Records Management – What’s New

Federal and state laws and payers require healthcare providers to create and maintain a whole host of records.

Records that are required to be maintained take many forms. A record may be a document from the business office, human resources, a medical record, a lab specimen, policies and procedures, equipment maintenance logs, incident and accident reports, etc. The retention requirements vary based on the type of record and may vary based on state and federal law.

Record retention requirements have been around seemingly forever, so what’s new? What’s new, is the stepped up enforcement.  If a provider fails to maintain the required records for the required period of time or fails to completely and timely respond to a request for documentation by a payer or a state or federal regulator, payers can deny payment, initiate civil and criminal actions for “false claims” and revoke and bar re-enrollment of the provider in the payer’s network, Medicare and any other governmental program

Recently, Medicare has begun to apply a strict liability approach to document retention and access standards. One of the challenges some providers, such as surgeons and hospital based providers face, is that they rely on other health care entities providing or furnishing the underlying service or item to maintain the records.

We recently represented a pulmonologist who received a request for medical records from Medicare for ICU records maintained by the various hospitals where he provided ventilator management services. When he was unable to produce the hospital records in a timely manner, Medicare began recouping nearly half a million dollars from his practice. Over time, and with our assistance, he was able to produce most of the records, but not until substantial dollars had been recouped and he was considering filing for bankruptcy.

Providers need to have a records management program. The program should address which records to retain, the retention periods and the specifics of record destruction. In deciding which records to retain, providers need to consider the following: (1) federal, state, local and payer retention requirements; (2) recommendations of accreditation and professional organizations: (3) the impact on the continuity of patient care information; and (4) the likelihood of utilization of the particular record. After identifying the records to be retained, providers need to provide for storage, retrieval and destruction of the records.

In light of Medicare’s new enforcement efforts, providers should focus on the ability to retrieve records in a complete and timely fashion.

Supreme Court Rules in Favor of Nursing Home Arbitration Agreements

In Kindred Nursing Center Ltd. Partnership v. Clark, the United States Supreme Court recently continued its protection of arbitration agreements by holding that the Federal Arbitration Act (FAA) preempted the Kentucky “clear statement” rule, because it disfavored arbitration agreements.

Kindred Nursing Centers operated nursing homes and rehabilitation centers.  When two of its former nursing home residents died, the decedents’ children, who held powers of attorney, filed wrongful death suits against the nursing home alleging substandard care.
The nursing home moved to dismiss the cases, based on arbitration agreements that the children signed as a condition of their parents moving into the nursing home.  The trial court ruled against the nursing home, which then appealed to the Kentucky Court of Appeals and the Kentucky Supreme Court.  Both courts affirmed.  Kentucky’s Supreme Court held that the arbitration agreements did not authorize the children to waive their parents’ rights to a jury trial.  The right to a jury trial, the court held, is “sacred and God-given,” and cannot be waived by an individual with power of attorney, unless in a “clear statement,” the power of attorney document explicitly authorizes it.

The U.S. Supreme Court overturned the Kentucky Supreme Court’s decision, and by a 7-1 vote, soundly rejected the “clear statement” rule.  The Supreme Court unequivocally asserted that the FAA, as it did with the “clear statement” rule, preempts any state rule that disfavors or diminishes the enforceability of arbitration agreements.  The Supreme Court seemed skeptical of the state court’s sincerity and dismissed the state court’s claim that the rule applied to arbitration agreements and other contracts.

Kindred adheres to a long line of pro-arbitration Supreme Court decisions which have held that arbitration agreements must be treated the same as all other contracts.  But Kindred goes even further.  Under Kindred, the FAA will not only preempt any state rule that expressly disfavors arbitration agreements, it will also preempt any rule “that covertly accomplishes the same objective by disfavoring contracts that (oh so coincidentally) have the defining features of arbitration agreements.”

Kindred’s 7-1 decision illustrates not only the Supreme Court’s continued support for arbitration agreements but also its increasingly aggressive approach to FAA preemption.  It sends a clear message that the Supreme Court will not tolerate state rules aimed at circumventing the FAA.  And it paves the way for the greater enforcement of arbitration agreements, not only in Kentucky, but all jurisdictions.


