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Update Update:False Claims Act Litigation: Cure for Caffeine? Tracy M. Field, M.S., J.D. Womble Carlyle Sandridge & Rice, LLP 271 17 th Street, NW – Suite.

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Presentation on theme: "Update Update:False Claims Act Litigation: Cure for Caffeine? Tracy M. Field, M.S., J.D. Womble Carlyle Sandridge & Rice, LLP 271 17 th Street, NW – Suite."— Presentation transcript:

1 Update Update:False Claims Act Litigation: Cure for Caffeine? Tracy M. Field, M.S., J.D. Womble Carlyle Sandridge & Rice, LLP 271 17 th Street, NW – Suite 2400 Atlanta, GA 30363 (404) 962-7539 Georgia Hospital Association Compliance Officers Retreat September 3-5, 2014 Sandra L.W. Miller, R.N., M.N., J.D. Womble Carlyle Sandridge & Rice, LLP 550 S. Main Street, Suite 400 Greenville, SC 29601 (864) 255-5425

2 Agenda Department of Justice Statistics – FYE 2013 Selected Recent Cases, Settlements, CIAs The Future? The Remedy…

3 False Claims Act The DOJ 2013 Numbers $3.8 billion in settlements/judgments from civil cases $2.6B in Health care matters: - $1.8B collected from drug/device settlements - “Off label” promotion - $1.5B from Abbott - $762M from Amgen - $505M for counterfeit drugs - $237M for Tuomey Hospital - $26M from Florida dermatologist, AKS with laboratory

4 False Claims Act The DOJ 2013 Numbers $2.6B in Health care matters: $1.8B collected from drug/device settlements $237M -- Tuomey Hospital $134M -- national kyphoplasty settlements with 53 hospitals $26M – Dr. Wasserman, dermatologist paid kickbacks by pathology lab

5 False Claims Act Drug - Devices FDA-Approved Drug Marketed But if misrepresented or failed to disclose clinical trial data Off label or free speech? Abbott: $1.5 billion Depakote GlaxoSmithKlein: $3 billion Paxil

6 False Claims Act Litigation Medical Devices Medtronic: June 2014, $9.9 M Settlement Kickbacks to physicians Speaking engagement: compensation Tickets to sporting events Providing marketing plans for doctors

7 False Claims Act The DOJ 2013 Numbers Qui Tam Relator Filings 753 Cases in Fiscal Year 2013 - 101 more than previous year’s “record” - majority (66%) in healthcare DOJ:$3.8 billion in settlements/judgments from civil cases - $345 million to Relators

8 False Claims Act Number of FCA New Matters, Including Qui Tam Actions

9 False Claims Act Legal Changes Civil War Statute Healthcare: 1986 Amendments − Fraud Enforcement and Recovery Act of 2009 (“FERA”) Amendments − Affordable Care Act (“ACA”)

10 False Claims Act FERA Increased Ability of Department of Justice to Issue Civil Investigative Demands (“CID”) Increased number of CIDs being issued Expands “reach” of DOJ of what is “false claim” Liability extends to subcontractors

11 False Claims Act ACA Liability for retention of Medicare and Medicaid Overpayments within 60 days of being “identified” Proposed rule: 10 year look-back ₋Where are we??

12 Health Fraud WakeMed January 17, 2013 Hearing Judge Boyle rejected Deferred Prosecution Agreement: Under the Federal Rules of Criminal Procedure ₋ Judges accept or reject plea deals, not “dictate terms” or “participate” o Neither Hospital CEO nor Board members attended hearing 12

13 Health Fraud WakeMed January 13, 2013 DOJ Files Memorandum in Support of DPA February 5 th Hearing; February 8, 2013 Order Accepts DPA Statement of facts clear that WakeMed responsible for acts of officers, directors and employees and can be used against them if breach Government can continue investigation(s) No interruption to essential health care 13

14 WakeMed The Legal Debate First criminal prosecution of hospital asserting material/false statements to government $8M settlement: $6M civil penalty $2M criminal Judge: “slap on the hand”; conviction “erased” in 2 years; use for “teenagers smoking pot” 14

15 WakeMed The Legal Process Deferred Prosecution Agreement (DPA): DOJ tool since 1999 File Criminal Information: Admission of Facts Deferral Avoids “Arthur Andersen Effect” Judge: Convict and Defer Sentencing… Debarment! 15

16 WakeMed The Investigation 2007 Program Safety Contractor Audit Data mining of claims For NC, WakeMed with highest Zero-Day stay billings for Oct. 1, 2003 – Sep. 30, 2006 On-site interviews at WakeMed – conflicting information o Be on-site with auditors! 16

17 False Claims Act Medical Necessity Community Health Systems: $98M August 2014 Settlement for Medical necessity of Inpatient Admissions – “corporate driven” Requires Board of Director Resolution: ₋Affirmatively state BOD has made “reasonable inquiry” into effectiveness of Corporate Compliance/Privacy program, o else explain why  Notify OIG if Change in Board Composition

18 False Claims Act Medical Necessity CHS Settlement: Medical Necessity 0-1 day stays for inpatient admissions: What if observation day 1? Ensure “proper and accurate documentation of medical records” Ensure the “proper and accurate assignment and designation of patients into inpatient, outpatient or observation status” Medical record documentation accurate including preadmission, admission, case management, billing, coding and reimbursement

19 False Claims Act Medical Necessity CHS Settlement: Medical Necessity “Personal obligation of each individual involved in medical documentation process” to ensure accurate documentation Ensure proper order authorization process ₋Ensure employees do not “disregard” physician orders IRO review: ₋50 paid claims in discovery sample; 5% error rate threshold o compare to OIG hospital audits??

