Prosecuting and defending health care fraud cases / Michael K. Loucks, Carol C. Lam.
2010
KF9368 .L68 2010 (Map It)
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Details
Author
Title
Prosecuting and defending health care fraud cases / Michael K. Loucks, Carol C. Lam.
Published
Arlington, Va. : BNA Books, [2010]
Copyright
©2010
Call Number
KF9368 .L68 2010
Edition
Second edition.
ISBN
9781570189098 (alk. paper)
1570189099 (alk. paper)
1570189099 (alk. paper)
Description
xxx, 1,185 pages : illustrations ; 26 cm
System Control No.
(OCoLC)688559523
Bibliography, etc. Note
Includes bibliographical references and index.
Record Appears in
Library Has
Main vol,Suppl(2011)
Gift
Purchased from the income of the Silver Fund
Added Author
Added Corporate Author
Gift
The Arthur W. Diamond Law Library
Purchased from the income of the Silver Fund
Table of Contents
Preface
v
Acknowledgments
vii
Summary Table of Contents
ix
pt. I
INTRODUCTION
ch. 1
Introduction
3
I.
The Development of Antifraud Measures
3
II.
Health Care Fraud Prosecutions: A History
5
III.
Structural Defects in the System
9
A.
Inverse Incentives
9
B.
Erosion of Copayments
11
IV.
An Overview of Fraud in Medicare
13
V.
Conclusion and Comment on the Rate of Prosecutions, Convictions, and Exclusions
14
ch. 2
Litigation and Counseling: An Overview
17
I.
Litigation in a Complex Environment
15
A.
Investigative Tools
15
B.
Understanding the Regulatory Environment
15
C.
Sanctions
19
II.
Determining the Provider's Risk and Organizing a Strategic Response
20
Figure 2-1
Advising the Client: FDA, Patient Abuse, and Referral Issues
22
Figure 2-2
Advising the Client: Billing and Referral Issues
23
pt. II
THEORIES OF FRAUD LIABILITY IN HEALTH CARE CASES
ch. 3
False Billing Within the Reimbursement Rules of Medicare and Key Federal Health Care Programs
27
I.
Introduction
28
II.
Overview of the Medicare Reimbursement System
30
A.
Legislative History
30
B.
The 2010 Changes
31
C.
Administration and Operation
34
D.
Structure of Medicare Reimbursement
34
III.
Medicare Part A in General
35
A.
Eligibility and Enrollment
35
1.
The Aged and the Disabled
35
2.
Uninsured Elderly Individuals
36
3.
Disabled Individuals
36
4.
Individuals Exposed to Environmental Health Hazards
37
B.
Extent of Insurance Coverage Under Part A
37
1.
Hospital Insurance Coverage
38
2.
Skilled Nursing Facility Insurance Coverage
39
3.
Home Health Care Insurance Coverage
40
C.
Payment of Claims Through Fiscal Intermediaries
42
D.
PART A: Reimbursement Methodology
43
1.
The Early Years: Cost-Based Reimbursement
43
2.
Prospective Payment System (PPS)
44
a.
Overview of the PPS
44
b.
Costs Covered by the PPS
45
c.
Exclusions From the PPS
46
I.
Hospitals and Hospital Units Not Covered
46
II.
Hospital Costs Not Covered
47
III.
Other Costs Not Covered
47
d.
Diagnosis-Related Group Classification Under the PPS
48
e.
The Future of the PPS System
48
E.
Obligations Required of Nursing Homes
49
F.
Implications for Counsel: Part A Billing
50
IV.
Medicare Part B
52
A.
Eligibility and Enrollment
52
B.
Extent of Insurance Coverage Under Part B
53
1.
Coverage in General
53
2.
Coverage for Physician Services
56
3.
Coverage for Anesthetic Services
57
4.
Coverage for Certain Diagnostic Tests
58
5.
Coverage for Ambulance Services
58
6.
Coverage for Outpatient Physical Therapy Services and Speech Pathology Services
59
7.
Coverage for Services Provided "Incident to" a Physician's Services
60
8.
Coverage for Durable Medical Equipment
62
9.
Ambulatory Surgical Centers
63
C.
Payment of Claims Through Carriers
63
D.
Implications for Counsel: Part B Billing
64
V.
Medicare Part C
65
A.
The Addition of HMO Coverage
65
B.
Provision of Care
65
C.
HMO Reimbursement and Opportunities for Fraud
66
VI.
Medicare Part D
67
A.
Development of Medicare Part D
67
B.
The Structure of Medicare Part D
68
1.
Enrollment Eligibility
68
2.
Specific Rules Regarding Prescription Drug Plan Sponsors
69
VII.
Specific Changes Implemented in 2010
73
A.
Program Integrity Modifications
74
1.
Provider Screening
74
2.
Overpayments
75
B.
Transparency Reports
75
1.
Reporting of Things of Value Given to Physicians and Hospitals
75
2.
Reporting Required of Pharmacy Benefit Managers
77
a.
Implications for Counsel
79
3.
Reporting Required of Nursing Homes
79
VIII.
The Section 340B Program
81
IX.
The Medicaid Programs
82
A.
"Best Price"
83
B.
Payment for Drugs Used Off-Label
85
C.
