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What Every Physician Needs To What Every Physician Needs To Know About Fraud And Abuse Laws Know About Fraud And Abuse Laws (But Is Afraid To Ask)(But Is Afraid To Ask)
Steven H. CohenSteven H. CohenCohen Law GroupCohen Law Group
an affiliate of the Whistleblower Legal Centeran affiliate of the Whistleblower Legal Center
55 West Wacker Drive, Suite 80155 West Wacker Drive, Suite 801Chicago, Illinois 60601Chicago, Illinois [email protected]@whistlelaw.com
www.whistlelaw.comwww.whistlelaw.com(312) 327-8800 Phone / (312) (312) 327-8800 Phone / (312)
327-0266 Fax327-0266 Fax
I.I. What Do Fraud What Do Fraud And And Abuse Laws Abuse Laws Cover?Cover?
Areas of Governmental Areas of Governmental ConcernConcern
Additional Costs to Health Care Additional Costs to Health Care ProgramsPrograms
Quality of CareQuality of Care Access to CareAccess to Care Patients’ Freedom of ChoicePatients’ Freedom of Choice CompetitionCompetition Health Providers Abuse of ProfessionalHealth Providers Abuse of Professional
JudgmentJudgment
I. What Do Fraud and Abuse Laws Cover ?I. What Do Fraud and Abuse Laws Cover ?
I. What Do Fraud And Abuse Laws Cover?I. What Do Fraud And Abuse Laws Cover?
Its ALWAYS about the moneyIts ALWAYS about the money
A. The Wrongful Receipt of A. The Wrongful Receipt of Federal or State Funds Federal or State Funds
B.B. The Presentment of a False The Presentment of a False Claim for Claim for
reimbursementreimbursementC.C. Improper relationships amongImproper relationships among
referral sourcesreferral sources
II.II. Who Can Prosecute?Who Can Prosecute?
A.A. FederalFederal1. US Attorneys Offices Throughout the 1. US Attorneys Offices Throughout the
CountryCountryCivil DivisionCivil DivisionCriminal DivisionCriminal Division
2. Department of Justice - Civil Fraud 2. Department of Justice - Civil Fraud Division Division (Washington, D.C.) (Washington, D.C.)
3. Federal Agencies3. Federal Agencies Centers for Medicare and Medicaid Services (“CMS”) Centers for Medicare and Medicaid Services (“CMS”)
(formerly HCFA)(formerly HCFA) Office of Inspector GeneralOffice of Inspector General Federal Bureau of InvestigationFederal Bureau of Investigation Federal Employee Health Benefits ProgramFederal Employee Health Benefits Program
II. Who Can Prosecute ?II. Who Can Prosecute ?
B. StateB. State1. Attorney General1. Attorney General2. State Agencies2. State Agencies3. Inspector General3. Inspector General4. State Regulatory Agencies4. State Regulatory Agencies5. State Medicaid Fraud 5. State Medicaid Fraud
Control UnitsControl Units
II. Who Can Prosecute ?II. Who Can Prosecute ?
II. Who Can Prosecute ?II. Who Can Prosecute ?
C. Private WhistleblowersC. Private Whistleblowers
D. Private InsurersD. Private Insurers
(Illinois and California)(Illinois and California)
E. Consumer/Class Action PlaintiffsE. Consumer/Class Action Plaintiffs
(i.e. medicaid/medicare/private (i.e. medicaid/medicare/private insured insured
beneficiaries/self pays)beneficiaries/self pays)
III. How Can TheyIII. How Can They Prosecute? Prosecute?
A. Criminal ActionsA. Criminal ActionsB. Civil ActionsB. Civil ActionsC. Administrative ProceedingsC. Administrative ProceedingsD. Privately Funded Class D. Privately Funded Class ActionsActions
