SELF-DISCLOSURE

ADVANTAGES & PITFALLS

Carrie Valiant, Esq.

Epstein Becker & Green, P.C.

Washington, DC

L. Lamar Blount, CPA

Healthcare Management Advisors

Atlanta, GA

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INTERNAL INVESTIGATIONS First Steps:

– Triage the issue - is it a problem?

– Determine whether independence/privilege is needed in investigation

Considerations– Potential Qui Tam– Positions involved– Availability of internal

staff– Skill level of internal

staff– Credibility of “report”

and results– Intention to share

results with the government

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INTERNAL INVESTIGATIONS (cont.)

Second Step– Evaluate the potential

nature and extent of problem

– Evaluate whether intentional fraud or serious risks to personnel or patients may be involved

– If so, consider immediate interventional actions

Possible Actions– Stop billing or other

activity involved– Terminate or

suspend individual– Terminate or

suspend contractorChange policy or procedure

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Second Step (cont.)– If not sure, create “holding” mechanism while

the issue is researched, or source of problem identified

– Examples• Stop or hold coding or billing• Impose secondary, independent review of

decision-making

INTERNAL INVESTIGATIONS (cont.)

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Third Step: Develop the Story Address key questions

– Nature of allegations?– How and why did it happen?– Who is involved?– How long has it occurred?– Why won’t it happen again?

INTERNAL INVESTIGATIONS (cont.)

LEGAL BACKGROUND

Self-DisclosureA / K / A -- “So, do we have to return the money?”

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SELF-DISCLOSURE

Penalties for non-disclosure

Certainty (but depends on extent of release)

Standard in the industry? The “sleep at night” factor More favorable treatment

The reality of the whistleblower

Control– documents– quantification– no subpoena– no raid

Why voluntary disclosure?

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SELF-DISCLOSURE (cont.)

What is voluntary disclosure?– Distinguish from regular repayment of claims

paid in error– Depends on nature of issue and monetary

value– Can be to any government body, including

DOJ, OIG, State Medicaid Agency– Does disclosure to carrier or fiscal

Intermediary “count”?

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SOCIAL SECURITY ACT Section 1128B of the Social Security Act provides

that “[w]hoever having knowledge of the occurrence of any event affecting his initial or continued right to…[a] benefit or payment [from a federal health care program] … conceals or fails to disclose such event with an intent fraudulently to secure such benefit or payment either in a greater amount that is due or when no such benefit or payment is authorized” is subject to up to five years imprisonment and a fine of $250,000 for individuals and $500,000 for corporations. (emphasis supplied)

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Can reduce rather usual FCA treble damages plus mandatory penalties of $5,000-$10,000 per false claim to “only” double damages

Disclosure must be– made by the person or entity that violated FCA– made to the DOJ– made within 30 days after first obtaining

information about FCA violation

FCA VOLUNTARY DISCLOSURE: 31 U.S.C.§3729(a)

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CRIMINAL CULPABILITY: FEDERAL SENTENCING

GUIDELINES “If the organization (A) prior to an imminent threat of

disclosure or government investigation; and (B) within a reasonably prompt time after becoming aware of the offense, reported the offense to appropriate governmental authorities, fully cooperated in the investigation, and clearly demonstrated recognition and affirmative acceptance of responsibility for its criminal conduct, subtract 5 points [from the Culpability Score.]” USSG 8C2.5(g) (emphasis added)

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“Appropriate governmental authorities,” means the federal or state law enforcement, regulatory, or program officials having jurisdiction over such matter, including OIG, HCFA, DOJ, State Medicaid Agency and the State AG. See USSG 8C2.5(g)(n.11).

“The term ‘appropriate governmental authorities’ does not encompass governmental agents, such as Medicare Contractors.” GAO/HEHS 99-59, Medicare Early Evidence of Compliance Program Effectiveness is Inconclusive, April 1999.

CRIMINAL CULPABILITY: FEDERAL SENTENCING

GUIDELINES

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OIG recommendation: Laboratory give notice to the OIG of misconduct that either (a) violates criminal law, or (b) constitutes a material violation of the civil law, rules and regulations governing federally funded health care programs within sixty days (60) days after receipt of the credible evidence of misconduct.

MODEL COMPLIANCE PLAN FOR CLINICAL

LABORATORIES: 2/97

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The billing company should report the existence of misconduct that may violate criminal, civil or administrative law promptly to the appropriate Government authority within a reasonable period, but not more than sixty (60) days after determining that there is credible evidence of a violation.

