DOJ focus is on ‘egregious’ and ‘despicable’ health care fraud

In a speech on May 18, 2017, at the American Bar Association’s 27th Annual Institute on Health Care Fraud, Acting Assistant Attorney General Kenneth A. Blanco stressed that the Department of Justice (DOJ) would continue with keeping health care fraud a priority. The amount of loss to the American tax payer per year due to healthcare fraud is in the billions, with some estimates putting the number close to $100 billion per year.

Blanco stressed the importance of cooperation between the Medicare Strike Force, the U.S. Attorney’s Offices, and federal and state investigative agencies. He noted that the DOJ was employing an in-house data analytics team to review CMS billing data in order to focus on the most aggravated cases quickly. In turn this data is pushed to other federal and state investigative agencies.

Detailing examples of recent work by the Health Care Fraud Unit, Blanco highlighted that October 2016, Tenet Healthcare Corporation, a publicly-traded company and the third largest hospital chain in the United States, entered into a global resolution with the government, agreeing to resolve an investigation of a corporate bribery and fraud scheme at four Tenet-owned hospitals in Georgia and South Carolina. As part of that scheme, the hospitals paid over $12 million in bribes to a chain of prenatal care clinics in exchange for the referral of Medicaid patients.

Under the global resolution: (1) two Tenet subsidiaries pleaded guilty to conspiracy to defraud the United States and pay kickbacks and bribes in violation of the Anti-Kickback Statute, and forfeited over $146 million in Medicare and Medicaid funds; (2) Tenet entered into a non-prosecution agreement requiring, among other things, an independent compliance monitor for a period of three years over all entities owned, in whole or in part by Tenet; and (3) Tenet and its subsidiaries entered into a civil settlement agreement and paid $368 million to the United States, the State of Georgia and the State of South Carolina (see Corporations, beware: Tenet Healthcare to pay $513M to settle kickback charges, Health Law Daily, October 4, 2016). Subsequently two individuals have pleaded guilty and a former senior executive of Tenet was indicted for the scheme (see DOJ comes for executive in Tenet fraud case, Health Law Daily, February 2, 2017).

CMS has estimated that the total health care spending in the United States in 2015 reached $3.2 trillion, or 17.8 percent of the gross domestic product. As such, the DOJ considered health care fraud as “egregious,” and from Blanco’s viewpoint, “despicable,” because it resulted in depriving medical care for those in actual need. Blanco noted that health care fraud impacts the public’s access to medical care, even the most basic forms, because fraud increases the costs for all.

Kusserow on Compliance: OIG and DOJ raising stakes on board compliance obligations

From the days of the first compliance guidance documents from the HHS Office of Inspector General (OIG), it has called for a “top-down” compliance program, beginning at the Board level. For example, it issued a joint White Paper, titled Practical Guidance for Health Care Governing Boards on Compliance Oversight,” which emphasized holding boards more accountable for proper oversight of compliance within their organizations. Language from these pronouncements about Board obligations and use of compliance experts is now included in corporate integrity agreements (CIAs). During the 2017 Health Care Compliance Association (HCCA) Compliance Institute, speakers from the OIG discussed a number of changes in CIAs, including new mandates for Board members. The OIG believes a key factor in determining effectiveness of the compliance program is how well the Board has been meeting its fiduciary duties and responsibilities for overseeing compliance. If it finds the organization has an effective program with proper oversight by the Board, the OIG may decide that a CIA is unnecessary or mitigate terms and conditions.   However, if it finds the program is inadequate, there will be a CIA and it will include stringent requirements for the Board. Among the best practices for Boards is to include one or more members who are “compliance literate” to ask the right questions and assess program effectiveness.  A compliance-literate person is someone with experience and expertise from having been a compliance officer or a consultant to compliance programs.  Alternatively, Boards should engage compliance experts to provide advice on asking compliance officers the right questions, evaluating the answers, and determining what metrics to rely upon in determining compliance program effectiveness.  By following one or both of these steps, Boards can go a long way to ensure they are meeting their fiduciary duties and responsibilities.

