The best defense is a good offense when mitigating False Claims Act liability
Our previous articles have reviewed the liability traps that the False Claims Act creates for long-term care providers. These traps have resulted in damages and penalties for healthcare providers to the tune of $2.5 billion in 2014 alone. This month, in the final article in this series, we shift gears to look at ways that long-term care providers can prevent and mitigate FCA claims and resulting liability.
A culture of compliance
In recent years, commentators' emphasis on the proverbial “culture of compliance” has allowed the phrase to slip from a statement about an organization's emphasis on corporate ethics to a cliché that too often becomes a substitute for any meaningful leadership on the issue. Still, it is worth recapturing the idea and reinfusing it with the substance that it has lost.
While there is no one-size-fits-all answer to what makes an effective compliance program, the United States Sentencing Guidelines lay out seven general principles that the government can use to assess a minimally effective program. In addition, the federal regulatory agencies with oversight responsibility for Medicare and Medicaid have emphasized the need for a robust compliance program as a “best practice” for providers and suppliers. For example, the Department of Health and Human Services Office of Inspector General issued compliance program guidance for nursing facilities in 2000 and 2008 that established the OIG's seven basic compliance program elements and identified particular areas of significant risk for LTC providers.
Other examples of the OIG's emphasis on developing a “culture of compliance” can be found throughout the relevant advisory opinions, settlement agreements, and public policy statements.
It should also be noted that proposed rules issued by the Centers for Medicare & Medicaid Services in July would require LTC facility operators to develop, implement, and maintain a comprehensive compliance and ethics program in order to participate in the Medicare and Medicaid programs. If finalized, every facility's compliance and ethics program would have to include certain specified components drawn largely from the OIG's existing CPG, such as:
The development and distribution of written standards of conduct, as well as written policies, procedures and protocols that cover topics such as reporting suspected violations;
The assignment of high-level personnel to oversee the compliance and ethics program;
Communication of the written compliance standards, policies, and procedures to the facility's staff, contractors, and volunteers;
Enforcement of the standards, policies, and procedures through consistent disciplinary mechanisms; and
Performance of an annual program review in order to update as indicated by changes in applicable laws and regulations.
Operators that have five or more LTC facilities would also be required to:
Conduct a mandatory compliance and ethics training program on an annual basis;
Designate a compliance officer for whom the compliance and ethics program is a “major responsibility;” and
Designate a compliance liaison at each of the operator's facilities.
Nearly all of these points reinforce management's obligation to set the tone for the company's compliance, to be well-informed of compliance obligations, and to push that message down through the company. A culture of compliance, in other words, begins with a commitment at the top. As Deputy Assistant Attorney General Brent Snyder remarked last year, “[i]f senior management does not actively support and cultivate a culture of compliance, a company will have a paper compliance program, [but] not an effective one.”
A key element of an effective compliance program is a system of internal reporting. A company must make its employees confident that they have an outlet for any concerns, that concerns will be taken seriously, and that they will face no adverse consequences for reporting. Still, simply having a reporting system is of little value if your organization does not use the information that it gathers in a thoughtful manner.
Thus, LTC operators must actively investigate any credible concerns raised by employees. If possible, speak to every employee who raises a question and, if appropriate, let him or her know the outcome. Even (and perhaps especially) if the concern raised does not amount to anything, employees who have first-hand knowledge that their concerns were taken seriously will be less likely to see them redressed elsewhere — such as the office of a relators' counsel. Additionally, for departing employees, use exit interviews to understand employee concerns and preemptively identify potential relators. If a concern is identified, pass it on to your organization's management and legal team, both for future remediation and present risk assessment.
Preempt potential false claims before they happen by training your employees appropriately. A key provision of the Deficit Reduction Act of 2005 requires any healthcare organization that receives Medicaid payments of $5 million or more to establish an education plan for its employees that includes detailed guidance on the FCA. This “whistleblower training” requires providers to train employees as to the rights and protections they would be afforded under the FCA and any state counterparts.
Many providers make the mistake of looking at these employee education requirements as a burden rather than an opportunity to help establish the tone of compliance in their organizations and to teach employees how to avoid making potentially false claims in the first place. Since your organization may have to provide this training anyway, do it right. Resist the temptation to provide nothing more than an online tutorial that simply “checks the box” on the training obligation. Make your training in person, in small groups, with annual refreshers for employees who work directly with government contracts or reimbursements.
If your organization does discover a false claims problem, self-disclosure to the appropriate government agency is an option. The benefit of self-disclosure is that it will generally result in a lower damages multiplier and lead to a settlement that does not include any obligations under a corporate integrity agreement or monitoring obligation.
Weighing against these benefits, however, is that the government will require an admission of culpability. Moreover, if a qui tam lawsuit already has been filed but is still under seal, self-disclosure does not deprive the court of jurisdiction.
If you have identified false claims submitted to a government payor, there are certain benefits to self-disclosing the suspected violation. It does not, however, function as an absolution. Self-disclosure thus will need to be analyzed on a case-by-case basis with experienced FCA counsel.
Read the government playbook
Finally, when it comes to enforcement, the government does not keep its priorities secret. The OIG releases its “Work Plan” on an annual basis, along with a mid-year update. The Work Plan sets forth many of the federal enforcement priorities and provides a window into the sorts of issues that government authorities are actively pursuing. Additionally, keeping abreast of FCA cases where the DOJ is deciding to intervene also may provide a glimpse of the issues and facts that the government is treating more seriously. Learning that the government is taking an interest in an area where your organization operates creates an excellent opportunity for internal review to catch weaknesses before they become FCA violations.
Given the amounts of money at stake, the FCA will continue to be a potent weapon for both the government and private relators to use against LTC providers. Risks, however, can be mitigated through good corporate ethics practices, careful monitoring of reimbursement claims, and regular communication and review with compliance officers and counsel. While the threat is real, it need not hamstring recipients of government payments who plan carefully and act responsibly.
Postscript In our August article, we discussed the use of statistical extrapolation to demonstrate FCA liability without directly analyzing Medicare billing claims. In late September, the Fourth Circuit agreed to hear an appeal in U.S. ex rel. Michaels et al. v. Agape Senior Community Inc., which rejected the relator's reliance on statistical sampling. The Fourth Circuit is thus poised to be the first federal appellate court to address the issue, but a decision will not be forthcoming until sometime next year.Jason R. Edgecombe is of counsel in the Atlanta, GA, office of Baker Donelson. He can be reached at firstname.lastname@example.org. Ted Lotchin is of counsel in Baker Donelson's Washington, D.C., office, and is a member of the Firm's Health Law Group. He can be reached at email@example.com.