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Legal Notes

The False Claims Act Rewards Greed, not Honest Attempts to Comply with Coding Guidelines

Glauser, Jonathan MD, MBA

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    Eighty-seven percent of private qui tam lawsuits are instituted without subsequent Department of Justice intervention or supervision. Of the $1.8 billion recovered by the government in qui tam cases as of early 2000, relators garnered $324 or approximately 18 percent of the government's recoveries. Decisions about prosecution of Medicare overbillings are being made by private individuals seeking personal gain, rather than systematic efforts by governmental agencies based on health care policy.

    We can assume that the $29 million awarded in this Blue Cross/Blue Shield case was more than the relator Evelyn Knoob was earning from her job as a mail room supervisor. In fact, as of 1998, qui tam relators received an average of more than $1 million each in more than 50 qui tam cases in which the government did not intervene, not bad considering that their legal fees were reimbursed.

    A number of problems exist within our system in having “private prosecutors” or relators being able to file lawsuits on behalf of the government. The qui tam provisions of the False Claims Act have the effect of encouraging employees not to report misbillings uncovered in internal compliance programs to their employers for correction. Rather, they have a financial incentive to use such information to file lawsuits against their employers to share in recoveries from the government.

    Because the relators' lawyer fees will be reimbursed by the defendants and they cannot be fired for ratting out their employers, there is little downside to doing exactly that. In fact, this represents a powerful incentive for not having compliance and audit programs. If some irregularity is found, an employee can make a lot more money telling the government than his employer.

    In fact, there is every incentive for a potential relator to wait as long as possible after finding out about any possible billing or coding irregularities because the financial awards will be proportionately greater when the case is finally brought to court or settled. At civil penalties of $5000 and up to $10,000 per false claim submitted with the automatic treble damages multiplier, the potential award goes up with time geometrically.

    The obvious risk is that someone else in the organization might find out first and go to the Department of Justice himself. Of course, the DOJ only intervenes in 13 percent of these cases, but the settlement for the relator (25–30% versus 15–25% if the government pursues the case) is higher if the private whistleblowers prosecute. It is still unwise in general to sue one's own employer for the sake of future job opportunities. And an employee may not have deep enough pockets to pursue a legal battle so it makes a lot of sense to wait until the stakes are high enough to make the lawsuit worthwhile. This may not take very long. On average, a hospital files 200,000 Medicare claims per day. There is no penalty to whistleblowers if they intentionally wait a while to report a violation.

    An organization has 30 days in which to investigate and respond. Considering how complex Medicare billing regulations are and how open to interpretation they are, it may be unrealistic to expect any investigation to be performed within 30 days. After this 30-day window, any incentive for an organization to disclose vanishes. Even if the organization does everything right and voluntarily discloses within 30 days, anyone who was an “original source” of some of the misbilling information may still file a qui tam lawsuit. Even relators who were involved in the fraud may file a qui tam lawsuit. However, they should not have planned and initiated the act. The government considers that bad form.

    One might think that employees have some fiduciary duty to the well-being of their employers. Filing a crippling lawsuit against a physician, physician group, or health care organization might seem to fly in the face of concepts such as loyalty and trust to the extent that these are supposed to exist. Of course, those employees who are in the best position to identify irregularities in billing also are those in a position to not report or to suppress evidence of violations to their employers.

    If the government can suspend reimbursements pending resolution of a case, there is powerful incentive to settle FCA lawsuits at all costs. There are no penalties for vindictive employees who file unwarranted lawsuits.

    Compliance Programs

    What about compliance plans as a quality assurance plan for doctors and health care organizations? A compliance program, headed by a compliance officer, is created to systematically assure the organization that it is in compliance with all of the rules and regulations that apply to it.