Miscellaneous Provisions: Required Corporate Integrity Programs
85
D.
Conclusion
86
ch. 4
The Civil False Claims Act
87
I.
Introduction
88
II.
Background and Application
91
A.
Background
91
B.
False Claims Act (FCA) Suits and Health Care Fraud
93
C.
Types of Health Care Fraud Schemes Alleged Under the FCA
93
III.
Elements of an FCA Action
96
A.
The Law
96
1.
The Pre-FERA False Claims Act
96
2.
The Post-FERA False Claims Act
96
3.
Comparison of Provisions
97
4.
The Principal Elements
99
B.
Claim
100
C.
Submission of the Claim
102
D.
Falsity of the Claim
104
1.
False Statements
104
2.
False Certifications
108
3.
Knowledge of the Claim's Falsity
112
E.
Damages and Penalties
115
F.
Respondeat Superior Liability
117
IV.
Qui Tam Provisions of the FCA
117
A.
Basic Procedure
118
1.
Complaint and Disclosure Statement
118
2.
Intervention
119
3.
Declination
120
4.
Dismissal
121
B.
Award to the Relator
121
C.
Whistleblower Protection
123
1.
Pre-FERA Case Law
124
V.
Legal Issues Under the Qui Tam Provisions
126
A.
Public Disclosure Bar
126
1.
The 1986 Amendments
127
2.
The 2010 Amendments
129
3.
Case Law Analyzing the 1986 Provision
130
a.
"Public Disclosure"
130
b.
"Allegations or Transactions"
132
c.
"Based Upon"
132
d.
"Original Source"
133
e.
Comment
134
B.
Suits Against States
135
C.
Proceeds of an FCA Case
137
D.
Constitutionality
138
E.
Collateral Estoppel Impact of Prior Guilty Pleas
138
VI.
Implications for Counsel
139
VII.
State False Claims Act Statutes
140
VIII.
Conclusion
141
ch. 5
The Federal Food, Drug, and Cosmetic Act
143
I.
Introduction
145
A.
Potential for Health Care Billing Fraud
145
B.
Liability of Manufacturers
146
1.
Criminal Prosecution
146
2.
Private Litigation
149
II.
Medicare Reimbursement Policies
150
A.
Coverage for New Procedures, Drugs, and Devices
150
B.
Coverage for Investigational Devices
153
1.
Experimental/Investigational (Category A) Devices
154
2.
Nonexperimental/Investigational (Category B) Devices
154
III.
Structure of the Federal Food, Drug, and Cosmetic Act
155
A.
Overview
155
B.
Purpose of the Act
156
C.
Drugs
157
1.
Investigational Use of a New Drug
159
2.
Premarket Approval of Drugs
162
a.
New Drugs
162
b.
Generic Drugs
163
3.
Supplements to an Approved Nonexperimental Drug Application or an Approved Abbreviated Nonexperimental Drug Application
165
4.
Required Records and Reports
168
D.
Medical Devices
168
1.
Classification
168
a.
Class I Devices
169
b.
Class II Devices
170
c.
Class III Devices
170
d.
Classification Panels
171
2.
Premarket Approval
171
a.
Concept of Substantial Equivalence and the 510(k) Process
171
b.
Class III Devices
172
c.
Labeling and Intended Use
174
3.
Determining Safety and Effectiveness
175
4.
Changes to a Device
177
5.
Medical Device Reports
178
E.
The Manufacturing of Drugs and Devices
179
1.
The Manufacturing Process
180
2.
The Registration and Inspection Process
181
3.
The "Current Good Manufacturing Practice" (CGMP) Requirements and Vagueness
183
IV.
Prohibited Activities
184
A.
Adulterated Drugs and Devices
184
1.
Manufacturing Problems
184
2.
Additional Adulteration Related to Drugs
185
3.
Additional Adulteration Related to Devices
186
B.
Misbranded Drugs and Devices
186
C.
Prohibitions and Disclosure Obligations Regarding Samples
189
V.
Criminal Prosecutions
190
A.
The Broad Prohibitions Against Adulteration and Misbranding
191
1.
Distribution Prohibitions
191
2.
Manufacturing Prohibitions
192
3.
Wholesale Distribution Prohibitions
193
4.
Prohibitions Regarding Samples
194
B.
The Crimes
194
1.
Misdemeanor Culpability
194
a.
In General
194
b.
Individual Liability
196
c.
Comment
199
2.
Felony Culpability
200
a.
In General
200
b.
Interplay With Securities and Exchange Commission Charges
205
c.
In the Sale of Drug Samples
206
3.
Each Shipment or Sale Is a Separate Crime
207
4.
Charging Issues
207
5.
Off-Label Promotion of Drugs and Devices
209
a.
The Legal Requirements
209
I.
Drugs
210
II.
Devices
211
III.
The Concepts of Adulteration and Misbranding
212
b.
The Practice of Medicine
212
c.
Evaluating the Economic Incentives
213
d.
First Amendment Rights of Drug and Device Manufacturers
215
I.
FDA Guidance and the Passage of the Food and Drug Administration Modernization Act of 1997 (FDAMA)
217
II.
The FDAMA Safe Harbor
218
e.
False Claims Act Liability for Off-Label Prescriptions
220
f.
