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| Dear Friend,
The good news is that your claims were not false claims. The bad news is that they've been deemed to be false claims.
An attorney friend was once the subject of a disqualification motion by opposing counsel on the basis that one of his offices was in a suite that didn't have a Certificate of Occupancy from the local building department. The motion was denied on the grounds, I believe, of being patently ridiculous.
But if the issue involved your billings for healthcare services, the outcome might have been different: All of your claims might have been deemed "false claims" subject to recoupment times a factor of 3, plus monetary penalties of up to more than $20,000 per claim.
That's the impact of a 2016 U.S. Supreme Court case known as Universal Health Inc. v. U.S. et al. ex rel. Escobar et al., which broadened the basis for turning otherwise valid claims for reimbursement into false claims. It did so by finding that, in some circumstances, an implied false certification can be the basis for False Claims Act (“FCA”) liability.
Here are the highlights and the interesting twist:
The Theory
Claims for payment from the federal government are wrapped in specific representations about the goods or services provided. For example, the use of a CPT code constitutes a representation that the services underlying that code were actually delivered.
The “implied false certification” concept holds that specific representations come bundled with implied certifications of certain underlying compliance with statutory, regulatory, or contractual requirements. Under that theory, if a claimant omits to inform the government that it is out of compliance with an underlying requirement, the claim is rendered false.
In Universal Health, the Supreme Court endorsed the implied false certification concept where two conditions are satisfied:
- The claim does not merely request payment, but also makes specific representations about the goods or services provided. [Note: CPT coded claims are such claims.] and
- Failure to disclose noncompliance with material statutory, regulatory, or contractual requirements makes those representations misleading half-truths.
Materiality Is Key
The Court stated that under the FCA, the misrepresentation must be material to the other party’s course of action, but that statutory, regulatory, and contractual requirements are not automatically material, even if they are labeled conditions of payment.
Materiality means "having a natural tendency to influence, or be capable of influencing, the payment or receipt of money or property.”
But How Material?
Of course, this begs the question of how "material" something must be to be seen as material in the context of your billings.
Although the issue involved a question of state law in respect of a state-run program that was not federally funded, several years ago one of my clients had millions of dollars of claims rejected due to the fact that a fictitious name filing had lapsed.
So what, actually, it is material? Consider the following thought experiment:
Last Hospital Before Freeway ("Last Hospital") is located in State X. State X has a strong prohibition on the corporate practice of medicine. Because it cannot directly employ physicians due to that prohibition, Last Hospital engages in a very common end-run: It controls 287 physicians through a captive medical group ("Captive"), which participates in the Medicare program, both directly and in the form of contracting with Medicare Advantage plans.
Four years and 537,312 claims later, Captive's former CFO, who had been fired for taking one day over her allotted vacation time, files an FCA case (i.e., a whistleblower lawsuit) against Captive alleging that:
- Captive is operating in violation of State X's law prohibiting the corporate practice of medicine.
- Compliance with that law is material to payments to Captive under Medicare and the Medicare Advantage Plans.
- Each of the 537,312 claims was a false claim.
Of course, that example is just a thought experiment. But it might be real at some point soon.
After all, there are plenty of potential whistleblowers, plenty of carriers managing federal health care program dollars, and plenty of government agencies, too, and each of them can use litigation as a business weapon.
The take-aways for you:
- It’s likely that the Universal Health case will result in more FCA whistleblower actions.
- CPT coded services are specific representations as to the goods/services provided.
- There are probably thousands of laws and regulations governing the operation of your business, so many that it’s probably the case that no single person or even group of persons could list them all for you. Compliance with a subset of those is likely material. Which ones are material in respect of any particular specific representation becomes the treble damages plus up to more than $20,000 in civil monetary penalties per claim question.
- Materiality is a double-edged sword. It unlocks the key to implied false certification for whistleblowers. But the argument over lack of materiality is a defense for targets of this type of FCA case.
- The best practical advice is to audit your medical group’s/business’s compliance with the broadest range of underlying regulations and laws. This can be stratified into those categories that are clearly material, those that may be material, and those that are less likely to be material.
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| | | Business Life in the Time of Coronavirus Mini-Series
The coronavirus crisis caused a short term economic crisis for many medical groups. Our mini-series shows you the way out. Plus, many of the concepts discussed are applicable during both good times and bad.
[If you haven't already seen them, follow this link to watch our entire series.] |
| | Watch Tuesday's video here, or just keep reading below for a revised, more polished version:
While driving on a three-lane highway there was a guy in front of me who pulled into the right lane and turned on his right signal as if he were going to turn right at the next intersection.
But when we got to about 100 yards before the intersection, he shot all the way to the left lane, only to shoot back to the right lane and turn right.
