What Every Physician Needs To Know About Fraud And Abuse Laws (But Is Afraid To Ask)

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 I. What Do Fraud and Abuse Laws Cover ? • Additional Costs to Health Care Programs • Quality of Care • Access to Care • Patients’ Freedom of Choice • Competition • Health Providers Abuse of Professional Judgment

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

5. II. Who Can Prosecute?

6. A. Federal II. Who Can Prosecute ? 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

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

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

9. III. How Can They Prosecute?

10. A. Criminal ActionsB. Civil ActionsC. Administrative ProceedingsD. 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 costreporting 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 Attending Physicians Drug Company Cases – Receiving end of “Kickbacks” Quality of Care – Kickbacks, Referrals Physician Practices/3d Party Billers – Physician Management Companies Whistleblowers Credentialing Problems Competitors V. How Physicians Become Targets Of Enforcement Actions

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

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

18. VI. Key Federal and State …Laws • U.S. Attorneys Love It : Government’s Most Powerful Enforcement Tool • 1995-2003 over 8 Billion recovered by the Government (and counting!) • Over 2.1 Billion recovered in 2003! • @ 6 Billion from whistleblower cases • 70% - Health Care Fraud • 20% - Defense Procurement • 10% - Other (Emerging areas)

19. Arkansas California Delaware District of Columbia Florida Hawaii Illinois Louisiana Massachusetts Nevada Tennessee Texas Virginia Utah ????? B. State False Claims Acts VI. Key Federal and State …Laws

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

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

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

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

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

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

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

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

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

30. VII. Fraud and Abuse Enforcement Under False 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 • 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 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

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

33. D. Civil Damages VII. Fraud/Abuse Enforcement Under False 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 • $100,000 damages X 3 = $300,000 • 2000 (# of claims) X $11,000 =$22,000,000 • Total Liability = $22,300,000

35. 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 F. Exclusions VII. Fraud/Abuse Enforcement Under False Claims Act Law

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

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 thanit should have or not receiving the value it expected. VII. Fraud/Abuse Enforcement Under False Claims Act Law

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

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

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

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

42. 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 Qui Tams Are IncreasinglyBrought by Competitors & Former Business Partners VIII. …Whistleblower Initiated Lawsuits…

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