Whistleblowers Expected to Receive $2.8 Million in Settlement of Stark Based False Claims Act Lawsuit

May 7, 2013 By

The Department of Justice recently announced a settlement with Adventist Health System/West under which the Department of Justice and the state of California will collect $14.1 million in settlement of False Claims Act allegations.  The lawsuit was initially filed by private individuals as whistleblowers who will receive a significant portion of the settlement.  There was no determination or admission of liability.

According to the announcement, the lawsuit alleged that Adventist Health improperly compensated physicians at one of its facilities by transferring assets to the physicians at less than fair market value and by compensating physicians for teaching services at rates contended to be above fair market value.  These payments to physicians were alleged to violate the Stark law and anti-kickback laws.

In commenting on the settlement, a representative of the Office of Inspector General observed:

“Payouts by hospitals and clinics – as the government alleged in this case – raise substantial concerns about physician independence and objectivity.  Taxpayers and vulnerable patients rightfully expect such payments to be investigated and pursued.”

As part of its on-going quarterly lunch time webinar series, the Ogden Murphy Wallace Healthcare Practice Group will provide a presentation on self-disclosure options and avoidance of state and federal False Claims Act liability in its June 4, 2013 webinar (to register click here).  If you have questions regarding self-disclosure and overpayments in general please contact Greg Montgomery.

Filed Under: Anti-Kickback/Stark, Compliance, False Claims Act, Overpayment

False Claims Act Recoveries Top $14.2 Billion

May 2, 2013 By

On May 1, 2013, the  Department of Justice announced a settlement with two Montana hospitals that added $3.95 million to its recoveries under the False Claims Act.  According to the announcement, with this additional recovery,  the Department of Justice has used the False Claims Act to recover more than $14.2 billion in federal healthcare payments since January, 2009.

Once again, allegations of hospital-physician financial relationships that violated the Stark law prohibition against self-referral were the stated basis for the allegations of False Claims Act liability.  In this case, according to the announcement, it was alleged that the hospitals paid incentive compensation to certain physicians in a manner that took into consideration the value or volume of the referrals by the physicians to the hospital by improperly including certain designated health services in the formula for calculating physician incentive compensation.

This situation was voluntarily disclosed by the hospitals.  In this regard, an OIG representative was quoted as commenting:

 “There is an expectation that corporations providing services to Medicare and Medicaid beneficiaries adhere to the provisions of the Stark Law.  I applaud St. Vincent Healthcare and Holy Rosary Healthcare for recognizing their potential liability in this matter and making a disclosure”

As part of its on-going quarterly lunch time webinar series, the Ogden Murphy Wallace Healthcare Practice Group will provide a presentation on self-disclosure options and avoidance of state and federal false claims act liability in its June 4, 2013 webinar (to register click here).  If you have questions regarding self-disclosure and overpayments in general please contact Greg Montgomery.

Filed Under: Anti-Kickback/Stark, Compliance, False Claims Act, Hospitals, Medicare, Overpayment, Stark

CMS PROPOSES TO INSPIRE MORE WHISTLE BLOWING

April 25, 2013 By

In a recently published proposed rule, CMS and HHS propose to substantially increase financial rewards available to individuals who report information regarding individuals or entities engaging in acts or conduct that are subject to Medicare sanctions.  The existing reward incentive program offers 10% of the amount of overpayment recovered or $1000 whichever is less.  Under the proposed rule, the reward could take a substantial jump up to 15% of $66,000,000, equaling $9,900,000.

 

CMS explains that under the existing reward incentive program which has been in effect since July 1998, only 18 rewards have been paid in a total amount of less than $16,000 and less than $3.5 million in overpayments have been collected.  It notes that after the IRS increased the rewards available under its rewards program in 2006, it has collected almost $1.6 billion and paid approximately $193 million in rewards.  CMS also tips its hat to the success of the whistle blower provisions of the False Claims Act, noting that rewards under this Act range from 15% to 30% of amounts recovered.

 

CMS estimates that with the proposed rule in place annual recoveries will increase by $24.5 million.  There will, however, be no whistle blower double dipping.  While conduct may entitle a whistle blower to recover under both the False Claims Act and the Reward Incentive Program, whistle blowers are going to have to pick only one whistle.  Regardless of which whistle is chosen, the bottom line is that with this new rule more individuals are going to be looking much harder at the conduct of providers and entities that seek payment for services and supplies from Medicare.

