Brian Bewley

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When was the last time you thought about your compliance program? As we know, an effective compliance program is important for healthcare companies. It’s also important to review your compliance program periodically and update it according to the latest guidance. OIG guidance and recent Corporate Integrity Agreements (CIAs) are informative about what the OIG is…

Last week, U.S. Senators warned hospitals that higher rates of back surgery may indicate a kickback if the purchase of spinal devices has increased as a result of physician ownership of device distributors.  Senators Orrin Hatch (R-Utah), Max Baucus (D-Mont.) and Chuck Grassley (R-Iowa) issued the bipartisan statement based on an HHS report that showed a direct correlation between…

More and more judges are rejecting settlements negotiated between federal regulators and companies accused of corporate fraud. Two recent examples illustrate this trend.

1. WakeMed

In January of 2013, a judge in North Carolina rejected a settlement reached between the Department of Justice and WakeMed Health and Hospitals, an 870-bed hospital system. WakeMed was accused…

The Departments of Justice and Health and Human Services released a report last week showing that the government has achieved the highest return on investment in the 16-year history of the Health Care Fraud and Abuse (HCFAC) Program.  According to the report, for every dollar spent on healthcare-related fraud and abuse investigations in the last three years, the government recovered $7.90.

The government recovered $4.2 billion from healthcare fraud enforcement efforts in FY 2012, up from $4.1 billion in FY 2011.  The government continues to focus on reducing fraud and waste in the healthcare system.

“This was a record-breaking year for the Departments of Justice and Health and Human Services in our collaborative effort to crack down on health care fraud and protect valuable taxpayer dollars,” said Attorney General Holder.　 “In the past fiscal year, our relentless pursuit of health care fraud resulted in the disruption of an array of sophisticated fraud schemes and the recovery of more taxpayer dollars than ever before.　 This report demonstrates our serious commitment to prosecuting health care fraud and safeguarding our world-class health care programs from abuse.”

The government also touted the use of fraud-fighting tools authorized by the Affordable Care Act including enhanced screenings and enrollment requirements, increased data sharing across the government, expanded recovery efforts for overpayments and greater oversight of private insurance abuses.  Screening of all 1.5 million Medicare-enrolled providers through the new Automated Provider Screening system began in FY 2012.  The report states that nearly 150,000 ineligible providers have already been eliminated from Medicare’s billing system. 

Pediatric critical care transport teams at the Alfred I. duPont Hospital for Children in Wilmington, Delaware participated in a study using iPads to communicate about the patient’s condition prior to and during transport.  The study, which was funded by the Nemours Fund for Children’s Health, found that use of iPads provided better communication between the transport…

A recent report by the Office of Inspector General for the Department of Health and Human Services (OIG) concluded that in Fiscal Year 2010, 61% of Medicare providers that appealed CMS payment decisions were fully successful in their respective appeal.  In other words, these providers persuaded the Administrative Law Judge (ALJ) handling the appeal to completely overturn previous adverse payment decisions made by CMS and its contractors.  Notably, of the 61% of providers that were successful, those appealing Part A and B claims had the most success, 67% and 59% respectively.

The Medicare overpayment appeal process consists of four levels.  At the first level of appeal, which is available after an initial overpayment determination, the individual or entity (appellant) appeals the overpayment decision to CMS’s Medicare Administrative Contractor.  If the appellant is unsuccessful, the next appeal is administered by CMS’s Qualified Independent Contractor (QIC).  The third level of appeal is administered by the ALJ, and the fourth level is administered by the Medicare Appeals Council.  OIG’s report contrasted the high success rate at the ALJ level to the low 20% success rate at the QIC level.  While there are many reasons for the difference, OIG’s report found that the main reason is that ALJs tend to view Medicare’s reimbursement and coverage policies less strictly than CMS’s contractors.  OIG also found that CMS participated in only 10% of all ALJ appeals, which resulted in the ALJ overturning CMS’s decision in 60% of these cases.