    The elements of a compliance program include:

    • ▪ Evidence that the organization is committed to standards of behavior with an emphasis on preventing fraud, waste, and abuse.
    • ▪ Effective training and education for everyone in the organization to ensure accurate billing.
    • ▪ Regular monitoring of the organization's activities.
    • ▪ A way for anyone in the organization to confidentially report practices deemed to be inappropriate. This may include telephone “ethics” hotlines and e-mail addresses.
    • ▪ The ability to respond to such reports and take corrective action, including immediate investigation for potential fraud and misbilling, with notification of the Office of the Inspector General (OIG).
    • ▪ A compliance officer to supervise the program.
    • ▪ Internal monitoring and audits to check for illegal kickbacks and periodically examine referrals and coding.

    Unfortunately, compliance plans are not so much of a quality assurance process as an insurance policy. Every physician is by now familiar with the stupefying complexity of evaluation and management coding. One may run afoul of the law without intending to do so. Whether there are physicians who are so baffled by the system that they choose to place central lines and perform lumbar punctures on 95 percent of patients who walk in to the ED is doubtful, but procedures also must be justified to avoid a claim of fraud.

    Yet, compliance plans are not set up because the physician, billing agency, or health care organization thinks it is inherently dishonest. Rather, the incentives are that an organization will incur reduced penalties and fines if it can demonstrate that potential misbillings and regulatory violations are being monitored and audited internally. Of course, this presumes that one's employees are not going to keep anything hidden for their own gain.

    The advantages to having a compliance policy are, of course, financial. The 1991 Federal Organizational Sentencing Guidelines provide substantial mitigation of federal criminal penalties for organizations which have “effective procedures to prevent and detect violations of the law.” Resulting fines may be as little as one-eighth of those for organizations without compliance programs.

    Compliance policies may prevent repeat offenses because prior violations increase criminal fines. The OIG has indicated to health care providers that they may receive some leniency in fraud investigations if they have an “effective” compliance program. Treble damages may become double damages, for example, if potential violations are reported by a company within 30 days of its learning of them.

    Ultimately, compliance programs may be part of any defense against fraud. The critical points hinge on whether the billing policy was clear, whether the defendant had knowledge of the billing rule or should have known, whether a compliance plan was in place to pick up errors, and whether prior offenses existed. Presumably, innocent mistakes should make FCA charges less crippling.

    Complex Rules

    Whether an organization can protect itself against employee lawsuits may appear to have an obvious solution. For example, because physicians, hospitals, and groups have an incentive to investigate themselves, it might seem reasonable to have their employees sign an agreement that any potential irregularities they become apprised of during the course of their work be disclosed to their employers so they may be corrected. If such an agreement were signed each year, or every six months, in theory, the risk of penalty to an organization might be mitigated. Whether such a certification would help providers in court against qui tam lawsuits has not been resolved.

    There is little hope in changing the complexity of the rules that spawned all of this confusion. In 1992 alone, the E&M coding section in the CPT manual jumped from seven pages to 44. There has been abundant physician protest about these codes. Everyone also knows that the time spent figuring out how to document enough review of systems, complexity of presentation, elements of social and family history, and so forth could be better spent learning recent medical developments, seeing more patients, and becoming a better doctor.

    The medical record generated certainly is not as readable or informative. In fact, because writing a prescription can change a low-risk encounter into a moderate-risk encounter, one might argue that the guidelines provide an incentive for physicians to use prescription drugs instead of over-the-counter drugs, and thereby increase the cost of health care.

    A grassroots rebellion by the AMA at its annual meeting in June 1998 had no effect on simplifying the E&M guidelines. Needless to say, the millions of dollars spent in postgraduate courses on the intricacies of Current Procedural Terminology, on consultants, and on compliance programs add nothing to patient care. Everyone knows this. A further encouraging note in one brochure advertising a seminar on these guidelines: “Don't expect HCFA to send you a copy of the guidelines or to train you in using them … but HCFA does expect you to be in compliance.”

    Academic Fraud

    Some cases of fraud do not involve money, but clearly, the powers-that-be are concerned with money. In academia, where people are presumably compensated less, there is still financial fraud such as billing for improper resident supervision. In 1996, a major university teaching hospital and a medical school were fined $42 million under the FCA.

