FALSE CLAIMS ACT ENFORCEMENT: RECENT TRENDS AND STEPS TO ENSURE COMPLIANCE AND AVOID FRAUD ALLEGATIONS

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1 FALSE CLAIMS ACT ENFORCEMENT: RECENT TRENDS AND STEPS TO ENSURE COMPLIANCE AND AVOID FRAUD ALLEGATIONS The Carolinas Center s 39 th Annual Hospice & Palliative Care Conference Columbia, SC Presenters: Joy Heath, Robert J. Bobby Higdon, Jr. and Ruth Levy September 28, 2015 WELCOME Joy Heath Partner, Health Care Williams Mullen Raleigh, NC jheath@williamsmullen.com Robert J. Bobby Higdon, Jr. Partner, Litigation Williams Mullen Raleigh, NC bhigdon@williamsmullen.com Ruth Levy Associate, Health Care Williams Mullen Raleigh, NC rlevy@williamsmullen.com

2 WHAT S ON YOUR MIND? #1 ENHANCING OPERATIONS #2 REDUCING RISK 3 TODAY S TOPICS > The False Claims Act > The Civil Monetary Penalties statute > State False Claims statutes > Increased enforcement by the government > Recent trends in hospice fraud cases and qui tam filings > Recognizing hospice fraud schemes > Steps to ensure compliance and avoid False Claims Act liability Please note: This presentation contains general, condensed summaries of actual legal matters, statutes and opinions for information purposes. It is not meant to be and should not be construed as legal advice. Individuals with particular needs on specific issues should retain the services of competent counsel. 4 2

3 OVERVIEW OF THE FALSE CLAIMS ACT > The False Claims Act (FCA), 31 USC , is the government s primary fraud enforcement tool. > The FCA imposes civil liability against persons who knowingly submit false or fraudulent claims to the government or knowingly avoid an obligation to pay money to the government. 5 FALSE CLAIMS ACTS(S) > The North Carolina False Claims Act (N.C. Gen. Stat ) imposes liability on individuals and companies for submission of false claims to the State of North Carolina. > South Carolina false claim statutes: South Carolina Presenting False Claims for Payment Statute (S.C. Code Ann ) South Carolina Medicaid False Claims Statute (S.C. Code Ann ) South Carolina Medicaid False Application Statute (S.C. Code Ann ) South Carolina Insurance Fraud and Reporting Immunity Act (S.C. Code Ann et seq.) 6 3

4 REVERSE FALSE CLAIMS 7 QUI TAM CASES > FCA litigation can be commenced by private citizens (relators or whistleblowers) on behalf of the government. > These qui tam cases are filed by the whistleblower and the whistleblower will receive a portion of the recovery. > The Fraud Enforcement and Recovery Act of 2009 (FERA) amends the FCA, providing the government with the ability to file its own complaint or to amend a whistleblower s complaint. 8 4

5 STANDARD OF PROOF > Knowingly means acting: With actual knowledge; In reckless disregard; or With deliberate ignorance of the truth or falsity of the claim. > In a reverse FCA action, intent is implied to a provider s retention of an overpayment 60 days after it is identified. 9 PENALTIES > Civil liability Penalties of not less than $5,500 and not more than $11,000 plus treble damages, for each false claim > Criminal liability Potential fines and imprisonment under18 USC 287 and 1001 > Novel theories of liability Anti-Kickback Stark 10 5

6 CIVIL MONETARY PENALTIES > Civil Monetary Penalties Statute (42 U.S.C. 1320a-7a) OIG may seek CMPs for, among other things: False Claims Kickbacks Stark violations Retention of overpayments Sanctions: CMPs of $10,000 per claim and $50,000 per kickback Exclusion from federal healthcare programs 11 INCREASED GOVERNMENT ENFORCEMENT > The government has increased its budgetary requests and allocations in connection with the enforcement of health care fraud. > Over the next decade, the Patient Protection and Affordable Care Act (PPACA) increases funding to the Healthcare Fraud and Abuse Control Program (HCFAC) by $350 million. These funds can be used for fraud and abuse control and for the Medicare Integrity Program. 12 6

7 FALSE CLAIMS ACT LIABILITY > Over half of all claims submitted to the government are health care claims. > The government recovers BILLIONS of dollars annually through False Claims Act cases. In fiscal year 2014, HCFAC efforts recovered $3.3 billion from individuals and companies facing allegations of fraud related to health care. 13 HEALTH CARE FRAUD & ABUSE > In its first year of implementation, the CMS Fraud Prevention System: Generated leads for 538 new fraud investigations. Provided new information for 511 existing investigations. Triggered 617 provider interviews and 1,642 beneficiary interviews. In October 2012, Medicare Strike Force operations in 7 cities led to charges against 91 individuals - including doctors, nurses, and other licensed medical professionals - for their alleged participation in Medicare fraud schemes involving approximately $432 million in false billing. 14 7

