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Update on Compliance/Enforcement ActionsUpdate on Compliance/Enforcement Actions

From White Coats to From White Coats to Orange Jumpsuits Orange Jumpsuits

© 2014 GARFUNKEL WILD, P.C.3069451

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Paul J. Mahoney, Esq.Paul J. Mahoney, Esq. New York State New York State Assistant Deputy Attorney GeneralAssistant Deputy Attorney General

Andrew E. Blustein, Esq. Andrew E. Blustein, Esq. Partner/Director, Garfunkel Wild, P.C.Partner/Director, Garfunkel Wild, P.C.

John G. Martin, Esq.,John G. Martin, Esq., Partner, Garfunkel Partner, Garfunkel Wild, P.C.Wild, P.C.

Gregory R. Smith, Esq.,Gregory R. Smith, Esq., Partner, Partner, Garfunkel Wild, P.C.Garfunkel Wild, P.C.

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Who Investigates Health Care Who Investigates Health Care Fraud and Abuse?Fraud and Abuse?

FederalFederal

• Department of Justice/U.S. AttorneysDepartment of Justice/U.S. Attorneys

• The Federal Bureau of Investigation The Federal Bureau of Investigation

• The Office of Inspector General for the U.S. The Office of Inspector General for the U.S. Department of Health and Human ServicesDepartment of Health and Human Services

• U.S. Postal InspectorsU.S. Postal Inspectors

• Drug Enforcement AgentsDrug Enforcement Agents


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Who Investigates Health Care Who Investigates Health Care Fraud and Abuse?Fraud and Abuse?

New York StateNew York State

• Medicaid Fraud Control Unit (“MFCU” – part of Medicaid Fraud Control Unit (“MFCU” – part of the New York State Attorney General’s Office)the New York State Attorney General’s Office)

• Local prosecutorsLocal prosecutors

• State Department of HealthState Department of Health

• The Office of the Medicaid Inspector General The Office of the Medicaid Inspector General (OMIG)(OMIG)


GWGWMandatory Compliance ProgramsMandatory Compliance Programs

NY Social Services Law § 363-d mandates NY Social Services Law § 363-d mandates that certain providers implement an that certain providers implement an effective compliance program.effective compliance program.

• Applies to all entities licensed under Articles 28 Applies to all entities licensed under Articles 28 & 36 of the NYS Public Health Law, and Articles & 36 of the NYS Public Health Law, and Articles 16 & 31 of the NYS Mental Health Hygiene Law16 & 31 of the NYS Mental Health Hygiene Law

• Applies to all persons, providers or suppliers Applies to all persons, providers or suppliers that claim or bill at least $500,000 from the that claim or bill at least $500,000 from the Medicaid program in the prior fiscal yearMedicaid program in the prior fiscal year

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Compliance program must address Compliance program must address specific risk areas, including:specific risk areas, including:

GovernanceGovernance Billings and paymentsBillings and payments Medical Necessity and Quality of CareMedical Necessity and Quality of Care Mandatory ReportingMandatory Reporting CredentialingCredentialing Other risk areas that are or should with due diligence Other risk areas that are or should with due diligence

be identified by the providerbe identified by the provider Failure to implement a compliance program may lead to Failure to implement a compliance program may lead to

exclusion from Medicaid and other sanctions.exclusion from Medicaid and other sanctions.

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NY State law requires compliance NY State law requires compliance programs to include the following 8 programs to include the following 8 elements:elements:

• Written policies and procedures that set forth Written policies and procedures that set forth compliance expectationscompliance expectations

• A compliance officer to oversee the day to day A compliance officer to oversee the day to day operation of the entityoperation of the entity

• Compliance training and education for all Compliance training and education for all personnel, including senior management and personnel, including senior management and the governing bodythe governing body

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• Communication lines to the Compliance Communication lines to the Compliance Officer, including a method for anonymous Officer, including a method for anonymous reporting of potential issuesreporting of potential issues

• Disciplinary policies to encourage good faith Disciplinary policies to encourage good faith participation in the compliance programparticipation in the compliance program

• A system for routine identification of A system for routine identification of compliance risk areas specific to provider typecompliance risk areas specific to provider type

• A system for responding to compliance issues, A system for responding to compliance issues, investigating and correcting any identified investigating and correcting any identified problems problems

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• A policy of non-intimidation and non-retaliation A policy of non-intimidation and non-retaliation for good faith participation in the compliance for good faith participation in the compliance programprogram

• Mandatory certification to the NYS Office of the Mandatory certification to the NYS Office of the Medicaid Inspector General every DecemberMedicaid Inspector General every December

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The Federal Anti-kickback StatuteThe Federal Anti-kickback Statute

The Basic Rule The Basic Rule

• In brief, the Anti-Kickback Statute prohibits In brief, the Anti-Kickback Statute prohibits offering, accepting or receiving anything of offering, accepting or receiving anything of value - directly or indirectly - in exchange for value - directly or indirectly - in exchange for or to induce referrals.or to induce referrals.

• Sounds like a common sense rule – do not give Sounds like a common sense rule – do not give anything of value to another person or entity in anything of value to another person or entity in order to induce or reward referrals.order to induce or reward referrals.


