Transcript AFFIRMATIVE CIVIL ENFORCEMENT

ENFORCEMENT UPDATE
2012 Texas Health Law Conference
October 15, 2012
John J. LoCurto
Kimberly Johnson
Wilson Jones
Assistant United States Attorney
Western District of Texas
Affirmative Civil Enforcement Unit
San Antonio, Texas
(210) 384-7100
Assistant Attorney General
Texas Office of the Attorney General
Medicaid Fraud Control Unit
San Antonio, Texas
(210) 384-7362
Thompson & Knight LLP
One Arts Plaza
1722 Routh Street, Suite 1500
Dallas, Texas 75205
(214) 969-1400
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DISCLAIMER
This presentation provides general information and should
not be construed as legal advice. The statements and
opinions expressed in this presentation, and any related
discussions, do not necessarily reflect the views of the
United States, the State of Texas, or any of their respective
agencies, officials, or attorneys.
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Healthcare Fraud Stats: FY2011
• Federal Funding
• Health Care Fraud and Abuse Control Program – $608 million
• Affordable Care Act – $105 million additional funds
• HIPAA – $128 million in mandatory funding to FBI
• Total healthcare fraud recoveries – $4.1 billion
• New criminal healthcare fraud matters – 1,110
• 743 convictions
• New civil healthcare fraud matters – 977
• Exclusions – 2,662 individuals and entities
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Potential Focus of Criminal Enforcement
• Electronic Medical Records
• September 24, 2012 letter from Attorney General Holder and Secretary Sebelius
• Using technology to “game the system”
• False documentation of care
» “Cloning” medical records to inflate payments
» “Cutting and pasting”
» Errors, overpayments, fraud
• Up-coding
• Misrepresenting diagnoses
• Up-coding DRGs
• Services Not Provided
• Lack of Medical Necessity
• e.g., observation vs. inpatient stay (“one-day stay” initiative)
• Unbundling
• Kickbacks
• Unqualified or Unsupervised Employees
• Failure to identify the actual provider of the service
• e.g., using the billing number of another provider
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Targets, Suspects, and Defendants
• The health care provider
• physicians, nurses, physician assistants, counselors, podiatrists,
pharmacists
• The hospital
• the entity itself and its owners, managers, operators
• The biller
• The providers’ employees
• The “marketer”
• The skilled or unskilled caregiver
• Medicare/Medicaid special program employees
• Any other person who assists in the commission of the
fraud or attempts to conceal fraud activities
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Criminal Enforcement
• New enforcement tools under ACA
• Pre-payment suspensions
• “Stopping the bleeding” early
• “reliable information that an overpayment or fraud or willful
misrepresentation exists” [42 C.F.R. 405.371]
• HEAT Task Forces
• Dallas and Houston
• Interagency cooperation leads to huge success in prevention,
detection, and punishment of health care fraud
• Medicaid Fraud Control Units (MFCUs)
• Mandated Medicaid program oversight and fraud detection and
investigation
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The Texas MFCU
• Created in 1979 as a division of the Office of the Attorney
General
• Four principal responsibilities:
1.
investigating criminal and civil fraud by Medicaid providers;
2.
investigating physical abuse and criminal neglect of patients in
health care facilities licensed by the Medicaid program, including
nursing homes and Texas Department of Aging and Disability
Services homes;
3.
prosecuting criminal fraud by Medicaid providers or assisting local
and federal authorities with such prosecution; and
4.
investigating fraud within the administration of the Medicaid
program.
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MFCU: Medicaid Fraud & Abuse
Referral Statistics – FY2012
• Pending Criminal Investigations - 1,218
• Fraud Cases - 1,120
• Abuse Cases - 67
• Patient Fund Cases - 31
• Convictions - 125
• Overpayments Identified - $45.1M
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Civil Enforcement – The FCA
• The False Claims Act
• Prohibits false claims for federal dollars [31 U.S.C. §§ 3729-3733]
• affirmative false claims and statements/records
• “reverse” false claims
• conspiracy
• Qui tam provisions
• Mandatory treble damages and civil penalties
• FY2011 recoveries – $2.45 billion
• Numerous recent amendments
• ACA confirms that kickbacks can result in FCA liability
[42 U.S.C. § 1320a-7b(g)]
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FCA Remedies
• Mandatory treble damages [31 U.S.C. § 3729(a)]
• 3x actual damages
• FCA does not specify how to calculate actual damages
• Gives flexibility to government
• Mandatory civil penalties [31 U.S.C § 3729(a)]
• $5,500 to $11,000 for each violation
• Damages not required – U.S. may sue just for penalties
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“Intent” Under the FCA
• Myth: FCA is a “fraud statute”
• FCA is often called a “fraud” statute, but that description is too
narrow
• Specific intent to defraud is not required [31 U.S.C. § 3729(b)(1)(B)]
• FCA requires “knowing conduct,” defined as:
• Actual knowledge
• Deliberate ignorance
• Reckless disregard
• Fact: “Reckless” conduct can give rise to FCA liability,
even in the absence of wrongful intent
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Qui Tam Actions
• FCA authorizes private “relator” to bring suit for U.S. [31 U.S.C. § 3730(b)]
• U.S. may “intervene” and take over or “decline” and let the relator proceed
• Historically, U.S. has intervened in approximately 22% of qui tam actions
• Sealed for at least 60 days (with extensions for good cause)
• U.S. has a statutory duty to investigate relator’s claims [31 U.S.C. § 3730(a)]
• Seal protects government’s investigation
• Election decision – pivotal event
• Unsealing
• Relator entitled to a share of the government’s recovery
• It government intervenes, the share is typically 15% to 25%
• If the government declines and relator prosecutes action, the share is typically 25% to 30%
• FY 2011– $470 million in aggregate relator share awards
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Administrative Enforcement
• Program Fraud Civil Remedies Act [31 U.S.C. §§ 38013812]
• “Little False Claims Act”
• Provides an administrative remedy against any person who makes,
or causes to be made, a false claim or written statement to certain
federal agencies
• Exclusions [42 U.S.C. § 1320a-7]
• HHS-OIG
• 20 bases – 4 mandatory, 16 permissive
• 2,662 individuals and entities excluded in FY 2011
• Corporate Integrity Agreements in exchange for exclusion
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New Administrative Approaches
• Shift in government enforcement strategy
• No more “pay-and-chase”
• Now, an integrated approach: “Prevent, detect, recover”
• Technology
• Training
• Advanced analysis, predictive modeling, and data mining
• Enhanced recovery tools and efforts
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Rise of Contractors
• CMS partnering with contractors to fight fraud
• Medicare Administrative Contractors (MACs)
»
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Process and pay claims – prevent improper payments before they are made
Jurisdiction 4 – Trailblazer
Jurisdiction H – Highmark Medicare Services
• Recovery Audit Contractors (RACs)
»
»
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Detect, correct, recoup improper payments (Parts A and B)
Paid on a contingency basis
Region C – Connolly, Inc.
