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Office of Inspector General voluntary disclosures — should I or shouldn't I?

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Richard Cheng
Richard Cheng

Nursing facility operators might be faced with this dilemma: Should I or shouldn't I provide an overpayment self-disclosure to the Department of Health and Human Services Office of Inspector General? This voluntary disclosure should be assessed with a cost benefits analysis lens while being mindful of the associated nuances.

The OIG has a protocol for self-disclosures. Nursing facility operators opting for self-disclosure should start the process with an internal investigation regarding any recognized overpayments and related concerns leading up to the overpayment. For self-disclosures to be effective, it is imperative for nursing facility operators to perform a thorough investigation so that credibility and transparency are not questioned at a later time.

The internal investigation should identify the individuals involved, root causes of overpayments, how it was detected, scope and severity of the problem, financial impact and any follow up actions taken in response to the problem.

As a point of clarification, the OIG self-disclosure protocol can be used for any potential violations of federal criminal, civil or administrative statutes that could lead to civil monetary penalties. This is distinctly different from the Stark Law self-disclosure protocol and minor mistakes may not qualify for the OIG self-disclosure protocol.

The OIG self-disclosure protocol is not a perfect system and should be carefully assessed whether it is appropriate for a nursing facility operator. One benefit of the OIG self-disclosure protocol is reducing criminal prosecution and civil liability risks.

The self-disclosure protocol provides a multiplier of one and one-half (1.5) times the single damages versus the Department of Justice (DOJ) settlements in the two to three times damages range. Further, it allows the nursing facility operator to avoid being subjected to an OIG Integrity Agreement, eliminating an arduous, expensive and time consuming structure that is forced upon operators.

Finally, the OIG self-disclosure protocol may toll the 60-day return of overpayment period, subject to the outcome of the self-disclosure. Other advantages include the ability to frame the issues from the nursing facility operator's perspective and creating a more collaborative dialogue with the regulators, as opposed to an adversarial one.

In short, it is a chance to limit financial damages and minimize internal disruption.

On the other hand, the OIG self-disclosure protocol does not release or guarantee relief to a nursing facility operator from criminal prosecution. If an operator is already being prosecuted or being investigated for the purpose of potential prosecution, the OIG self-disclosure protocol is not an appropriate option. It is unlikely the DOJ will join the self-disclosure process or consider releasing the operator from criminal prosecution because the DOJ may already be aware of the disputed issues.

Remember, the premise behind the OIG self-disclosure protocol is to bring awareness of issues not already discovered by the government enforcers. Another risk of self-disclosure is the opportunity for the government to inquire about broader and other areas beyond the scope of the disclosure, leading to additional criminal prosecution or imposed civil liability. If transparency is questioned because disclosure was deemed to be incomplete or inaccurate, the benefits of self-disclosure may be eliminated, causing a wider investigation into other issues.

The evaluation should hinge on this: How likely will the problem be discovered by the government, causing large-scale legal exposures, versus voluntarily entering into a settlement and knowing financial payments will be paid to the government, coupled with all the other ancillary issues associated with the process?

As stated earlier, this is a difficult process with multiple considerations. It would be advantageous for nursing facility operators considering this option to discuss it thoroughly with a legal professional experienced in this area.

Richard Y. Cheng is an attorney and partner at Dykema Cox Smith, where he is a part of the Health Care Practice Group and the Cannabis Practice Group. Prior to his legal career, he worked as a licensed occupational therapist in Dallas.

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