 

As part of its on-going quarterly lunch time webinar series, the Ogden Murphy Wallace Healthcare Practice Group will provide a presentation on self-disclosure options and avoidance of state and federal false claims act liability in its June 4, 2013 webinar.  If you have questions regarding these updated protocols or self-disclosure and overpayments in general please contact Greg Montgomery.

 

Filed Under: Compliance, Medicare, Overpayment Tagged With: ,

OIG Issues Updated Self-Disclosure Protocol

April 17, 2013 By

The OIG recently issued an update to its self-disclosure protocols to supply providers with additional guidance for self-disclosure.  In touting the benefits of self-disclosure, the OIG update notes that it now rarely requires integrity agreements in conjunction with self-disclosure settlement, it’s damage multiplier may be as low as 1.5, and the self-disclosure may stop the sixty (60) day clock running on potential False Claims Act liability.

The updated protocols emphasize that not every billing error is eligible for or should be reported under these protocols.  Reporting is limited to matters that may potentially violate federal laws for which civil monetary penalties are authorized.  Thus, for example, if you should discover that you may not have met all the criteria for provider based billing in an off campus clinic, you may have billing errors, but properly and promptly addressed, these do not invoke civil monetary penalties.

Recognizing that conduct for which civil monetary penalties are authorized also may be conduct that violates the Stark law, the updated protocols have a separate section providing guidance for disclosing arrangements that potentially violate both anti- kickback and Stark laws.  Arrangements that potentially violate both anti-kickback and Stark laws should be disclosed under the OIG protocol and not under the CMS stark self-disclosure protocol.  Of note in comparison to the CMS self-disclosure protocol for potential Stark violations, the updated OIG protocol is very clear that the self-disclosure submittal  must clearly acknowledge that the disclosed arrangement constitutes a potential violation of the anti-kickback and Stark laws.

As part of its on-going quarterly lunch time webinar series, the Ogden Murphy Wallace Healthcare Practice Group will provide a presentation on self-disclosure options and avoidance of state and federal false claims act liability in its June 2013 webinar (to register click here).  If you have questions regarding these updated protocols or self-disclosure and overpayments in general please contact Greg Montgomery.

 

Filed Under: Compliance, OIG, SRDP, Stark

WHISTLE-BLOWING CARDIOLOGIST EXPECTED TO RECEIVE $2.4 MILLION

January 29, 2013 By

Under the terms of a settlement agreement signed earlier this month, Dr. Nicholas L. DePace should receive approximately $2,400,000 as his portion of a settlement of the qui tam False Claims Act lawsuit he filed in 2008.  In addition, defendant Cooper Health System agreed to pay $430,000 to the law firm that represented Dr. DePace in the qui tam action.

The essence of the 60 page complaint filed by Dr. DePace is that Cooper Health System made improper payments to physicians to induce referrals by recruiting high volume referring physicians and paying them $18,000 annually to sit on its heart institute advisory board formed in 2002.    According to the complaint, the advisory board was staffed with two categories of members:  physicians employed by the Health System or related entities and local physicians who were recruited to the board to advise the heart institute.  Dr. DePace was employed by one of the Health System related entities for slightly more than five months in 2007 and alleged that he served as an advisor to the heart institute during 2007 and 2008.

In his complaint filed in 2008, Dr. DePace alleged that the only responsibility required of the advisory members was attendance at bi-monthly meetings of the board which were to last approximately 17 hours each.  According to the complaint, although the function of the advisory board was to provide advice to the heart institute, the selection process for recruiting members to the board was governed by the volume of new business the member could provide regardless of the member’s academic credentials or professional experience.  The complaint recites in great detail the agendas at several meetings (largely unrelated to cardiology), the five-star cuisine served at one such meeting, and the duration of the meetings which allegedly fell far short of the 17 hours mentioned.  The complaint calculates that the advisors were paid in excess of $550/hour to attend these meetings and were required to attend only four such meetings a year to earn their $18,000 in advisory compensation.

The complaint estimated that  from the formation of the advisory board in 2002 until the complaint was filed in 2008, Cooper Health System paid at least $2,268,000 in illegal kickbacks in the form of advisory fees.  According to the complaint, these payments allowed Cooper Health System to “lock-in” valuable referrals from general practitioners and cardiologist and solidify dominance in the healthcare market in southern New Jersey.

The total amount to be paid by Cooper Health System under the terms of the settlement agreement was in excess of $12 million.  The settlement agreement does not constitute an admission of liability by Cooper Health System or a concession by the United States or Dr. DePace that any of the claims were not well founded.

If you have questions regarding OIG settlements please contact Greg Montgomery.

 

Filed Under: Anti-Kickback/Stark, Compliance, OIG
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