Represents current formulation of standard.

OIG’S COMPLIANCE PROGRAM GUIDANCE FOR THIRD-PARTY

BILLING COMPANIES: 11/98

PROVIDER SELF-DISCLOSURE PROTOCOL

Office of Inspector GeneralDepartment of Health and Human Services

October 1998

www.hhs.gov/progorg/oig

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Name, address, PIN, TIN and billing numbers

Corporate relationships Designated

representative Matter under current

inquiry by government agency/contractor?

Description of the matter

Individuals/entities implicated & their roles

Relevant time periods Type of provider Basis of belief that

violation occurred Federal health care

programs affected Certification

BASIC INFORMATION

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Findings of internal investigation pursuant to Internal Investigation Guidelines

Findings of self-assessment pursuant to Self-Assessment Guidelines

Certifications

SUBSTANTIVE INFORMATION

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Nature and Extent of Improper/Illegal practice (Telling the Story)– Potential causes of practice– Detailed description of incident or practice– Identify divisions, departments, branches or

related entities involved and/or affected– Impact on/risks to health, safety, or quality for

assessment of immediacy – Delineate time period

INTERNAL INVESTIGATION GUIDELINES

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Nature and Extent (cont.)

– Identify individuals who knew of, encouraged, participated in, the practice or incident

– Identify individuals involved in detecting matter– Identify individuals who should have known, but

failed to detect the matter based on job responsibilities

– Estimation of monetary impact on federal programs

INTERNAL INVESTIGATION GUIDELINES (cont.)

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Discovery & Response to the Matter– Describe how matter was identified– Describe entity’s effort to investigate and

document the incident or practice

INTERNAL INVESTIGATION GUIDELINES(cont.)

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Discovery & Response (cont.)

– Detailed chronology of the investigative steps taken re: internal inquiry including:• List of individuals interviewed, their positions,

subject matter, dates and summaries; include names of individuals who refused interviews

• Description of files, documents and records reviewed

• Summary of auditing activity• Summary of documentation supporting estimation

of losses

INTERNAL INVESTIGATION GUIDELINES (cont.)

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Discovery & Response (cont.)

– Actions taken to stop inappropriate conduct and prevent recurrence

– Describe related health care businesses affected

– Describe disciplinary actions against corporate officials, employees and agents

– Appropriate applicable notices to other government agencies

INTERNAL INVESTIGATION GUIDELINES (cont.)

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Certification– “to the best of the individual’s knowledge, the

internal investigation report contains truthful information and is based on a good faith effort to assist OIG in its inquiry and verification of the disclosed matter.”

– Signed by disclosing provider or authorized representative of entity

INTERNAL INVESTIGATION GUIDELINES (cont.)

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According to OIG, this self-assessment should be a review of either:– all claims affected by the disclosed matter for

the relevant period; or– a statistically valid sample of the claims that

can be projected to the population of claims affected by the matter for the relevant period.

INTERNAL INVESTIGATION GUIDELINES (cont.)

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Considerations– “All claims” simplifies process but may involve

inordinate volume– “Sample” reduces volume to review but involves

more sophistication and skill to avoid rejected results

– Design the plan to not be biased

SELF-ASSESSMENT GUIDELINES

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SELF-ASSESSMENT GUIDELINES (cont.)

The determination should be based on:– implicated population size– the variance of characteristics to be reviewed the

cost of the self-assessment– the available resources– the estimated duration of the review– other appropriate factors

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Submit a work plan describing the self-assessment process– articulate the objective of the review and the

procedure– identify the population & methodology used to

development population– sources of data upon which the review will be

based• applicable legal standards• sources of payment data

– personnel qualifications

SELF-ASSESSMENT GUIDELINES (cont.)

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For samples, the work plan should include a Sampling Plan that:– describes the objective– defines the population – defines the sampling frame– identifies the sampling unit– specifies the sample design

• may be simple random sampling, stratified or multistage

SELF-ASSESSMENT GUIDELINES (cont.)

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Sampling Plan (cont.)

– sample size may be determined through use of a probe sample• probe sample must contain at least 30 sample

units and cannot be used as part of the full sample

– full sample typically is based on a 90 to 95% confidence level with +/- 5 to 20% precision. Minimum OIG standard is 90% confidence level and 25% precision

SELF-ASSESSMENT GUIDELINES (cont.)