Collateral Consequences of Off-Label Promotion
220
g.
Implications for Counsel
221
6.
Importation of Drugs
222
C.
Commencement of Criminal Proceedings
224
1.
Section 305 Proceedings
224
2.
Grand Jury Investigations
225
VI.
Debarment and Suspension
225
VII.
Miscellaneous Matters Not Covered
227
pt. III
THE ANTI-KICKBACK STATUTE, STARK PROHIBITIONS, AND ANTI-KICKBACK ADVISORY OPINIONS
ch. 6
The Anti-Kickback Statute and Related Safe Harbors
231
I.
Introduction
233
II.
The Anti-Kickback Statute: An Overview
233
A.
Legislative History
233
B.
Purpose of the Statute
235
C.
The Prohibitions: An Overview
236
D.
The Safe Harbors: An Overview
237
E.
Void-for-Vagueness Challenges
237
F.
Practical Implications for Counsel
238
III.
Elements of the Anti-Kickback Statute
239
A.
The Criminal Prohibitions
239
B.
Remuneration
241
1.
Remuneration Defined
241
2.
Examples of Remuneration
243
3.
Business Relationship Between Payer and Payee
246
a.
General Agreements
246
b.
Joint Ventures
247
4.
Purpose of the Payments
249
a.
The Applicable Legal Standard
249
b.
Expressions of Purpose
252
C.
Inducement
254
D.
"Knowingly and Willfully"
255
1.
Debate Surrounding the Terms
255
2.
United States v. Starks
258
E.
"Directly or Indirectly" and "Overtly or Covertly"
259
IV.
The Exceptions to the Anti-Kickback Statute Prohibitions and the Safe Harbor Regulations
259
Table 6.1
Referral Restrictions: Overlapping Exceptions and Safe Harbors
261
Table 6.2
Safe Harbor Treatment in OIG Anti-Kickback Advisory Opinions
265
A.
Discounts
268
1.
In General
268
2.
Restrictions
271
a.
Restrictions on the Statutory Exception
271
b.
Restrictions on the Regulatory Safe Harbor
271
3.
Practice Pointers
274
B.
Employee Bonuses
275
C.
Payments to Group Purchasing Agent
276
D.
Waiver of Coinsurance
277
E.
Risk-Sharing Arrangements
278
1.
The Statutory Exception
279
2.
Increased Coverage, Reduced Cost-Sharing Amounts, or Reduced Premium Amounts Offered by Health Plans to Enrollees
280
3.
Price Reductions Offered to Health Plans by Contract Providers
281
4.
Price Reductions Offered to Eligible Managed Care Organizations
283
5.
Price Reductions Offered by Contractors With Substantial Financial Risk to Managed Care Organizations
286
6.
Comment on These Safe Harbors
289
F.
Investment Interests
289
1.
Large, Publicly Traded Entities
290
2.
Small Entities With Active and Passive Investors
291
3.
Small Entities, With Active and Passive Investors, in an Underserved Area
292
4.
Investments in Group Practices
294
5.
Ambulatory Surgical Centers (ASCs)
293
a.
Surgeon-Owned, Single-Specialty, and Multispecialty ASCs
294
b.
Hospital/Physician ASCs
295
c.
Comment
296
G.
Lease of Space and Equipment Rental
296
1.
Lease of Space
296
2.
Equipment Rental
298
H.
Personal Services and Management Contracts
298
I.
Sale of Practice
300
J.
Referral Services
302
K.
Warranties
303
L.
Practitioner Recruitment
305
M.
Obstetrical Malpractice Insurance Subsidies
306
N.
Cooperative Hospital Service Organizations
306
O.
Referral Arrangements for Specialty Services
307
P.
Ambulance Supply Replenishment
307
Q.
Waiver of Coinsurance by Pharmacies Under Medicare Part D
309
R.
Rural Health Centers in Medically Underserved Areas
309
S.
Electronic Prescribing Items and Services
310
T.
Electronic Health Records Items and Services
312
V.
Sanctions
313
A.
42 U.S.C. [§]1320a-7a(a)(5)
313
B.
42 U.S.C. [§]1320a-7a(a)(7)
315
C.
42 U.S.C. [§]1320a-7a(b)
315
VI.
State Statutes
316
VII.
Implications for Counsel
317
ch. 7
The Stark Prohibitions and Related Safe Harbors
319
I.
Introduction
320
II.
Scope of the Stark Prohibitions
323
A.
"Referral"
325
B.
"Designated Health Services"
326
C.
"Financial Relationship"
327
D.
Remuneration
329
III.
The Stark Safe Harbors
331
A.
Safe Harbors Relating to Ownership and Investment Interests
333
1.
Publicly Traded Securities and Mutual Funds
334
2.
Hospitals in Puerto Rico, Rural Entities, and Certain Hospitals
335
B.
Safe Harbors Relating to Compensation Arrangements
337
1.
Rental of Office Space and/or Equipment
337
2.
Bona Fide Employment Relationships and Personal Service Arrangements
339
3.
Hospital Remuneration
342
4.
Physician Recruitment
342
5.
Isolated Transactions
344
6.
Arrangements Between Hospitals and Physician Group Practices
345
7.
