DOJ recently announced a massive coordinated effort with other federal agencies to charge 345 defendants allegedly responsible for over $6 billion in fraud. DOJ, OIG, FBI, DEA, and various US Attorneys’ Offices in 51 federal districts teamed up to unveil charges against more than 100 doctors, nurses, and licensed clinical personnel. In its September 30 press release, DOJ asserts that the largest portion of the $6 billion in losses – 75% – is attributable to what it describes as “Telemedicine Fraud Cases.” At first blush, this is a headline-grabbing figure that suggests that the nascent Medicare telehealth industry is rife with fraudulent conduct. But, in peeling back the layers, are DOJ’s concerns really about telehealth or historic issues in healthcare and other industries?
We invite you to join us on Tuesday, August 25 for our next installment of the Fast Break series, this time focused on fraud enforcement following the coronavirus (COVID-19) pandemic.
Please join us for a webinar on Wednesday, June 3 at 3:00 pm ET to discuss the issues associated with the pursuit of funds under business interruption insurance coverage and FEMA public assistance and how they may intersect with the acceptance of terms and conditions associated with the CARES Act provider relief funds.
Partners Jay Konkel, Jeff Raskin, and Susan Feigin Harris will discuss these issues and some common scenarios presented by client questions.
Authors’ Note: In what may be emblematic of the legal landscape in the time of coronavirus (COVID-19), after we finalized the blog post below for publication regarding the US Department of Health and Human Services updates to the HHS FAQs relating to the CARES Act Relief Fund payments made by HHS on May 19, the agency later added or updated its FAQ on the night of May 20, with some notable changes. These updates have been included (and emphasized in italics) in this republication.
With just days left until provider attestations are due related to acceptance of CARES Act Provider Relief Funds, the US Department of Health and Human Services (HHS) has recently been updating its FAQs, providing some additional clarity, and potentially confusion, surrounding the acceptance of Relief Funds from its initial tranche $30 billion of General Distribution payments. Attestations for the first tranche of payments on April 10 are due May 25, and HHS continues to furnish guidance regarding the details of the General Distribution Relief Fund.
In managing the quickly evolving healthcare landscape during this current crisis, healthcare companies should be wary of fraudsters who attempt to divert critical resources. The US Department of Justice (DOJ) and the US Department of Health and Human Services Office of Inspector General (OIG) are alerting the public about fraud schemes related to the coronavirus (COVID-19).
In the Care Alternatives False Claims Act (FCA) appeal, a panel of the US Court of Appeals for the Third Circuit on March 4 reversed the summary judgment granted to hospice provider Care Alternatives at the district court, disagreeing with AseraCare precedent out of the US Court of Appeals for the Eleventh Circuit, and holding that clinical disagreement alone may comprise legal falsity and is sufficient to create a triable issue of fact for the jury.
In an action especially significant to hospice providers but also other healthcare providers regarding the determinations of medical necessity for Medicare billing purposes, the US Department of Justice (DOJ) and AseraCare have just agreed, following a mediation, to settle for $1 million the long-running False Claims Act qui tam litigation matter in which the United States had previously sought $200 million in liability.
In its press release, Aseracare said the settlement involves a single payment and will not require a corporate integrity agreement with the HHS Office of Inspector General.
In a recent analysis for Today’s General Counsel, healthcare industry partner Katie McDermott analyzes the US Court of Appeals for the Eleventh Circuit’s decision in United States v. AseraCare, Inc. and offers key takeaways for False Claims Act (FCA) practitioners from “this reasoned and scholarly opinion.” Cautioning that the healthcare industry should not misunderstand “the import of AseraCare and assume that hospice eligibility or medical necessity challenges for other health services cannot morph into big healthcare fraud investigations to audits,” Katie advises that the healthcare community “should heed the court’s caveats that documentation should support well-founded physician judgment and assure that its clinical practices can consistently meet this favorable standard.”
Read the full article starting on page 44 of Today’s General Counsel.
The US Court of Appeals for the Eleventh Circuit has issued its much awaited decision in United States v. Aseracare, and for those who question how mere differences clinical opinion can ever support punitive False Claims Act (FCA) liability, the opinion is especially informative. The decision is significant for hospice providers and all healthcare providers that have battled government enforcers on its theory that evidence of subjective lack of medical necessity is fraud for the last decade. The decisions should be a bellwether for the US Department of Justice (DOJ), as well as an opportunity for DOJ to revisit its enforcement initiatives related to medical necessity, which have gone off the rails in recent years with the pursuit of cases that do not reasonably suggest fraud has actually occurred.
