SUBJECT: False Claims Act Explanation and Reporting Requirements NUMBER: 1004 CROSS REFERENCE NUMBER: 1823 REG. REF.: 31 U.S.C. 37-29 PURPOSE: POLICY: The purposes of this policy are to describe the Federal False Claims Act (the FFCA ) and its prohibitions and requirements. This policy is based on the requirement in the Deficit Reduction Act that requires Community LIFE to establish a written policy for all employees that provides detailed information about the False Claims Act for the purpose of preventing and detecting fraud, waste, and abuse. It is the policy of the Community LIFE to adhere to all applicable state and federal laws and regulations regarding the submission of claims to federal health care programs, including the Federal False Claims Act (the FFCA ). Consistent with this policy, Community LIFE has systems which monitor claims from contract providers for correctness, and the information Community LIFE submits directly or indirectly to federal and state health programs, in order to avoid submission of false or misleading claims. It also fully cooperates with governmental authorities in the investigation of any alleged false claim and adheres fully to the provisions of the FFCA that protect whistle blowers (described below). This policy and adherence to the applicable law applies to all Community LIFE employees and all of its contracted providers of health services to its enrollees. BACKGROUND SUMMARY OF FEDERAL FALSE CLAIMS ACT A. Federal False Claims Act The FFCA is an anti-fraud law that was enacted in 1863. The FFCA makes an individual or entity who files a false claim against the US government liable for up to three times the government s damages plus civil penalties of $5,000 to $10,000 per false claim. Individuals and entities who file a false claim or conspire to file a false claim may also be subject to criminal financial penalties and imprisonment for up to five years or ten years, respectively. The FFCA allows both the government and individuals to file suit against the alleged wrongdoer on behalf to the United States. The FFCA does not apply to claims, records or statements related to the Internal Revenue Code. While the False Claims Act imposes liability only when the claimant acts knowingly, it does not require that the person submitting the claim have actual knowledge that the claim is false. A person who acts in reckless disregard or in deliberate ignorance of the truth or falsity of the information, also can be found liable under the Act under Section 3729(b). For purposes of Section 3729(b), the terms "knowing" and "knowingly" Downloads:2FABF79F- 1595-46D2-8053-585BA9231383:1004 False Claims Act.doc Page 1 of 7
mean that a person, with respect to information (1) has actual knowledge of the information; (2) acts in deliberate ignorance of the truth or falsity of the information; or (3) acts in reckless disregard of the truth or falsity of the information, and no proof of specific intent to defraud is required. Some examples of violations include submitting a bill to the government for medical services that are knowingly not provided, knowingly submitting a false record in order to obtain payment from the government, or knowingly obtaining money from the government to which you are not entitled and then using false statements or records in order to retain the money. A false claim occurs when a person: Knowingly presents or causes to be presented a false or fraudulent claim for payment or approval to the US government; Knowingly makes, uses or causes to be made or used, a false record or statement to get a false or fraudulent claim paid or approved by the US government; Conspires to defraud the US government by getting a false or fraudulent claim allowed or paid; Knowingly makes, uses or causes to be made or used a false record or statement to conceal, avoid or decrease an obligation to transmit money or property of the US government; Has possession, custody or control of property or money used, or to be used, by the Government and knowingly delivers, or causes to be delivered, less than all of that money or property; Is authorized to make or deliver a document certifying receipt of property used, or to be used, by the Government and, intending to defraud the Government, makes or delivers the receipt without completely knowing that the information on the receipt is true; Knowingly buys, or receives as a pledge of an obligation or debt, public property from an officer or employee of the Government, or a member of the Armed Forces, who lawfully may not sell or pledge property; Knowingly makes, uses or causes to be made or used a false record or statement material to an obligation to pay or transmit money or property to the Government, or knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the Government (e.g. knowingly avoids an obligation to Downloads:2FABF79F- 1595-46D2-8053-585BA9231383:1004 False Claims Act.doc Page 2 of 7