So, we’re talking about making decisions.
It’s like looking at a menu and taking twenty minutes to decide what you want, as opposed to quickly looking down and making a decision and then sticking with it.
Often there’s a real beauty in having made a decision, because the process of making one--whether we’re talking about life in general or a business deal--can be difficult. But make it, get it over with, and then put it behind you. You’ve made a decision, carry forward. This crosses over to the subject of my book, The Medical Group Governance Matrix, which talks about groups that are so bogged down that they can’t make decisions.
You know, groups that have a president, but the president has no power because the other twelve shareholders have to be consulted before any decision can actually be made. Or a group that operates without anyone in charge but simply on a consensus basis among 25 partners.
Hone your decision-making skills. Make a decision. And make it quickly, or else you’re going to be held hostage to other people’s decisions, which are going to impact your position.
Then once you make that decision, implement it, and forget about it.
Stick with the decision you’ve made and carry on.
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| | How to Deploy the Secret Sauce of Opportunistic Strategy
Webinar On Demand
They say that COVID-19 has changed the world, creating the "new normal." Many of your colleagues and many hospital administrators are running scared.
Others, leaders like you, know that crisis means opportunity.
Let me provide you with the strategic tools and insights that you need in order to seize opportunities, whether they’re in the context of your current business relationships, the expansion of your business activities, or the creation of new ventures.
You will learn:
•Defense as a defective default: It’s necessary, but not sufficient.
•Exploiting weakness: Drop the guilt and identify opportunity.
•Flat line negotiation is fatal: Understand its myths and limitations.
•Negotiation reality: Learn to identify and deploy on multiple planes to affect the outcome.
•Maneuver: Harness the power of maneuver, both in overall strategy and in specific negotiation strategy.
Others see a crisis and freeze in fear. Learn how to see the opportunities and obtain the tools to increase your odds of obtaining them.
The price to attend is $479. The cost of not attending is astronomical. |
| | | Wednesday - Whether or Not Balloon Sinuplasty Indictment is Hot Air, its Lessons Apply to You - Medical Group Minute
Watch the video here, or just keep reading below for a slightly polished transcript:
Even if you can't even spell sinuplasty, understanding the lessons of the January 5, 2022, indictment of Raleigh, North Carolina ENT Anita Louise Jackson, M.D. will make you breathe easier.
Dr. Jackson, who operated Greater Carolina Ear, Nose & Throat, P.A. (“GCENT”) billed Medicare in excess of $46 million from 2014 through 2018 for more than 1,200 balloon sinuplasty procedures on more than 700 patients. Those billings resulted in more than $5.4 million in Medicare payments to GCENT.
Jackson apparently came on the government’s radar (via a program integrity contractor audit) because that volume made Jackson the top Medicare paid provider of balloon sinuplasty in the U.S. even though GCENT was outside of a major metropolitan area.
In the Superseding Indictment made public last week, a federal grand jury indicted Dr. Jackson for:
- Adulteration of Medical Devices in violation of 21 U.S.C. §§ 331(k), 333(a)(1), 333(a)(2), and 351(a)(2)(A).
- Ten counts of Paying Illegal Remunerations in violation of 42 U.S.C. § 1320a-7b(b)(2)(B) [i.e., the federal Anti-Kickback Statute].
- Three counts of Making False Statements Relating to Health Care Benefits, in violation of 18 U.S.C. § 1035(a)(2).
- Two counts of Aggravated Identity Theft, in violation of 18 U.S.C. § 102A(a)(1).
- Three counts of Mail Fraud, in violation of 18 U.S.C. § 1341.
- Conspiracy, in violation of 18 U.S.C. § 371.
Note that an indictment is a series of allegations only. Dr. Jackson has not been convicted of anything and the criminal trial process is just beginning.
However, if convicted, Jackson faces a maximum term of imprisonment of 20 years for Mail Fraud, 10 years for Paying Illegal Remuneration, 5 years for Conspiracy and Making False Statements, and a 2-year mandatory prison sentence for Aggravated Identity Theft consecutive to any other punishment. She also faces fines exceeding $250,000.
The indictment alleges that Dr. Jackson reused, as a routine business practice, no more than 30 strictly “single use” balloon sinuplasty devices to perform the thousand-plus sinuplasty procedures. Although represented to patients as sterile, the indictment alleges that the devices were simply washed with soap, water and some cleaning agents and then air dried in a non-sterile environment before reuse.
The illegal remuneration charge relates to allegations that Dr. Jackson routinely concealed from her Medicare patients the true amount that they were obligated to pay for the procedures, leading them to believe that they either owed nothing or only a small co-payment. The government alleges that she did not collect the patient copayments and ultimately wrote them off without making genuine efforts to collect. That, according to the indictment, resulted in Medicare paying all, or nearly all, of the balloon sinuplasty charges for her Medicare patients, when Medicare was in fact obligated to pay only 80% of the charges.
