False Claims Act: Hot Topics in Case Law and Current Investigations

Transcription

1 False Claims Act: Hot Topics in Case Law and Current Investigations Georgia Hospital Association Compliance Retreat Lake Oconee Georgia September 18-19, 2015 Tracy M. Field, M.S., J.D. Sandra L.W. Miller, J.D.

2 Agenda OIG Activities: Investigations and Oversight Fraud Alerts Hospital Compliance Audits A Case Study for Compliance Officers and Hospitals Board Responsibilities Cases of Interest.(not all of them!) 2

3 False Claims Act The DOJ 2014 Numbers $2.3 billion: civil health care fraud settlements/judgments $3.3 billion: overall health care fraud recoveries 2014 health care FCA recoveries were $1 billion less than FY 2013 lowest in five years budget sequestration/fewer resources to fight fraud 782 new civil health care fraud investigations opened 3

4 False Claims Act Number of FCA New Matters, Including Qui Tam Actions 4

5 False Claims Act The DOJ 2014 Numbers $2.3B Healthcare Civil settlements/judgments: Over $1.1B collected from drug/device $333M in settlements/judgments involving hospitals $85M -- Halifax Hospital Medical Center $ 98.2M Community Health Systems 5

6 6

7 False Claims Act 2015 Enforcement Actions Dr. Aria Sabit, Michigan : $11M/criminal May 2015 Apex, a physician-owned distributorship, paid Sabit/ neurosurgeons kickbacks directly tied to referrals Fraud Case for all payers for medically unnecessary spinal fusion surgeries Sabit admitted caused serious bodily injury to patients Other FCA cases pending against POD owners 7

8 OIG Special Fraud Alert June 2014: Lab Payments to Referring Physicians Compensation to collect specimens Registry Payments AKS Implications Seem obvious? Are all financial relationships disclosed for staff? 8

9 False Claims Act Medical Devices Medtronic: June 2014, $9.9 M Settlement Kickbacks to physicians Speaking engagement: excessive compensation Tickets to sporting events Providing marketing plans for doctors 9

10 OIG Fraud Alert Physician Compensation Arrangements May Result in Significant Liability June 9, 2015 Physicians who enter into compensation arrangements such as medical directorships must ensure that those arrangements reflect fair market value for bona fide services the physicians actually provide. (emphasis added) 10

11 OIG Fraud Alert Medical Directorships/ Physician Consultants Is this Breaking News? Compensation Agreements may violate AKS if payment not fair market value for services actually provided Physicians should consider terms 11

12 False Claims Act Physician Compensation Citizens Medical Center (Tx): May 2015 $21.75M AKS/Stark: MD compensation Relators: competing cardiologists Alleged excessive payments to ED physicians (chest pain referrals); cardiologists and gastroenterologists (increase colonoscopies; medical directorships paid $1k per day) 12

13 False Claims Act Physician Compensation Halifax Hospital: 2014 $86M AKS/Stark: MD compensation Employed Oncologists: salaries and bonus pool, including credit for personally performed services and facility charges Employed Neurosurgeons Compliance Official as relator 13

14 Halifax Hospital False Claims Act Physician Compensation Bonus pool included payment for items not personally performed by oncologists - Judge: As matter of law, Stark violation as varied with volume of referrals Neurosurgeons: Hospital made no profit by paying salaries at more than x2 the 90th%le compared to peers - Judge: Go to trial 14

15 Case Study: FDA Mark Heinicke January 29, 2015 Purchased cancer, arthritis, and osteoporosis drugs from foreign countries Drugs were identical to FDA-approved drugs Criminal Charges under the FDCA $177,000 in restitution Civil Liability under the FCA $340,000 to settle false claims allegations 15

16 Case Study: FDA How does the Government conduct an investigation pursuant to the FDCA? Government executes a warrant Violations the FDCA include misbranding of drugs. Government seizes medical and financial records as well as internal research conducted by the practice. 16

17 Case Study: FDA Purpose of an investigation The government likely already knows the scope of the violation. The purpose of the search warrant is to determine what the physicians knew and when they knew it 17

18 Case Study: FDA Level of knowledge about the legality of importing foreign drugs affects the level of criminal liability Felony charges are brought against those with more knowledge; misdemeanor charges against those with less. 18

