The Department of Justice (DOJ) Civil Division recently announced that it recovered over $3.7 billion from civil False Claims Act (FCA) cases for the fiscal year 2017. Two-thirds of the total settlements and judgments involved the health care industry. It is particularly noteworthy that 93 percent of the recoveries came from qui tam (“whistleblower”) cases, in which the whistleblowers (or “relators”) collected $400 million. Whistleblowers bring about 500 new healthcare cases annually, with an average of 2 cases every working day. Moreover, roughly a quarter of a million whistleblowers contacted the Department of Health and Human Services (HHS) Office of Inspector General (OIG) directly, or through their hotline, during the same period. The majority of successful DOJ cases involve physician arrangements that implicate the Anti-Kickback Statute (AKS). Further, organizations with illegal physician arrangements comprise the majority of organizations that ultimately enter into OIG Corporate Integrity Agreements (CIAs). This is continued evidence that both the DOJ and OIG’s number one healthcare enforcement priority relates to physician arrangements.
Carrie Kusserow has 15 years of experience in healthcare compliance, including over 5 years of experience managing and overseeing a national hotline service. Ms. Kusserow stated that most individuals directly contact government agencies due to their belief that management will not take their internal reports seriously. The message here is that organizations can reduce the likelihood of external “whistleblowing” by promoting their internal reporting channels. Further, organizations should convince their workforce that they will take information provided through those channels seriously, and act upon such information in an appropriate and timely manner. This avenue of communication can reassure individuals that their problems and concerns can be addressed internally, without any need to report externally. If employees cannot or do not feel comfortable with internal reporting, they may feel the need to report problems to outside parties. In such circumstances, employees may also feel that the problems will only be resolved if they report them to external authorities. External reporting can lead to negative press coverage, scrutiny from governmental agencies, or employees filing actions with an attorney. As such, Ms. Kusserow advises compliance officers to redouble their efforts by encouraging employees to report potential fraud through internal channels, and demonstrate that such reports will be taken seriously by management.
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Encouraging internal reporting can also help to identify emerging compliance issues. As a result, the organization can solve problems before: a) the issues escalate into a larger problem that causes irreparable damage; or (b) employees look externally for a solution with an attorney, government agency, or the media. Organizations may decide to operate their own internal hotlines; however, operating an internal hotline is not a best practice. Instead, most organizations turn to outside hotline vendors because: (a) this permits employees to report problems at any time, which is not possible for an internally operated system; (b) vendor operated hotlines are less expensive than internally operated programs, as costs of operation are amortized over many organizations; (c) hotline vendors have more experience with managing whistleblowers; (d) most employees believe an independent third-party hotline or reporting system is more trustworthy than one operated by the employer; and (e) vendors are able to provide insightful hotline data, reports of caller debriefings, and trend analyses.
Tom Herrmann, JD, is a highly experienced compliance consultant who previously served in the Office of Counsel to the OIG’s Inspector General. In this role, Mr. Herrmann was extensively involved in managing AKS cases. Mr. Herrmann recommends that compliance officers should augment their efforts to ensure that their organization is conducting ongoing monitoring of arrangements with referral sources. This is also true for ongoing auditing of such arrangements. He cautions that compliance officers should make this their top priority, as the DOJ and OIG consider unlawful referral arrangements as their number one health care enforcement priority. Unfortunately, healthcare organizations do not always follow such advice.
Mr. Herrmann has found that compliance officers often find themselves on a collision course with legal counsel, when it comes to oversight of an organization’s arrangements with referral sources. In his experience, compliance officers tend to defer to legal counsel, citing their superior knowledge and expertise on the subject, and especially given legal counsel’s involvement in developing all referral arrangements. Yet, attorneys have developed and reviewed virtually all of the arrangements that the DOJ and OIG have successfully challenged; this indicates that legal counsel’s review of arrangement contracts is not likely to reveal issues that the DOJ and OIG are concerned with. Rather, the DOJ and OIG are likely to take issue with the circumstances surrounding arrangements with referral sources. For example, these agencies are concerned with: 1) the establishment of medical need for particular services, including the determination of who is best qualified to meet those needs; 2) the fair market value for the services needed; and 3) the verification of performance on the contract before payments are made. These are areas that go beyond most lawyers’ involvement. As such, arrangements with referral sources, like all other high-risk areas, should be subject to ongoing monitoring by a responsible executive. This includes staying abreast of applicable laws and regulations relating to such arrangements (e.g. AKS and Stark Laws), developing policies and procedures for ongoing compliance, maintaining an arrangements database to ensure policies are being followed correctly, and verifying that all arrangements are effectively monitored. The compliance officer should ensure that the above tasks are carried out, and validate that ongoing monitoring is achieving the objectives. In situations when legal counsel resists compliance oversight, Mr. Herrmann suggests that the compliance officer should consider hiring outside experts to conduct the ongoing auditing tasks.
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