1. What Every Physician Needs To Know About Fraud And Abuse Laws (But Is Afraid To Ask) Steven H. Cohen Cohen Law Group an affiliate of the Whistleblower Legal Center 55 West Wacker Drive, Suite 801 Chicago, Illinois 60601 scohen@whistlelaw.com www.whistlelaw.com (312) 327-8800 Phone / (312) 327-0266 Fax

2. I.What Do Fraud And Abuse Laws Cover?

3.  Areas of Governmental Concern  Additional Costs to Health Care Programs  Quality of Care  Access to Care  Patients’ Freedom of Choice  Competition  Health Providers Abuse of Professional Judgment Judgment I. What Do Fraud and Abuse Laws Cover ?

4. I. What Do Fraud And Abuse Laws Cover? Its ALWAYS about the money A. The Wrongful Receipt of Federal or State Funds B. The Presentment of a False Claim for reimbursement reimbursement C. Improper relationships among referral sources referral sources

5. II.Who Can Prosecute?

6. A.Federal 1. US Attorneys Offices Throughout the Country Civil Division Criminal Division 2. Department of Justice - Civil Fraud Division (Washington, D.C.) 3. Federal Agencies  Centers for Medicare and Medicaid Services (“CMS”) (formerly HCFA)  Office of Inspector General  Federal Bureau of Investigation  Federal Employee Health Benefits Program II. Who Can Prosecute ?

7. B. State 1. Attorney General 2. State Agencies 3. Inspector General 4. State Regulatory Agencies 5. State Medicaid Fraud Control Units II. Who Can Prosecute ?

8. C. Private Whistleblowers D. Private Insurers (Illinois and California) (Illinois and California) E. Consumer/Class Action Plaintiffs (i.e. medicaid/medicare/private insured (i.e. medicaid/medicare/private insured beneficiaries/self pays) beneficiaries/self pays)

9. III. How Can They Prosecute?

10. A. Criminal Actions B. Civil Actions C. Administrative Proceedings D. Privately Funded Class Actions III. How Can They Prosecute ?

11. IV. What They Prosecute

12.  Inadequate medical documentation  Improper use of CPT codes (i.e., “upcoding”)  Billing for services or procedures that were not performed or not medically necessary  False certifications to the Government  “Special” billing policies for Medicare and/or Medicaid patients  Fraudulent cost reporting IV. What They Prosecute Traditional Areas

13.  Substandard quality of medical care  Physicians billing for services performed by RN’s/Physician Assistants  Payments, discounts or other “special arran- gements” between providers  Kickbacks and illegal referrals  Pharmaceutical Fraud IV. What They Prosecute Emerging Areas

14. V. How Physicians Become Targets of Enforcement Actions

15. E/R Physicians E/R Physicians Attending Physicians Attending Physicians Drug Company Cases – Receiving end of “Kickbacks” Drug Company Cases – Receiving end of “Kickbacks” Quality of Care – Kickbacks, Referrals Quality of Care – Kickbacks, Referrals Physician Practices/3d Party Billers – Physician Management Companies Physician Practices/3d Party Billers – Physician Management Companies Whistleblowers Whistleblowers Credentialing Problems Credentialing Problems Competitors Competitors V. How Physicians Become Targets Of Enforcement Actions Enforcement Actions

16. VI. Key Federal and State Fraud and Abuse Enforcement Laws (The Tools of the Trade)

17. A. The Federal False Claims Act 31 USC §§3729 et. seq. VI. Key Federal and State …Laws

18. U.S. Attorneys Love It : Government’s Most Powerful Enforcement Tool U.S. Attorneys Love It : Government’s Most Powerful Enforcement Tool 1995-2003 over 8 Billion recovered by the Government (and counting!) 1995-2003 over 8 Billion recovered by the 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 Fraud 70% - Health Care Fraud 20% - Defense Procurement 20% - Defense Procurement 10% - Other (Emerging areas) 10% - Other (Emerging areas) VI. Key Federal and State …Laws

19. B. State False Claims Acts ArkansasCaliforniaDelaware District of Columbia FloridaHawaiiIllinoisLouisianaMassachusettsNevadaTennesseeTexasVirginiaUtah????? VI. Key Federal and State …Laws

20. C. Stark Act/Anti-kickback Laws (Federal) Laws (Federal) VI. Key Federal and State …Laws

21. D. Medicare Anti-Kickback Statute Prohibited Conduct - knowing/willful solicitation or receipt or offer or payment of remuneration remuneration VI. Key Federal and State …Laws

22. E. Key Issues Under the Anti-Kickback Statutes Joint Ventures Joint Ventures Commissioned Sales Representatives Commissioned Sales Representatives Service Agreements Service Agreements Leases Leases Discounts Discounts Group Purchasing Organizations Group Purchasing Organizations Physician Recruitment Physician Recruitment VI. Key Federal and State …Laws

23. F. Medicare Anti-Kickback Statute - Penalties - Penalties Criminal fines & imprisonment Criminal fines & imprisonment Civil money penalty of $50,000 plus Civil money penalty of $50,000 plus 3X the amount of the remuneration 3X the amount of the remuneration Exclusion Exclusion (False Claims Act liability) (False Claims Act liability) VI. Key Federal and State …Laws

24. G. Criminal False Claims Statutes 1. Medicare/Medicaid-specific statutes (42 U.S.C. §1320a-7b) (42 U.S.C. §1320a-7b)  False claims  False statements  Failure to refund VI. Key Federal and State …Laws

