Tag Archives: compliance

Hospital CEO to pay $1.25 million False Claims tab; a chilling reminder for health system and hospital leadership

2019 is well underway and so are Q1 board meetings.  If you haven’t done so already and serve on a hospital board or work with hospital boards, look back at the December 11, 2018 DOJ press release which announced that a Pennsylvania hospital and health system CEO agreed to pay $1.25 million. https://www.justice.gov/usao-edpa/pr/coordinated-health-and-ceo-pay-125-million-resolve-false-claims-act-liability  

The announcement caught the attention of CEOs, board members and other health leaders across the country as a pre-holiday reminder of the potential for individual civil and criminal liability arising out of compliance failures.  Dr. Emil Dilorio, the founder, principal owner and CEO of Coordinated Health Holdings Co., a for-profit hospital and health system, agreed to settled allegations with the DOJ under the False Claims Act.  The DOJ alleged that he and the company (which is on the hook for $11.25 million) submitted false claims to Medicare and other federal health care programs for orthopedic surgeries in a practice known as unbundling.  Coordinated Health also had to enter into a five year Corporate Integrity Agreement – one of the most dreaded enforcement tools that HHS has in its arsenal.  “The alleged corporate culture and leadership that promoted this conduct and allowed it to continue despite crystal clear warning is shameful,” said U.S. Attorney William M. McSwain of the Eastern District of Pennsylvania.   

It is now an opportune time to assess your organization’s true corporate culture and determine whether your leadership appreciates its growing responsibilities and is equipped to fulfill those responsibilities in a meaningful way.  Going through the motions of compliance education is simply not enough.  The federal government has been very clear that it expects leadership, including boards, to understand their corporate governance responsibilities, their responsibilities regarding review and oversight of the organization’s compliance program, as well as applicable federal and state laws such as the False Claims Act. 

While the OIG has stated that there is not a “one size fits all” program design for all compliance programs and that companies should tailor their compliance program designs, individuals who serve on for-profit and not-for-profit boards should make sure that they are fully equipped during the entire life cycle of their tenure.  Board responsibility, particularly in the fast paced and highly regulated health care space, is not a static journey. 

Moreover, each board member has a different baseline understanding of the industry, experience and skill set.  Not every board member is living and breathing MACRA, ACOs, EMRs, CINs and AKS.  But the old assumptions that health care has too many acronyms to bother lay members with or that the Stark law makes no sense and is not worth going over, have never been accurate and are definitely not in today’s enforcement environment.  In fiscal year 2018 alone, the DOJ recouped $2.8 billion for False Claims Act cases.

Any prudent board member should make sure that either the organization’s current program is sufficiently tailored to that board’s individual needs or ask for additional and ongoing education and support. Initial education and ongoing refresh are just the beginning of an effective board compliance program.  The OIG expects that board members understand their responsibilities to provide oversight for corporate compliance programs and to promote an ethical culture in their organizations.  This is no small task.  The regulatory framework is complex and in a state of flux, the OIG’s Work Plan is comprehensive and not the only determinant of focus areas and compliance risks, hospital operations are being reinvented to transition out of the fee for service model, and the reimbursement landscape is uncertain. 

At a minimum, new and existing board members should look to understand the organization’s business models; organizational and governance structures; governing documents; authority matrix including any powers reserved for a parent or subsidiary board; board committee policies and procedures; D&O policies and scope of coverage; COI policies; current compliance plan; past years’ compliance plans and performance against the plans; significant compliance concerns that have led to self-disclosures or other self-reporting obligations; any recent or material government investigation; the terms of any Corporate Integrity Agreements; significant security or privacy breaches; processes and procedures in place relating to financial arrangements with physicians and physician groups; the fraud and abuse laws; medical necessity; billing and reimbursement basics; security obligations; and other key regulatory requirements that impact the organization. 

Board members are also advised to meet the compliance lead, understand how issues are identified and remediated, and have access to the compliance team to answer any questions that may arise.  Internal and, as appropriate, external counsel should be part of the process and partner with the compliance lead and board members, when necessary.  These steps are important but not sufficient and every organization should continuously assess and improve its ongoing compliance strategy.

Service on a hospital board is an opportunity to serve and a privilege.  It is also an obligation full of responsibilities.  With so many issues competing for boards’ attention these days, the Coordinated Health settlement is a timely reminder that hospital leadership and boards cannot take their eyes off of the importance of compliance.  The risk is too high to get lost in the alphabet soup.

$125 Million Settlement For Alleged FCA Violations

In a settlement with the US DOJ in U.S. ex rel. Halpin and Fahey v. Kindred Healthcare Inc. et al., 1:11-cv-12139, Kindred Healthcare, Inc., a skilled nursing and long-term care company, has agreed to pay the federal government more than $125 million for alleged False Claims Act violations by a therapy services company, RehabCare Group, Inc., acquired by Kindred in June, 2011.

RehabCare contracts with more than 1,000 skilled nursing facilities across the country, and, along with Kindred, is alleged to have caused those facilities to submit Medicare claims for services at the highest reimbursement levels that were not actually provided, or not necessary.   Two whistleblowers stand to receive almost $24 million from the settlement.

While all providers need to have strong compliance, this is a reminder that larger providers, whose operations span multiple offices, cities and states, need to be especially vigilant and install strong company-wide compliance programs.

OIG Issues Guide For Health Care Boards on Compliance Oversight

On April 20, 2015, the Department of Health and Human Services Office of Inspector General (“OIG“) published its “Practical Guidance for Health Care Governing Boards on Compliance Oversight” (the “Guide“).  The Guide was prepared in collaboration with the Association of Healthcare Internal Auditors, the American Health Lawyers Association, the Health Care Compliance Association, and according to the Guide, provides tips to health care boards (“Boards“) on four categories: “(1) roles of, and relationships between, the organization’s audit, compliance, and legal departments; (2) mechanism and process for issue-reporting within an organization; (3) approach to identifying regulatory risk; and (4) methods of encouraging enterprise-wide accountability for achievement of compliance goals and objectives.”  While not a legally binding document, the Guide provides helpful insight for Boards and underscores best practices in these areas. Continue reading OIG Issues Guide For Health Care Boards on Compliance Oversight

HHS OIG Notice Seeks Comments on Safe Harbors, Special Fraud Alerts

Once a year, as required by the Health Insurance Portability and Accountability Act of 1996, the Department of Health and Human Services Office of the Inspector General (“OIG”) solicits proposals to develop new or revised anti-kickback, fraud and abuse safe harbors. The OIG published its request for proposals for new or revised safe harbors in the December 29, 2011 Federal Register. The notice also seeks comments on developing special fraud alerts.

Continue reading HHS OIG Notice Seeks Comments on Safe Harbors, Special Fraud Alerts