Stark Law Introduction

Transcription

1 Stark Law Introduction 41 st Annual SCALL Institute March 23, 2013 Eric B. Gordon Partner McDermott Will & Emery LLP Boston Brussels Chicago Düsseldorf Houston London Los Angeles Miami Milan Munich New York Orange County Rome San Diego Silicon Valley Washington, D.C. Strategic alliance with MWE China Law Offices (Shanghai) 2010 McDermott Will & Emery LLP. McDermott operates its practice through separate legal entities in each of the countries where it has offices. This communication may be considered attorney advertising. Previous results are not a guarantee of future outcome. The following legal entities are collectively referred to as "McDermott Will & Emery," "McDermott" or "the Firm": McDermott Will & Emery LLP, McDermott Will & Emery/Stanbrook LLP, McDermott Will & Emery Rechtsanwälte Steuerberater LLP, MWE Steuerberatungsgesellschaft mbh, McDermott Will & Emery Studio Legale Associato and McDermott Will & Emery UK LLP. These entities coordinate their activities through service agreements. This communication may be considered advertising under the rules regulating the legal profession.

2 Part I: Stark Law A Brief Overview 1

3 A Brief History Lab ownership by MDs MRI ownership by MDs Stark I Lab only Ownership and compensation Stark II 9 additional services, including inpatient and outpatient hospital services 2

4 What is it? It s a Medicare payment rule Prohibits Medicare payment for services furnished pursuant to a prohibited referral Administered by Centers for Medicare and Medicaid Services ( CMS ), not the DHHS, Office of Inspector General ( OIG ) It s a fraud and abuse rule OIG civil monetary penalties (administrative fines) DOJ False Claims Act cases 3

5 The Stark Law The First Prohibition If a physician (or an immediate family member) Has a financial relationship with an entity The physician may not make a referral to that entity For Medicare designated health services (DHS) Unless an exception applies The Second Prohibition The entity can t bill for the service 4

6 Stark Law vs. Federal Antikickback Law Stark is a strict liability statute It doesn t matter whether a hospital s violation is intentional or willful It doesn t matter whether a violation affected physician referral patterns, increased utilization, corrupted clinical judgment, or impinged on patient choice Stark simply demands compliance with an exception or refund of the Medicare payments 5

7 Sanctions Absolute requirement to repay all claims for Medicare services furnished pursuant to prohibited referral Civil monetary penalties of up to $15,000 per service for: Submitting the bill or claim ( know or should know standard); or Not making a prompt refund Potential exclusion from Federal programs False Claims Act liability Two theories (after FERA and PPACA) Claims for DHS prohibited by Stark are false or fraudulent Failure to make a prompt refund = reverse false claims, i.e., avoiding an obligation to the federal government 6

8 CMS Self-Referral Disclosure Protocol Stark self-disclosures are common and have increased substantially since CMS Self-Referral Disclosure Protocol (SRDP), which was initiated in September disclosure submissions in disclosure submissions in disclosure submissions in 2012 through October Of those submissions, only 18 have been settled to date The settlements have been modest, only one reaching even $250,000 Abuse/PhysicianSelfReferral/Self_Referral_Disclosure_Protocol.html 7

9 Stark Self-Disclosures to DOJ Detroit Medical Center (December 2010) Detroit Medical Center self-disclosed approximately 300 physician arrangements Most (but not all) involved so-called technical violations of Stark $30 million settlement Settlement amount reportedly limited, in part, based on ability to pay 88

10 Stark Self-Disclosures to DOJ (cont d) Condell Medical Center, IL (December 2008) Self-disclosed physician arrangements Below FMV leases Loans to physicians Technical Stark violations of writing requirements $36 million settlement 99

11 Stark Self-Disclosures to DOJ (cont d) HealthSouth (December 2007) Two improper financial arrangements with orthopedists discovered in self-audit $14 million settlement 10

12 Stark Self-Disclosures to DOJ (cont d) St. John Health System, Okla. (December 2009) St. John Health System self-disclosed 24 physician arrangements it discovered on internal review St. John described the violations as technical $13 million settlement 11

13 Qui Tam (False Claims Act) and Government Investigation Settlements Settlements by hospitals with Department of Justice relating to filed whistleblower suits or government investigations have often resulted in large settlements 12

14 Qui Tam (False Claims Act) and Government Investigation Settlements (cont d) Lester E. Cox Medical Center, MO (July 2008) Medical director agreements allegedly not in writing, in excess of fair market value or based on referrals with single large medical group Services agreement with same group that included ancillary production in salary calculation $60 million settlement reportedly limited, in part, based on ability to pay The medical group also paid $1 million in settlement 13