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The Federal Anti-kickback StatuteThe Federal Anti-kickback Statute

Potential Penalties For Violation of the AKSPotential Penalties For Violation of the AKS

• Fines of up to $25,000 Fines of up to $25,000

• Imprisonment (of up to 5 years)Imprisonment (of up to 5 years)

• Exclusion from Federal and state health care Exclusion from Federal and state health care programs (including Medicare and Medicaid)programs (including Medicare and Medicaid)

• Qui Tam ActionsQui Tam Actions


GWGW The New York State The New York State Anti-Kickback Statute Anti-Kickback Statute

The Basic RuleThe Basic Rule

• Prohibits Prohibits MedicaidMedicaid providers from accepting, providers from accepting, offering, receiving, or soliciting any payment or offering, receiving, or soliciting any payment or other consideration “to purchase, lease or other consideration “to purchase, lease or order any goods, facilities or services for which order any goods, facilities or services for which payment is made by the State.”payment is made by the State.”

• No intent requirementNo intent requirement

• Most states have their own version of an Anti-Most states have their own version of an Anti-Kickback Statute Kickback Statute

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GWGW The New York State The New York State Anti-Kickback Statute Anti-Kickback Statute

Misdemeanor or Class E Felony (if money or Misdemeanor or Class E Felony (if money or property obtained exceeds $7,500 in value)property obtained exceeds $7,500 in value)

PenaltiesPenalties

• ImprisonmentImprisonment

• A fine of not less than $500 nor more than A fine of not less than $500 nor more than $10,000$10,000

• A fine in an amount, fixed by the court, not to exceed double the amount of the defendant’s gain from a violation of such provisions

• A fine and imprisonment

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GWGWThe False Claims ActsThe False Claims Acts

What is a “false claim”?What is a “false claim”?

• Some are obvious – services not actually Some are obvious – services not actually provided, service are upcoded, or services that provided, service are upcoded, or services that are not medically necessary.are not medically necessary.

• Not so obvious: False CertificationNot so obvious: False Certification

• This is the theory that says every time you bill This is the theory that says every time you bill Medicare (or Medicaid) you are certifying that Medicare (or Medicaid) you are certifying that you are in compliance with all rules and you are in compliance with all rules and regulations of the program.regulations of the program.

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GWGWMedicare Enrollment CertificationMedicare Enrollment Certification

I agree to abide by the Medicare laws, regulations and I agree to abide by the Medicare laws, regulations and program instructions that apply to this supplier. The program instructions that apply to this supplier. The Medicare laws, regulations, and program instructions are Medicare laws, regulations, and program instructions are available through the Medicare contractor. I understand available through the Medicare contractor. I understand that payment of a claim by Medicare is conditioned upon that payment of a claim by Medicare is conditioned upon the claim and the underlying transaction complying with the claim and the underlying transaction complying with such laws, regulations, and program instructions (including, such laws, regulations, and program instructions (including, but not limited to, the Federal anti-kickback statute and the but not limited to, the Federal anti-kickback statute and the Stark law), Stark law), and on the supplier’s compliance with all and on the supplier’s compliance with all applicable conditions of participation in Medicare applicable conditions of participation in Medicare (emphasis added).(emphasis added).

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GWGWMedicaid Billing CertificationMedicaid Billing Certification

The persons providing services, care and The persons providing services, care and supplies have the necessary licensing, supplies have the necessary licensing, certification, training and experience to certification, training and experience to perform the claimed services; I have perform the claimed services; I have reviewed these claims; I (or the entity) reviewed these claims; I (or the entity) have furnished or caused to be furnished have furnished or caused to be furnished the care, services, and supplies itemized the care, services, and supplies itemized and done so in accordance with applicable and done so in accordance with applicable federal and state laws and regulations federal and state laws and regulations

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GWGWFalse CertificationFalse Certification

What can be a “false certification”?What can be a “false certification”?

• Violation of a specific regulation (e.g., lack of Violation of a specific regulation (e.g., lack of proper license to provide service, lack of proper license to provide service, lack of required supervision)required supervision)

• Violation of an instruction in a CMS manualViolation of an instruction in a CMS manual

• Violation of local law or regulationViolation of local law or regulation

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GWGWFalse Claims ActFalse Claims Act

No proof of a specific intent to defraud is No proof of a specific intent to defraud is required. required.

• This is supposed to be a weapon to combat This is supposed to be a weapon to combat fraud.fraud.

• Instead it can be turned into a vehicle to Instead it can be turned into a vehicle to punish less than 100% perfect compliance with punish less than 100% perfect compliance with every Medicare and Medicaid rule and every Medicare and Medicaid rule and regulation.regulation.

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The Federal False Claims ActThe Federal False Claims Act

ConsequencesConsequences

• Treble damagesTreble damages

• Per claim penalty of $5,500 Per claim penalty of $5,500 to $11,000to $11,000

• Exclusion from Federal and state health care Exclusion from Federal and state health care programs (including Medicare and Medicaid).programs (including Medicare and Medicaid).