Rejecting DOJ’s signature theory of liability that falsity may be established by mere clinical disagreement divined from a cold retroactive review of the record, the court held that the trial court was right to grant a new trial to Aseracare based on erroneous jury instructions that allowed mere clinical disagreement to be the only evidence of falsity to find punitive FCA liability against the national hospice provider. The district court had granted a new trial on the basis that the instructions were wrong and the Eleventh Circuit agreed. The court further held that the summary judgment subsequently granted to Aseracare should be vacated and reconsidered to give the government an opportunity to present other falsity evidence related to the sample claims, if the government has such actual evidence to be considered. So, procedurally, the case stays alive, but is on thin ice at best.
The court noted that the trial record was devoid of any evidence that physicians had lied regarding their certifications of eligibility or that hospice services were not provided to the patient, and pointed out that much of the evidence showed Aseracare’s compliance with Medicare’s hospice regulatory scheme. The opinion noted that CMS and the Medicare contractor at trial supported the view that the Medicare hospice benefit was structured to consider good-faith, subjective clinical opinions based on the common sense reality that death is an inexact science, and that two physicians could hold different views of a patient’s prognosis and eligibility. Even the government’s expert changed his mind on patient eligibility over time—an incredible situation given that his testimony was the sole evidence to support the jury’s verdict and punitive liability in excess of $200 million.
There are many gems in this well-reasoned and scholarly opinion, the first at the appellate level to consider the government's FCA theory. Some key takeaways for practitioners include the following:
- To properly state a claim alleging hospice fraud under the FCA, the government must show facts surrounding a physician’s certification of eligibility that are inconsistent with the proper exercise of a physician’s clinical judgment. Mere differences of reasonable opinion concerning a patient’s likely longevity are not sufficient to allege FCA liability.
- Falsity evidence must be linked to the government’s actual samples of false claims. General anecdotal information of business practices untethered to the proffered false claims is not evidence of falsity for FCA purposes.
DOJ’s medical necessity initiatives over the last several years have focused on hospice and therapy providers, virtually all with the same playbook: cold record retrospective review, often by a nurse reviewer, to allege falsity based on alleged inadequate documentation conclusions as to clinical eligibility. There is often no evidence of actual fraud or material noncompliance. Often, the physicians who certify eligibility are not even interviewed regarding their certifications before catastrophic punitive liability is asserted. DOJ’s theory of liability does not require actually developing evidence of falsity, only evidence of clinical disagreement. Many of these investigation matters are founded on clinical disagreement, lightly sprinkled with general anecdotal complaints regarding business practices, or with C-suite emails that look bad but had no influence on the physician’s certification or were even known to the clinicians caring for the patient.
This opinion powerfully reasons why the government’s approach is inconsistent with the FCA statute and the Medicare hospice benefit regulatory scheme. Its reasoning applies with equal vigor to the medical necessity fraud initiative DOJ has developed over the years against other healthcare providers. The opinion also highlights the danger of not developing the right evidence to show fraud and relying on evidentiary shortcuts to assert liability under a highly punitive statute.
Finally, the opinion lays bare the reality that government enforcement practices sometimes ignore the regulations and rationale for the regulatory scheme at issue in order to fashion a more pliable account of how regulations are intended to work—even if that account is contrary to what has been legislated by Congress and implemented by the regulatory agency. In Aseracare, the government enforcers ignored the regulatory scheme as explained by its own Medicare agency witnesses to assert punitive liability under the FCA. This has a chilling and negative effect on all hospice providers, which is the exact opposite of what is right for the patients and their families who need this important benefit.
We hosted a very informative Fast Break session last week on complex FCA issues. If you weren't able to join, the session was led by Katie McDermott and Matt Hogan, who are both authorities in False Claims Act (FCA) litigation. Understanding the complex dynamics for dealing with both the US Department of Justice (DOJ) and qui tam relators, Katie and Matt led us through the minute details of relator litigation, declined qui tams, and partial interventions, just to name a few things.
Among the overarching issues we discussed, coming on the heels of the US Supreme Court’s Cochise decision, is the Court’s seemingly renewed interest in the FCA and the possibility of statutory amendments to the FCA to balance out many of the, as Katie termed it, “procedural inequities” that now exist when a healthcare organization is an FCA defendant. Katie and Matt also discussed recent DOJ pronouncements about their FCA enforcement procedures and priorities, highlighting that the FCA remains the most significant overarching risk area for healthcare stakeholders.