III. How Can They Prosecute ?III. How Can They Prosecute ?
IV. What They IV. What They ProsecuteProsecute
Inadequate medical Inadequate medical documentation documentation
Improper use of CPT Improper use of CPT codes (i.e., codes (i.e., “upcoding”)“upcoding”)
Billing for services or Billing for services or procedures that procedures that were not performed were not performed or not medically or not medically necessarynecessary
False certifications False certifications to the Governmentto the Government
““Special” billing Special” billing policies for Medicare policies for Medicare and/or Medicaid and/or Medicaid patients patients
Fraudulent costFraudulent cost reportingreporting
IV. What They ProsecuteIV. What They Prosecute
Traditional AreasTraditional Areas
Substandard quality Substandard quality of medical careof medical care
Physicians billing for Physicians billing for services performed services performed by RN’s/Physician by RN’s/Physician AssistantsAssistants
Payments, discounts or Payments, discounts or other “special arran- other “special arran- gements” between gements” between providersproviders
Kickbacks and illegal Kickbacks and illegal referralsreferrals
Pharmaceutical FraudPharmaceutical Fraud
IV. What They ProsecuteIV. What They Prosecute
Emerging AreasEmerging Areas
V. How Physicians V. How Physicians Become Become
Targets of Targets of Enforcement ActionsEnforcement Actions
E/R PhysiciansE/R Physicians Attending Attending
PhysiciansPhysicians Drug Company Drug Company
Cases – Receiving Cases – Receiving end of end of “Kickbacks”“Kickbacks”
Quality of Care – Quality of Care – Kickbacks, Kickbacks, ReferralsReferrals
Physician Physician Practices/3d Party Practices/3d Party Billers – Physician Billers – Physician Management Management CompaniesCompanies
WhistleblowersWhistleblowers Credentialing Credentialing
ProblemsProblems CompetitorsCompetitors
V. How Physicians Become Targets Of V. How Physicians Become Targets Of
Enforcement ActionsEnforcement Actions
VI. Key Federal and VI. Key Federal and StateState Fraud and Abuse Fraud and Abuse Enforcement Laws Enforcement Laws (The Tools of the (The Tools of the Trade)Trade)
A. The Federal False Claims A. The Federal False Claims ActAct
31 USC §§3729 31 USC §§3729 et. seq.et. seq.
VI. Key Federal and State …Laws VI. Key Federal and State …Laws
U.S. Attorneys Love It : Government’s Most Powerful U.S. Attorneys Love It : Government’s Most Powerful Enforcement ToolEnforcement Tool
1995-2003 over 8 Billion recovered by the 1995-2003 over 8 Billion recovered by the Government (and counting!)Government (and counting!)
Over 2.1 Billion recovered in 2003!Over 2.1 Billion recovered in 2003! @ 6 Billion from whistleblower cases@ 6 Billion from whistleblower cases 70% - Health Care Fraud70% - Health Care Fraud 20% - Defense Procurement20% - Defense Procurement 10% - Other (Emerging areas)10% - Other (Emerging areas)
VI. Key Federal and State …Laws VI. Key Federal and State …Laws
B. State False Claims B. State False Claims ActsActsArkansasArkansas
CaliforniaCalifornia
DelawareDelaware
District of ColumbiaDistrict of Columbia
FloridaFlorida
HawaiiHawaii
IllinoisIllinois
LouisianaLouisiana
MassachusettsMassachusetts
NevadaNevada
TennesseeTennessee
TexasTexas
VirginiaVirginia
UtahUtah
??????????
VI. Key Federal and State …LawsVI. Key Federal and State …Laws
C. Stark Act/Anti-C. Stark Act/Anti-kickbackkickback
Laws (Federal)Laws (Federal)
VI. Key Federal and State …Laws VI. Key Federal and State …Laws
D.D. Medicare Anti-Kickback Medicare Anti-Kickback StatuteStatuteProhibited ConductProhibited Conduct
- knowing/willful solicitation - knowing/willful solicitation oror receipt receipt or or offer offer oror payment of payment of
remunerationremuneration
VI. Key Federal and State …Laws VI. Key Federal and State …Laws
E. Key Issues Under the E. Key Issues Under the Anti-Kickback StatutesAnti-Kickback Statutes
Joint Ventures Joint Ventures Commissioned Commissioned
Sales Sales RepresentativesRepresentatives
Service Service AgreementsAgreements
LeasesLeases
DiscountsDiscounts Group Group
Purchasing Purchasing OrganizationsOrganizations
Physician Physician RecruitmentRecruitment
VI. Key Federal and State …Laws VI. Key Federal and State …Laws
F. F. Medicare Anti-Medicare Anti-Kickback Kickback StatuteStatute
--PenaltiesPenalties Criminal fines & imprisonmentCriminal fines & imprisonment Civil money penalty of $50,000 Civil money penalty of $50,000 plusplus
3X the amount of the remuneration 3X the amount of the remuneration ExclusionExclusion (False Claims Act liability)(False Claims Act liability)
VI. Key Federal and State …Laws VI. Key Federal and State …Laws
G. Criminal False Claims G. Criminal False Claims StatutesStatutes1. Medicare/Medicaid-specific 1. Medicare/Medicaid-specific
statutesstatutes (42 U.S.C. (42 U.S.C. §1320a-7b)§1320a-7b)
False claimsFalse claims False statementsFalse statements Failure to refundFailure to refund
VI. Key Federal and State …Laws VI. Key Federal and State …Laws
G.G. Criminal False Claims Statutes Criminal False Claims Statutes
(cont.)(cont.) 2. Federal Health Care Offenses2. Federal Health Care Offenses
VI. Key Federal and State …Laws VI. Key Federal and State …Laws
Scheme to defraud health care benefitScheme to defraud health care benefit program (18 U.S.C. program (18 U.S.C. §1347)§1347)
False statements relating to health careFalse statements relating to health care (18 U.S.C. §1035)(18 U.S.C. §1035) Obstruction of health care offense Obstruction of health care offense investigation (18 U.S.C. § 1518)investigation (18 U.S.C. § 1518)
G.G. Criminal False Claims StatutesCriminal False Claims Statutes(cont.)(cont.)