GWGWQui Tam False Claim ActionsQui Tam False Claim Actions

The Federal and New York False Claims Acts both The Federal and New York False Claims Acts both permit citizens – “whistleblowers” – to commence permit citizens – “whistleblowers” – to commence a False Claims Act case.a False Claims Act case.

This is a growth industry for disgruntled Health This is a growth industry for disgruntled Health Care employees. Whistleblowers can get as Care employees. Whistleblowers can get as much as 30% of the recovery.much as 30% of the recovery.

Qui Tam lawyers work on contingency, like Qui Tam lawyers work on contingency, like malpractice lawyers. No cost to whistleblowers: malpractice lawyers. No cost to whistleblowers: a lottery ticket.a lottery ticket.

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GWGWQui Tam False Claim ActionsQui Tam False Claim Actions

There has been a significant increase in There has been a significant increase in qui tam (i.e., whistleblower) actions over qui tam (i.e., whistleblower) actions over the last two years.the last two years.

• Between 2000 and 2009, approximately 300 to Between 2000 and 2009, approximately 300 to 400 qui tam actions were filed.400 qui tam actions were filed.

• In the last two fiscal years alone, more than In the last two fiscal years alone, more than 700 qui tam actions were filed.700 qui tam actions were filed.

• Since the beginning of 2009, more than $2.47 Since the beginning of 2009, more than $2.47 billionbillion has been recovered through qui tam has been recovered through qui tam actions.actions.

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GWGWFederal Excess – Bringing the HeatFederal Excess – Bringing the Heat

What’s Fraud Got To Do With It?What’s Fraud Got To Do With It? Recent DOJ Press ReleaseRecent DOJ Press Release: “Since its inception in : “Since its inception in

March 2007, the Medicare Fraud Strike Force, March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, now operating in nine cities across the country, has charged over 2,300 defendants who has charged over 2,300 defendants who collectively have billed the Medicare program for collectively have billed the Medicare program for over $7 billion. In addition, the HHS Centers for over $7 billion. In addition, the HHS Centers for Medicare & Medicaid Services, working in Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the increase accountability and decrease the presence of fraudulent providers.”presence of fraudulent providers.”

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GWGWOIG Fraud AlertOIG Fraud Alert

In June of 2015, the OIG issued a Fraud In June of 2015, the OIG issued a Fraud Alert highlighting the need for physician Alert highlighting the need for physician compensation arrangements, such as compensation arrangements, such as medical directorships, to reflect fair medical directorships, to reflect fair market value for legitimate services.market value for legitimate services.

The OIG cautioned providers to carefully The OIG cautioned providers to carefully consider the terms of medical consider the terms of medical directorships and other financial directorships and other financial arrangements before entering into them. arrangements before entering into them.

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GWGWRecent Cases/Enforcement ActionsRecent Cases/Enforcement Actions

U.S. ex. rel Thomas Reed Simmons v. Meridian Surgical Partners, et.al.

Involved allegations that Meridian allowed Involved allegations that Meridian allowed physicians to invest at a valuation that was physicians to invest at a valuation that was significantly lower than Meridian paid to acquire significantly lower than Meridian paid to acquire its controlling interest, ensuring a high return on its controlling interest, ensuring a high return on investment.investment.

Meridian paid over $5 million to settle the case. Meridian paid over $5 million to settle the case.

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GWGWTuomey CaseTuomey Case

U.S. ex rel. Drakeford v. Tuomey: U.S. ex rel. Drakeford v. Tuomey: Court Court Recently Affirmed a verdict of Recently Affirmed a verdict of $237,454,195, because$237,454,195, because

Each year, the physicians were paid a base salary Each year, the physicians were paid a base salary that was adjusted upward or downward depending on that was adjusted upward or downward depending on their collections from the prior year; and their collections from the prior year; and

The physicians received the bulk of their The physicians received the bulk of their compensation in the form of a productivity bonus, compensation in the form of a productivity bonus, pegged at eighty percent of the amount of their pegged at eighty percent of the amount of their collections.collections.

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GWGWHypothetical Fact PatternHypothetical Fact Pattern

In 2013, a new ASC opens for business. Doctors Joe and Frank are the original shareholders, and pay an appropriate fair market value fee for their shares as a start-up entity.

In 2015, Doctor Bob purchases 5% of the ASC’s outstanding shares for $1 million.

Six months later, Doctor Sam purchases 5% of the ASC’s outstanding shares, but for $500,000. Doctor Sam is known to be a strong producer of business for the ASC.

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GWGWHypothetical Fact PatternHypothetical Fact Pattern

Doctor Bob discovers that he paid double what Doctor Sam paid for the same equity, becomes angry and threatens to become a whistleblower.

In response, Doctors Joe and Frank offer to make Doctor Bob the ASC’s “Medical Director of Quality Assurance” at a salary of $200,000 per year, conditioned on Bob increasing his referrals by 10%. Bob accepts.

Sally, a former technician at the ASC who was recently fired for drinking on the job, knows about the arrangement. Sally files a qui tam action alleging that Doctor Bob is a “no show” Medical Director, and that she was fired for complaining about unsafe practices at the ASC. She also alleges improper Medicaid billing.

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