8 IN NORTH & SOUTH CAROLINA? > A Charlotte man and owner of a behavioral health company was sentenced in 2013 to serve 24 months in prison for attempting to obtain nearly $400,000 in fraudulent reimbursement claims from North Carolina Medicaid. > South Carolina-based Harmony Care Hospice Inc. and CEO/Owner Daniel Burton to Pay U.S. $1.286 Million The United States alleged that Harmony and Burton knowingly submitted false claims for patients who were not eligible for hospice care. 15 WHITE COLLAR & INVESTIGATIONS > Investigative environment > Resources targeting your institution > What to do when you are in the government s line of sight: Fact witness Subject Target > When and how to respond to the government > When and how to do an internal investigation 16 8

9 WAKEMED If you have not been following the WakeMed Medicare claims scandal, you missed plenty of legal fireworks. But outside of the courtroom drama and intrigue, this case should serve as a cautionary tale for all healthcare providers who may be playing fast and loose with Medicare regulations. February 14, WAKEMED The case began following a 2007 audit of WakeMed Health & Hospitals, a large not-for-profit provider in North Carolina. Federal investigators uncovered millions of dollars in claims of Medicare recipients that allegedly should have been reported as less-lucrative procedures. The story played out for weeks in the Charlotte News & Observer. February 14,

10 WAKEMED At first WakeMed denied the charges, but eventually agreed in December to an out-of-court agreement that included a hefty fine of $8 million and regular auditing by the feds. The case became a sensation in healthcare circles when U.S. District Judge Terrence Boyle last month refused to sign the deal. Last week, however, the judge agreed to accept the settlement. February 14, INFORMATION 20 10

11 OVERPAYMENTS TO WAKEMED 21 OVERPAYMENTS TO WAKEMED 22 11

12 COMPLIANCE Protecting Your Agency With Pro-Active Action 23 SEVEN SISTERS OF COMPLIANCE 24 12

13 COMPLIANCE 101 STANDARDS >Develop and distribute written standards of conduct, as well as written policies and procedures, which promote the your agency s commitment to compliance and address specific areas of potential fraud. 25 DUTY TO COOPERATE > Providers MUST cooperate with all: Announced and unannounced site visits Audits Investigations Post-payment reviews Other program integrity activities conducted by the Department N.C. Gen. Stat. Ann. 108C

14 FAILURE TO COOPERATE > Providers who fail to grant prompt and reasonable access, or timely provide specifically designated documentation to the Department may be terminated from the North Carolina Medicaid or North Carolina Health Choice programs. N.C. Gen. Stat. Ann. 108C COMPLIANCE 101 OFFICER > Designate an individual as your compliance officer or appoint a corporate compliance committee. > Charge your officer or committee with the responsibility for operating and monitoring your compliance program. > Make sure your officer/committee reports directly to the CEO and the governing body

15 COMPLIANCE 101 EDUCATION >Develop and implement regular, effective education and training programs for all employees. 29 ATTENTION: HOSPICE PROVIDERS > Hospice Prior Approval (PA) Process: Update (e.g., revocations, discharges or voids) Effective January 1, 2015, requests for hospice prior approval (PA) updates are to be faxed to DMA on Form DMA Requests should not be sent to CSC, the state contractor for NCTracks

16 OIG ADVISORY OPINION 31 TRAINING 32 16

17 COMPLIANCE 101 HOTLINE > Create and maintain a process, such as a hotline or other reporting system, to receive complaints and ensure effective lines of communication between the compliance officer and all employees. > Adopt procedures to protect the anonymity of complainants and to protect whistleblowers from retaliation. 33 COMPLIANCE 101 AUDITS >Use audits and/or other evaluation techniques to monitor compliance, identify problem areas, and assist in the reduction of identified problem areas

18 IMPORTANCE OF AUDITS > Are visits performed as documented? > Do clients and family members verify that services were performed as documented? > Are your staff communications appropriate? > Are you handling re-payments properly? 35 COMPLIANCE 101 DISCIPLINARY >Develop appropriate disciplinary mechanisms to enforce standards and develop policies to address employees who have violated internal compliance policies, applicable statutes, regulations or federal health care program requirements and to address the employment of sanctioned and other specified individuals

19 COMPLIANCE 101 POLICIES >Develop policies that direct prompt and proper responses to detected offenses, including the initiation of appropriate corrective action and preventative measures. 37 SEVEN ELEMENTS > What is the difference? > A conforming compliance plan can: Avoid trouble Facilitate positive resolution Reduce penalties 38 19

20 LABOR & EMPLOYMENT ISSUES Edward S. Schenk, III Partner, Labor & Employment > Companionship exemption > ACA mandates on insurance > Labor Board actions 39 QUESTIONS? 20