of the charges brought against pain management professionals have alleged that these individuals have contributed to the nation’s current opioid epidemic through the unlawful distribution of opioids and other prescription narcotics.


I.  Pain Management Providers Around the Country are Being Targeted by DOJ:

To be clear, there is, in fact, a significant problem with prescription opioid abuse and diversion.  In the first six months of 2017, there have been a number of federal enforcement cases brought against pain management physicians, practices and clinics for a wide variety of opioid-related violations.  Several of these include:

February 2017:  In this Pennsylvania case, a pain management physician pleaded guilty to selling prescriptions for controlled substances in exchange for cash payments.  The government further alleged that many of the customers who went to the clinic were drug dealers or addicts who sold the medications they were prescribed.  It was further alleged that neither the defendant nor the other pain management professionals charged in the case conducted medical or mental health examinations as required by law. The government alleged that during the period that this conspiracy took place, the defendant physician illegally sold over $5 million worth of controlled substances.

March 2017:  Two Michigan physicians providing care to pain management patients were found guilty by a jury for allegedly running a “pill mill” supplying narcotics to drug-seeking individuals.  More specifically, the government argued that the evidence showed that the physicians wrote prescriptions for Schedule II narcotics to individuals outside of the course of professional medical practice and for no legitimate purpose.  The government further claimed that the clinic’s physicians prescribed over 1.5 million oxycodone pills and charged customers $250 cash for a 30-day supply of narcotics.

April 2017:  In this Louisiana case, a physician and former co-owner of a pain management practice pleaded guilty to several criminal counts.  The physician was alleged to have run a “pill mill” where he prescribed controlled substances to drug abusers and seekers for a flat fee, even though there no legitimate medical purpose for the prescriptions.

May 2017:  In this Missouri case, a medical resident pleaded guilty to writing over 70 false prescriptions.  The government reported that the defendant wrote opioid prescriptions using the names of six separate persons, despite the fact that he did not have a physician-patient relationship with any of them.

June 2017:  In this New York case, a criminal complaint was unsealed against a family practice physician with no specialized training in pain management, who is alleged to have written more than 14,000 prescriptions, totaling more than 2.2 million oxycodone pills, between approximately 2012 and 2017.  The government has alleged that thousands of illegal prescriptions were written that did not have a legitimate medical purpose.

July 2017:  This Tennessee-based pain management practice settled False Claims Act violations for $312,000.  The pain practice was alleged to have caused the submission of false claims to Medicare and TennCare for medically unnecessary urine drug tests. The settlement also resolves allegations that the [pain practice] caused the submission of false claims to Medicare and TennCare for non-Food & Drug Administration. . . approved pharmaceuticals. . . “The United States’ investigation was initiated after extensive data analysis identified [the practice] as a potential outlier in the provision of urine drug testing to Medicare patients.”

As you will notice, the standard that DOJ repeatedly cites is that a prescription is illegal if it has no “legitimate medical purpose” and / or is outside the “usual course of his professional practice.”  From a practical standpoint, if your prescribing practices fall into one of these categories, DOJ is likely to argue that your practices are below the applicable standard of care and are indicative of a crime. Typical statutory offenses charged in criminal pain management diversion and / or trafficking cases include:

Drug Trafficking (21 U.S.C. §§ 84l).  Typically charged when alleging that a party knowingly and intentionally, prescribed controlled substances, not for a legitimate medical purpose and not in the usual course of professional practice.

Health Care Fraud (18 U.S.C. § 1347).  It is unlawful for any person to knowingly: (1) defraud any health care benefit program; or (2) obtain by false pretenses any money or property owned or under the control of a health care benefit program.   Any person convicted under this statute could be fined and/or imprisoned for a maximum of 10 years.  If the offense resulted in serious bodily injury, then the eligible term of imprisonment is increased to 20 years.  If the offense resulted in death, then the maximum term of imprisonment is increased to life.

Aggravated Identity Theft (18 U.S.C. § 1028A).  Under this statute, whoever during and in relation to any felony enumerated in subsection (c) [predicate offense], . . . knowingly transfers, possesses, or uses without lawful authority a means of identification of another person, shall, in addition to the punishment provided for such [predicate offense], be sentenced to a term of imprisonment of 2 years. . .

Examples of the 60 predicate offenses include: 18 U.S.C. 1001 (relating to false statements or entries generally), 18 U.S.C. 1035 (relating to false statements relating to health care matters), 18 U.S.C. 1347 (relating to health care fraud) 18 U.S.C. 1343 (relating to wire fraud) 18 U.S.C. 1341 (relating to mail fraud)

Obstruction of a Federal Audit (18 U.S.C. § 1516).  It is illegal to intentionally influence, or obstruct a federal auditor in the course of performing his or her official duties relating to any person or organization receiving more than of $100,000 from the federal government in any one-year period.  The penalty for violating this section is the imposition of a fine and/or a maximum of five years imprisonment.  A federal auditor is any person employed for the purpose of conducting an audit or quality assurance inspection on behalf of the federal government.

Obstruction of a Criminal Investigation into Health Care Offenses (18 U.S.C. § 1518).  It is unlawful to prevent, obstruct, or delay the communication of information relating to a federal health care offense to a criminal investigator. Any person convicted for violating this statute could face a fine and / or up to five years imprisonment. 