Payments by a Physician for Items and Services
346
8.
Nonmonetary Compensation up to $300
346
9.
Fair-Market-Value Compensation
347
10.
Medical Staff Incidental Benefits, Risk-Sharing Agreements, and Compliance Training
348
11.
Indirect Compensation Arrangements
349
C.
Safe Harbors Relating to Both Ownership and Investment Interests and Compensation Arrangements
349
1.
Physician Services Provided in a Group Practice
349
2.
In-Office Ancillary Services
350
3.
Prepaid Health Plans
351
4.
Certain Clinical Laboratory Services
352
5.
Academic Medical Centers
352
6.
Implants in Ambulatory Surgical Centers
353
7.
Erythropoietin and Other Dialysis-Related Outpatient Prescription Drugs
353
8.
Preventive Screening Tests, Immunizations, and Vaccines
354
9.
Eyeglasses and Contact Lenses Following Cataract Surgery
354
D.
Additional Miscellaneous Safe Harbors
355
1.
Referral Services
355
2.
Obstetrical Malpractice Insurance Subsidies
355
3.
Professional Courtesy
356
4.
Retention Payments in Underserved Areas
356
5.
Communitywide Health Information Systems
356
6.
Electronic Prescribing Items and Services
357
7.
Electronic Health Records Items and Services
357
IV.
Reporting Requirements and Disclosure Protocols
359
V.
Penalties
360
A.
Refund for Prohibited Services
360
B.
Penalty for Each Billed Service
360
C.
Penalty for Each Prohibited Referral Arrangement
360
D.
Penalty for Failing to Identify Prohibited Referral Arrangements
361
E.
Cumulative Effect of Penalties
361
VI.
Advisory Opinions
362
ch. 8
The Anti-Kickback Advisory Opinions
363
I.
Introduction
368
II.
The Advisory Opinion Process
369
A.
Requesting an Advisory Opinion
369
1.
Subject Matter
369
2.
Required Contents
371
3.
Consultation With Department of Justice and U.S. Attorneys' Offices
372
4.
Time Frame for Response
373
B.
Effect of an Advisory Opinion
373
C.
Other Considerations
375
1.
Legal Considerations
375
2.
Advisory Letters Issued by the Health Care Financing Administration in the 1970s
376
3.
The Entrapment-by-Estoppel Defense
377
III.
The Advisory Opinions
377
A.
Arrangements That Affect Medicare or Medicaid Program Beneficiary Payment Obligations
380
1.
Grant Programs to Fund Patient Copayments
380
a.
Donor-Blind, Disease-Specific Grant Programs Run by Independent Charities
381
I.
Implications for Counsel
384
b.
Donor-Specific Programs by Pharmaceutical Companies for Patients Using Only Company Drugs
384
I.
Implications for Counsel
385
2.
Programs to Pay Dialysis Patients' Premiums
386
a.
Implications for Counsel
386
3.
Waiver of Facility Copayments for All Company Retirees
387
a.
Implications for Counsel
388
4.
Waiver of Copayments Through "Coordination of Benefits" Between a Nursing Home and a Health Plan
388
a.
Implications for Counsel
391
5.
Waiver of Patient Copayments and Deductibles for Clinical Trials
391
a.
Clinical Trial of Experimental Surgical Procedure
392
b.
NIH-Sponsored Clinical Trials
393
c.
CMS-Sponsored Clinical Trials
394
d.
Implications for Counsel
394
6.
Waiving Copayment Obligations for Program Beneficiaries Receiving Emergency Ambulance Services
394
a.
By Not-for-Profit Ambulance Provider With a Negligible Market Share
395
b.
For Municipal or County Residents Receiving Emergency Ambulance Services
395
c.
By Hospital to Ensure Transportation of Patients From Referral Sources
397
d.
Implications for Counsel
397
7.
Waiver of Copayments for Profoundly Ill Patients
398
a.
Implications for Counsel
398
8.
Waiver of Copayments to Support a Preexisting Program Promoting Health Care
399
a.
Implications for Counsel
399
9.
Waiver of Copayments for Medicare Part D Beneficiaries
400
10.
Waiver of Copayments for Patients from an Indian Tribe
400
11.
Waiver of Copayments for Services by a Breast Cancer Center
401
a.
Implications for Counsel
401
12.
Waiver of Premiums and Copayments in the Delivery of Managed Care
401
13.
Waiver of Coinsurance for Dual-Eligible Nursing Home Residents
403
14.
Year-End Percentage Rebate Payment by a Retailer to Pharmacy Customers
403
B.
Arrangements That Involve the Provision of Free Supplies, Services, or Gifts to Referral Sources
404
1.
Providing Free Services and Items of Care to Program Beneficiaries
404
a.
Free Transportation Services to Patients
404
b.
Free Vision Screening Tests for Infants
405
c.
Free On-Site Screening Services as Part of a Telemedicine Network
406
d.
Free Ambulance Services to Indigent Patients
407
e.
Provision of Free Items by Home Health Agencies
407
f.
Gifts by Durable Medical Equipment Suppliers
408
g.
Free Drugs Provided to Patients Through Patient Assistance Plans
409
h.
Free Care Provided to End-State Renal Disease Patients
412
I.
Implications for Counsel
412
2.