VI. Key Federal and State …Laws VI. Key Federal and State …Laws
Conspiracy to defraud the Conspiracy to defraud the Government (18 U.S.C. §371)Government (18 U.S.C. §371) False statements (18 U.S.C. False statements (18 U.S.C. §1001)§1001) Mail fraud (18 U.S.C. §1341)Mail fraud (18 U.S.C. §1341) Wire fraud (18 U.S.C. §1343)Wire fraud (18 U.S.C. §1343) RICO (18 U.S.C. §§1961-64)RICO (18 U.S.C. §§1961-64) Money laundering (18 U.S.C. Money laundering (18 U.S.C. §1956)§1956)
H. Deceptive Trade H. Deceptive Trade Practice Practice Act/Consumer Fraud Act/Consumer Fraud Act (State)Act (State)
VI. Key Federal and State …Laws VI. Key Federal and State …Laws
I. Administrative Rules I. Administrative Rules
and Regulationsand Regulations
(Federal and State)(Federal and State)
VI. Key Federal and State …Laws ?VI. Key Federal and State …Laws ?
VIIVII. . Fraud/Abuse Fraud/Abuse Enforcement Under Enforcement Under False Claims Act False Claims Act LawsLaws
VII. Fraud and Abuse Enforcement Under FalseVII. Fraud and Abuse Enforcement Under False
Claims Act LawsClaims Act Laws
A. Broad Based CoverageA. Broad Based Coverage Any person who knowingly presents or causes Any person who knowingly presents or causes
a a presentment of a false claim for approval presentment of a false claim for approval or or payment payment
or knowingly makes or cause to be made a or knowingly makes or cause to be made a false statement to get a false claim paid false statement to get a false claim paid or or approvedapproved
Any false or fraudulent claim for paymentAny false or fraudulent claim for payment Statute is liberally construedStatute is liberally construed All other fraud and abuse laws All other fraud and abuse laws
feed into the FCAfeed into the FCA
B. A Relaxed Proof of B. A Relaxed Proof of FraudFraud
VII. Fraud and Abuse Enforcement Under FalseVII. Fraud and Abuse Enforcement Under False
Claims Act LawsClaims Act Laws
Knowingly—Knowingly—(1) actual knowledge(1) actual knowledge(2)deliberate ignorance(2)deliberate ignorance(3)reckless disregard of the truth(3)reckless disregard of the truth
* No proof of specific intent is required * No proof of specific intent is required * Mere negligence or innocent mistake * Mere negligence or innocent mistake
generally not enoughgenerally not enough
C. Powerful Remedies for C. Powerful Remedies for ViolationsViolations
VII. Fraud/Abuse Enforcement Under FalseVII. Fraud/Abuse Enforcement Under False
Claims Act LawClaims Act Law
1. Civil/Criminal Penalties1. Civil/Criminal Penalties2. Treble Damages2. Treble Damages3. Court Imposed/Government supervised3. Court Imposed/Government supervised compliance problemscompliance problems4. Exclusion/Limitation of Participation in4. Exclusion/Limitation of Participation in Government Health Care ProgramsGovernment Health Care Programs
D. Civil DamagesD. Civil Damages
VII. Fraud/Abuse Enforcement Under FalseVII. Fraud/Abuse Enforcement Under False
Claims Act LawClaims Act Law
LiabilityLiability- 3X actual damages- 3X actual damages- $5,500 to $11,000 $5,500 to $11,000 per claimper claim- Equitable reliefEquitable relief- (attorneys fees)(attorneys fees)
EE. . SAMPLE PENALTY SAMPLE PENALTY CALCULATION CALCULATION
VII. Fraud/Abuse Enforcement Under FalseVII. Fraud/Abuse Enforcement Under False
Claims Act LawClaims Act Law
$100,000 damages X 3 = $300,000$100,000 damages X 3 = $300,000 2000 (# of claims) X $11,000 2000 (# of claims) X $11,000
=$22,000,000=$22,000,000 Total Liability = $22,300,000Total Liability = $22,300,000
F. ExclusionsF. Exclusions Mandatory Mandatory
ExclusionExclusion
Felonies relating toFelonies relating tofraudfraud
breach of fiduciary dutybreach of fiduciary duty obstructing an obstructing an
investigationinvestigation
Permission ExclusionPermission Exclusion
Misdemeanor for program Misdemeanor for program violationsviolations
If OIG concludes you have:If OIG concludes you have:
1. failed to disclose 1. failed to disclose required required
informationinformation
2. failed to grant 2. failed to grant immediate access immediate access
to to investigatorsinvestigators
VII. Fraud/Abuse Enforcement Under FalseVII. Fraud/Abuse Enforcement Under False
Claims Act LawClaims Act Law
G. Government Initiated ActionsG. Government Initiated Actions
VII. Fraud/Abuse Enforcement Under FalseVII. Fraud/Abuse Enforcement Under False
Claims Act LawClaims Act Law
H. H. Whistleblower Initiated Whistleblower Initiated (Qui Tam Lawsuits)(Qui Tam Lawsuits)
private individuals who have non-public private individuals who have non-public knowledge of fraudulent practices by a person knowledge of fraudulent practices by a person against a government agency resulting in the against a government agency resulting in the government paying more thangovernment paying more thanit should have or not receiving the value it it should have or not receiving the value it expected.expected.
