The U.S. Department of Justice (DOJ) and the New York State Attorney General intervened in a federal False Claims Act (FCA) case on June 27, 2014, accusing Mount Sinai Health System of failing to report and return Medicaid overpayments within 60 days of identifying them. See U.S. ex rel Kane v. Healthfirst, Inc., et al., No. 11-2325 (S.D.N.Y). This case is one of the first examples of litigation involving “the 60-day repayment provision” under the Affordable Care Act (ACA).
Kimela West
Another Hospital Faces Stark Fight: The Halifax Hospital Decisions
On November 13 and November 18, the federal district court handed down separate rulings on summary judgment motions in a Florida Stark Law case that many consider the new Tuomey–U.S. ex rel. Baklid-Kunz v. Halifax Medical Center. In the first decision, the Court granted the U.S. partial summary judgment on the Stark violation with respect to compensation paid to certain medical oncologists employed by the hospital. In the second decision, the Court denied the hospital’s motion for summary judgment with respect to certain neurosurgeons employed by the hospital. Both decisions tee up important hospital/physician employment issues for trial.
The case stems from a qui tam False Claims Act lawsuit filed in 2009 in which Elin Baklid-Kunz, the former compliance officer, made allegations regarding Halifax Hospital Medical Center (“Halifax Hospital”) and Halifax Staffing, Inc. (“Halifax Staffing”) (collectively, “Halifax”). The compliance officer alleged that Halifax:
- Had financial relationships with physicians that did not meet a Stark exception, and as a result the physicians inappropriately referred Medicare services to Halifax; and
- Inappropriately billed other services to Medicare.
The Department of Justice chose to intervene in the lawsuit in 2011 with respect to the Stark Law issues. Halifax filed a Motion for Summary Judgment and the U.S. filed a Motion for Partial Summary Judgment with respect to the Stark Law issues.
Ruling on the Government’s Motion for Partial Summary Judgment
Two different compensation arrangements were the subject of these decisions. In the first decision, the Court considered the Government’s motion for partial summary judgment with respect to compensation paid to the medical oncologist employed by Halifax and the resulting designated health service referrals from those physicians. The alleged Stark violations were the result of employment agreements entered into with six medical oncologists in 2005 that provided for an incentive bonus pool equal to 15% of the “operating margin for the Medial Oncology program” of the Hospital. Even though the physicians were permitted to divide that pool among themselves as they determined, which they did based on individual production, the Hospital admitted that the pool included revenue from services that were not personally performed by the medical oncologists, such as fees related to the administration of chemotherapy.
What Healthcare Organizations can do to Prepare for the Mandatory Compliance Condition of Enrollment
With the passage of the ACA, the voluntary nature of compliance programs is about to change. Smaller healthcare organizations and other ancillary providers who have previously not established compliance programs will now be required to adopt formal programs. The ACA mandates providers and suppliers participating in federal health care programs to implement compliance programs with “core elements” as a condition of enrollment.
The HHS Secretary is responsible for setting a timeline to implement the new “core elements” for each health care sector and then setting a timeline for providers to adopt compliance programs. Details regarding the extent of the program have not yet been described or published. Skilled nursing facilities are the first providers required to implement an effective compliance program by March 23, 2013.
Our Insight. Your Advantage. By doing the work now, healthcare organizations can get ahead and avoid surprises when HHS eventually publishes the mandatory compliance program rules for other healthcare sectors. Many in the healthcare industry anticipate the OIG’s voluntary compliance program guidance will serve as an example to HHS as it determines which compliance program elements shall be required. As you prepare your compliance programs,