The indictment alleges that Jackson used cloned medical records, in some cases word for word, and not complete, per patient, medical records, to justify the necessity of the procedures and to document their performance. It also alleges that Jackson acquired patient signatures on various forms after the fact and had an on-staff notary notarize them as of incorrect dates. Additionally, after being directed as a result of audits to repay Medicare more than $1.7 million, Jackson is alleged to have created and supplied false medical records to support an appeal of the audit result.
The Obvious and More Esoteric Lessons For You Even if the Indictment is Hot Air
- Don’t adulterate devices or other items and then use or supply them as unadulterated.
- Don’t subsequently lie about the bona fides of the devices or items.
- Don’t bill for items that were not provided.
- Don’t routinely write-off Medicare patient balances or even present Medicare patients with false bills that indicate no or a falsely low co-pay.
- Don’t use template, or even worse, cloned medical records to support your claims, even if the services were completely, properly, and ethically performed.
- Don’t falsify records and signatures or the date on which they were obtained.
- Don’t lie to federal auditors.
- And, perhaps the most important, don’t set yourself up to go to prison by thinking you are setting the government up to overpay you.
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| | | Listen to the podcast here, or just keep reading for the transcript.
Over the weekend, I took a road trip out to the middle of nowhere. Once in a while, you'll see a sign that says, “No Services Next 32 Miles,” and what do you know, there isn’t even an exit for 32 miles.
That's not unlike the term of a contract. It runs for the three or five years, or whatever -- that's the stated term of the contract.
On the other hand, you’re driving on some road, and suddenly there's a detour, forcing you to exit. That’s like a termination provision in a contract.
It might have been you who decided to detour because there’s a rest stop (you terminated the contract), or it might have been that the road ahead is actually blocked (the other party exercised the termination provision).
Exits of that sort, of the contractual sort, can be two kinds: either an exit as a result of a breach (which should be with the right to cure), or a “without cause” type of exit.
Of course, "without cause" exits cut two ways. One is that you want out of the contract early, so you exercise it. But, the other is that your contracting partner wants you out of the deal and they want you out quickly.
Just remember, the correct and complete way of analyzing the true term of any agreement isn’t simply to look at the 32 mile stretch, that is, the three or five year stated term.
Instead, it's to take into account how quickly you could be forced to exit or how quickly you could force the other side to exit the deal.
You can brag all you want to your partners that you pulled one over on the hospital CEO when you talked her into that five-year exclusive contract. Just don’t mention the 60 days without cause termination provision, because that's the true term of the deal. |
| | | Calibrate Your Compass
Read our exclusive RedPaper to guide you through this evolving situation.
The coronavirus crisis caused a short-term economic crisis for many medical groups. Our RedPaper shows you the way out. Plus, many of the concepts discussed are applicable during both good times and bad.
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| | Help Us Help You With Helpful Content
What tailored content would you most like to see during this
time? How can we focus on solutions to your most pressing strategic concerns?
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| | | | We all hear, and most of us say, that the pace of change in healthcare is quickening. That means that the pace of required decision-making is increasing, too. Unless, that is, you want to take the “default” route. That’s the one is which you let someone else make the decisions that impact you; you’re just along for the ride. Of course, playing a bit part in scripting your own future isn’t the smart route to stardom. But despite your own best intentions, perhaps it’s your medical group’s governance structure that’s holding you back.
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| In fact, it’s very likely that the problem is systemic. The Medical Group Governance Matrix introduces a simple four-quadrant diagnostic tool to help you find out. It then shows you how to use that tool to build your better, more profitable future. Get your free copy Free.
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| | | | Whenever you're ready, here are 4 ways I can help you and your business:
1. Download a copy of The Success Prescription. My book, The Success Prescription provides you with a framework for thinking about your success. Download a copy of The Success Prescription here.
2. Be a guest on “Wisdom. Applied. Podcast.” Although most of my podcasts involve me addressing an important point for your success, I’m always looking for guests who’d like to be interviewed about their personal and professional achievements and the lessons learned. Email me if you’re interested in participating.
3. Book me to speak to your group or organization. I’ve spoken at dozens of medical group, healthcare organization, university-sponsored, and private events on many topics such as The Impending Death of Hospitals, the strategic use of OIG Advisory Opinions, medical group governance, and succeeding at negotiations. For more information about a custom presentation for you, drop us a line.
4. If You’re Not Yet a Client, Engage Me to Represent You. If you’re interested in increasing your profit and managing your risk of loss, email me to connect directly. |
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