The great basketball player Michael Jordon observed:
The minute you get away from fundamentals-whether it is proper technique, work ethic or mental preparation- the bottom can fall out of your game, your schoolwork, your job, or whatever you are doing.
Paying attention to the fundamentals may seem obvious. With seemingly endless change, however, healthcare businesses and professionals get confused about what they can or cannot do and frustrated by seemingly ever-changing rules. Some stop trying to critically examine their business practices. Others decide to do whatever makes sense to them and risk having to explain later. Still others are either in denial; either “this rule cannot include me”, or “I’m too small/there are too many others, they will never look at me.” The consequence is that, whether deliberately or inadvertently, some physicians and healthcare organizations themselves facing serious potential consequences.
2016 – $4.7 billion in False Claims Act recoveries
The Department of Justice reported that in federal fiscal year 2016, which ended on September 30, this agency recovered $4.7 billion as the result of judgments and settlements under the Civil False Claims Act (“FCA”, the so-called “Whistleblower” statute). Included in this total are settlements involving, among others, the banking, securities, and defense industries, The settlement amounts do not include the defendants’ cost of defending themselves.
Significantly, over half of this amount, $2.5 billion (53%), was collected from parties involved in the healthcare industry- healthcare systems, businesses, individual physicians, etc. The Whistleblowers who initiated many of these cases (primarily disgruntled current or former employees, or competitors) were awarded approximately 20% of that amount, $519 million.
It is fundamental for healthcare businesses and professionals to keep in mind: Whistleblowing is alive, well, well-known and potentially lucrative for Whistleblowers.
Ignoring the rules can lead to a disaster
As in prior years, many of the FCA settlements in 2016 involved large organizations. However, a significant number did not. For example, a New Jersey physician, an OB-GYN, settled FCA allegations for $5.25 million. Although this physician avoided criminal prosecution, they and will be excluded from participating in the Federal health care programs (including Medicare and Medicaid) for 20 years. It remains to be seen whether the physician will face further sanctions; for example, will the state licensing board(s) seek to revoke their license(s), will his/her hospital privileges will be restricted, etc.?
It is fundamental for healthcare businesses and professionals to keep in mind: Healthcare organizations and professionals that submit claims for fraudulent services may find themselves facing both financial and professional disaster, even if they avoid imprisonment.
The obligation to exercise professional judgment never ends
During 2016, 21st Century Oncology and its wholly-owned subsidiary, South Florida Radiation Oncology, LLC, settled allegations of performing unnecessary services. These defendants settled the allegations by agreeing to pay the federal government $34.7 million. As part of the settlement, the Whistleblower, who was a former 21st Century physicist, will receive $7 million.
It is fundamental for healthcare businesses and professionals to keep in mind: Physicians (as well as other healthcare professionals) may not ignore their obligation to question whether the items and services they provide/order are medically reasonable and necessary.
FCA risk is not limited to healthcare organizations and licensed professionals
After litigating allegations involving arrangements with physicians that violated the Federal Kickback Prohibition and Stark Physician Self-Referral restrictions, Toumey Healthcare faced a $237 million judgement, which was finally settled for $72 million. (NOTE: It is still unclear whether the physicians involved will be sanctioned.) However, less well reported was the settlement between the Department of Justice and the individual who served Toumey’s chief executive officer during the time in question, who is not a physician. In order to settle the allegations concerning this individual’s involvement, he will be personally liable to pay $ 1 million. In addition, and perhaps more significantly, this individual will be excluded from participation in the Federal healthcare programs for 4 years; which means, among other things, no participant in either Medicare or Medicaid (for example, a hospital or medical group) can compensate him/her using funds derived from a Federal healthcare program.
It is fundamental for healthcare businesses and professionals, as well as their administrative staffs to keep in mind: Non-physicians may be sanctioned too.
Lab Company Settles FCA Allegations for $ 38 Million
A Whistleblower alleged that a clinical laboratory company provided improper payments, computer software, and meals to potentially referring physicians during a 4 year period, 2008-2011. In order to settle these allegations, the defendant agreed to pay Medicare $35.5 million and pay various state Medicaid programs $2.5 million. Of this amount, the Whistleblower will receive approximately $7.8 million. (Whether the physicians involved will be sanctioned is unknown at this time.)
It is fundamental for healthcare businesses and professionals to keep in mind: There is no excuse for ignoring federal guidelines concerning the relationship between a referral source and the recipient of their referrals.
Two more 2016 settlements illustrate the reach of the FCA
A two person dermatology practice in north Georgia agreed to pay $1.9 million in order to settle allegations that they billed for evaluation and management services which were not covered by Medicare.
It is fundamental for healthcare businesses and professionals to keep in mind: Before you submit claims for payment, make sure that the items/services were rendered as claimed and that they meet the requirements of Medicare or Medicaid.
A psychiatrist in solo practice improperly billed for telehealth services. In order to settle this allegation, the physician agreed to pay $36,704.
It is fundamental for healthcare businesses and professionals to keep in mind: No provider of healthcare items and services is too small or too remote to avoid scrutiny or sanction.
Additional fundamental lessons common to many FCA settlements, include:
- Many of these cases originate with individuals who are/were employees or contractors of and know an organization’s internal operations.
- The size of the organization or whether it is a for-profit or not-for-profit entity is of no consequence to Whistleblowers or the Department of Justice.
- In addition to financial penalties, individuals face disciplinary sanctions and reputational damage that may be irreversible.
- Organizations and professionals that do not maintain robust compliance programs, or do not seek or chose to ignore advice from experienced healthcare counsel may be assuming more risk than they recognize.
- Ignorance is not an effective defense.
- The best defense is to assemble a team of experts, including a billing consultant, an accountant, and a healthcare attorney, all of whom have experience working with similar organizations and professionals.
- No matter what else happens with healthcare reform, you ignore these fundamentals at your peril.
If you see your organization reflected in any of the examples of FCA settlements described above and want to avoid the same fate, or you want to take steps to ensure that your organization will not be included in future FCA statistics, and if your organization has not already done so, establishing a relationship with experienced healthcare counsel is something you should seriously consider doing, now.
By Stephen H. Siegel, Esq.