Remuneration Arrangements Involving Ambulance Providers
413
a.
Hospital Gift of an Ambulance to a Municipality
414
I.
Comment
414
b.
"Pay to Play" Payments by Ambulance Companies to Local Governments
415
c.
Equipment Leased at a Nominal Charge to Ambulance Companies
416
d.
In-Kind Swap of Services Between an Ambulance Provider and a Municipality
417
3.
Provision of Free Pharmacy Services to Hospital Organ Transplant Centers
417
a.
Implications for Counsel
418
4.
Kickback Implications of a Charitable Gift From a Hospital to a Referral Source, Whether a Physician, Medical School, or Another Hospital
418
a.
Implications for Counsel
421
5.
Exchanging Free Podiatry Services for Access to Shoe Retailer Customers
422
a.
Implications for Counsel
424
6.
Providing Free Employees to Potential Referral Sources
424
a.
Free Psychiatric Residents Provided by Hospitals to a Charitable Coalition
424
b.
Free Lab Assistants Provided by a Laboratory Company to Dialysis Facilities
425
c.
Implications for Counsel
426
7.
Free Goods and Services Among Referral Participants in a Telemedicine Network
426
8.
Free Care and Services Provided by a Hospice to Referral Sources
427
a.
Implications for Counsel
428
9.
Gifts From a Hospital to Other Institutional Providers
428
a.
Hospital Gifts to a Hospice
428
b.
Hospital Gifts to a Nursing Home
429
10.
Free Items Provided by Durable Medical Equipment Suppliers
430
11.
Transfer of Money From a State Authority to Medical Education and Research Funds
431
12.
Free Supplies and Services Provided by a Laboratory to Referral Sources
431
C.
Arrangements That Involve Discounts, Financial Incentives, the Provision of Services, or Other Business Transactions Between Providers and Referral Sources
432
1.
Joint Ventures (Other Than Ambulatory Surgical Centers)
432
a.
The Hospital Radiology Joint Venture
432
I.
Implications for Counsel
435
b.
Joint Ventures for Magnetic Resonance Imaging Centers
435
c.
Joint Venture Ambulance Services
437
d.
Joint Physician Investment and Cross Referrals to a Physical Therapy Center
438
e.
Joint Venture Pathology Laboratory Company
439
f.
Joint Venture Pediatric Psychiatric Day Treatment Facility
439
g.
Joint Venture Imaging Clinic in a Medically Underserved Area
440
h.
Joint Venture Rural Medical Practice
440
I.
Joint Venture Between an Independent Provider Association and a Managed Care Organization
441
I.
Implications for Counsel
442
2.
Ambulatory Surgical Centers (ASCs)
442
a.
ASC Between Orthopedic Surgeons and Anesthesiologists
443
I.
Implications for Counsel
444
b.
ASCs Between Hospitals and Physicians
445
I.
Implications for Counsel
448
c.
Physician-Owned ASCs
449
3.
Arrangements Between Hospitals and Physicians or Physician Groups (Not Involving Joint Ventures)
449
a.
Sharing Profits Resulting From Cost-Cutting Between Hospitals and Physicians
450
b.
Physician Recruitment Payments by Hospitals
453
c.
Hospital Payments for On-Call Emergency Services Coverage
454
4.
The Orthopedic Consignment and Loaner Program
455
a.
Implications for Counsel
457
5.
Discount Pharmaceutical Arrangement
458
a.
Implications for Counsel
459
6.
Discounted Ambulance Services Bundled With Services Paid for by Medicare
459
a.
Implications for Counsel
461
7.
Bundled Pricing in the Sale of Mattresses to Skilled Nursing Facilities
462
8.
Business Arrangements and Patient Referrals Between Physicians
463
a.
Ophthalmologists and Optometrists
463
I.
Implications for Counsel
464
b.
Oncologists and Urologists
465
9.
Podiatry Network Assuming an Employer's Copayment Obligations for Supplemental Coverage
465
10.
Network Payments for Provider Referrals
466
11.
Payment for Referral of Patients for Housing, Including Nursing Homes
467
12.
Insurance Guarantee Plan for an Injectable Pharmaceutical
469
a.
Implications for Counsel
470
13.
Referral Arrangement Between a Hospice and a Nursing Home for Dual-Eligible Individuals
470
14.
Durable Medical Equipment Supplier's Discount Practices
471
15.
Arrangements That Involve Internet Advertising
472
a.
Implications for Counsel
474
D.
Miscellaneous Opinions
474
1.
Arrangements That Establish Price or Service Differentials in the Care Provided to Federal Program Beneficiaries Versus Privately Insured Patients
474
a.
Charging Higher Prices to Medicare Program Beneficiaries
474
I.
Implications for Counsel
475
b.
Swapping Discounted Nonfederal Business for Nondiscounted Federal Business
476
I.
Implications for Counsel
477
2.
Giving Something of Value in Absence of an Ability to Make Referrals
478
3.
Incentives Offered to Employees in a Collective Bargaining Agreement
478
4.
Group Purchasing Organization Safe Harbor Applied to Electricity Purchases
479
5.
Outpatient Pharmacy Program Implemented Under the Veterans Health Care Act
479
6.
Contribution by a Pharmaceutical Company to a Charitable Organization
480
7.