15 Qui Tam (False Claims Act) and Government Investigation Settlements (cont d) Erlanger Medical Center, TN (October 2005) Alleged improper physician arrangements conducted through faculty practice plan Included medical directorships and leases with large medical groups $40 million settlement 14

16 Qui Tam (False Claims Act) and Government Investigation Settlements (cont d) McAllen/South Texas Health System (October 2009) Allegations of improper directorships and leases with 7 physicians $27.5 million settlement 15

17 Qui Tam (False Claims Act) and Government Investigation Settlements (cont d) North Ridge Medical Center, FL (March 2004) Ten physician employment agreements alleged to take into account referrals One medical director agreement alleged to exceed FMV $22.5 million settlement At time, largest Stark law settlement to date 16

18 Qui Tam (False Claims Act) and Government Investigation Settlements (cont d) St. Joseph Medical Center, MD (November 2010) Multiple service agreements with single medical group allegedly in excess of fair market value $22 million settlement 17

19 Qui Tam (False Claims Act) Litigation Litigated cases create even greater potential exposure Christ Hospital, Health Alliance of Greater Cincinnati (May 2010) Allegations that the hospital provided assignments to its cardiac testing station based on referrals $108 million settlement following favorable preliminary rulings for government on Stark issues 18

20 Qui Tam (False Claims Act) Litigation (cont d) Tuomey Healthcare System, SC (2010, retrial pending) Allegations that 18 part-time employment agreements violated Stark law $45 million judgment entered by district court Overturned by Fourth Circuit for re-trial, possible damages 3x original judgment 19

21 Qui Tam (False Claims Act) Litigation (cont d) Halifax Hospital Medical Center, FL (currently in pretrial motions) Allegations that employment agreements with 3 neurosurgeons and 7 oncologists violated Stark law Whistleblower s counsel have publicly announced their belief that potential damages are in the hundreds of millions of dollars 20

22 Recent Stark Case Law Fair Market Value, Volume/Value U.S. ex rel Singh v. Bradford U.S. ex rel Drakeford v. Tuomey Kosenske v. Carlisle HMA Inc. 21

23 Part II: Stark Compliance 22

24 A Swiss Cheese Law Ownership exceptions Ownership and compensation exceptions Compensation exceptions Direct and indirect exceptions 23

25 Direct Compensation Exceptions Common Requirements A signed writing (except employment exception) Signed by both parties in advance At least a one-year term (except employment exception) Specifying the services and/or items to be provided 24

26 Direct Compensation Exceptions Common Requirements Compensation (or formula) must be set in advance Compensation must be fair market value Agreement must be commercially reasonable Compensation can t take into account volume/value of referrals 25

27 Fair Market Value Historically, FMV viewed as soft requirement Unlike technical elements or structural violations, requires fact-based inquiry Now, common source of government inquiry and qui tam lawsuits Under the Stark Law, the defendant has the burden of proof that an arrangement is fair market value 26

28 Gifts and Business Courtesies Gifts Nonmonetary compensation Annual limit ($380 for 2013) Examples: entertainment, business-related meals, holiday gifts 27

29 Part III: FAQs Do the rules apply to arrangements that have nothing to do with referrals? Do the rules apply to physicians when not acting as clinicians (e.g., Board trustees)? 28

30 The Scope of the Stark Law Do the rules apply to full-time employees? Do the rules apply to family members? 29

31 Where to Find the Law Statute Section 1877 of the SSA (42 U.S.C. 1395nn) Regulations codified at 42 C.F.R. Part 411 Preamble discussions and regulations Stark I Proposed Regs (Mar. 11, 1992) Stark I Final Regs (Aug. 14, 1995) Stark II Proposed Regs (Jan. 9, 1998) Stark II Final Regs Phase I (Jan. 4, 2001) Phase II (Mar. 26, 2004) Phase III (Sept. 5, 2007) Electronic prescribing/ehr Exceptions (Aug. 8, 2006) 2008 MPFS Proposed Rule (July 12, 2007) 2009 MPFS Proposed Rule (July 7, 2008) 2009 MPFS Final Rule (November 14, 2008) 2009 IPPS Proposed Rule (April 30, 2008) 2009 IPPS Final Rule (August 19, 2008) 2010 MPFS Proposed Rule (July 13, 2009) 2010 MPFS Final Rule (November 25, 2009) 2011 OPPS Final Rule (November 24, 2010) 30

32 Where to Find the Law Abuse/PhysicianSelfReferral/index.html?redirect=/physicians elfreferral/ Authorities List of CPT Codes CPI Adjustments Advisory Opinions 31

33 Discussion 32