Prohibition Against Kickbacks (Anti-Kickback Statute) (42 U.S.C. § 1320a–7b(b)). The federal Anti-Kickback Statute makes it a crime to knowingly and willfully offer, pay, solicit, or receive remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to purposefully induce or reward referrals of items or services payable by a federal health care program. Simply put, it is against the law to pay or provide anything of value in an effort to induce referrals or business related to a federal health care program.

II.  What is Behind the Current Crackdown on Improper Opioid Prescribing Practices?

The DOJ currently believes that these pain management medications are a large contributing factor to the ongoing opioid epidemic. The DOJ believes that opioid medications are being over prescribed and are not being used for the intended purposes, but are ending up on the streets for illegal sale and use. From 1999 to 2015, more than 183,000 patients died from overdoses related to prescription opioids with over 30,000 of those deaths occurring in 2015. Almost half of those deaths from 2015 being from prescription opioid overdose. With nearly 2 million Americans either abusing or dependent on opioids, the Center for Disease Control and Prevention (CDC) took significant steps last year to address the growing problem of opioid abuse in this country. In March 2016, the agency published its CDC Guideline for Prescribing Opioids for Chronic Pain (CDC Guideline). Since the issuance of the CDC Guideline, a growing number of states have either adopted this voluntary guidance or implemented similar restrictions on the prescribing practices of physicians, nurse practitioners and physician assistants in their respective states.

III.  The Role of Medicare Part D:

Medicare Part D is an optional prescription drug program for Medicare beneficiaries. As of 2016 it covered more than 40 million individuals. While Medicare Part D can be very beneficial when it comes to helping its beneficiaries handle their pain management it can also easily be taken advantage of. While Medicare part D was aimed at providing medication for beneficiaries, it has substantially contributed to the opioid crisis through over prescription as well as the redirection of prescriptions for unlawful and abusive purposes, such as recreational use and the sale of opioids.

The CDC recently posted guidelines for medical prescription providers on how to prescribe opioids to patients with chronic pain. The CDC cautions providers on prescribing patients more than 90mg or more of morphine per day, any higher dosage and the patient becomes at risk for overdose or fatality.  A result of over prescription of opioids was one third of all beneficiaries receiving at least one prescription opioid through Medicare Part D in 2016. In total, approximately 14 and a half million people received opioid prescriptions, out of a total of 43.6 million Part D beneficiaries. These 14.4 million prescriptions totaled $4.1 billion for nearly 80 million prescriptions.

Several states such as Alabama and Mississippi have significantly higher proportions of opioid prescriptions for Medicare Part B beneficiaries, 46% and 45% respectively. Approximately 10% of Medicare Part B recipients received one or more opioids on a regular basis, with 5 million beneficiaries receiving opioids for three months or more in 2016.  More than half a million beneficiaries received high amounts of opioids through Part D in 2016. All of these beneficiaries received a morphine equivalent dose (MED) of greater than 120mg per day for at least 3 months[1].

IV.  Conclusion:

To be clear, the government’s interest in opioid and controlled substance prescribing practices isn’t new.  A cursory look at the list of administrative sanctions taken by almost any state’s Medical Board and / or Dental Board will confirm that pain medications have been, and will likely continue to be, a significant problem.  Unfortunately, the number of opioid-related complaint referrals has risen over the practices. Nevertheless, prescribing practices of Federal and state regulators are carefully monitoring the opioid prescribing practices of qualified physicians, nurse practitioners, physician assistants, podiatrists and dentists in their respective jurisdiction. Despite the fact that the CDC March 2016 guidance is “voluntary,” we recommend that pain management professionals review their prescribing practices and verify whether their particular practices are consistent with the recommendations set out in the CDC’s March 2016 guidance.  Additionally, you should ensure that your opioid prescribing practices also comply with any requirements established by your state legislature and any state licensing authorities.

[1] United States of America. U.S. Department of Health & Human Services. Office of Inspector General. HHS OIG Data Brief OEI-02-17-00250.

Health Care Fraud to Remain a DOJ Priority

Exclusion News (May 22, 2017):
By Paul Weidenfeld

Health Care Fraud will continue to be a high priority of the Department of Justice Kenneth Blanco, the Acting Head of the Criminal Division.  Describing health care fraud as “egregious,” “despicable” and driven by “greed” – Mr. Blanco, told the iABA Health Care Fraud Institute last week. went on to say that the department would be “vigorous” in its pursuit of those who violate the law in this area.”

Department of Justice announcements of its commitment to health care fraud enforcement are common and would hardly have been noticed in prior administrations. But by going out of his way to “be clear” that health care fraud is “something that Attorney General Sessions feels very strongly about” and remains a “priority” for DOJ, Mr. Blanco appears to be sending the message that health care fraud had not been left behind in a Justice Department that has been pursuing several new initiatives and has several new areas of focus. 

A Concern that Health Care Fraud Deprives Care to the those in Need

While patient safety and financial costs have been the longstanding focus of health care fraud enforcement, Mr. Blanco told the conference attendees that money stolen is “important,” but that his focus was on the impact that health care fraud has by denying services to those in need. In his view, health care fraud “deprives many people of access to medical care, even the most basic forms of care, because fraud increases the costs for all of us and shuts out those who are the most needy or those in society who are just making it.”