The 7th Circuit Court of Appeals recently upheld the convictions of two former hospital executives finding that there was more than enough evidence for a reasonable jury to conclude that certain contracts arranged by the two with physicians and physician assistants were intended to induce illegal referrals to the hospital.

One of the defendants had argued that the conspiracy conviction was based on conduct that occurred after he left his employment at the hospital. The court said that simply leaving employment of the hospital where the referral fraud conspiracy was operating was not by itself enough and that the conspirator was required to make an affirmative declaration that he was exiting the conspiracy to his co-conspirators.

The take away from this appeal is that individuals involved in questionable kickback or other false claims conduct cannot just walk away. They should consult legal counsel for exit strategy advice.


Orthopedic Practice Pays $1,537,796 to Resolve Allegations of False Claims Submitted to Federal and State Programs for Medical Services

The orthopedic practice and its physicians paid $1,537,796 to settle civil claims stemming from allegations that they submitted false claims to Medicare, Medicaid, the Department of Veterans Affairs, and TRICARE.

Following an internal review and audit, the practice discovered irregularities in prior billing processes and practices. The practice proactively contacted the United States government to voluntarily disclose the billing irregularities and documentation deficiencies they had identified. The practice cooperated with the government and provided access to both privileged and non-privileged internal documentation, audit, and medical records, as well as access to their consultant statistician.

The voluntary disclosure and investigation revealed that the government had certain civil claims against the practice for false claims arising under Medicare, Medicaid, TRICARE, and the Veterans Health Administration. Specifically, that the practice had improperly billed the health care programs for the following: (i) physician extenders without documentation in progress notes to support billing, evaluation, and management codes; (ii) durable medical equipment, prosthetics, orthotics, and supplies (“DMEPOS”) where bills had incorrect CPT codes, where documentation did not support proof of delivery of the DMEPOS, and where documentation did not support that the DMEPOS was ordered or medically necessary for the patient; (iii) evaluation and management codes related to hospital consults that were not supported by documentation in progress notes; and (iv) physical therapy where the documentation did not support CPT codes billed and or the number of physical therapy units billed.

A few thoughts. That is a lot of money and in order to resolve the matter the practice provided the government with access to privileged information. If practices regularly audit their billing and coding processes and practices, problems like this will be identified early and disclosures and investigations may be able to be avoided.

Nursing Homes Ready For Emergency Preparedness Rules?

Neville M. Bilimoria
Neville M. Bilimoria

With all the regulatory changes facing nursing homes these days, it is no wonder most are behind in the world of compliance. It seems nursing homes are constantly berated with new regulations and more issues to deal with on a daily basis. The recent article in the May 22, 2017 edition of Modern Healthcare was, therefore, not a surprise: “Regulation: Nursing homes and hospice providers face looming emergency preparedness deadline.”

The article discusses the real November 15, 2017 deadline for nursing homes to comply with the emergency preparedness regulations promulgated by the Centers for Medicare & Medicaid Services (“CMS”) in September 2016. The article further discusses how most facilities are not close to complying by the November 15, 2017 deadline. The problem is that while nursing homes have historically had some emergency preparedness policies and procedures, the new CMS rules impose more robust policies, procedures, and mechanisms to be in place prior to November 15, 2017. That would require nursing homes to partner with local hospitals, police and fire departments to make sure their preparedness plans are up to date, robust, and systematically applied. The rules mandate, among other things, back-up generator contingencies, cybersecurity attack back up plans, and widespread training on a myriad of emergency preparedness policies and procedures that need to be developed by nursing homes. The rules even require disaster drills to be conducted by the nursing home in conjunction with local emergency response agencies.

Continue reading Nursing Homes Ready For Emergency Preparedness Rules?

Research Misconduct False Claims Act Lawsuit Upheld

A North Carolina federal judge Tuesday refused to dismiss a False Claims Act lawsuit claiming a University and some of its faculty knowingly falsified medical research data in order to get federal grants, saying that the whistleblower had adequately stated his case.

