Fraud and abuse enforcement aug 2015

Fraud & Abuse

Enforcement Update August 13, 2015

Agenda

� Settlement and enforcement trends

� Noteworthy court decisions

� Cases to watch

� Proposed Stark Law exceptions and OIG’s new

Board guidance

� Enforcement trends—three insights

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Settlement Trends – Physician

Employment

� Physician employment cases on the rise

– St. Mary ($2.3M, income guarantee administration

for 15 MDs)

– All Children's Florida ($7M, FMV of employed MDs)

– New York Heart ($1.3M, MD comp based upon

referral volume)

– Citizens Medical Center ($21.7M alleged above FMV

pay to ED physicians and bonuses for cardiology

referrals)

– Halifax Medical ($85M for oncology bonus program)

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Settlement Trends –

Quality/ Necessity

� Quality and medical necessity on the rise – St. Joseph ($16.5M, unnecessary heart surgery)

(MD sentenced to 30 months in 2013)

– Health Man. Assoc. ($1M, unnecessary sinus endoscopy)

– Baptist Health ($2.5M, two neurologists misdiagnosed MS and brain disorders so they could prescribe drug therapy)

– King’s Daughter Medical ($41M, unnecessary cardiac stents)

– Regional Hospital of Jackson ($510,000, unnecessary cardiac stents)

4

Settlement Trends-Civil AKS

� AKS cases continue– South Shore PHO ($1.8M, recruitment grants to 33

practices)

– Citizens Medical Center ($21.7M ED physicians bonuses and cardiology referrals)

– Westchester Medical ($18.8M, cardiology MDA)

� Not trend, but issue to watch: meaningful use certifications (maybe?)– Shelby Regional Med Center CFO Joe White plead guilty

to making false statements for EHR incentives• White oversaw EHR implementation and was responsible

for attesting to the Meaningful Use

• Fined $4.5M, but no jail

5

Noteworthy Decisions

� U.S. v. Patel (7th Cir. 2/15/2015)

– AKS conviction upheld for MD who received payment from home health company for signing medical necessity certifications

– DOJ conceded that there was no patient steering or influence

– Court read AKS’ concept of referrals broadly

– Lesson: AKS violation not require proof that patients were actually steered or directed to provider

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� No FCA liability for Conditions of Participation or state law

noncompliance unless condition of payment

– U.S ex rel. Rostholder v. Omnicare, FDA manufacturing

deficiency not basis for FCA

– U.S ex rel. Portilla v. Riverview Post Acute, fall risk deficiency

not basis for FCA claim

– U.S v. McKesson, state dental licensure noncompliance not

basis for FCA claim

– But see U.S ex rel. Escobar v. Universal Health, (1st Cir. 2015)

Medicaid licensing and supervision rules were conditions of

payment

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� U.S. ex rel. Drakeford v. Tuomey Healthcare (4th Cir. 7/2/2015)

– Fourth Circuit upholds verdict and judgement of $237M

– Grant of new trial to DOJ was upheld

– Hospital argued that employment agreements should be analyzed under Stark “on their face” not as implemented—Fourth Circuit: jury adequately instructed

– Hospital argued fine was unconstitutionally large—Fourth Circuit: government damages was all Medicare payment, and thus the fine was reasonable

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� U.S. ex rel. Kane v. Continuum Health Partners(SDNY) (8/3/2015)– Medicaid HMO has IT glitch that causes large NY

hospitals to bill Medicaid FFS (resulting in Medicaid overpayments)

– All overpayment were refunded before DOJ intervened (but after DOJ investigation)

– Relator ran report identifying 900 claims, of which only 50% were actual overpayments

• Relator terminated 4 days after emailing report

– Relator files complaint 61 days after he emailed the report to his supervisor

• DOJ intervenes 3.25 years later

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� U.S. ex rel. Kane v. Continuum Health, trial court

denied the hospitals’ motion to dismiss stating:

– Term “identified” has no plain meaning

– Congress’ intent was to place burden of audits and

refunds on the providers

– 60-day clock starts when provider is put on notice

of a potential overpayment

• This is an “unforgiving rule,” but implies that it will be

tempered by prosecutorial discretion

– Retention of an overpayment is per se FCA violation

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Overpayment refunds as

enforcement trend?

� Pediatric Services of America paid $6.88M to

resolve qui tam alleging failure to refund

Medicaid overpayments (8/4/2015)

– DOJ claiming that this is the first settlement

based upon failure to return an overpayment

– Relator was individual responsible for

addressing Medicaid payment credits

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Cases to Watch

� U.S. v. ex rel. Green v. Inst. Of Cardiovascular

Excellence (MD Fl 6/2/2015)

– DOJ investing medical group; negotiations break

down

– Following week: Medicare payments suspended

– Court permitted discovery into connection

between DOJ and CMS actions

• But, ACA permits suspension of payment based upon

a “credible allegation of fraud”

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Cases to Watch

� U.S. ex rel. Paradies et al. v. Asercare Inc., et al. (NDAL)

– FCA cased based on alleged medically unnecessary hospice services

– Court ordered bifurcation of FCA trial

– DOJ must first prove claims for services were objectively false

– Second phase, DOJ must demonstrate that company officials had knowledge

� DOJ not allowed during first phase to introduce evidence of general corporate practices (might paint company in bad light)

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Cases to Watch

� U.S. ex re. Martin v. Life Care Centers of

America (EDTenn)

