Of the “fraud and abuse” laws, the three decades old Ethics in Patient Referrals Act, 42 U.S.C. § 1395nn, dubbed “Stark Law” after Congressmen Pete Stark who sponsored it, can often be the most challenging to properly interpret and apply, easily leading to head scratching. The law as originally enacted was simple in concept: to remove any financial motivation for doctors to send their patients for unnecessary testing that could raise health care costs and/or result in bad health care. Now often subject to much criticism and even calls for repeal, Stark Law’s is often viewed as confusing, which is ironic because Congressman Stark intended for the law to create “bright line” tests that would provide clear guidance to physicians about what self-referral arrangements are unlawful. Instead, the evolution of the law over the years, including implementing regulations, advisory opinions and court cases have rendered proper interpretation and application of the law debatable and unpredictable in some circumstances.
In our Georgia business and healthcare law firm, we have noticed that cases involving Medicare fraud and billing compliance issues are published on virtually a daily basis, underscoring the critical need that physicians, nurses and other care providers and billing professionals exercise caution and vigilance in billing Medicare or other third party payers. For example, last week in Dallas, Texas, two physicians and three nurses were sentenced to prison for submitting fraudulent claims to Medicare through a home healthcare agency. The financial harm and potential billing fraud and serious “zero tolerance policy” of the Office of the Inspector and Federal Government for Medicare fraud has enhanced the financial and legal risks to healthcare providers and billing companies for all billing discrepancies. The OIG published its 2018 National Health Care Fraud Takedown providing the following statistics, which reflect law enforcement efforts to combat healthcare fraud and abuse:
The United States Department of Justice issued a press release on March 28, 2018 regarding the sentencing of Sandra Parkman, age 63, for Medicare fraud. Our business and health care law firm follows developments in the fraud and abuse legal arena. The DOJ, as well as numerous other Federal and state law enforcement agencies, are continuing with their push to crack down on offenses they determine to constitute “fraud and abuse” under applicable statutes and rules.
United States District Judge Kurt D. Engelhardt of the Eastern District of Louisiana sentenced Ms. Parkman to 32 months in prison. Additionally, she was ordered to pay $277,197 in restitution. Ms. Parkman elected to go to trial in her case. There was a three-day jury trial. At trial, the government presented evidence that Ms. Parkman engaged in a scheme to provide durable medical equipment (DME) that was not medically necessary to federal program beneficiaries in the New Orleans area. The owner of a DME supply company, Tracy Browns, a co-defendant in the case, allegedly paid kickbacks to Ms. Parkman to provide information of eligible Medicare beneficiaries and to obtain physician signatures on order forms for the DME in question. Brown was convicted in a separate trial and sentenced to 80 months in prison.
On January 19, 2017, the United States Department of Justice (DOJ) issued a press release announcing a deal reached with Costco Wholesale to resolve DOJ’s disputed allegations that Costco violated Federal law in filling prescriptions by lax protocol. The allegations against Costco stem from an investigation by the United States Drug Enforcement Agency (DEA) Diversion Groups based in Seattle, Los Angeles, Sacramento and Detroit.
Georgia Healthcare and Business Litigation Law Firm
Our Atlanta and Augusta-based business law firm closely follows healthcare industry legal developments, including the healthcare fraud and abuse matters. A strong focus of the DEA and supporting Federal and State law enforcement activities is the current epidemic of Opioid abuse in the United States. According to the United States Centers for Disease Control and Prevention (CDC), deaths from Opioid overdose in the United States have quadrupled since 1999; and during the same period, sales of these drugs quadrupled. The most common such Opioids are Methadone, Oxycodone and Hydrocodone. “Pill mills” are a principal target of DEA and State law enforcement efforts. To combat pill mills and other circumstances that may give rise to misuse of opioids and controlled substances, the DEA will pursue healthcare providers and entities that fail to strictly follow legal protocols in prescribing or dispensing controlled substances.
The United States Department of Health and Human Resources (HHS) and the United States Department of Justice (DOJ) recently issued a joint annual report for 2016 (the Report) providing details about the federal fraud and abuse program and, in particular, annual financial recoveries. Fraud and abuse law enforcement efforts continued to be a top priority for the Federal Government and an important means of defraying the rising costs of our nation’s healthcare delivery system. According to the Report, the Federal Government obtained over $2.5 billion in additional revenue in 2016 by way of health care fraud judgments and settlements.
The US Department of Health & Human Services (HHS) says that it cannot meet the requirements of a federal court order to reduce the horrible backlog of Medicare appeals cases that for many years has plagued the United States and adversely impacted the ability of health care providers to be paid. The problem has been under scrutiny for some time, and the US General Accountability Office (GAO) has outlined in a report various inefficiencies to which the GAO attributes the problem. Health care providers in many instances are completely unable to, in a timely manner, vindicate their claims in Medicare appeals. Nevertheless, HHS contends that it needs more money from Congress to fix the problem.
In a case styled Am. Hosp.Assn v. Burwell, D.D.C., No. 14-cv-851, the United States District Court for the District of Columbia entered a recent Order wherein the Federal Court set annual backlog reduction targets of 30, 60, 90 and 100 percent over the next four years. In the case, the American Hospital Association and affiliated entities requested that the United States District Court compel HHS to adjudicate pending Medicare-reimbursement appeals in compliance with statutory deadlines. As explained in the Order, hundreds of thousands of appeals have languished in a terrible backlog. In the case, HHS contended that mandamus (i.e., a Court-ordered solution) was not necessary and that HHS would, eventually, resolve the issue. The Plaintiff, however, contended that a Court-ordered (and enforceable) time table for a solution was required in light of HHS’ failure thus far to fix the problem. The Plaintiff proposed the following timetable for reduction of the backlog:
So much focus is placed on the federal “whistleblower” statute, the Federal False Claims Act, that similar acts, such as various States’ versions of the law, are often not as well known. All have a common thread: they are a tool to recover tax payer money lost to fraudulent acts and serve to deter such fraud. Georgia has two false claims act statutes designed to combat fraud and abuse in Georgia.