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Sampling Plan (cont.)

– “probe” sample and sample must be selected through random numbers

– OIG strongly recommends “RAT-STATS” (statistical software available on web)

– discuss how missing sample items are to be handled

– identifies characteristics measured for testing each sample item

SELF-ASSESSMENT GUIDELINES (cont.)

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Sampling Plan (cont.)

– Estimate damages to the federal health care program • simple extrapolation of error rate found in

sample• using RAT-STATS to project upper and lower

limits of overpayments• multiple confidence and precision levels

– Indicate how results will be reported

SELF-ASSESSMENT GUIDELINES (cont.)

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Certification– “to the best of the individual’s knowledge, the

report contains truthful information and is based on a good faith effort to assist OIG in its inquiry and verification of the disclosed matter.”

– Signed by disclosing provider or authorized representative of entity

SELF-ASSESSMENT GUIDELINES (cont.)

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Issue of “naming names” under OIG’s Provider Self-Disclosure Protocol– effect on overall effectiveness of compliance

program from finger pointing– can global or systems fault be alleged?

COMMON ISSUES FACED DURING SELF-DISCLOSURE

PROCESS

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What government agency should be approached?

COMMON ISSUES FACED DURING SELF-DISCLOSURE

PROCESS (cont.)

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Potential for referral to OIG from intermediary if approach intermediary

Factors include:– dollar amount at issue - carrier/intermediary thresholds– government identified enforcement priority?

• OIG Work Plan• Individual government settlements• DOJ National Enforcement Project• Targeted provider for other settlements/investigations

COMMON ISSUES FACED DURING SELF-DISCLOSURE

PROCESS (cont.)

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Expectation regarding Extent of Release– Carrier/intermediary--overpayment liability– State Medicaid program--state liability– OIG--exclusion/civil monetary penalties– DOJ--FCA penalties– DOJ Criminal Division--criminal release

COMMON ISSUES FACED DURING SELF-DISCLOSURE

PROCESS (cont.)

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Expectation regarding Amount of Payment– overpayment liability at single damages– for OIG/DOJ release--usual settlement posture

is double damages

COMMON ISSUES FACED DURING SELF-DISCLOSURE

PROCESS (cont.)

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Expectation regarding Timing– Rule of Thumb: The more parties brought to the

table, the longer the time necessary to Accomplish settlement

– Important to consider if:• Anticipated sale of company or major refinancing• Timing of reports for publicly traded companies

COMMON ISSUES FACED DURING SELF-DISCLOSURE

PROCESS (cont.)

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Structuring the investigation– Delineation of tasks

Retaining outside counsel & consultants and maintaining the attorney/client privilege

Presentations to management & creating reasonable expectations regarding– timing– liability– business disruption

COMMON ISSUES FACED DURING SELF-DISCLOSURE

PROCESS (cont.)

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When to Approach the Government Options

– upon discovery of issue– upon preliminary review and confirmation of

issue– upon full investigation and quantification

COMMON ISSUES FACED DURING SELF-DISCLOSURE

PROCESS (cont.)

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When to Approach the Government (cont.)

Considerations– first swipe at magnitude often over-broad,

suggesting greater liability than warranted– earlier disclosure can avoid duplication of effort– later disclosure can lead to quicker resolution– whistleblower lawsuits and other threats to

“voluntary” nature of disclosure– government timetables

COMMON ISSUES FACED DURING SELF-DISCLOSURE

PROCESS (cont.)

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What to Present to the Government Presentation is important How much detail to present?

– Less is more (but not always!)– Consider whether materials presented raise new

issues– Explaining missing information or materials– Personal meetings vs. written submission

COMMON ISSUES FACED DURING SELF-DISCLOSURE

PROCESS (cont.)

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An inaccurate, incomplete or otherwise misleading disclosure may be worse

than no disclosure at all

COMMON ISSUES FACED DURING SELF-DISCLOSURE

PROCESS (cont.)

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A Maryland Health system settled for $2.7 million to settle charges of alleged overbilling of Maryland Medicaid.

$829,000 in damages was assessed because the organization, through counsel, disclosed to state officials that the overbilling lasted only 6 months when it had been going on for several years.

COMMON ISSUES FACED DURING SELF-DISCLOSURE

PROCESS (cont.)

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Questions & Answers

Epstein Becker & Green

202-861-1857

www.EBGlaw.com

Healthcare Management Advisors

770-751-1199

www.HMA.com

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