Marketing Programs
481
a.
Management and Marketing Services for a Physician-Owned Clinic
481
I.
Implications for Counsel
482
b.
"White Coat" Marketing Program
482
c.
Incentives Offered to Induce Physicians to Complete Marketing Surveys
483
8.
Percentage Payments to Consultants Reviewing Provider Billings
483
a.
Implications for Counsel
484
9.
Payments to Employees and Independent Contractors
484
a.
Payments to Referring Physicians by a Nursing Home
484
b.
Purchase of a Clinic as a Condition of Employment
485
c.
Sharing Credit Card Frequent Use Points With Employees
485
d.
Incentive Payments to an Independent Manufacturer's Representative
485
I.
Implications for Counsel
486
e.
Payments to Part-Time Physicians
487
10.
Golf Tournament Paid for by Referral Sources
487
a.
Implications for Counsel
488
11.
Warranty on a Bundled Product
488
a.
Implications for Counsel
489
12.
Employment of Excluded Individuals
490
a.
Employment of an Excluded Physician in a Nontreatment Role
490
b.
Employment of an Excluded Physician for Business Development
490
c.
Comment
491
d.
Transfer of an Excluded Individual's Invention to an Independent Corporation
492
13.
Automatic Refund in the Event of Denial of Medicare Coverage
492
14.
Business Reorganization
492
15.
"Per Patient," "Per Click," and "Per Order" Management Fees
493
16.
Malpractice Insurance Subsidy by a Hospital to Specific Individual Physicians
494
VI.
Conclusion
494
Appendix. Table 8.1 Index to Advisory Opinions by Health Care Industry Sector
495
pt. IV
THE INVESTIGATION AND CHARGING DECISION
ch. 9
The Investigation
503
I.
Introduction
505
A.
The Prosecutor's Perspective
505
B.
The Defense Perspective
506
II.
Civil Versus Criminal Enforcement
507
A.
The Rise and Fall of Halper
509
B.
Qui Tam Provisions
510
C.
Grand Jury Secrecy
510
III.
Investigative Tools and Techniques
511
A.
Audit Data and Analysis
512
1.
Audit Data
512
2.
Audit Analysis
512
B.
Subpoenas for Documents and Other Documents
514
1.
Types of Subpoenas
516
a.
Grand Jury Subpoenas
516
I.
Subpoena Duces Tecum Request
517
II.
Secrecy
518
b.
Inspector General Subpoenas
520
I.
Authority to Obtain Information; Scope of Subpoena
520
II.
Secrecy
522
III.
Enforcement
522
c.
Administrative Subpoenas in Criminal Health Care Fraud Cases
523
I.
Appealability
526
II.
Enforcement of Administrative Subpoenas
526
d.
Administrative Subpoenas to Institutions Under Investigation
527
2.
Responding to a Subpoena
527
a.
Time for Production
529
b.
Form of Production
530
c.
Burdensomeness Challenges
531
C.
Privileges
532
I.
Attorney-Client Privilege
532
a.
Availability of the Privilege
533
b.
Assertion of the Privilege
534
c.
Waiver of the Privilege
535
d.
The Crime-Fraud Exception
538
2.
Fifth Amendment Privilege
539
3.
Psychotherapist-Patient Privilege
540
4.
Peer Review Privileges
542
D.
Confidentiality Issues
542
1.
Confidentiality of Alcohol and Drug Abuse Patient Records
542
2.
Patient Confidentiality Under State Law
546
3.
Confidentiality Under HIPAA
547
a.
Purpose of the Rules
548
b.
Structure of the Regulations: The Prohibition
548
I.
"Covered Entity"
549
II.
"Business Associate"
549
III.
"Protected Information"
550
c.
Structure of the Regulations: Exceptions to the Rule and Other Requirements
551
d.
Limitation on the Scope of the Regulations
553
e.
Relevant Permitted and Required Uses and Disclosures
553
I.
Disclosures by Whistleblowers
553
II.
Disclosures to Health Oversight Agencies and Law Enforcement
554
f.
Interaction With the Food, Drug, and Cosmetic Act
557
g.
Marketing
557
I.
Implications for Counsel
559
E.
Search Warrants
561
1.
Probable Cause
564
2.
Execution of the Warrant
567
a.
Potentially Privileged Material at the Search Site
569
b.
Computers at the Search Site
570
c.
Access to Patient and Financial Records
572
3.
Photographs and Video Recordings
572
4.
Interviews
573
5.
Length of Search
573
6.
Rule 41 Motion
573
7.
Standing to Challenge a Search
574
8.
Consent to a Search
576
F.
Administrative Searches
576
G.
Trash Runs
577
H.
Obtaining Documents From Witnesses
577
I.
Witness Testimony
578
1.
Contacting Represented Persons or Parties
579
2.
Grand Jury Testimony
581
3.
Qui Tam Relators
583
4.
Civil Investigative Demands
584
J.
Recordings
584
1.
Consensual Recordings
585
2.
Wiretaps
586
IV.
Conclusion
588
ch. 10
The Charging Decision
589
I.
Introduction
590
II.
Statutory Offenses
592
A.
Title 18 Offenses: Relevant Conspiracy Statutes
594
1.