The assertion that there is a direct linkage between health care fraud and the deprivation of services to certain specific segments of the population appears to stake out new ground in the fight against health care fraud. It will be interesting to see if this slight shift in concerns results in any change in health care fraud enforcement policies or investigation goals.

Data Mining and Information Sharing Driving Enforcement

Mr. Blanco also discussed recent investigations and stressed that the “cooperative partnerships” between the criminal division strike force, the investigative agencies and the U.S. Attorney’s Offices were critical to the recent enforcement successes. To this point, he noted that last years “national health care fraud takedown” involved 36 separate U.S. Attorney’s Offices and many State Medicaid Fraud Control Units while resulting in charges against 301 individuals and alleged false billings in the amount of $900 million.

The wide array of investigative and prosecutorial tools at the divisions disposal and the advanced data mining techniques being employed were also credited. As Mr. Blanco stated, “We now have an in-house data analytics team headed by some of the best and brightest. Analyzing billing data from CMS has become a key part of our investigations because it permits us to focus on the most aggravated cases and to identify quickly emerging schemes and new types of Medicare fraud…We have the opportunity to halt schemes as they develop. This cutting-edge method has truly revolutionized how we investigate and prosecute health care fraud.”

Final Thoughts 

The Justice Department may have new leadership, new interests and new initiatives, but last week appears to be intended to send a “clear” message that it’s interest and focus on health care fraud will remain strong under Mr. Sessions.  It will be interesting, however, to keep an eye on whether there is a “shift” in focus to a consideration of the impact of fraud upon the long term availability of services; and if so, what form that shift might take in terms of future cases or initiatives.

 

DOJ Announces $4.7B in FCA Recoveries: What Does It Mean?

DOJ Announces $4.7 billion in FCA Recoveries


FCA RecoveriesBy Paul Weidenfeld
December 16, 2016

The “Third Best Year” in False Claims Act History?

The Department of Justice announced earlier this week that FY 2016 was its third best year in “False Claims Act History” with recoveries of more than $4.7 billion in settlements and judgments. Though it as been trumpeted as DOJ’s return to its record setting years, an examination of the numbers reveal that healthcare FCA recoveries have actually been remarkably consistent over the past seven years, and that they say more about the emphasis DOJ places on resolving “big” cases than they do about overall fraud enforcement.

A Dependence on Large Casesdoj

Big settlements make for impressive press releases and are good for overall numbers, and FY 2016 was no exception.   The “Top 5” settlements accounted for over 52% of all federal recoveries at 2.5 billion, and total announced recoveries for these cases was a staggering $3.55 billion! Following the playbook, the “Top 5” healthcare settlements accounted for a whopping 60% of all federal healthcare FCA recoveries at just a  tick over $1.5 billion. The dependency on large settlements is not new. Indeed, according to research that we have conducted, the five largest settlements consistently accounted for over 50% of recoveries in every calendar year fro 201-2014 just as it did in FY 2016.

Healthcare Recoveries Remarkably Stable

Despite the dependence on obtaining a few large settlements each year, DOJ’s $2.6 billion in healthcare FCA recoveries for FY 2016 continued a trend of surprising stability in recoveries attributable to healthcare.  Beginning in FY 2010 with the recovery of $2.5 billion, over the seven year period including this year, recoveries attributed to healthcare enforcement have averaged $2.5 with a consistency that belies the suggestion that enforcement has been “up and down” or inconsistent.  The recoveries over that period of time are as follows: FY 2010 – $2.5B, FY 2011 – $2.4B, FY 2012 – $3.1B, FY 2013 – $2.7B, FY 2014 – $2.4B, FY 2015 – $2.1B, and FY 2016 – $2.6B!

Fluctuations are Directly Tied to Housing and Financial Fraud Settlements

Although the fluctuations in FCA recoveries from year to year are often related to how “good” a year DOJ has had, the reality is that with healthcare relatively stable, the differences in recoveries over the last seven years have been directly tied to the Housing and Financial Fraud Settlements. In 2012, DOJ’s reported “record recoveries” were attributable to the $1.7 billion in recoveries it received as part of the landmark housing settlement; in the new record of $6 billion recovered in 2014, 3.3 billion came from banking and housing recoveries; and 2016’s “third best” year was tied to the $2 billion in housing and banking settlements.

Recovery Numbers Do Not Necessarily Equate to Enforcement Efficiency

If enforcement is the process of ensuring compliance with the applicable laws and regulations, it is reasonable to question whether it is fair to equate larger FCA recoveries with greater or more effective enforcement in general — or more particularly, with last year’s major settlements as four of the top five cases were by repeat defendants.  This was the second time Pfizer paid a large sum for Wyeth’s alleged misconduct ($784.6 million in 2016 and $413.2 in 2013); Novartis paid $410 million in 2016 and $495 million in 2010 in settlements; Tenet’s $513 million settlement in 2016 was preceded by a $900 million settlement in 2006 that was a “record settlement” at the time, and Wells Fargo participated in the landmark $25 billion dollar in 2012 before entering into the 1.2 billion it paid this year. 

