Healthcare fraud continues to be a significant priority for the U.S. Department of Justice. On February 24, 2021, the DOJ’s Criminal Division Fraud Section published its annual “Fraud Section Year in Review 2020.” While the Fraud Section has three separate enforcement units, the Health Care Fraud (HCF) Unit is responsible for all enforcement activities in the health care industry. The Unit’s focus is to protect against fraud and abuse in federal health care programs and recoup illicit gains.
During 2020, the HCF Unit operated 15 strike forces in 24 federal judicial districts throughout the U.S. The efforts of these strike forces led to charges against 167 individuals alleging $3.77 billion in fraudulent charges for health care paid for by federal and state programs. This should cause any health care provider to stand up and take notice. And enforcement in the health care industry is not likely to go away soon with so many schemes ripe for the government’s picking and generating recoupment on behalf of the federal health care programs.
Here are couple of the latest schemes that have landed pharmacies, pharmacists and other health care professionals squarely in the crosshairs of federal enforcement:
A 2018 Department of Justice civil settlement involving a Florida interventional pain physician was a cliff hanger when it surfaced, especially vis a vis the issue of the so-called Company Model, where anesthesiologists and referring physicians jointly owned an anesthesia provider. The Daitch settlement involved interventional pain specialists who settled the case for $2.8 Million. There, the government claimed that a mass of urine drug tests weren’t reasonable or medically necessary. But the issue buried in the settlement call the issue of intertwined medical businesses and the Company Model into question.
The so-called Company Model involves the formation of a company that provides anesthesia services. It’s jointly owned by anesthesiologists and referring physicians. Theoretically, on a Monday, the anesthesiologists own the anesthesia practice and bill for all anesthesia services performed at a GI lab or ASC. On a Tuesday, however, the new company (jointly owned by the same anesthesiologists and the referring physicians) steps in and starts billing for the anesthesia services, thus indirectly sharing a part of the profits with the physicians who are generating the anesthesia referrals.
In the beginning of June, 2020, the Department of Justice (“DOJ”) revised its Evaluation of Corporate Compliance Programs Guidance Document. The Document is designed to assist prosecutors in making informed decisions as to whether, and to what extent, the company’s compliance program is effectivefor purposes of determining, when a compliance violation has occurred, the appropriate form of any resolution or prosecution and monetary penalty. It also guides a prosecutor as to the company’s compliance obligations contained in any criminal resolution. The Document has been revised on three occasions since 2017, telegraphing the DOJ’s intent to prosecute those businesses without compliance plans, or without effective compliance plans, more harshly than those taking steps to identify and remedy risks.
A healthcare business’ failure to have in place a compliance program designed to detect and respond to potential fraud and security risks places it at a serious risk of civil and criminal liability. When a compliance issue is investigated, charged and resolved, DOJ prosecutors are instructed to consider whether the business has invested in and improved its corporate compliance program and internal controls systems. They must also determine whether those improvements have been tested to demonstrate that they would prevent or detect similar misconduct in the future. According to the DOJ, there are three fundamental questions that a prosecutor should ask when determining whether a business’ compliance plan is sound:
A recent ruling by a state trial court handling the Palm Beach County Sober Home Task Force prosecutions against providers of addiction treatment and sober home services is creating lots of confusion and alarm around the state and could have very far reaching consequences for the entire healthcare industry well beyond addiction treatment.
The issue presented by the prosecution focuses on whether a person charged with violating the state’s Patient Brokering Act (PBA) can be found guilty even if he/she didn’t know what he was doing was unlawful. The PBA broadly prohibits paying someone for patient referrals, very much like the federal Anti-Kickback statute. If allowed, the client would have gotten legal advice, paid for it, followed it, and still not be able to show a judge or jury that, despite all their best efforts, they simply followed the law as instructed.
Can a healthcare facility or provider be guilty of violating a criminal law [the PBA] if they’d gotten legal advice and followed it? Traditionally, the answer would be a clear “no.” The argument against the State’s position would be something like “How can someone intend to violate a criminal law if they got legal advice regarding how to comply with it and then followed that advice?” The argument of the state might look something like “We don’t even think the judge or jury ought to be able to hear that the person got legal advice and followed it.” The court punted the issue to the appellate court.
The DOJ reported on August 5th a settlement with a South Carolina hospital concerning physician compensation. Though certainly not the first or the biggest case of its kind (e.g. note the Halifax Hospital and North Broward Hospital District cases, which generated settlements of over $100M and $60M respectively), it’s attention grabbing nonetheless.
The SC case was brought by a whistleblower, a neurologist formerly employed by the hospital. The doctor alleged that the seven year employment agreements violated Stark and the Anti Kickback Statute because the compensation was more than what was legally permissible and was also based in part on ancillary services ordered by the employed doctors. Seasoned readers will understand that the concept of “fair market value” (FMV) is at the heart of regulatory compliance and also that compensation surveys of organizations like the Medical Group Management Association (MGMA) are important guides in term of what is/is not FMV. In the SC hospital case, compensation met or exceeded the top 10% of similarly qualified physicians in the area, which is very interestingly noted by the DOJ (because some of the comp levels were still within the MGMA surveys). In other words, the trend here is for the Feds to push back against comp levels on the high end of the FMV spectrum.
The current fixation on Accountable Care Organizations (ACOs) is causing an enormous amount of two things: (1) talking, and (2) inactivity. Yes, the concept of delivering care in a manner that reduces or at least controls costs is important and interesting. Yet, the marketplace is replete with people and businesses that have adopted a wait and see approach, which is really no approach at all. Businesses and people who will thrive (especially in dynamic times) are those who, as always, take a lesson from sharks: swim ahead or drown.
So what about ACOs? What the best “thing”? How do you make one? First, you have to do away with the focus on ACOs, since they are more of a concept than a thing. Focusing on ACOs as a thing merely paralyzes the viewer because they are, by definition, not subject to such limitations. What is clear, however, is what they’re supposed to do: reduce costs and improve quality in a demonstrable way. How do you do that? Easy…squeeze the toothpaste tube backwards.
Health law is the federal, state, and local law, rules, regulations and other jurisprudence among providers, payers and vendors to the healthcare industry and its patient and delivery of health care services; all with an emphasis on operations, regulatory and transactional legal issues.