– DOJ alleged that Life Care billed for services in

its skilled nursing facilities that were not

medically necessary

– Court allowing DOJ to use statistical

extrapolation NOT to determine damages BUT

to establish FCA liability

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Proposed Stark Law Changes

� Proposed PPF 2016 Rule (7/15/2015)

includes several proposed Stark Law changes

– New exception for time-share leases

– New flexibility with “written” agreement,

“signature” requirement, “one year” term, and

holdovers

– Outpatient hospital space not remuneration

– Questions to provider community about health

care reform

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New OIG Board Guidance

� OIG issues Supplemental Guidance to Boards

– April 20, 2015 – First one in 2004

– General expectations for board oversight of

compliance functions

– Roles and relationships

– Reporting to the Board

– Identifying and auditing risk areas

– Encouraging accountability and compliance

oig.hhs.gov/compliance/compliance-guidance/docs/Practical-Guidance-for-Health-

Care-Boards-on-Compliance-Oversight.pdf

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Insight 1: Whistleblowers

Currently Drive Enforcement

� Since FY2008

– Qui tam cases doubled

– DOJ-originated cases cut in half

� Increase in qui tam cases not accidental

– DRA of 2005

– FERA of 2009

– ACA of 2010

� Likely to continue

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www.justice.gov/civil/pages/attachments/2014/11/21/fcastats.pdf

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Insight 2: New OIG CMP Litigation

Team Could Be A Game Changer

� OIG creating new litigation team to focus on:– CMP cases

– Exclusion cases

� Team will include at least 10 attorneys dedicated full time to investigating and litigating CMP and exclusion cases

� Most likely targets will be individuals– Physicians

– Executives

� Consider when settling FCA cases– Secure appropriate releases for individuals

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Settlement Trends: ROI*

� OIG INVESTIGATIONS: FY 2012-FY 2014

– $14.8B in judgments/settlements

– 2,079 Criminal Actions

– 1,172 Civil Actions

– 10,363 Program Exclusions

� Health Care Fraud and Abuse Control

– Largest OIG Funding Source

– For every $1 invested/$7.70 return

– $27.8B since 1997*Gary Cantrell Deputy IG Investigations to Committee on Ways and Means 3/24/15

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Insight 3: Data Breach & HIPAA

Risk Are At An All Time High � Breaches

� Premera Blue Cross (hack of 11M records, 1/2015)

� Anthem (hack of 80M records, 2/2015)

� CareFirst BCBS (hack 1.1M records, 5/2015)

� UCLA (hack of potentially 4.5M patients, 7/2015)

� Settlements

� BCBS Puerto Rico, $3.8M (breach of 13,000)

� Concentra, $1.7M (laptop theft)

� QCA Health Plan, $250K (laptop theft)

� NY-Presbyterian ($3.3M) and Columbia Univ. ($1.5M)

(firewall accidentally inactive)

� Parkview Medical, $800K (71 boxes in driveway)

� Boston Children’s $40K (lost laptop)

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Risk: Data Breach & HIPAA

� OCR published data on breaches

– 1270 breaches effecting 500+ since 2010

– 2004 to 2013: complaints received by OCR doubled and

OCR resolutions almost tripled

� 2015 OCR Enforcement is on “high-impact” breaches

� Revised HIPAA Guidance

• April 2015: Version 2.0 of the Guide to Privacy and Security

of Electronic Health Information [Evolutionary, not

revolutionary…]

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Risk: Data Breach & HIPAA

� Develop and train on clear policies and procedures

for workforce to follow after a breach is discovered – Including who to contact if a breach is discovered

� Identify committee of stakeholders to convene

after a breach (may be existing committee)

� Consider separate committee of stakeholders to

prepare for outside incursion (include high-level

personnel)– Develop response plan

– Include identification of outside resources

� Risk management through insurance

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HIPAA Resource: Not Every

Disclosure is a Breach

� Impermissible use or disclosure is presumed a breach

� Presumption overcome if a low probability that the PHI

was compromised demonstrated by a written risk

assessment of the following:

– The nature and extent of the PHI involved, including the

types of identifiers and the likelihood of re-identification;

– The unauthorized person who used the PHI or to whom

the disclosure was made;

– Whether the PHI was actually acquired or viewed; and

– The extent to which the risk of PHI has been mitigated.

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Questions?

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Presenter Biographies

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Jeffrey Fitzgerald, Shareholder

Health Care Regulatory

303.583.8205 | [email protected]

Brian D. Bewley , Shareholder

Health Care Regulatory

816.360.4372 | [email protected]

Thoroughness and thoughtfulness are the keys to Jeff

Fitzgerald’s success in defending health care clients in

health care fraud investigations.

He believes effective strategies for successfully defending

investigations include the rigorous exploration of the facts

and a detailed analysis of the applicable regulations. Jeff

represents health care providers in disputes with federal

and state licensure bodies, professional licensure boards,

and other regulators and law enforcement agencies.

He also assists health care companies that have proactively

discovered potential compliance issues. Jeff uses his

experience in resolving investigations to develop practical

solutions that bring finality and risk reduction to compliance

problems.

Brian focuses his practice on healthcare fraud and abuse

and compliance issues, and routinely represents entities

under investigation based on alleged violations of various

civil, criminal, and administrative laws, including the False

Claims Act (FCA) and OIG’s Civil Monetary Penalties (CMP).

Prior to joining Polsinelli, Brian served as Senior Counsel at

OIG-HHS and acted as the Team Leader for the Boston,

Miami, Dallas, and San Francisco regions. Brian was also

appointed by a former United States Attorney, now a

federal court judge, to act as a Special Assistant U.S.

Attorney to handle civil health care fraud matters.

Brian frequently presents on various health care regulatory

fraud and abuse issues, acts as Program Chair for the Health

Care Compliance Association’s Midwest Region Conference,

and serves as a member of the American Health Lawyers

Association Advisory Opinion Task Force for the Fraud and

Abuse Practice Group.

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