Could Effective Enforcement Result in Lesser instead of Greater Recoveries?

At some point, one might expect greater or more effective enforcement to result in less fraud and, therefore, lower recoveries.  After all, even though enforcement efforts recovered almost $9 billion in Housing and Financial Fraud Settlements, aren’t those losses attributable in some measure (perhaps in large measure) to a lack of enforcement in the first place?  One would also expect that it might detect situations before they turned into “top heavy” billion dollar losses that drive enforcement recoveries so high.

Congratulations are Still in Order

I may wonder about the “meaning” of the recovery of $4.76 billion dollars in FY 2106, but I certainly don’t question its value or importance — or the work and efforts that went into obtaining them. It is an accomplishment and congratulations are in order.

Providers should take notice and do all that they can to stay out of harms way!

 

This article was written by Paul Weidenfeld, Co-Founder of Exclusion Screening, LLC.

A frequent speaker and writer on issues related to the Fraud and Abuse Issues, the False Claims Act and Issues related to Exclusions and Exclusion Screening, feel free to reach out to Paul at paul@exclusionscreening.com or to call him at 202-754-8001.

 

OIG Imposes Record Penalties for Exclusion Violations

exclusion violations
OIG Imposes Record $21.5 Million in Penalties for Exclusion Violations!

The OIG imposed a record $21.5 million civil money penalties and restitution against an Ohio corporation that operates pharmacies and supermarkets in 34 states for exclusion violations involving the employment of excluded individuals and fulfilling prescriptions by excluded prescribers! The settlement alleged that the company filled prescriptions from 84 excluded pharmacists and directly employed 14 pharmacists that had been excluded from federal health care programs.

The Office of Personnel Management participated in the investigation through its Office of Inspector General and confirmed that 14 direct employees had been debarred from participating in the Federal Employee Health Benefit Program (FEHBP).  OPM received over $314,000 in penalties and $628,000 in restitution as part of the settlement.

Federal Health Care Programs do not pay for items or services that are provided, either directly or indirectly, by excluded individuals and the Office of Inspector General also has the authority to impose Civil Money Penalties on providers that knowingly submit such claims. Providers that fail to screen on a monthly basis to identify excluded employees or vendors are considered to have knowningly submitted such claims related to such persons or entities.

When the OIG announced last June that it had created a Special Litigation Unit dedicated to enhancing its enforcement of OIG Exclusion Requirements and Civil Money Penalty, it put the provider community on notice of its continuing commitment to enforce exclusion screening requirements and punish exclusion violations. Since that time, it has announced over 50 settlements involving the employment of exclusion individuals including a number of recent large settlements.

OIG Exclusion

Paul Weidenfeld, Co-Founder and CEO of Exclusion Screening, LLC, is the author of this article. He is a longtime health care lawyer whose practice has focused on False Claims Act cases and health care fraud matters generally. Contact Paul should you have any  questions at: pweidenfeld@exclusionscreening.com or 1-800-294-0952.

DOJ Doubles Down on False Claims Act Penalties!

DOJ Doubles False Claims Act Penalties  By Robert W. Liles.  August 3, 2016.  The False Claims Act is the primary civil enforcement tool utilized by the federal government in its fight against fraud generally, and, in particular, Medicare and Medicaid Fraud.[1]  Already an extraordinarily useful statute forgovernment prosecutors both in termsof ease of use and in terms of the penalties and damages that may be recovered, the Department of Justice has further raised the stakes by virtually doubling the civil monetary penalties that may be assessed.  The action, which was effective August 1, 2016,was taken in accordance with the provisions of the Bipartisan Budget Act of 2015, and this article provides an overview of the False Claims Act anddiscusses the scope of the increases in penalties that are being implemented.

I.  Background of the Federal False Claims Act

Sometimes referred to as “Lincoln’s Law,” the False Claims Act was first passed in 1863 in response to war profiteering. Among its provisions were measures intended to encourage the disclosure of fraud by private persons through the filing of a qui tam suit. The term qui tam is taken from a Latin phrase meaning “he who brings a case on behalf of our lord the King, as well as for himself[2] Under the qui tam (also commonly referred to as “whistleblower”) provisions of the statute, a private person (often referred to as a “relator”) may bring a False Claims Act lawsuit on behalf of, and in the name of, the United States, and possibly share in any recovery made by the government.

II.  How Are False Claims Act Cases Brought Against Health Care Providers?

Cases brought by whistleblowers make up the vast majority of False Claims Act cases filed against health care providers. Between government-initiated cases and qui tam cases brought by whistleblowers, most Compliance Officers have become well acquainted with the statute and its provisions. As set out in a December 2015 DOJ Press Release, during the previous fiscal year, DOJ secured $3.5 billion in civil settlements and judgments in connection with cases involving fraud against the government.[3] Notably, $1.9 billion of these recoveries were health care related. [4] Since early 2009, approximately $17 billion has been recovered under the False Claims Act.[5] This amounts to almost one-half of the total recoveries made under the False Claims Act since the statute was amended in 1986.  For a copy of the Civil Division Fraud Statistics, click here.