In its Semi-Annual Report to Congress, OIG announced that expected recoveries for FY 2012 are $6.9 billion.  The $6.9 billion consists of $923.8 million in audit receivables and $6 billion in investigative receivables.  The investigative receivables include criminal restitution, settlements pursuant to False Claims Act (FCA) cases and Civil Monetary Penalty (CMP) actions, and…

In a recent advisory opinion, the OIG stated that it would not seek sanctions against a hospital-based hospice agency for providing certain volunteer services to terminally ill patients who did not qualify for the hospice benefit. The OIG recognized that the volunteer services may ultimately influence the recipients to select the hospice, which was a…

The Office of Inspector General (OIG) of the Department of Health and Human Services has concluded that a per diem payment structure between a not-for-profit hospital and specialist physicians would not result in administrative sanctions under OIG’s civil monetary penalties law that relates to prohibited remuneration by the anti-kickback statute. According to an OIG Advisory Opinion that was posted this week:

Each year, [the hospital] allocates an aggregate annual payment amount per specialty for on-call coverage payments to participating physicians based on: (1) the likely number of days per month the specialty would be called; (2) the likely number of patients a participating physician would see per call day; and (3) the likely number of patients requiring inpatient care and post-discharge follow-up care in a participating physician’s office (OIG Advisory Opinion 12-15)

Once the aggregate amount per specialty is determined, the hospital divides this amount by 365 days to create the on-call coverage per diem fee to be paid to the specialty physicians. Notably, these physicians receive the per diem fee for each day of coverage under the arrangement even if they are not contacted by the emergency department to treat a patient.

Numerous elements of the particular arrangement at issue were highlighted by OIG as minimizing the risk of fraud and abuse. First, the per diem payment was certified by an independent consultant as commercially reasonable and within the range of fair market value for actual and necessary services. It was also calculated without regard to referrals or other business generated by the participating physicians. The OIG highlighted that the per diem amount was calculated annually in advance and was uniformly administered without regard to the individual physician’s referrals.

The Sixth Circuit recently made some interesting findings related to the knowledge standard in the False Claims Act (“FCA”) and whether maximizing profits is evidence of fraud.

The knowledge standard in the FCA may create a disincentive for defendants to litigate cases brought by the government, especially considering the standard for liability can be met by the government demonstrating that the defendant acted with reckless disregard or in deliberate ignorance of the truth or falsity of the claim.   See 31 U.S.C. § 3729.  In light of this fairly low standard, it is no secret that some defendants decide it is less costly to settle a case, rather than engaging in protracted litigation with the government.  However, in one recent case the defendant, Renal Care Group, Inc. and its wholly-owned subsidiary, decided to fight back against allegations it defrauded the government of millions of dollars while providing dialysis treatments to Medicare beneficiaries suffering from end-stage renal disease.  Renal Care lost the first battle when the district court granted summary judgment in favor of the United States and awarded the government $82.6 million in damages and penalties.  On appeal, however, Renal Care secured a major victory when the court of appeals reversed the district court’s judgments on grounds that Renal Care did not act in reckless disregard under the FCA.

Without going into the specific facts alleged by the government, there are two important findings from this Sixth Circuit decision worth noting.  First, the Sixth Circuit determined that Renal Care did not act recklessly.  Per the Sixth Circuit, a defendant can be held liable under the FCA by showing that it acted with actual knowledge or constructive knowledge.  United States v. Renal Care Group, et al., No. 11-5779, slip op. at 17 (6th Cir. Oct. 5, 2012).  Constructive knowledge can be proven by demonstrating that the defendant acted in deliberate ignorance of, or with reckless disregard to, the truth or falsity.  One of the facts relied on by the court in reaching its decision on the knowledge requirement is that Renal Care sought legal counsel, who in turn sought clarification from CMS on what appears to be fairly ambiguous regulations.  The court focused on this fact, in addition to some others, in reaching its conclusion that Renal Care did not act recklessly.