Face Challenges Confidently

Government Scrutiny and Qui Tams

Monday, September 11th, 2017

By: Jeffrey S. Baird, Esq.

The U.S. Department of Justice (“DOJ”) and the Office of Inspector General (“OIG”) have become much more aggressive in bringing civil and criminal investigations against DME suppliers and their owners. Many investigations are a result of qui tam (whistleblower) lawsuits. This is when a disgruntled ex-employee, disgruntled current employee, or any other person with “original facts,” files a federal lawsuit against the supplier and its owners. The lawsuit will be in the name of the current/ex employee (“relator”) and in the name of the U.S.

Qui Tam Lawsuits

The qui tam lawsuit will be based on the federal False Claims Act (“FCA”). It is the position of the DOJ that if the supplier commits an act that violates any law (civil or criminal), and if the supplier eventually submits a claim to a government health care program (in which the claim directly or indirectly is related to the act), then the claim is a “false claim.”

Under the FCA the supplier (and its individual owners) can be liable for actual damages, treble damages, and between $10,781 to $21,563 per claim.

When the qui tam lawsuit is initially filed, it will go “under seal,” meaning that nobody (except for the DOJ) will know about it. An Assistant U.S. Attorney (in the jurisdiction in which the qui tam is filed), who specializes in civil health care fraud cases, will review the lawsuit and will ask investigative agents (FBI, OIG) to investigate the allegations set out in the qui tam suit. The agents may talk to current employees and/or ex-employees. The agents may talk to patients, marketers, and referring physicians. The agents may talk to others who may have information regarding the allegations set out in the qui tam.

The investigation may take six months, or it may take several years. If the civil AUSA believes that the supplier’s actions are particularly serious, then he/she may ask a criminal AUSA to launch a criminal investigation. In fact, most criminal health care fraud investigations arise out of qui tam lawsuits. Often, a supplier will have to resolve two cases brought by the DOJ: a civil case … and a criminal case.

Once the investigation is completed, then the DOJ will “unseal” the lawsuit, meaning that the defendant supplier will find out about it. If the civil AUSA believes that the qui tam has merit, then the DOJ will take the lawsuit over and the relator’s attorney will “sit on the sidelines.” If the DOJ does not “intervene” (i.e., take the lawsuit over), then the relator’s attorney can proceed without the DOJ’s assistance.

Because of the potential massive liability under the FCA, most qui tam lawsuits are settled (i.e., the supplier pays a lot of money). In addition to paying money to the DOJ (of which 15% to 20% will go to the relator), the supplier will usually be required to enter into a Corporate Integrity Agreement (“CIA”) with the OIG. A CIA normally has a 5 year term. Under the CIA, the supplier must fulfill a number of obligations to the OIG.

Sifting Through Data

Change in Billing Pattern – Assume that a DME supplier exhibits a history of billing. For example, the supplier bills about the same amount each year, with reasonable annual increases. Now assume that the dollar amount of claims submissions rapidly increases as a result, for example, of purchasing leads and/or engaging in a telehealth arrangement. DME MACs will take notice of this sudden increase and will (i) place the supplier on prepay review, (ii) conduct post-payment audits, or (iii) ask a ZPIC to conduct an audit. These steps may lead to a government investigation.

Billing Pattern Falls Outside the Norm – The DME MACs have data indicating what a normal billing pattern is for a particular product … in a particular geographical location. If a supplier’s billing pattern falls outside this “norm,” then the supplier will be scrutinized.

Government Interviews Witnesses

Interview of Physicians – Agents of CMS contractors (e.g., ZPICs) and of governmental agencies (e.g., DOJ and OIG) will call or personally visit physicians whose names are on a DME supplier’s orders. The agents will attempt to determine if the order is “physician/patient driven” or if it is “DME supplier driven.”

Interview of Patients – Agents will call or personally visit patients to determine (i) if they received the product for which the government was billed and (ii) if they really wanted the product (or if the process was “DME supplier driven”). Agents often intimidate elderly patients. Afraid that they “will lose their Medicare benefits,” the patients will often say whatever the agents “lead them on to say.”

Interview of Current and Ex Employees – Agents will call or personally visit current and ex employees. As with patients, agents will intimidate the current/ex employees. The current/ex employees, out of fear that “they may have done something wrong,” will be inclined to say whatever the agents “lead them on to say.”

Importance of Compliance Program

The DME supplier can take a number of steps to reduce the risk of coming under governmental scrutiny, the most important of which is to implement a robust compliance program. The supplier needs to have a committed compliance officer. For large suppliers, being a compliance officer can be a full-time position. For smaller suppliers, the compliance officer will likely “wear multiple hats.”

The compliance officer is normally not an attorney. The compliance officer does not have to be an expert on all of the federal and state anti-fraud laws. However, the compliance officer needs to know enough about avoiding fraud that he/she has a “Pavlovian reaction” when the supplier is about embark on a program, or enter into an arrangement, that is questionable. At that juncture, the compliance officer can pick up the phone and call a health care attorney to determine if the supplier is about to start down the proverbial “slippery slope.”

Another important reason for a vibrant compliance program is to provide to employees a safe process by which they can voice concerns about the supplier’s practices. Most employees do not, at the outset, plan on becoming a qui tam relator. Normally, an employee becomes a qui tam relator only after the employee brings a concern to management … and management does not treat the employee’s concern seriously. Out of frustration and anger, the employee will contact an attorney. If the employees know that they can safely (and if they desire, confidentially) go to a compliance officer with a concern, then the risk of an employee talking to a qui tam attorney decreases.

Jeffrey S. Baird, JD, is Chairman of the Health Care Group at Brown & Fortunato, PC, a law firm based in Amarillo, Tex. He represents pharmacies, infusion companies, HME companies and other health care providers throughout the United States. Mr. Baird is Board Certified in Health Law by the Texas Board of Legal Specialization, and can be reached at (806) 345-6320 or jbaird@bf-law.com.