III. Provisions of the False Claims Act.

 The False Claims Act [6] imposes civil monetary penalties and exposes any person to civil liability under the circumstances below:

Sec. 3729. False claims: (a) Liability for Certain Acts—any person who:

(1) Knowingly presents, or causes to be presented, to an officer or employee of the United States Government or a member of the Armed Forces of the United States a false or fraudulent claim for payment or approval;

(2) Knowingly makes, uses, or causes to be made or used, a false record or statement to get a false or fraudulent claim paid or approved by the Government;

(3) Conspires to defraud the Government by getting a false or fraudulent claim allowed or paid;

(4) Has possession, custody, or control of property or money used, or to be used, by the Government and, intending to defraud the Government or willfully to conceal the property, delivers, or causes to be delivered, less property than the amount for which the person receives a certificate or receipt;

(5) Authorized to make or deliver a document certifying receipt of property used, or to be used, by the Government and, intending to defraud the Government, makes or delivers the receipt without completely knowing that the information on the receipt is true;

(6) Knowingly buys, or receives as a pledge of an obligation or debt, public property from an officer or employee of the Government, or a member of the Armed Forces, who lawfully may not sell or pledge the property; or

(7) Knowingly makes, uses, or causes to be made or used, a false record or statement to conceal, avoid, or decrease an obligation to pay or transmit money or property to the Government, is liable to the United States Government

IV.  False Claims Act Penalties.

A person found to have violated this statute may be liable for both civil penalties and treble damages. [7] The amount of civil penalties that may be imposed for each false claim depends on when each was made. For claims or statements made after October 23, 1996, but before August 1, 2016, the minimum penalty which may be assessed under 31 U.S.C. 3729 is $5,500 and the maximum penalty is $11,000.

On June 30, 2016, DOJ published an Interim Final Rule in the Federal Register announcing that it intended to increase the minimum per-claim penalty under Section 3730(a)(1) of the FCA. As the Interim Final Rule reflects, claims made on or after August 1, 2016, the minimum penalty which may be assessed under 31 U.S.C. 3729 is $10,781 and the maximum penalty is $21,563. While DOJ has provided a 60-day period for the filing of public comments, as of August 1st, the government had not reconsidered  implementation of these significantly higher penalties.

V.  Conclusion.

From a practical standpoint, the existing applicable penalties have proven more than adequate to potentially force a health care provider into bankruptcy if an acceptable settlement is not reached in a False Claims Act that is on track to be litigated. Nevertheless, the imposition of these higher penalties may very well impact the negotiating position taken by DOJ and its client agencies when a health care provider seeks to resolve a case, rather than litigate the claims.

Now, more than ever, compliance is critical and it is essential that organizations have effective Compliance Plans in place.   Established efforts to comply with the provisions of an effective Compliance Plan can better ensure an organization’s adherence with applicable statutory and regulatory requirements.

False Claims Act

Robert W. Liles, Managing Partner of Liles Parker, LLP and Co-Founder of Exclusion Screening is the author of this article.  Contact Robert through this link to the Liles Parker website  or by phone to (202) 298-8750 if you have any questions or require assistance with drafting and implementing a effective Compliance Plan.

 

 

 

[1] Criminal False Claims may be pursued under 18 U.S.C. § 287.

[2] False Claims Act Cases: Government Intervention in Qui Tam (Whistleblower) Suits, U.S. Department of Justice, available at www.justice.gov/usao/pae/Documents/fcaprocess2.pdf (last accessed May 2016).

[3] Press Release, Department of Justice, Office of Public Affairs, Department Recovers Over $3.5 Billion from False Claims Act Cases in Fiscal Year 2015 (Dec. 3, 2015), available at https://www.justice.gov/opa/pr/justice-department-recovers-over-35-billion-false-claims-act-cases-fiscal-year-2015.

[4] See id.

[5] See id.

[6] Notably, approximately 37 states, along with the District of Columbia and some municipalities, also have their own False Claims Acts that are similar to the federal .

[7] For example, if a physician improperly submits a false claim to Medicare for payment in the amount of $100 and is subsequently paid $100, the physician would be liable under the False Claims Act for both damages and penalties. Under the False Claims Act, the government may recover up to three times the amount of damages it suffers, which in this example would be $300, plus penalties of between $5,500 and $11,000 per false claim. Collectively, the physician’s liability would range from $5,800 to $11,300 for a $100 claim.

Health Care Fraud: Second Conviction Secured in Michigan Excluded Provider Scheme

health care fraudIn February, we reported that the Michigan Attorney General secured a racketeering and health care fraud conviction against an excluded Michigan podiatrist. The podiatrist participated in an elaborate health care fraud scheme with another Michigan provider. In early July, the Michigan Attorney General successfully convicted the doctor who knew or should have known that the podiatrist was excluded.

Health Care Fraud Conviction Details

The Attorney General’s investigators determined that the provider hired a former podiatrist who was convicted of health care fraud in 2003. The podiatrist was subsequently excluded from participation in the federal health care programs for a period of 25 years. The provider billed private insurance and the government for the excluded podiatrist’s medical services as if he performed them. Trial testimony indicated that the provider made payments to the excluded podiatrist from the same account where health care program payments were deposited.

For entering into this scheme, the provider was convicted of racketeering (20-year felony), thirteen counts of health care fraud (4-year felony), and five counts of Medicaid fraud (4-year felony). Up to $200,000 in fines accompanied the convictions.