25. G.Criminal False Claims Statutes (cont.) 2. Federal Health Care Offenses 2. Federal Health Care Offenses VI. Key Federal and State …Laws  Scheme to defraud health care benefit program (18 U.S.C. §1347) program (18 U.S.C. §1347)  False statements relating to health care (18 U.S.C. §1035) (18 U.S.C. §1035)  Obstruction of health care offense investigation (18 U.S.C. § 1518) investigation (18 U.S.C. § 1518)

26. G.Criminal False Claims Statutes (cont.) VI. Key Federal and State …Laws  Conspiracy to defraud the Government (18 U.S.C. §371)  False statements (18 U.S.C. §1001)  Mail fraud (18 U.S.C. §1341)  Wire fraud (18 U.S.C. §1343)  RICO (18 U.S.C. §§1961-64)  Money laundering (18 U.S.C. §1956)

27. H. Deceptive Trade Practice Act/Consumer Fraud Act (State) VI. Key Federal and State …Laws

28. I. Administrative Rules and Regulations and Regulations (Federal and State) (Federal and State) VI. Key Federal and State …Laws ?

29. VII. Fraud/Abuse Enforcement Under False Claims Act Laws

30. VII. Fraud and Abuse Enforcement Under False Claims Act Laws Claims Act Laws A. Broad Based Coverage  Any person who knowingly presents or causes a presentment of a false claim for approval or payment  or knowingly makes or cause to be made a false statement to get a false claim paid or approved approved  Any false or fraudulent claim for payment  Statute is liberally construed  All other fraud and abuse laws feed into the FCA

31. B. A Relaxed Proof of Fraud VII. Fraud and Abuse Enforcement Under False Claims Act Laws Claims Act Laws Knowingly— (1) actual knowledge (2)deliberate ignorance (3)reckless disregard of the truth * No proof of specific intent is required * Mere negligence or innocent mistake generally not enough generally not enough

32. C. Powerful Remedies for Violations VII. Fraud/Abuse Enforcement Under False Claims Act Law Claims Act Law 1. Civil/Criminal Penalties 2. Treble Damages 3. Court Imposed/Government supervised compliance problems compliance problems 4. Exclusion/Limitation of Participation in Government Health Care Programs Government Health Care Programs

33. D. Civil Damages VII. Fraud/Abuse Enforcement Under False Claims Act Law Claims Act Law  Liability - 3X actual damages -$5,500 to $11,000 per claim -Equitable relief -(attorneys fees)

34. E. SAMPLE PENALTY CALCULATION VII. Fraud/Abuse Enforcement Under False Claims Act Law Claims Act Law  $100,000 damages X 3 = $300,000  2000 (# of claims) X $11,000 =$22,000,000  Total Liability = $22,300,000

35. F. Exclusions  Mandatory Exclusion  Felonies relating to fraud  breach of fiduciary duty  obstructing an investigation  Permission Exclusion  Misdemeanor for program violations  If OIG concludes you have: 1. failed to disclose required information 2. failed to grant immediate access to investigators VII. Fraud/Abuse Enforcement Under False Claims Act Law Claims Act Law

36. G. Government Initiated Actions VII. Fraud/Abuse Enforcement Under False Claims Act Law Claims Act Law

37. H. Whistleblower Initiated (Qui Tam Lawsuits) private individuals who have non-public knowledge of fraudulent practices by a person against a government agency resulting in the government paying more than it should have or not receiving the value it expected. VII. Fraud/Abuse Enforcement Under False Claims Act Law Claims Act Law

38. VIII. Special Focus: The Whistleblower Initiated Lawsuit (Qui Tam Lawsuits)

39.  Whistleblower can proceed even if Government declines even if Government declines VIII. …Whistleblower Initiated Lawsuits… ?  “Private Attorney Generals” Whistleblowers Whistleblowers  Whistleblower can receive up to 30% of recovery to 30% of recovery

40. A. Who Can Be A Whistleblower?  Non-Public: Typically insider- type info but doesn’t have to be.  Knowledge: Typically personal knowledge. VIII. …Whistleblower Initiated Lawsuits…  Governed by Statute: Federal or State law  Individuals: Person, persons, or entity; employee, competitor, former employee or employee, competitor, former employee or contractor (called the “Relator”). contractor (called the “Relator”).

41. B. Who May Sue? “Any person” with non-public (inside) information Employees, ex-employees Employees, ex-employees Competitors, former business partners, colleagues Competitors, former business partners, colleagues VIII. …Whistleblower Initiated Lawsuits…

42. Qui Tams Are Increasingly Brought by Competitors & Former Business Partners  Dr. A Sells His Practice-and Knows How the New Group Bills  Terminated ER Group Sues Hospital-Which Then Claims Docs Were Fraudulently Billing as a Defense to the MDs’ Damage Claims  Competitors Who “Do It Right” Tire of Shady Practice By “Bad Apples”  Pharmaceutical Reps Lower the Boom on Their Competitors’ Marketing Practice  Insurers Go After Abusive Providers VIII. …Whistleblower Initiated Lawsuits…

43.  Best Defense is a Good Offense (Staff or at a Hospital)  Clean Up The Industry  The Bounty (Millionaires) C.Why Someone Blows The Whistle? VIII. …Whistleblower Initiated Lawsuits…  Competitor Suits (Evening the Playing Field)  Vindication