19 What you think you know: Case Study: FDA The drugs were manufactured in another country Drugs came from the same company that distributes in the United States Drugs were chemically identical to the drug their traditionally purchased counterparts (not counterfeit ) 19

20 What you should know: Case Study: FDA If a drug fails to go through the proper legal channels, it is considered misbranded Misbranded drugs can be chemically identical to their legitimate counterparts Liability extends to those who receive the drug from the distributor Belief that drugs are FDA-approved is not sufficient to absolve liability. 20

21 Penalties Case Study: FDA Civil and criminal penalties are possible Misbranding is a crime under the FDCA Misdemeanor charges can result in fines up to $1,000 and jail time up to one year for each violation. Felony charges can result in fines up to $10,000 and jail time up to three years for each violation. 21

22 OIG Audits Hospital Compliance Reviews OIG Region IV is most active in the USA for these audits Medical Devices - Inpatient/ Outpatient Inpatient/short stay admissions Payments greater than charges MS-DRG Coding High and low payments 22

23 OIG Auditors: OIG Audits Hospital Compliance Reviews We pulled a sample of claims for January 1, 2012 to December 31, 2014 and extrapolate medical necessity denials across the population Your Answer: 23

24 OIG Auditors: OIG Audits Hospital Compliance Reviews Here s a chart, please fill in for each claim whether the claim were coded accurately? Whether medical necessity was satisfied? Your Answer: 24

25 OIG Audits Hospital Compliance Reviews Medical Devices - Inpatient/ Outpatient - Key Issue: What is the device? The Lead (for $3k) The Generator (for $40k) CMS doesn t necessarily agree with OIG interpretations. 25

26 OIG Audits Hospital Compliance Reviews Now what s wrong with that picture? The OIG Letter Announcing Audit Details Scope/ Documents What to do if OIG asks for more. Silence is golden Step out of the room Know the references OIG does not make the law on CMS reimbursement regulations! 26

27 OIG Inquiries OIG Audits Hospital Compliance Reviews Can we see your risk assessment for Meaningful Use? Your answer? 27

28 False Claims Act Statistical Sampling U.S. ex rel. Martin v. Life Care Centers of America (Sept. 2014) Statistics to prove intent? Damages? The Problem : Life Care operates over 200 SNFs; billed 68% of its Medicare rehabilitation stays using the Ultra High category (national average of 35%) 54,000 patients admitted assigned to Ultra High level rehabilitation; over 154,000 submitted claims 28

29

30 False Claims Act Statistical Sampling U.S. ex rel. Martin v. Life Care Centers of America (Sept. 2014)- Statistics to prove intent? Damages? The Problem: Is there really a Problem? Could Life Care operate SNFs located adjacent to rehab hospitals? Have patients needing more rehab? 30

31 False Claims Act Statistical Sampling Each patient individually considered? Is it false claim? What about reversal rate when auditors denials appealed? 31

32 False Claims Act Use of Statistical Sampling Life Care: Statistics Acceptable To Prove FCA: Per Judge: Sampling has been used in litigation for decades: 400 claims for admissions If no statistical sampling, incentivize defendants to commit fraud on wide scale Defendants can challenge expert s qualifications, and present own expert testimony - Used date of admission to discharge, even if no rehab? 32

33 False Claims Act Use of Statistical Sampling U.S. ex. Rel. Ruckh v. Genoa Healthcare (April 2015) Middle District of Florida Statistical sampling could be used to prove relator s FCA claims through upcoding and upcharging practices at 53 of defendant s nursing and rehabilitative facilities The Court has to rule on whether actual sampling to be done will be reliable Stay tuned.. 33

34 False Claims Act Off-label Promotion of Drugs Accredo Health Group (specialty pharmacy): April 2015, $45M Settlement AKS and FCA violation for patient referrals for achieving highest refill percentage for off-label use of drug (separate action against Novartis) adherence improvement plan with calls scripted for nurse 34

35 False Claims Act Off Label Promotion for Drugs - Devices Government target may be manufacturer - Is company advertising/promoting off-label use that FDA has not approved? - Speakers? - Are those speakers/experts prescribing off-label uses more than peers? FCA for practice? 35