18 U.S.C. [§]1349
594
2.
18 U.S.C. [§]371
594
a.
Objects of the Conspiracy
595
b.
Manner and Means of the Conspiracy
597
c.
Overt Acts
597
d.
Strategic Opportunities for the Prosecution
597
B.
Title 18 Offenses Involving Fraud Schemes
600
1.
Mail Fraud, 18 U.S.C. [§]1341
601
2.
Wire Fraud, 18 U.S.C. [§]1343
605
3.
Health Care Fraud, 18 U.S.C. [§]1347
607
a.
Purpose of the Statute
607
b.
"Willfully"
608
c.
"Executes or Attempts to Execute"
609
d.
"Scheme or Artifice to Defraud"
609
e.
"In Connection With the Delivery"
611
f.
"Affecting Commerce"
611
g.
Vagueness Challenge
611
h.
Enhanced Penalties for Bodily Injury and Death
612
I.
Implications for Counsel
613
C.
Title 18 Offenses Involving False Claims and False Statements
613
1.
False Claim to the United States, 18 U.S.C. [§]287, and the Related Conspiracy Statute, 18 U.S.C. [§]286
613
a.
18 U.S.C. [§]287
613
b.
18 U.S.C. [§]286
818
2.
False Statements to the United States, 18 U.S.C. [§]1001
618
3.
False Statements Relating to Health Care Matters, 18 U.S.C. [§]1035
621
D.
Title 18 Offenses Involving Theft or Bribery
622
1.
Theft or Bribery Concerning Programs Receiving Federal Funds, 18 U.S.C. [§]666
622
2.
Theft or Embezzlement in Connection With Health Care, 18 U.S.C. [§]669
626
E.
Title 18 Offenses Involving Obstruction of Audits and Investigations
627
1.
Obstruction of Agency Investigations, 18 U.S.C. [§][§]1505 and 1503
627
2.
Obstruction of Criminal Investigations, 18 U.S.C. [§]1510
629
3.
Obstruction of Federal Audits, 18 U.S.C. [§]1516
630
4.
Obstruction of Criminal Investigations of Health Care Offenses, 18 U.S.C. [§]1518
630
F.
Offense Traditionally Charged Under Title 21
631
1.
Unlawful Distribution of a Controlled Substance, 21 U.S.C. [§]841(a)(1)
631
G.
The Title 42 Medicare/Medicaid Fraud Statutes
634
1.
Making or Causing to Be Made False Statements or Representations, 42 U.S.C. [§]1320a-7b(a)
635
2.
The Medicare/Medicaid Anti-Kickback Statute, 42 U.S.C. [§]1320a-7b(b)
638
3.
False Statements or Representations With Respect to Condition or Operation of Institutions, 42 U.S.C. [§]1320a-7b(c)
640
4.
Illegal Patient Admittance and Retention Practices, 42 U.S.C. [§]1320a-7b(d)
641
5.
Violation of Assignment Terms, 42 U.S.C. [§]1320a-7b(e)
641
6.
Wrongful Disclosure of Individually Identifiable Health Information Under HIPAA, 42 U.S.C. [§]1320d-6
641
a.
"In Violation of This Part"
642
b.
Felony Intent
643
H.
Criminal Forfeiture Involving Health Care Offenses
644
1.
Criminal Forfeiture, 18 U.S.C. [§]982(a)(7)
644
III.
Special Statute of Limitations
646
IV.
Implications for Counsel
646
Figure 10-1
Potential Exposure to Criminal Health Care Fraud Charges
647
pt. V
SETTLEMENT AND LITIGATION
ch. 11
Global Resolutions
651
I.
Introduction
652
II.
Overview of Global Resolutions
653
A.
Determining the Government's Case
654
B.
Approaching the Government
654
1.
Civil Investigations
655
2.
Criminal Investigations
656
3.
Deferred Prosecutions
657
4.
Program Exclusion
659
a.
Mandatory Exclusion
659
b.
Permissive Exclusion
660
5.
Civil Monetary Penalties
663
III.
Negotiating a Global Resolution
664
A.
Individual Defendants
666
B.
Corporate Defendants
668
1.
Criminal Resolutions
668
2.
Civil Resolutions
672
3.
Corporate Integrity Agreements
673
4.
Corporate Compliance Plans
674
C.
Administrative Exclusion
676
D.
Other Administrative Sanctions
678
E.
Exposure to State Criminal Charges and Civil Liability
678
Table 11.1
Recent State Health Care Fraud Settlements
679
F.
Other Potential Consequences
684
IV.
Global Settlements Exceeding $1 Million
685
Table 11.2
Number and Amounts of Settlements in Four-Year Intervals
687
Table 11.3
Frequency of Settlements (1991-2010)
687
V.
Conclusion
689
Table 11-A
Health Care Fraud Settlements of at Least $1 Million (January 1, 1991-November 1, 2010)
ch. 12
Criminal Trial
691
I.
Introduction
692
II.
Trial Strategy
693
A.
Prosecution Theory
693
B.
Defense Theory
696
C.
Practice Pointers
698
1.
Overview
698
2.
The Pretrial Skirmishing
700
3.
The Post-Guilty-Verdict Motion for a New Trial or for Acquittal
703
4.
