By Steve Thorpe
Legal News
Oncologist Dr. Farid Fata was recently sentenced to 45 years in prison following his guilty plea in September 2014 to multiple 13 counts of health care fraud, one count of conspiracy to pay or receive kickbacks and two counts of money laundering after 22 of his patients recounted treatments that were unnecessary or excessive. A whistleblower used the “qui tam” provisions of the Federal False Claims Act (“FCA”) to provide information that led to Fata’s downfall. Qui tam lawsuits are a type of civil lawsuit whistleblowers bring under the FCA, a law that rewards whistleblowers if their qui tam cases recover funds for the government. Debra Geroux is a senior attorney in Butzel Long’s Bloomfield Hills office and certified in healthcare compliance (CHC) through the Health Care Compliance Association (HCCA). Geroux’s clients include mental health authorities, home health agencies, pharmacies, doctors, nursing facilities and hospitals. In 2012, Geroux co-authored a Healthcare Licensing Manual for the State Bar’s Healthcare Law Section, titled “State of Michigan Health Care Provider Licensure & Certification Process,” to assist individuals in navigating the licensing and disciplinary processes.
Thorpe: Can you give us “Qui Tam 101” … the origins of the laws and how they’ve evolved?
Geroux: The False Claims Act was originally enacted in 1863 under President Lincoln in an effort to eradicate fraud against the federal government. To assist the government, the FCA included a provision that encouraged private individuals (known as “relators”) to report incidents to the government and entitles these private parties to file suit on behalf of the government (a “qui tam” action). To incentivize these whistleblowers, the FCA provided that relator received a share in the government’s recovery. In the 1940s the Act was amended to reduce the whistleblowers’ share of the recovery and to prevent qui tam lawsuits based on information already known by the government. Not surprisingly, the amendments significantly reduced qui tam actions. It wasn’t until 1986 that Congress revamped the FCA, this time in response to egregious conduct of defense department contractors (you may recall claims of government contractors charging exorbitant fees for ordinary items like toilet seats and hammers). The 1986 amendments increased penalties (including treble damages) for fraudulent claims, and incentives for qui tam actions, including a 15-30 percent share in the government’s recovery. Since then, the Act was amended a few times, most significantly in 2009 and 2010 with the Fraud Enforcement and Recovery Act (“FERA”) and the Affordable Care Act, which broadened its scope and made it easier for qui tam actions to be maintained by the private relators.
Thorpe: How did qui tam figure into the Fata case?
Geroux: From all accounts the Fata criminal case was prompted, at least in part, by the qui tam lawsuit. If you look at the recently unsealed Qui Tam Complaint and the Affidavit supporting the Criminal Complaint, the allegations are similar; the clear implication being that the civil division shared the qui tam complaint and supporting documents with the criminal division for investigation. While the Department of Justice (“DOJ”) has attorneys dedicated to both civil and criminal prosecution of fraud cases, it wasn’t until the fall of 2014 that DOJ publicly announced a new policy requiring all new qui tam complaints received in the civil division be shared with the criminal division immediately.
Thorpe: What incentives do the laws provide for whistleblowers?
Geroux: The most notable incentive of the FCA is the share that a relator receives in the recovery. Depending on who ultimately prosecutes the case (the government or the relator), the share ranges between 15- 30 percent, the higher end being reserved for those cases that are fully litigated by the relator alone. Another incentive is the mandatory recovery of attorneys’ fees when the relator is successful.
Thorpe: Qui tam lawsuits are filed “under seal.” How does that work?
Geroux: The qui tam complaints are filed in court “under seal,” meaning that they are not placed into the public domain. The FCA requires that a qui tam complaint remain under seal for 60 days to allow the government to investigate the allegations, although extensions are common to enable the government to complete its investigation. Once the government completes its investigation, it can either take over the case (“intervene”) or decline to do so leaving the relator to proceed on his or her own. When this happens, the complaint is unsealed and the matter proceeds as with any other civil case. In that case, while the damages ultimately recovered belong to the government, the relators’ share increases to 25-30 percent.
Thorpe: The Affordable Care Act has received significant backlash in the media and the repeated challenges in the courts due to some of its controversial provisions. However, there are other aspects of the ACA that have, for the most part,
been immune from attack. How does the ACA affect the landscape of anti-fraud efforts?
Geroux: Perhaps the most notable aspect of the ACA in combating fraud, waste and abuse comes from the additional resources allotted–specifically, the ACA included $350M over 10-years for anti-fraud efforts. These funds have led to the creation of the Health Care Fraud Prevention and Enforcement Action Team (“HEAT”), a collaboration of the Department of Health & Human Services (“HHS”) and DOJ. Through HEAT strike forces in nine geographic locations with high incidents of fraud, including one in metro-Detroit, the government has executed several nationwide Medicare fraud takedowns, including the most recent sweep in June of this year involving over 240 individuals and over $710M in false billings.
Thorpe: You were co-author of an article on health care fraud that said educating the public and guiding compliance should be major priorities. How might that be accomplished going forward?
Geroux: Educating the public has been a key to the government’s anti-fraud efforts. Nowadays, patients are taking a great role in their healthcare services. They’re looking at the bills and asking questions. Employees of healthcare providers are more knowledgeable of the laws that affect their industry and are becoming increasingly aware of what is and isn’t proper. The public is speaking up when they perceive a wrong and the government is listening. With this increased awareness and oversight by the public, provider compliance is not merely good business, it is a necessity.
The concept of compliance is not new, but its import has changed in the past decade. For healthcare providers, the Office of Inspector General (“OIG”) for HHS has touted the virtues of a good compliance program. Since 1998, the OIG has published Compliance Program Guidance for all types of healthcare providers, ranging from the small physician practice and third party billing company to larger entities such as hospitals and nursing homes. While these were voluntary efforts, the laws have shifted recently to mandatory compliance programs. Civil settlements with the OIG include provisions mandating implementation of an effective compliance program. Mandatory compliance programs are also included in the ACA as an aspect of Medicare participation.
Unfortunately, many healthcare providers do not appreciate the benefit of having a compliance program or the risks involved in not having one. Setting aside that a compliance program is tool to ensure the healthcare provider is practicing in accordance with all the regulations that govern the practice—call it good business—an effective compliance program can significantly reduce the liability of a provider that gets into trouble. In the criminal context, the applicable sentence can be reduced where an effective compliance program was in place but the violation still occurred.
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