VII. Fraud/Abuse Enforcement Under FalseVII. Fraud/Abuse Enforcement Under False
Claims Act Law Claims Act Law
VIII. Special Focus: VIII. Special Focus: The The WhistleblowerWhistleblower Initiated Lawsuit Initiated Lawsuit (Qui Tam Lawsuits)(Qui Tam Lawsuits)
Whistleblower can proceedWhistleblower can proceed even if Government declineseven if Government declines
VIII. …Whistleblower Initiated Lawsuits… ?VIII. …Whistleblower Initiated Lawsuits… ?
“ “Private Attorney Private Attorney Generals”Generals”
WhistleblowersWhistleblowers
Whistleblower can Whistleblower can receive upreceive up to 30% of recoveryto 30% of recovery
A. Who Can Be A A. Who Can Be A Whistleblower? Whistleblower?
Non-PublicNon-Public: : Typically insider-Typically insider-type info but type info but
doesn’t have to doesn’t have to be.be.
KnowledgeKnowledge: : Typically personal Typically personal knowledge.knowledge.
VIII. …Whistleblower Initiated Lawsuits…VIII. …Whistleblower Initiated Lawsuits…
Governed by StatuteGoverned by Statute: : Federal or State lawFederal or State law
IndividualsIndividuals: Person, : Person, persons, or entity;persons, or entity;
employee, competitor, employee, competitor, former employee orformer employee or
contractor (called the contractor (called the “Relator”).“Relator”).
B. Who May Sue?B. Who May Sue?
““Any person” with non-public (inside) Any person” with non-public (inside) informationinformation
Employees, ex-employees Employees, ex-employees Competitors, former business partners, Competitors, former business partners,
colleaguescolleagues
VIII. …Whistleblower Initiated Lawsuits…VIII. …Whistleblower Initiated Lawsuits…
Qui Tams Are IncreasinglyQui Tams Are Increasingly Brought by Brought by Competitors & Former Business PartnersCompetitors & Former Business Partners
Dr. A Sells His Practice-and Dr. A Sells His Practice-and Knows How the New Group Knows How the New Group BillsBills
Terminated ER Group Sues Terminated ER Group Sues Hospital-Which Then Hospital-Which Then Claims Docs Were Claims Docs Were Fraudulently Billing as a Fraudulently Billing as a Defense to the MDs’ Defense to the MDs’ Damage ClaimsDamage Claims
Competitors Who “Do It Competitors Who “Do It Right” Tire of Shady Right” Tire of Shady Practice By “Bad Apples”Practice By “Bad Apples”
Pharmaceutical Reps Pharmaceutical Reps Lower the Boom on Their Lower the Boom on Their Competitors’ Marketing Competitors’ Marketing PracticePractice
Insurers Go After Abusive Insurers Go After Abusive ProvidersProviders
VIII. …Whistleblower Initiated Lawsuits…VIII. …Whistleblower Initiated Lawsuits…
Best Defense is a Best Defense is a Good OffenseGood Offense
(Staff or at a (Staff or at a Hospital)Hospital)
Clean Up The IndustryClean Up The Industry The BountyThe Bounty
(Millionaires)(Millionaires)
C.C. Why Someone Blows Why Someone Blows The Whistle?The Whistle?
VIII. …Whistleblower Initiated Lawsuits…VIII. …Whistleblower Initiated Lawsuits…
Competitor SuitsCompetitor Suits
(Evening the (Evening the
Playing Field)Playing Field)
VindicationVindication