Particular Cases
704
a.
An Unsuccessful Defense: The Regulations Were Too Ambiguous
704
b.
A Successful Defense: Defendants' Interpretation of the Regulation Was Reasonable
706
c.
Prosecution Focus on Defendant's Intent to Defraud Amid Confusing Rules
707
d.
Conflicting Expert Interpretations of the Governing Regulation
708
e.
Intent to Cheat Versus "My Interpretation Must Be Reasonable Because Everyone Is Doing It"
709
f.
"Greedy Doctor Performing Unnecessary Surgeries" Versus "Kind, Caring Practitioner"
711
III.
Common Evidentiary Issues
713
A.
Medical Experts
716
B.
Billing and Regulatory Experts
717
1.
Billing Experts
717
2.
Regulatory Experts
719
C.
Audit Data
721
1.
In General
721
2.
Presenting Audit Data
722
a.
Billing Information
722
b.
Statistical Inferences
723
I.
Statistical Profiles
723
II.
Statistical Sampling
725
c.
Summary Charts
727
D.
Evidence of Past Regulatory Violations and Global Settlements
729
IV.
Common Defenses and Rebuttals
730
A.
The Lack of Knowledge or Intent Defense
731
1.
The Provider Was Unaware
731
2.
Rules and Regulations Are Ambiguous, Complex, or Confusing
736
3.
Risks Associated With Asserting the Lack of Knowledge or Intent Defense
740
B.
The "Happy Patient" Defense
740
1.
Evidence That the Alleged Fraud Did Not Occur
740
2.
Evidence to Determine the Scope of the Fraud
741
3.
Evidence on the Medical Necessity of the Services
741
C.
The Entrapment-by-Estoppel Defense
742
V.
Jury Instructions
744
A.
The Good Faith Instruction
745
B.
The Conscious Avoidance Instruction
748
VI.
Conclusion
750
ch. 13
Sentencing
751
I.
Introduction
752
II.
The Federal Sentencing Process
755
A.
Scheduling and the Presentence Report
755
B.
Notice of Issues and the Sentencing Hearing
756
III.
The Sentencing of Individuals
759
A.
Sentence Enhancements
761
1.
Loss Enhancement
761
a.
Loss and Unlicensed Providers
766
b.
Loss and Relative Culpability
768
c.
Loss and the Identity of the Victim
770
d.
Loss Where No Direct Financial Loss Presents
771
I.
Loss and the Sale of Adulterated Products
772
II.
Loss in Kickback Cases
775
e.
Calculating the Loss
777
f.
Offenses Otherwise Involving Sophisticated Means
781
g.
Offenses Involving Multiple Victims or Mass Marketing
783
2.
Role in the Offense
784
3.
Use of a Special Skill
789
4.
Abuse of a Position of Trust
792
a.
General Application
793
b.
Abuse of Trust and the Necessity of a License
799
5.
Taking Advantage of Vulnerable Victims
801
6.
Reckless Endangerment
805
7.
Obstruction of Justice
807
B.
Sentence Reductions
809
1.
Minimal Role in the Offense
809
2.
Acceptance of Responsibility
809
C.
Sentences Outside the Guideline Sentencing Range
811
1.
Departures
811
a.
Upward Departures
812
b.
Downward Departures
814
I.
Collateral Consequences and Prior Good Works
816
II.
Diminished Capacity
820
2.
Deviations from the Guideline Sentencing Range
821
a.
"The Nature and Circumstances of the Offense"
822
b.
The History and Characteristics of the Defendant
823
c.
The Need for the Sentence Imposed to Meet Certain Criteria
824
d.
Additional Factors Under 18 U.S.C. [§]3553
825
D.
Financial Consequences
826
1.
Fine
826
2.
Restitution
827
E.
Unusual Sentences
828
IV.
The Sentencing of Organizations
829
A.
Principles Guiding Federal Sentencings
831
1.
Remedy the Harm
832
2.
Determine the Fine Range
833
a.
Determining the Fine Within the Range
836
b.
Payment of the Fine
837
3.
Impose Probation
837
B.
Assessing Costs of the Prosecution
839
V.
Conclusion
839
Appendix List
841
Appendix A
Civil False Claims Act (31 U.S.C. [§][§]3729-3733)
843
Appendix B
The Anti-Kickback Statute (42 U.S.C. [§]1320a-7b(b))
861
Appendix C
Stark Self-Referral Law (42 U.S.C. [§]1395nn)
865
Appendix D
Table of State Laws Restricting Referrals by Health Care Providers and Providing for False Claims Causes of Actions
881
Appendix E
Exclusion From Participation in Government Health Care Programs (42 U.S.C. [§]1320a-7) and Civil Monetary Penalties (42 U.S.C. [§]1320a-7a)
899
Appendix F
Selected Text From Privacy Regulations (Department of Health and Human Services): Disclosure of Patient Information (45 C.F.R. [§]164.512)
919
Appendix G
Table 11-A: Health Care Fraud Settlements of at Least $1 Million (January 1, 1991-November 1, 2010)
923
Appendix H
Social Security Act---U.S. Code Correspondence Table: Selected Provisions Relating to Health Care Fraud
1133
Table of Cases
1135
Subject Index
1157