20 FALSE CLAIMS ACT Medical Necessity CHS Settlement: Must refund overpayment: ₋ in 60 days, or ₋ within 90 days notify government as to when they can reasonably expect calculation of overpayment and refund

21 FALSE CLAIMS ACT Medical Necessity Health Management Associates (HMA) Medical Center of Southeastern OK, $1.4M settlement (April 2014) ₋ Medically unnecessary surgeries on children (sinus surgeries) billed by Dr. Castro and hospital 21

22 FALSE CLAIMS ACT Medical Necessity Health Management Associates (HMA) Employed physician as whistleblower – first to Joint Commission, not validated Allegations of free office space, medically unnecessary admissions from ED CEO named individually as well as HMA 22

23 FALSE CLAIMS ACT Medical Necessity Maryland St. Joseph’s Medical Center: $4.9M settlement for unnecessary hospital admissions Related prosecution of cardiologist (Dr. Midei) for medically unnecessary admissions under fraud theory Malpractice case: Class action: $37M for 200+ patients (April 2014); others pending 23

24 False Claims Act Medical Necessity Baptist Health System: April 2014 : $2.5 M Qui Tam Action: “Misdiagnosis and subsequent mistreatment” of patients with neurological disorders” Multiple sclerosis Treatment by providers and drug regimens false Failure by Hospital to disclose physicians’ misdiagnosis after disclosing improper use of Botox for treatment

25 False Claims Act Medical Necessity US ex rel Ryan v. Lederman Radiologist for Staten Island University Hospital allegedly improperly billed Medicare for cancer treatments (stereotactic/gamma knife) Hospital settled - $25M DOJ: LCD does not cover below-neck procedures Court: Specific LCD controls, therefore IF KNOWLEDGE of noncoverage proven, violation of FCA

26 False Claims Act Medical Necessity Ohio Cardiac Providers: April 2014 : $1 M Improper compensation arrangements between hospital and physicians led to referrals Note: Ohio Valley Hospitals settled previously for $3.8 M

27 False Claims Act Medical Necessity Carondelet Health Network: August 2014; $35M settlement Unnecessary Inpatient Rehabilitation Services Relator assertions 2004-11 admissions not necessary Hospital investigated, disclosed $24M already Government: disclosures not timely or adequate

28 FALSE CLAIMS ACT Medical Necessity Kentucky St. Joseph’s Medical Ctr: $16.5 M settlement settlement for unnecessary cardiac hospital admissions (January 2014) Exclusive arrangement between hospital and Cumberland Clinic to provide cardiac services 3 other cardiologists were whistleblowers 28

29 False Claims Act Medical Necessity King’s Daughters Medical Center: June 2014; $41M Unnecessary Cardiac Procedures and Kickbacks (prohibited financial arrangements with physicians) Alleged falsification of medical records to support MN Stark violations: Cardiologists compensation “unreasonably high and in excess of fair market value”

30 FALSE CLAIMS ACT Aggressive Litigants Contractors as whistleblowers: Reported concerns to compliance, but issues not addressed Data Mining More sophisticated whistleblowers Whistleblowers “going all the way” 30

31 False Claims Act Physician Arrangements All Children’s Health System: April 2014 - $7M Qui Tam: “Aggressive acquisition program” to secure exclusive physician referral relationships “Lucrative compensation plans” Not all terms in contract

32 False Claims Act Physician Arrangements All Children’s Health System Compensation plan -Guaranteed base salary -Salary at “median of the medians” for FMV -Hospitalists paid at 100% FMV -Incentive bonuses and merit bonuses for teaching, research, professionalism -If practice produces net profit, incentive payment to physician

33 False Claims Act Physician Arrangements All Children’s Health System: includes payment in salary and bonuses call pay practice purchase price Government declined to intervene, but issued Statement that Stark law applies to Medicaid and Medicare referrals

34 False Claims Act Physician Arrangements Amedisys, Inc.: April 2014 settlement; $150M improper financial relationship with referring physicians and home health agencies

35 False Claims Act Special Relator Holzer Health System (ongoing) Qui Tam by VP of Compliance Allegation: Overuse of one air ambulance provider Retaliatory Discharge Claim survives dismissal since employer knew of the seriousness – “protected conduct” – there were 6 pending investigations - hired attorney - directed not to write findings

36 OIG Special Fraud Alert June 2014: Lab Payments to Referring Physicians Compensation to collect specimens Registry Payments *Antikickback Statute Implication

37 HHS OFFICE OF INSPECTOR GENERAL October 2013 Report Responds to Congressional Request Focused on Spinal Fusion Devices (1000 claims) For FY 2011, POD devices used in 1 in 5 spinal fusion surgeries Concerns ₋ Costlier per case ₋ Increase in volume and rate of growth of surgeries once POD in place 37

38 Other FCA, Stark Issues Privilege Issues Halifax Hospital: Whistleblower suit: unlawful compensation of physicians violating Stark, AKS – $200M Government intervened: Discovery of regulatory compliance, communication with legal Court: Business advice, not protected with in-house counsel 38

39 Other FCA, Stark Issues Privilege Issues In re Kellogg Brown & Root US Court of Appeals for DC Circuit – June 27, 2014 opinion Privilege for in-house investigations! 39

40 QUESTIONS? Tracy M. Field tfield@wscr.com Womble Carlyle Sandridge & Rice, LLP 271 17 th Street, N.W., Suite 2400 Atlanta, Georgia 30363 (404) 962-7539 Sandra Miller samiller@wcsr.com Womble Carlyle Sandridge & Rice, LLP 550 S. Main Street, Suite 400 Greenville, SC 29601 (864) 255-5425


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