Takeaway

The Michigan provider was held liable because he “knew or should have known” that the podiatrist he contracted with was excluded from participation in the federal health care programs. The OIG and state Attorney Generals are working to end health care fraud by seeking out providers who employ or contract with excluded persons or entities. The best way to protect yourself from liability is to screen all employees and contractors against all federal and state exclusion lists monthly. Call Exclusion Screening, LLC today for a free assessment of your needs and costs at 1(800) 294-0952

 

Ashley Hudson

Ashley Hudson, Associate Attorney at Liles Parker, LLP and former Chief Operating Officer for Exclusion Screening, LLC, is the author of this article.

Pennsylvania Judge Holds that CIA violations May Result in FCA Liability

OIG

 

In late July, a federal district court in Pennsylvania joined in the flurry of False Claims Act (FCA) decisions. These decisions further interpreted the ACA’s amendments to the law. The court in United States ex rel. Boise v. Cephalon, Inc. considered two important issues. The issues regarded when a party has an obligation to pay the government, and when a failure to do so could result in reverse false claims liability. Providers should be on high alert and ensure that they are in compliance with all requirements. This includes the requirement to screen employees monthly in order to avoid being OIG’s next false claims target.

Background

The defendant in Cephalon failed to comply with its Corporate Integrity Agreement (CIA) and OIG sought repayment. OIG alleged that they failed to comply with the CIA, which caused reverse false claims and produced FCA liability.

Cephalon, a drug manufacturer, argued that it could have only had an obligation to pay penalties under the CIA if HHS-OIG actually demanded payment. The relator argued that Cephalon’s obligation to pay actually arose when it breached the CIA’s reporting requirements. The court disagreed with Cephalon and instead held for the relator. The court found that a CIA imposes contractual obligations through reporting requirements. Furthermore, a breach of these contractual obligations could cause a company to be liable for reverse false claims even if OIG had not yet demanded payment. Finally, the court elaborated that “specific contract remedies” like specific penalties create a “less contingent obligation to pay.”

Takeaways

The federal government is taking advantage of the new false claims recoupment tools made available to it through the ACA. If you are not screening your employees and contractors against state and federal exclusion lists, then now is the time to ensure your practice is complying with the law. Call Exclusion Screening, LLC for a free assessment of your needs and costs at 1-800- 294-0952.

Ashley Hudson

Ashley Hudson, Associate Attorney at Liles Parker, LLP and former Chief Operating Officer for Exclusion Screening, LLC, is the author of this article.

Excluded Individual Conducts Elaborate Health Care Fraud Scheme

close-up-of-the-front-of-a-canadian-ontario-ambulance-1441977

 

The owner of a New Jersey ambulance company was indicted for health care fraud in mid-August of 2015. The owner was excluded from participation in the federal health care programs after being convicted of defrauding New Jersey health care programs in 2003. This is just the latest in a steady stream of health care related enforcement actions by state attorney generals.

Background

New Jersey prosecutors allege that the provider has been the owner and operator of a New Jersey ambulance company to which Medicare and Medicaid have paid out a combined $7.5 million since 2010. The provider allegedly hid his involvement in the company by paying employees in cash. The defendant has owned and operated the ambulance company since 2005, which is only two years after he was excluded from participation in the federal health care programs for a period of 11 years. The provider now faces a 17-count federal indictment with a possible sentence of 30 years in prison for conducting the health care fraud scheme.

Takeaways

It may be difficult to protect yourself from individuals like this New Jersey provider who explicitly sought to defraud the federal health care programs. Providers should, however, try to protect themselves by conducting monthly exclusion screening searches of their employees and contractors. Providers should also maintain proper records of these searches. States, like the federal government, are actively pursuing those who are in violation of federal health care regulations. Remember, compliance is always the best policy!

Ashley Hudson

Ashley Hudson, Associate Attorney at Liles Parker, LLP and former Chief Operating Officer for Exclusion Screening, LLC, is the author of this article. Feel free to contact us at 1-800-294-0952 or online for a free consultation.

Southern District of New York Provides Clarity on “Identifying” Overpayments

false claims act

In early August of 2015, the Southern District of New York (SDNY) provided insight as to when the 60-day clock for returning an overpayment begins to run under the Patient Protection and Affordable Care Act of 2010 (ACA). This decision is particularly relevant to screening for exclusions because the government has started to penalize providers who submit claims for services provided directly or indirectly by an excluded individual or entity for the greater penalty of submitting a false claim. Simply stated, the government now views claims as legally false if an excluded person provided any part of that claim. This makes providers possibly liable pursuant to the false claims act.

The court’s additional clarity on when the 60-day clock begins to run for false claims act liability may be the OIG’s next tool in retrieving Federal dollars from those providers who fail to screen their employees or contractors monthly. Therefore, those providers could be in receipt of overpayments for monies received from services provided by excluded persons or entities.