    In this setting, there is a different coin of the realm — academic output. Physicians of all stripes lie about their accomplishments. Two percent of those claiming to be physicians are imposters by one estimate. Five percent of physicians seeking employment with primary care clinics at an HMO falsely reported board certification, residency training, or both. Misrepresentations of academic achievements among residency applicants were noted in 20 percent of applications to one emergency medicine residency program.

    Perhaps there was citation of articles that did not exist, articles that did not list the person as an author, citations in journals that could not be verified to exist, or articles submitted that never saw the light of day. In emergency medicine, as with any other field, I suspect, physicians have padded their curriculum vitae in myriad ways. The integrity of the field may be jeopardized, although it is certain that no discipline is immune. The government does not prosecute for academic falsifications as far as I can tell. Unless they want to coach football at Notre Dame, these doctors may not get penalized for overstating credentials.

    The Bottom Line

    The government doesn't have one single opinion or conscience so arguing logically about billing guidelines is fruitless. No one cares whether they make sense. And the population isn't getting any younger. The implication that most physicians are trying to defraud third-party payers shouldn't be taken personally. Medicare outlays grew from 3.2 percent of the federal budget and 20 million beneficiaries in 1970 to 11.2 percent and 38 million enrollees in 1996. It isn't defense spending or foreign aid that threatens the federal budget.

    Until some way is found to control outlays for health care for the elderly, evaluation and management documentation will not become any less complicated or irrelevant to patient care. Some reform regarding relator behavior and fraud law is in order. The current system rewards pure greed rather than honest attempts to comply with ridiculously complex coding guidelines.

    There is no effort in these cases to achieve efficient and workable financial and cost-reporting mechanisms in federal or state health care reimbursement. Besides, even minor mistakes in date, place, physician-provider numbers, or organization relationships can trigger harsh fines and triple damages. It harkens back to the old Soviet Union when it was difficult for a citizen not to run afoul of the law in some way. We physicians are responsible for what is done in our names, even if we don't know the details. The physician community must act to ensure that honest attempts to comply with billing and coding law cannot be foiled by their own employees.

    Doctors made less money from 1998 to 1999 by 3.4 percent while providing equal or greater service. No one outside of the house of medicine cared then, and no one cares now. From an economic perspective, perhaps no one should care. More people are applying to medical school than there are spots available. If malpractice is bad news for physicians, fraud is worse. Criminal penalties can result from health care fraud investigations, not to mention fines and exclusion from Medicare and Medicaid.

    Suggested Readings:

    1. Ruhnka JC. Qui tam claims: Threat to voluntary compliance programs in health care organizations. J Health Polit Policy Law 2000;25(2):283.
    2. Samir Fakhry. Billing, coding, and documentation in the critical care environment. Surg Clin NA 2000;80(3):1067.
      3. American Medical News. AMA finds physicians making less money. June 7, 1999, p. 9.
        4. Desmarias HR. The fraud and abuse provisions of the Kassebaum-Kennedy Bill. Bull Am Coll Surg 1997;82:8.
        5. Kassirer JP, Angell M. Evaluation and management guidelines: Fatally flawed. N Engl J Med 1998;339:1697.
        6. New guidelines for coding physicians' services: A step backward. N Engl J Med 1998;339(23):1705.
          7. Department of Health and Human Services and Department of Justice. Health Care Fraud and Abuse Control Program Annual Report for FY 1998. Washington, D.C.: Department of Health and Human Services and Department of Justice, 1999.
            8. Offen ML. Medical-legal issues facing neurologists. Neuro Clin 1999;17(2):321.
              9. Gurudevan SV, Mower WR. Misrepresentation of research publications among emergency medicine residency applications. Ann Emerg Med 1996;27:327.
              10. Shaffer WA, Rollo FP, Holt CA. Falsification of clinical credentials by physicians applying for ambulatory-staff privileges. N Engl J Med 1988;318:356.
              © 2002 by Lippincott Williams & Wilkins