36 False Claims Act Drugs - Devices Government target may be manufacturer - Use of Sunshine Act Data? - Impact on Hospitals/ Employed Providers? Speakers? - Ensure outside engagements still within FMV for salary/ use vacation time? - Policy: Should providers give marketing talks? 36

37 False Claims Act 2015 Enforcement Actions Medical Center of Central Georgia $20M settlement Admission status basis of FCA ( ) Five-year CIA must engage independent review organization (IRO) What happened. 37

38 False Claims Act Medical Necessity King s Daughters Medical Center: June 2014; $41M Unnecessary Cardiac Procedures and Kickbacks (prohibited financial arrangements with physicians) Alleged falsification of medical records to support MN Stark violations: Cardiologists compensation unreasonably high and in excess of fair market value 38

39 FALSE CLAIMS ACT Medical Necessity Garden State Settlement : $3.6M settlement for unnecessary cardiac diagnostic tests and procedures Stress tests, echos and more complex diagnostics 39

40 False Claims Act Medical Necessity Baptist Health System: April 2014 : $2.5 M Qui Tam Action: Misdiagnosis and subsequent mistreatment of patients with neurological disorders, including Multiple sclerosis Treatment by providers and drug regimens false Failure by Hospital to disclose physicians misdiagnosis after disclosing improper use of Botox for treatment 40

41 False Claims Act Medical Necessity Dr. Sean Orr, Jacksonville Fla.: $150K Settlement (May 2015) - Former chief neurologist of Baptist Health Systems - Allegations that knowingly misdiagnosed patients with neurological disorders such as multiple sclerosis 41

42 FALSE CLAIMS ACT Medical Necessity Jackson-Madison County General Hospital: $1.3M settlement for unnecessary cardiac procedures Angioplasty, catheterization, ultrasound imaging. Whistleblower: Chief of Cardiology for Hospital 42

43 False Claims Act Medical Necessity Carondelet Health Network: August 2014; $35M settlement Unnecessary Inpatient Rehabilitation Services Relator assertions admissions not necessary Hospital investigated, disclosed $24M already Government: disclosures not timely or adequate 43

44 If Adverse Findings FALSE CLAIMS ACT Self-Audits Document Remediation Beyond Education Efforts? General issues used to show specific false claim Assert knowledge that poor documentation Retention of Overpayments? 44

45 False Claims Act Retained Overpayment NY ex rel Robert P Kane v Healthfirst; USA v. Continuum Alleged knowingly concealed avoided/decreased obligation to pay to government Hospitals received payment from Medicaid managed care plans AND Medicaid Healthfirst (MCO) electronic RAs with errors NY Comptroller notified Hospitals of overpayments made in error (2010) 45

46 False Claims Act Retained Overpayment NY ex rel Robert P Kane v Healthfirst; USA v. Continuum Hospital employee conducted internal investigation early 2011 More than 60 days to repay final repayments not made until March 2013 In some instances, after government issued CIDs Stay tuned..were the overpayments identified as early as government contends? 46

47 CHS Settlement: Medical Necessity False Claims Act Medical Necessity Personal obligation of each individual involved in medical documentation process to ensure accurate documentation Ensure proper order authorization process Ensure employees do not disregard physician orders IRO review: 50 paid claims in discovery sample; 5% error rate threshold o compare to OIG hospital audits?? 47

48 CHS Settlement: FALSE CLAIMS ACT Medical Necessity Must refund overpayment: in 60 days, or within 90 days notify government as to when they can reasonably expect calculation of overpayment and refund. 48

49 False Claims Act Settlements HMA Hospital Incentivized indigent patients led to increased DSH payments Physician cases Pharmaceutical, Device, Hospice cases Medicare Advantage plans Pharmacy Benefit Plans 49

50 QUESTIONS? Tracy M. Field Womble Carlyle Sandridge & Rice, LLP th Street, N.W., Suite 2400 Atlanta, Georgia (404) Sandra L. W. Miller, J.D. Womble Carlyle Sandridge & Rice, LLP 550 South Main Street, Suite 400 Greenville, South Carolina (864)