I. Background – False Claims Act

The Fraud Enforcement and Recovery Act (FERA), enacted in 2009, amended the False Claims Act and added a “reverse false claims” provision. This reverse false claims provision imposes liability of $5,500 to $11,000 per false claim[1] on persons who “knowingly and improperly avoid[] or decrease[] an obligation to pay or transmit money or property to the Government.”[2] The term “knowingly” includes persons who have “actual knowledge of the information,” as well as those who “act in deliberate ignorance” or in “reckless disregard of the truth or falsity of the information.” The term “require[s] no proof of specific intent to defraud.”[3] In addition, FERA further clarified that an “obligation means an established duty, whether or not fixed, arising from an express or implied contractual, grantor-grantee, or licensor-licensee relationship, from a fee-based or similar relationship, from statute or regulation, or from the retention of any overpayment.”[4]

The ACA added additional clarification to the overpayment retention provision. Specifically, it required that a person who has received an overpayment must  “report[] and return[]” the overpayment “by the later of (A) the date which is 60 days after the date on which the overpayment was identified; or (B) the date any corresponding cost report is due, if applicable.” An overpayment is defined as any monies “received or retained” under Medicare or Medicaid to which a person is not entitled.[5] Failure to repay an overpayment by the 60-day deadline constitutes a reverse false claim under the False Claims Act. However, Congress failed to define “identified” in the statute, which caused ambiguity about when the 60-day clock begins to run.

II. United States ex rel. Kane v. Healthfirst, Inc., et al.

The United States ex rel. Kane v. Healthfirst, Inc., et al., case arose after relator Robert Kane, a former Continuum employee, conducted an internal investigation of the company. The investigation revealed that 900 specific claims amounting to over $1 million may have been wrongly submitted and paid by Medicaid as a secondary payor.[6]

According to the Complaint, Continuum was questioned about a “small number of claims” that the Comptroller’s office concluded were improperly submitted for Medicaid reimbursement.[7] After several conversations, the parties discovered that the problem was related to a software glitch that caused certain claims to contain a code which automatically referred the claim for additional payment for covered services. Continuum was sent a corrective software patch by the software vendor that would ensure that Continuum would not improperly bill any other secondary payors.[8]

Once the software problem was identified in December 2010, Continuum asked Kane to determine which claims were improperly submitted due to the software malfunction.[9] After reviewing the claims, Kane sent an email containing a spreadsheet identifying over 900 claims dating back to May 2009 and totaling more than $1 million. All of these claims contained the problematic code that caused the billing error to Continuum’s Vice President for Patient Financial Services, Continuum’s Assistant Vice President for Revenue Cycle Operations- Systems, and other Continuum management. Kane’s email stated that further scrutiny was necessary to confirm his findings, but the Defendants alleged that he had identified a large portion of the claims that were incorrectly billed. Kane was fired four days after sending this email. According to the Complaint, Continuum did nothing with the alleged overpayments Kane identified except for reimbursing five of the 900 erroneously submitted claims.[10]

The Comptroller, however, continued to review Continuum’s billing and found more claims which it promptly brought to Continuum’s attention from March 2011 through February 2012.[11] Continuum reimbursed the claims identified by the Comptroller beginning in April 2013 until March 2013. Continuum never brought Kane’s research to the Comptroller’s attention and only repaid around 300 claims after the Government issued a Civil Investigative Demand in June 2012. Due to its “intentional and reckless”[12] delay in repaying the alleged overpayment more than 60 days after they were identified, the Government, through Relator Kane, alleged that Continuum is liable for reverse false claims. Therefore, Continuum was allegedly liable for treble damages plus an $11,000 penalty for each overpayment illegally retained more than 60 days after identification.[13]

III. SDNY Court Defines “Identifying” Overpayments

Continuum responded to these allegations by filing a Motion to Dismiss arguing that Kane’s email merely “provided notice of potential overpayments and did not identify actual overpayments so as to trigger the ACA’s sixty-day report and return clock.”[14] The term “identified” was left undefined by Congress in the text of the ACA, which gave rise to Continuum’s motion.

In its motion, Continuum contended that the court should adopt a definition of “identified” as “classified with certainty.” The Government responded that instead “an entity ‘has identified an overpayment’ when it ‘has determined, or should have determined through the exercise of reasonable diligence, that [it] has received an overpayment.’” The Government’s definition would essentially define “identified” as when “a person is put on notice that a certain claim may have been overpaid.”[15]

In an effort to ascertain the plain meaning of “identify,” the court consulted dictionary definitions, but it found that the wide range of definitions alone were not particularly helpful. Next, the court utilized canons of construction, reviewed the ACA’s legislative history, and considered the legislative purpose behind including a mandate to return overpayments within the ACA. The court found the legislative history particularly revealing and noted that Congress chose to adopt the Senate’s version of the bill which contained “identified” instead of the House Bill which employed the term “known.” After a thorough evaluation, the court concluded that “identified” should be defined as the moment “when a provider is put on notice of a potential overpayment, rather than when an overpayment is conclusively ascertained, [which] is compatible with the legislative history of the False Claims Act and FERA.”[16]

The court tempered its decision in stating that “the mere existence of an ‘obligation’ does not establish a violation of the False Claims Act.” Instead, the court held that a reverse false claim is only triggered when “an obligation is knowingly concealed or knowingly and improperly avoided or decreased.” Therefore, the court advised that prosecutorial discretion be employed to avoid filing enforcement actions against “well-intentioned providers working with reasonable haste to address overpayments” because this would be “inconsistent with the spirit of the law.”