ACA expands RAC program to Medicare Parts C and D and to Medicaid
Majority of RAC audits are institutional (e.g., one-day stays)
• Zone Program Integrity Contractors (ZPICs)
»
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Investigate fraud and initiate actions to deny/suspend payment
Zone 4 – Health Integrity
Liaison with law enforcement
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“Parallel” Enforcement Proceedings
• Simultaneous civil/criminal investigation of same defendants
• Permissible
• U.S. v. Kordel, 397 U.S. 1, 11 (1970)
• U.S. v. Posada Carrilles, 541 F.3d 344, 354 (5th Cir. 2008)
• Preferable
• Greater emphasis being placed on “parallel” proceedings
• U.S. Attorneys’ Manual 1.12000, 9-42.010, 9-28.1100
• Not limited to civil/criminal investigations
• Administrative and state proceedings may also run parallel
• ACA regulations allow payments to be suspended administratively
during investigations of credible fraud allegations
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Investigative Tools
• Inspector General Subpoenas
• Search Warrants
• Authorized Investigative Demands / HIPAA Subpoenas
• Voluntarily obtained information
• Proffers
• Consensual monitoring
• Civil Investigative Demands
• Documents
• Interrogatories
• Testimony
• Civil Discovery
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Limits on Information Sharing
During Parallel Investigations
• Legal Limitations:
• Grand Jury [Fed. R. Crim. P. 6(e)]
• Taxpayer Information
• Wire Taps [Title III]
• Practical Considerations :
• Open Records Laws (when working with states)
• Discovery Obligations
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Internal Investigations
• Upjohn warnings – the “corporate Miranda warning”
• Conflicts / ethical issues
• Attorney-client privilege issues
• Joint Defense Agreements
• Voluntary disclosures and “cooperation”
• Facts are critical
• “[W]aiving the attorney-client and work product protections has never
been a prerequisite under the Department’s prosecution guidelines for
a corporation to be viewed as cooperative.” [USAM 9-28.710]
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Witnesses
• Common Defense Strategies
• Blanket assertion of representation of company and all employees
• All employee interviews coordinated through defense counsel
• Common Government Responses
• Law enforcement investigation – contacts authorized by law
• Former employees
• Current employees, other than:
» Managers with related duties
» Employees whose acts/omissions are at issue
• Texas Disciplinary Rules of Professional Conduct 4.02
• “[A] lawyer shall not communicate or cause or encourage another to communicate
about the subject of the representation with a person, organization or entity of
government the lawyer knows to be represented by another lawyer regarding that
subject, unless the lawyer has the consent of the other lawyer or is authorized by
law to do so.”
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Finding and Preserving the Evidence
• Documents vs. physical evidence: chain of custody control
• Search evidence: manuals, newsletters, program
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correspondence
Bank account information
Provider applications
Photos
Expert reviews of mandatory patient files
Patient physical exams (e.g., dentist patients)
Other notes (e.g., patient care coordinator notes, nursing home
nurse’s notes)
Purchase inventories (pharmaceutical companies, DME
wholesale providers, etc.)
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Legal Hold Notices
• Affirmative duty to preserve
• The duty is the same, only the technology is new
• Balancing timeliness of notice vs. thoroughness of recipients list
• Triggered once litigation is “reasonably anticipated”
• Cookie cutter approach is treacherous
• When to issue, scope, and evolution all depend on facts of each case
• Legal holds should be revisited, reiterated, and tailored throughout matter
• Get to know your clients’ IT personnel
• Spoliation
• Risks run both ways
• U.S. ex rel. Baker v. Community Health Sys., Inc., No. 05-cv-279 (D.N.M. Aug.
31, 2012)
• Consultation and cooperation with government can be key
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Resolution
• Requests for “global” settlements can be problematic
• Criminal
• Civil
• Administrative
• “Parallel” tracks divide with exclusive authorities
• Civil Division cannot agree to criminal release
• HHS-OIG has sole authority over exclusion
• Federal law enforcement has no authority to prevent state
administrative action
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Questions?
John J. LoCurto
Assistant United States Attorney
Western District of Texas
Affirmative Civil Enforcement Unit
(210) 384-7362
Kimberly Johnson
Assistant Attorney General
Texas Office of the Attorney General
Medicaid Fraud Control Unit
(210) 384-7100
Wilson Jones
Thompson & Knight LLP
1722 Routh Street, Suite 1500
Dallas, TX 75201
(214) 969-1400