Amer erican A Alliance o ce of Or Orthopaed edic E c Exec ecuti tives es 2019 2019 Com Complian ance S Sym ymposium “Regulatory Enforcement Actions: Compliance Issues Impacting Orthopedics” Robert W. Liles, JD, MBA, MS, CPC Liles Parker, Attorneys & Counselors at Law AAOE 2019 Compliance Symposium
Current Enforcement Environment " Men must turn square corners when they deal with the government," stated the Supreme Court in Rock Island Arkansas & Louisiana R. Co v. United States, 254 U.S. 141, 143 (1920). Justice Felix Frankfurter later commented that this view “does not reflect a callous outlook. It merely expresses the duty… to observe the conditions defined by Congress for charging the public treasury.” Fed. Crop Ins Corp. v. Merrill, 323 U.S. 380 (1947) 54. AAOE 2019 Compliance Symposium
Current Enforcement Environment The Yates Memo On September 9, 2015, Deputy Attorney General Sally Yates issued a Memorandum entitled: “Individual Accountability for Corporate Wrongdoing” This important document instructs DOJ prosecutors to stop resolving corporate cases that release individuals from personal liability, absent extraordinary circumstances. AAOE 2019 Compliance Symposium
Current Enforcement Environment FY 2018 Civil, Criminal and Administrative Statistics • Notably, health care enforcement efforts are not limited to only Strike Force territories. Each of the 94 U.S. Attorneys Offices around the country have dedicated civil and criminal prosecutors investigating health care fraud and abuse matters. • During FY 2018, the federal government won or negotiated over $2.8 billion in judgments and settlements under the False Claims Act. Of the $2.8 billion in settlements and judgments recovered by the Department of Justice this past fiscal year, $2.5 billion involved the health care industry. Although the gross recoveries were almost $600 less than what was collected in FY 2017, it is worth noting that an additional $329 million was collected in health care related cases than last year. • During FY 2018, 645 qui tam (whistleblower) cases were filed. About 87% percent of all new FCA matters pursued against entities involved in the healthcare industry were brought by relators. • During FY 2018, DOJ opened 1,139 new criminal health care fraud investigations. • Last fiscal year, HHS-OIG excluded 2,712 individuals and entities from participation in Federal and health care programs. AAOE 2019 Compliance Symposium
Current Enforcement Environment False Claims Act Actions • What is the False Claims Act? Simply put, the federal civil False Claims Act (FCA) is the primary civil enforcement tool used to combat fraud against the United States. The False Claims Act imposes civil monetary penalties and damages on any person who knowingly submits, or causes to be submitted, a false claim to the government for payment . • What is meant by “knowingly”? The term “knowingly” does not merely mean “ actual knowledge ,” the term also includes reckless disregard and deliberate ignorance . 31 U.S.C. § 3729-3733. • Statute of limitations, damages and penalties under the False Claims Act. Generally, the False Claims Act has a six-year statute of limitations that can be tolled (under certain circumstances) up to a maximum of ten years from when the government knew, or reasonably should have known, that the violation occurred. 31 U.S.C. § 3731(b). • The penalties for violations of the False Claims Act are currently: Treble damages, plus $11,463 and $22,927 per false claim or statement. ( These 2019 estimated amounts reflect the anticipated increase that has not yet been announced by DOJ ). AAOE 2019 Compliance Symposium
Current Enforcement Environment False Claims Act Actions • Recent changes to the False Claims Act: Changes to the False Claims Act were passed under the Fraud Enforcement and Recovery Act (FERA) which made it clear that any person who knowingly concealed or knowingly and improperly avoided an “obligation to pay” would be liable under the False Claims Act’s reverse false claims provisions. Changes to the False Claims Act were also subsequently covered in the Health Care Reform Act. Importantly, the Health Care Reform Act defined “overpayments” as “any funds that a person receives or retains” under Medicare or Medicaid, to which they are not entitled. The Health Care Reform Act further provides that all overpayments must be reported and refunded within 60 days of being identified. What does “identified” mean? Moreover, the legislation made it clear that a repayment retained by a person after the deadline for reporting and returning the “overpayment” is an “obligation” for purposes of the False Claims Act. The bottom line is clear – should you identify an overpayment, it must be repaid within 60 days or the provider may be liable under the False Claims Act AAOE 2019 Compliance Symposium