IV. Takeaways

This decision is significant because it is the first opinion interpreting the term “identify” as it is used in relation to the ACA’s 60-day overpayment reporting requirement. While it is only binding in the Southern District of New York, it will likely guide other court opinions as they arise.

Providers should be aware that they could be liable for overpayments 60 days after they are “put on notice of a potential overpayment.” Therefore, providers should act with “reasonable haste” in reviewing potential overpayments to demonstrate good faith compliance.

Finally, providers must continue to screen their employees and contractors against the Federal and state exclusion lists monthly. The Government has only recently begun to pursue excluded individuals for False Claims Act violations. The new interpretation of “identify” as being “on notice” could provide the Government with a brand new tactic to retrieve federal monies. One of the reasons we strongly advocate that providers check all federal and state exclusion lists monthly is to find potential exclusions and demonstrate maximum compliance before an exclusion problem arises.

V. Conclusion

Failing to screen thoroughly and verify potential matches each month is not a way to avoid liability. It is unlikely that OIG would excuse overpayment liability if a provider claimed he was not “on notice” about an employee’s excluded status if that provider failed to properly screen and verify employees. Further, if a provider has identified a potential match, then he must work diligently to verify this match and return any monies received for services provided by this employee if he is excluded because the initial identification date could potentially start the 60-day clock for false claims act liability. [17]

Ashley Hudson

Ashley Hudson, Associate Attorney at Liles Parker, LLP and former Chief Operating Officer for Exclusion Screening, LLC, is the author of this article. Feel free to contact us at 1-800-294-0952 or online for a free consultation.


[1] Opinion and Order at 9 n.12, United States ex rel. Kane v. Healthfirst, Inc., et al., No. 11-2325 (S.D.N.Y Aug. 3, 2015).

[2] 31 U.S.C. § 3729(a)(1)(G) (2011).

[3] Id. § 3729(b)(1).

[4] Id. § 3729(b)(3) (emphasis added).

[5] 42 U.S.C. § 1320a-7k(d)(4)(B) (2010).

[6] Complaint-in-Intervention of the United States of America at 11, United States ex rel. Kane v. Healthfirst, Inc., et al., No. 11-2325 (S.D.N.Y. June 27, 2014).

[7] Id. at 10.

[8] Id.

[9] Id.at 11.

[10] Id.

[11] Id.

[12] Opinion and Order at 11, United States ex rel. Kane v. Healthfirst, Inc., et al., No. 11-2325 (S.D.N.Y Aug. 3, 2015).

[13] Id. at 8.

[14] Id. at 17.

[15] Id.  (emphasis added).

[16] Id. at 23.

[17] Exclusion Screening, LLC is not a law firm and does not provide legal advice. As such, this is not intended, and should not be taken, as legal advice. We strongly recommend that you seek the advice of counsel whenever decisions that may have legal consequences are made.

DC Contractor for Dental Providers Indicted for False Claim

False Claim
I.  Fraud Found in HHS’ Backyard

A Virginia contractor for dental providers was recently indicted by a grand jury on charges of wire fraud, health care fraud, identity theft and making false statements relating to health care matters. The contractor’s company provided administrative and consulting services to dental practices in and around the Washington, D.C. area. She faces ten years in prison for each count of health care fraud and five years in prison for each count of making a false claim regarding health care matters. The contractor faces several more years for all other charges against her. 

The contractor allegedly used her company as a way to gain admission to dental practices in order to steal identities from patients and the dentists themselves. She would then use the stolen identities to create merchant accounts with dental financing programs by sending in several false enrollment applications. With these accounts, the contractor billed patients for inflated and unauthorized charges. The contractor went so far as to submit false charge slips bearing fake patient signatures for services that were never rendered. To support these false claims, the contractor created false patient records.  

II.  False Claim

This particular provider may be convicted of submitting false claims to Federal or State health care programs. This underscores why screening contractors and vendors is essential to running a fully compliant practice. Any individual or entity that is convicted for submitting a false claim or committing health care fraud can be automatically excluded from receiving funds from any Federal or State health care program. Furthermore, any provider who contracts with an individual or entity that the provider “knew or should have known” was excluded (i.e., was not screening for exclusions on a monthly basis or screening improperly) risks incurring Civil Monetary Penalties (CMPs) of up to $10,000 per item claimed and assessments of up to three times the amount of each item claimed.

III.  Final Thoughts

Helping providers avoid hefty fines for exclusion violations is our business. We work to ensure that providers stay compliant with health care regulations by screening employees, contractors and vendors for exclusions monthly through the two Federal and all available State exclusion lists. Our proprietary exclusion database, SAFER (State and Federal Exclusion Registry), incorporates exclusion data from both the OIG-LEIE and GSA-SAM, as well as 37 individual state exclusion lists. SAFER allows providers to have peace of mind that their practice complies with the many different Federal and State exclusion obligations. Contact the experts at Exclusion Screening, LLC today for a free consultation at 1-800-294-0952 or fill out our online  price quote form.  

OIG Exclusion

Paul Weidenfeld, Co-Founder and CEO of Exclusion Screening, LLC, is the author of this article. He is a longtime health care lawyer whose practice has focused on False Claims Act cases and health care fraud matters generally.

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