The Department of Justice (DOJ) has also been ramping up to better focus on Boards meeting their fiduciary obligations in guarding against corporate wrongdoing. Its Fraud Section published “Evaluation of Corporate Compliance Programs” as guidance for compliance officers on how the adequacy of their companies’ compliance programs is evaluated by prosecutors.   They laid out a series of questions prosecutors are likely to ask in evaluating the effectiveness of compliance programs. The following highlights questions that relate to Board involvement in compliance oversight.

  • What compliance expertise does the Board have or not have to meet its fiduciary obligations?
  • How frequently does the Board meet with the compliance officer and outside experts (auditors and consultants) outside the presence of management?
  • What information does the Board receive to assist it in its compliance oversight?
  • How does the Board evaluate the compliance program effectiveness?
  • How does the Board determine resources necessary for the operation and management of the compliance program?
  • How have management and the Board followed up on identified potential problems?

Tips and suggestions for compliance officers

Compliance officers should:

  • educate the Board on its fiduciary obligations and personal consequences for not meeting them;
  • meet with the Board regularly, including in executive session without management presence;
  • ensure that the Board receives all types of relevant audit findings and remediation progress reports on a regular basis;
  • urge the Board to include one or more members who are “compliance literate” to assist in evaluating compliance program effectiveness and be able to ask the right questions; and
  • engage compliance experts to assess the program before encountering the DOJ and OIG and use results to brief the Board evidencing they are providing active compliance oversight.

Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

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Copyright © 2017 Strategic Management Services, LLC. Published with permission.

Former ALJ pleads guilty for role in $550 million scam

A former administrative law judge (ALJ) for the Social Security Administration (SSA) pleaded guilty in federal district court in Kentucky on May 12, 2017, for his part in a scheme that defrauded the SSA of over $550 million in federal disability payments for thousands of claimants.

For more than 20 years, the ALJ adjudicated disability claims on behalf of the SSA. As part of his guilty plea, he admitted to accepting over $609,000 in cash payments over some seven years in more than 3,100 cases from a Kentucky Social Security disability lawyer. The former ALJ admittedly divided the cash deposits among various accounts in an attempt to conceal the source of the cash.

In exchange for the illegal gratuities, the ALJ advised the lawyer as to the type of medical evidence to submit for his clients and he awarded disability benefits to thousands of claimants represented by the lawyer without holding hearings. As a result, the lawyer received at least $7.1 million in representative fees from the SSA, and by his misconduct, the ALJ obligated the SSA to pay more than $550 million in lifetime benefits to claimants.

The ALJ was indicted on April 1, 2016, along with the lawyer and a clinical psychologist. They were charged with conspiracy, fraud, false statements, money laundering and other related offenses in connection with the scheme. The lawyer pleaded guilty to the fraud scheme earlier this year; the clinical psychologist is currently awaiting trial; and the ALJ’s sentencing is set for Aug. 25, 2017.

Kusserow on Compliance: Tips for getting the most from your CIA

This was the title of a section in a presentation by Laura Ellis, HHS Office of Inspector General (OIG) Senior Counsel, at the recent Health Care Compliance Association (HCCA) Compliance Institute, where she explained that the settlement process is very lengthy, and that compliance officers should spend that time period preparing for what is to come. Even before matters are referred to the OIG for settlement negotiations, the matter will have been with the Department of Justice (DOJ) for a long time.  It is only after the DOJ turns matters over to the OIG that the agency determines whether or not a corporate integrity agreement (CIA) is necessary, and if so, what terms and condition should be included in the agreement.  Ellis stated that negotiations with the OIG may take up to a year before a CIA emerges.   It is during this rather long lead-up period that the compliance officer should be very busy preparing for what is to come.  Ellis offered a number of suggestions for the compliance officer to follow while this process is underway, including:

Thomas Herrmann, J.D., was previously responsible for negotiating CIAs on behalf of the OIG and in providing monitors with a number of years’ consulting experience, working with more than a dozen clients with CIAs and as an Independent Review Organization (IRO). He agreed with the Ellis statement about the long lead time before a CIA is signed, and that the compliance officer should not waste that valuable time.  Once executed, the clock begins ticking and a lot has to be accomplished in a relatively short time.   Among the most important tasks needing immediate attention is finding and vetting potential outside experts to be the IRO and, in some cases, compliance experts for the Board and quality monitors. The responsibility for selecting these experts lies with the organization, not the OIG.  This may take a lot of time and warrants serious consideration as in all likelihood, the organization will have them for five years.  A mistake in selection will come back to haunt the organization and may aggravate matters with the OIG.  The compliance officer should be very much involved in finding and selecting the right experts with the right expertise.   The more experience the firm selected has in performing this type of work, the less likely there will be problems.  An experienced firm won’t have the learning curve of an inexpert firm that oftentimes adds cost to the engagement and results in poor reports to the OIG.  For an organization that is already in hot water with the DOJ and OIG, this kind of complicating matter is not wanted.

Carrie Kusserow has over 15 years’ compliance officer and consultant experience, and was brought in to be the compliance officer to an organization under a CIA while Laura Ellis was the monitor. Kusserow echoes Ellis’ advice to organizations to take steps to “get the most out of the money” expended on these resources. The more expert they are in the health care sector, the better.  The more experience the individuals assigned to do the work have, particularly experience with the OIG, the better.   The one thing to avoid is hiring an IRO and then paying it to learn about the type of work being done by the organization or how to interact with the OIG. Having top-notch experts can impart considerable added value from prior experience of doing this kind of work. She also pointed out that once these outside experts are engaged, there is another lag period before they begin their work and again when they present reports on the results of their work.  It is a huge mistake to allow these gap periods to elapse without doing serious preparation work.  It is important to begin planning at the earliest date for what is needed to meet CIA terms and conditions, which will assist in this effort, and development of a project plan for execution.   The planning process and timelines for meeting CIA requirements will have to take into account when reports by the IRO, and possibly the compliance expert, are due to the OIG.

Steve Forman, CPA, has over 35 years’ experience, having served as both as a compliance officer and as an IRO many times, and as a compliance expert four times under a CIA. He advises compliance officers that one step that cannot be undertaken too soon is getting the Executive/Management Compliance Committee and Board Compliance Committee involved. They need to understand fully in practical and operational terms their personal obligations, along with what is needed from them to meet CIA obligations.   He also strongly recommends at the first indication that a CIA may be in the future to begin reviewing posted agreements on the OIG website, especially those that involve similar types of organizations.   One point of caution is that the OIG has been changing CIAs significantly as to new requirements, conditions, and certifications by board members and executives. Information derived from these reviews should be translated into a plan of action to ensure the organization is in tune with what the OIG will expect.  He strongly suggests that compliance officers consider engage compliance experts to do two things:

  1. Have the compliance program conduct an independent evaluation and act on findings and recommendations. Having such a report with evidence of correcting any deficiencies can be invaluable evidence to the OIG in making a determination as to whether a CIA is necessary and, if so, mitigating terms and conditions. It will be looking for this evidence.
  2. Once a CIA is executed, immediately engage experts to conduct a mock audit to test the terms and conditions that must be met under the CIA and to have them addressed before the IRO or compliance expert under the CIA begins work.

Taking these two steps can avoid a lot of problems, expenditures and complications under a CIA. The OIG takes evidence of independent experts serious. That is why they rely upon them as IROs, Compliance Experts, and Quality Monitors.

Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

Connect with Richard Kusserow on
Google+ or LinkedIn.

Subscribe to the Kusserow on Compliance Newsletter

Copyright © 2017 Strategic Management Services, LLC. Published with permission.