In a three-page order, U.S. District Judge Catherine C. Eagles denied dismissal motions by the University and individual defendants. The judge did not elaborate on her decision beyond saying that plaintiff had brought claims upon which relief could be granted.

At the time the alleged events occurred, the plaintiff was a laboratory research analyst in the Pulmonary, Asthma and Critical Care Division of the Health Systems. One of the defendants was a clinical research coordinator in that same division and is charged with directly manipulating the research in question, while another defendant, a research professor of medicine, was a direct supervisor.

This case is just one of the recent research misconduct cases initiated by whistleblowers, with false claims act implications. Researchers have exposure for alleged research misconduct from multiple sources. The consequences of a research misconduct allegation can be devastating to the individual researcher, as well as the sponsoring institution. Findings of research misconduct can result in exclusion from grants, termination of employment, and possible civil and criminal penalties.

The Best of MPM

The Journal of Medical Practice Management (Journal) recently published a collection of favorite articles from the Journal. My article, Purchasing Technology: A Few Things to Consider, co-written with the Rebecca Dean, CEO of a physician practice client, was selected for inclusion in the Journal’s powerhouse articles collection. Copies of the article are available from the Journal. A critical take away from the article is to make sure that the technology you are purchasing will do what you need it to do. Get representations and warranties in writing. Do not accept verbal promises.


A new OIG CMP rule effective January 6, 2017 clarifies the liability guidelines for EMTALA violations. The rule affirmed that willful conduct by a provider is not required for the OIG to impose penalties for EMTALA violations and revised the definition of  “responsible physician” to clarify that on-call physicians at hospitals with specialized capabilities are considered responsible physicians subject to EMTALA. 

The new rule removes “intent to leave” as a mitigating factor, adds “corrective action” as a mitigating factor and adds “risk of patient harm” as an aggravating factor. Because alleged EMTALA violations increasingly include allegations against the hospital and the responsible physician, a potential conflict of interest exists between the hospital and the responsible physician, due to the temptation to divert blame by pointing fingers.  The hospital and the responsible physician should have separate legal counsel.  For physicians, EMTALA violation findings can become medical license disciplinary actions.




New Purchased/Referral Care (PRC)  regulations give the Indian Health Service (I) , Tribal  Organizations (T) and Urban Indian Organizations (U) the ability to cap payment rates at a “Medicare-like rate” to physicians and other non-hospital provides and suppliers.  PRC covered services include outpatient care, physicians, laboratory, dialysis, radiology, pharmacy and transportation services.  The effective date of the regulations was May 20, 2016, with an implementation date of no later than March 21, 2017. In the absence of a contract or agreement with I/T/U for a different rate, the PRC “Medicare-like rate” applies when a Provider accepts a referral or request for services, accepts a purchase order for services, or files a claim for payment for an I/T/U patient.   Under the coordination of benefits provisions, PRC is a residual resource and pays after all other resources have considered the claim. Federal law prohibits the provider from billing the I/T/U  patient for authorized care.






Cherokee Nation Sues Drug Wholesalers and Retailers for Opioid Abuse

On April 20. 2017, the Cherokee Nation filed suit in the District Court of the Cherokee Nation alleging that certain wholesale drug distributors and pharmacies have caused the citizens of the Cherokee Nation to become addicted to opioid drugs and that the defendants could and should have taken steps to prevent the opioid epidemic. The complaint states that the defendants created an environment in which drug diversion can flourish causing damages to the Cherokee Nation; including the cost of medical care, counseling and rehabilitation services, child welfare, law enforcement and public safety, and lost productivity of Cherokee Nation citizens and businesses. The Cherokee Nation is asking the Cherokee Court to award injunctive relief, compensatory damages, statutory damages, punitive damages and attorneys’ fees. The Complaint states that the District Court of the Cherokee Nation has jurisdiction because the defendant distributors conduct business with the Cherokee Nation and the defendant pharmacies fill prescriptions for Cherokee Nation citizens and hire Cherokee Nation citizens.

This case raises a number of interesting issues regarding the duties of pharmacies to ensure that they dispense only those prescriptions that are based on legitimate medical need. This is a case to watch.