Georgia Healthcare Whistleblower Law Attorneys
A brief history of this area of law puts the modern Federal and Georgia False Claims Acts in proper light. The Federal False Claims Act was passed during the Civil War era in response to fraud by government contractors who seized the opportunity of intense government spending on the war to defraud the government. An essential concept undergirding the earliest versions of the law was to create a financial incentive for one dishonest contractor — a “relator” — to turn in another. Hence the original law (1863) provided that the relator could be paid up to one-half of the government’s recovery in a false claims act case. The original law survived for decades as a remedial statute designed as a means for the Federal Government to recover what were thought to be, without the law, unrecoverable substantial losses for the treasury that attended dishonest acts. As one court explained:
The U.S. Department of Health and Human Services (HHS) recently released its Medicaid Fraud Control Units Fiscal Year 2015 Annual Report (the “Report”). The Report’s findings highlight 1,553 convictions, 731 civil settlements, and $744 million in criminal and civil recoveries relating to Medicaid fraud and abuse. Fraud and Abuse financial recoveries remain a top priority for the Federal Government and hence a primary objective of Federal law enforcement. Our Georgia business and healthcare law firm follows developments in the world of healthcare law, including fraud and abuse issues.
The Social Security Act (SSA) mandates that, absent certain circumstances, each State operate a Medicaid Fraud Control Unit (MFCU). The District of Columbia and forty-nine States currently maintain MFCUs. MFCUs are one of many Federal law enforcement tools in its fraud and abuse arsenal. The statutory mission of MFCUs is to investigate and prosecute Medicaid fraud by health care providers and patient abuse and neglect. HHS’ Office of Inspector General (OIG) certifies, provides oversight of, and assesses performance relative to Federal compliance standards of all MFCUs. The States are responsible for operation of MFCUs and receive reimbursement for a percentage of their costs from the Federal Government, pursuant to the SSA. MFCUs are currently reimbursed for 90% of their costs for the first three years of their operation and 75% thereafter.
Each MFCU employs staff that comprise investigator(s), auditor(s) and attorney(s) to review referrals of potential fraud and abuse involving Medicaid and to make decisions regarding potential civil and/or criminal prosecution. The Report essentially provides the latest annual update on the success of MFCUs in prosecuting Medicaid fraud matters.
A Few Findings of the Report
The Report’s findings include:
On August 1, 2016, the United States Department of Justice (DOJ), through the United States Attorney’s Office, Northern District of New York issued a press release regarding the DOJ’s resolution of fraud allegations against St. Joseph’s Hospital Health Center (St. Joseph’s). No determination of fraud by a Court has been determined nor have the allegations of fraud been proven. Our Georgia healthcare law firm follows legal developments with regard to healthcare reimbursement and fraud and abuse.
The Federal Government’s allegations against St. Joseph concern the state’s Medicaid program. The DOJ alleged that St. Joseph’s staff was not qualified to provide certain mental health services for which Medicaid reimbursement was sought and obtained. St. Joseph provided the services in question under its program known as the Comprehensive Psychiatric Emergency Program (CPEP). The CPEP maintained a mobile unit that would serve patients in particular counties who could not, or would not, access mental health crisis intervention services available in the emergency room. New York law has regulations with which CPEPs must comply. Those State regulations delineate the proper composition of professional staff who must be involved with the applicable intervention services when such services are provided somewhere other than in the emergency room. Reimbursement for such services is expressly conditioned upon compliance with the New York regulations that govern proper staffing.
The DOJ alleged that St. Joseph violated the New York False Claims Act by submitting payment to Medicaid for “mobile-crisis outreach services” by individuals who did not meet New York’s CPEP qualifications to provide such services. The alleged violation of the New York False Claims Act was premised on the submission of claims for payment without disclosing that St. Joseph’s staff (allegedly) failed to meet the qualification requirements under State law for the particular services provided. St. Joseph’s agreed to pay $3.2 million to conclude the matter.
Georgia Stark Law and Physician Self-Referral Attorneys
The Senate Report is, at a minimum, a strong indicator that calls for change in the law are heard and efforts are underway to evaluate improvements to the law.
A Brief History of Stark Law
Stark Law is Federal physician self-referral law premised upon the notion that physicians are prone to order (i.e., “refer”) more medical items and services if they stand to benefit financially from doing so. For example, where a physician has an ownership interest in a lab to which he refers patients, he will incentivized to send more patients to the lab for lab work.
Thus in 1989 Representative Fortney “Pete” Stark (D-CA), of whom the statute was named, proposed the law to address two perceived adverse consequences of financial incentives for physician self-referrals of medical items and services reimbursed by a Federal healthcare program: (1) overbilling of Federal healthcare programs; and (2) the provision of medical services that do not benefit a patient. Stark Law, Section 1877 of the Social Security Act, codified at 42 U.S.C. § 1395nn, as originally passed, was a fairly straightforward and narrow prohibition that precluded a physician from referring patients or specimens to clinical labs, including physician office labs, where labs paid for by fed programs (Medicare, Medicaid, or CHAMPUS) if the physician (or immediate family member) had a “financial relationship” with the lab. Indeed, Pete Stark declared in sponsoring the law that the intent was to create a “bright line” standard that would benefit physicians and protect Federal healthcare programs. But the law did not remain simple and expanded from the straightforward lab referral context to apply to a list of services and items known as “Designated Health Services,” identified by CMS billing codes.