pay back an overpayment as detailed in FERA). The known overpayment is to be reported and returned by the later of (a) 60 days after the date on which the overpayment was identified or (b) the date the applicable cost report is due. Any known overpayment not reported and returned within this timeframe becomes a false claim. Additionally, FERA also clarified that no specific intent to defraud needs to be shown to impose liability. A unique feature of the FFCA is the ability of a private citizen to act on behalf of the US government by bringing a civil action against a person believed to have violated the act. This is called a qui tam action (whistleblower). The government may choose to intervene and proceed with the lawsuit itself. In some instances the person who initiated the lawsuit (the relator ) will get a portion of the money the government collects from the wrongdoer. Section 3731 of the FFCA sets forth the procedures that must be followed under the act. Civil actions may not be filed more than six (6) years after the date on which the violation occurred or more that three (3) years after the date when material facts are known or should have been known by the US Government, and in no event more than ten (10) years after the date on which the violation occurred. The US Attorney General has the authority to require individuals with information relevant to false claims to produce the evidence or answer questions about the evidence during the course of an investigation. This must be done in the manner set forth in section 3733 of the Act. B. Whistleblower protection for persons who report violations The act protects employees who are discharged, demoted, suspended, threatened, harassed or in any manner discriminated against in the terms and conditions of employment because of lawful acts they take for participation in a lawsuit filed or to be filed under this act. Employees who are treated inappropriately under this law are entitled to all relief necessary to make the employee whole. This could include reinstatement, back pay, interest on the back pay and compensation for damages. Community LIFE prohibits any retaliation against employees who report wrongdoing, including suspected violations of the FFCA. Please refer to Community LIFE policy # 1005 Reporting and Non-Retaliation, for additional information. C. Administrative Remedies for False Claims and Statements Purpose is to provide federal agencies which are victims of false, fictitious and fraudulent claims and statements with an administrative remedy to compensate such agencies for losses resulting from such claims and Downloads:2FABF79F- 1595-46D2-8053-585BA9231383:1004 False Claims Act.doc Page 3 of 7
statements, to permit administrative proceedings to be brought against persons who make, present or submit such claims and statements and to deter the making, presenting and submitting of such claims and statements in the future; and to provide due process protections to all persons who are subject of the administrative adjudication of false, fictitious or fraudulent claims or statements. Any person who makes a false claim may be subject to a civil penalty of not more than $5,000 for each claim except in certain instances when they may be subject to twice the amount of the claim. This penalty may apply to any person who makes, presents, or submits, or causes to be made, presented, or submitted, a claim that the person knows or has reason to know:! Is false, fictitious, or fraudulent;! Includes or is supported by any written statement which asserts a material fact which is false, fictitious, or fraudulent;! Includes or is supported by any written statement that (i) omits a material fact; (ii) is false, fictitious, or fraudulent as a result of such omission; and (iii) is a statement in which the person making, presenting, or submitting such statement has a duty to include such material fact; or! Is for payment for the provision of property or services which the person has not provided as claimed. Furthermore, any person who makes, presents, or submits, or causes to be made, presented, or submitted, a written statement that: The person knows or has reason to know (i) asserts a material fact which is false, fictitious, or fraudulent; or (ii) omits a material fact; and Is false, fictitious, or fraudulent as a result of such omission; In the case of a statement described in (ii) above is a statement in which the person making, presenting, or submitting such statement has a duty to include such material fact; and Contains or is accompanied by an express certification or affirmation of the truthfulness and accuracy of the contents of the statement, Shall be subject to, in addition to any other remedy that may be prescribed by law, a civil penalty of not more than $5,000 for each such statement. This law allows various authorities within the federal government to investigate allegations that false or fraudulent claims have been filed. If there is sufficient evidence of liability, the US Attorney General is notified. The Attorney General may approve or disapprove the referral to a presiding officer for a hearing. Page 4 of 7