Current Enforcement Environment Recent Guidance Issued on the False Claims Act • 2018: DOJ Granston Inter-office DOJ Memo from the Director of the Commercial Litigation Branch to the Fraud Section not intended for public release discussing factors for Evaluating dismissals of False Claims Act Cases without the consent of the relator. • 2018: Issuance of DOJ Memo Limiting the Use of Agency Guidance in Affirmative Enforcement Cases . Memo from the Associate Attorney General to DOJ Components regarding the limitation of the use of Agency Guidance in False Claims Act and other affirmative matters brought by DOJ. • 2019: Guidelines for Taking Disclosure, Cooperation and Remediation into Account in False Claims Act Matters . The DOJ issued guidelines setting out the factors that Federal prosecutors would take into consideration when entities and individuals voluntarily self- disclose conduct that may constitute liability under the False Claims Act. These guidelines are set out under Section 4-4.112 of the Justice Manual. AAOE 2019 Compliance Symposium
Current Enforcement Environment Criminal Enforcement Actions • Charges Outlined in Recent Criminal Indictments Have Included: Submission of false and fraudulent claims. Overbilling. Identity theft. False patient information. Solicitation of referrals. Provider kickbacks and bribes. Medical identity theft. Forgery of physician’s signature. Billing for services by unlicensed individuals. Unsupervised staff. Employment of excluded individuals and falsification of records. Filing claims with names and identifiers for dead people. AAOE 2019 Compliance Symposium
Current Enforcement Environment Criminal Enforcement Actions • Federal Anti-Kickback Statute (42 U.S.C. § 1320a–7b(b)). The federal Anti-Kickback Statute makes it a crime to knowingly and willfully offer, pay, solicit, or receive remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to purposefully induce or reward referrals of items or services payable by a federal health care program. Simply put, it is against the law to pay or provide anything of value in an effort to induce referrals or business related to a federal health care program. • Increased penalties and imprisonment for kickback violations. Under the Bipartisan Budget Act of 2018 (effective February 9, 2018): Criminal penalties for acts involving Federal health care programs under 42 U.S.C. § 1320a–7b, including but not limited to the Anti-Kickback Statute, were increased from $25,000 to $100,000 . Additionally, the maximum sentences for felonies involving Federal health care program fraud and abuse under 42 U.S.C. § 1320a–7b, including but not limited to the Anti-Kickback Statute, were increased from Five to Ten years. AAOE 2019 Compliance Symposium
Current Enforcement Environment Criminal Enforcement Actions • The federal Anti-Kickback Statute and the False Claims Act were long viewed as separate and distinct enforcement tools, with the False Claims Act used in civil enforcement matters and the anti-kickback statute applied in criminal kickback cases. • Over the past 20 years, the enforcement landscape has slowly changed. Starting in the early 1990’s, whistleblowers began asserting violations of the False Claims Act in cases that would typically be pursued as a criminal anti-kickback violation. • These cases often involved fact patterns where a party was alleged to have violated the anti- kickback statute and , in the process, billed for services that were allegedly worthless and made a false express and / or implied certification to the Medicare or Medicaid program. • The 2010 passage of the Affordable Care Act obviated the need to bootstrap a violation of the anti-kickback statute into a violation of the False Claims Act. Under the ACA, a claim submitted in violation of the federal anti-kickback statute now automatically constitutes a false claim for purposes of the False Claims Act. AAOE 2019 Compliance Symposium
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