what every physician needs to know about fraud and abuse laws (but is afraid to ask)

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 Center55 West Wacker Drive, Suite 80155 West Wacker Drive, Suite 801

Chicago, 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

mailto:[email protected]

http://www.whistlelaw.com/

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 moneyA. The Wrongful Receipt of A. The Wrongful Receipt of

Federal or State Funds Federal or State FundsB.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



C. Private WhistleblowersC. Private WhistleblowersD. 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 Government 1995-2003 over 8 Billion recovered by the Government (and counting!)(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)


B. State False Claims B. State False Claims ActsActsArkansasArkansasCaliforniaCaliforniaDelawareDelawareDistrict of ColumbiaDistrict of ColumbiaFloridaFloridaHawaiiHawaiiIllinoisIllinois

LouisianaLouisianaMassachusettsMassachusettsNevadaNevadaTennesseeTennesseeTexasTexasVirginiaVirginiaUtahUtah??????????

VI. Key Federal and State …LawsVI. Key Federal and State …Laws

C. Stark Act/Anti-C. Stark Act/Anti-kickbackkickback

Laws (Federal)Laws (Federal)


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


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


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)


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


G.G. Criminal False Claims Statutes Criminal False Claims Statutes

(cont.)(cont.) 2. Federal Health Care Offenses2. Federal Health Care Offenses


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.)


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)


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 a Any person who knowingly presents or causes 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 or false statement to get a false claim paid 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


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


$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 to

fraudfraud 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 informationinformation2. failed to grant 2. failed to grant immediate access immediate access to to investigatorsinvestigators


G. Government Initiated ActionsG. Government Initiated Actions


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


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


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?


Competitor SuitsCompetitor Suits(Evening the (Evening the Playing Field)Playing Field)

VindicationVindication

what every physician needs to know about fraud and abuse laws (but is afraid to ask)

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