The US attorney General is responsible for judicial enforcement of any civil penalties or assessment imposed. A hearing must be brought within six (6) years after the date on which such claim or statement is made, presented or submitted. A civil action to recover a penalty or assessment under this title must be brought within three (3) years after the date on the determination of liability becomes final. Pennsylvania Law: In addition to the requirements under the aforementioned Federal laws, Pennsylvania law provides that it is unlawful to present a false or fraudulent claim for payment to the Pennsylvania Medicaid Program. Violations of the laws against false and fraudulent claims are punishable by civil and criminal penalties. The Pennsylvania Fraud and Abuse Control Act (62 P.S. 1401 et seq.). The Pennsylvania Fraud and Abuse Control Act imposes liability on persons who and companies that make, or cause to be made, false or fraudulent claims to the government for payment and/or who/that knowingly make, use or cause to be made or used a false record or statement to get a false or fraudulent claim paid by the government. In addition, Pennsylvania Statutes Title 62, Section 1407 provides, in relevant part, that: (a) It shall be unlawful for any person to: (1) Knowingly or intentionally present for allowance or payment any false or fraudulent claim or cost report for furnishing services or merchandise under medical assistance, or to knowingly present for allowance or payment any claim or cost report for medically unnecessary services or merchandise under medical assistance, or to knowingly submit false information, for the purpose of obtaining greater compensation than that to which he is legally entitled for furnishing services or merchandise under medical assistance, or to knowingly submit false information for the purpose of obtaining authorization for furnishing services or merchandise under medical assistance. A person who violates this provision is guilty of a felony of the third degree with a maximum penalty of $15,000 and seven years imprisonment. If the person was previously convicted in state or federal court of conduct that would constitute a violation of this provision, a subsequent offense is a felony of the second degree with a maximum penalty of $25,000 and ten years imprisonment. In addition, the person Page 5 of 7
committing the violation is liable to repay the amount of excess payments plus interest and to pay an amount not to exceed three times the excess payments. A person convicted of a violation is ineligible to participate in the Medicaid program for a period of five years. If the state Medicaid agency determines that a provider has committed a prohibited act, it has the authority to terminate the provider s Medicaid provider agreement upon notice, and to institute a civil suit against the provider for twice the amount of excess payments plus interest. Notice of action taken by the agency will be forwarded to the Medicaid Fraud Control Unit of the Department of Justice and to the appropriate licensing board of the Department of State for appropriate action. In addition to Sections 1407-1408, Pennsylvania has enacted a Whistleblower Law that provides certain protections to an employee who witnesses or has evidence of wrongdoing or waste while employed and who in oral or written communication makes a good faith report of the wrongdoing or waste to a superior, to an agent of the employer or to an appropriate authority. Community LIFE policy 1005, titled Reporting and Non- Retaliation addresses the Pennsylvania Whistleblower law and reporting and nonretaliation. PROCEDURES: Any claims submitted to or payments received from a governmental entity directly or indirectly shall be in accordance with the FFCA and the Fraud Enforcement & Recovery Act of 2009 (FERA) and applicable Pennsylvania state laws as summarized above. 1. Employees shall report any good faith concerns of real or alleged violations of this policy or the FFCA, or FERA. 2. Employees should first contact their manager to make the report. If an employee is uncomfortable with or is unable to follow the chain of command, the Employee should contact the Human Resources Manager or Corporate Compliance Officer. 3. If an employee is uncomfortable contacting the internal resources above, the employee can make a report by calling the Compliance Hotline (1-877-785-0006). 4. Contract health providers, enrollees or their responsible parties should contact the Corporate Compliance Officer (412-436-1344) or the Compliance Hotline (1-877- 785-0006). 5. Please refer to Community LIFE policy #1005 Reporting and Non-Retaliation, for additional information regarding protection of individuals who report violations of this policy. Page 6 of 7
6. An explanation of the False Claims Act and Whistleblower protections will be included in the revised Employee Handbook, and this policy will be used as an addendum to the Handbook until that time. 7. Employees may obtain a copy of this policy from the Public Folders on the Community LIFE shared drive or from their Center Administrator. 8. Contractors may obtain a copy of this policy from the Corporate Compliance Officer. 9. An employee s failure to comply with the FFCA, FERA and/or this policy can result in disciplinary action up to and including termination in accordance with Community LIFE policy 1843 Termination. References: The Pennsylvania Fraud and Abuse Control Act: 62 P.S. 1401 et seq. Pennsylvania Whistleblower Law: 43 P.S. 1421 to 1428 POLICIES REFERENCED WITHIN THIS POLICY: 1005 Reporting and Non-Retaliation 1843 Termination ORIGINAL DATE: January 4, 2007 REVISED DATE: June 27, 2012 Page 7 of 7
PRECEDING REVISION DATE: February 15, 2010 Page 8 of 8