David S. Barmak Health Care Law Blog on Lawyers.com

Compliance Programs
Can Reduce Likelihood

of False Claims
Lawsuits – Qui Tam Lawsuits  By Residents

David S. Barmak, Esq/

The following story is based upon a lawsuit we handled
involving an outpatient rehab clinic as well as numerous discussions with the
US Attorneys’ office and the NJ Medicaid Fraud Unit.  I’ve modified the
story to take place in a nursing home because the lessons are
transferrable.   

A physical therapist worked for Moosehead Physical
Therapy*.  Moosehead Physical Therapy had a contract to provide inpatient
rehab for Beavertail Nursing Home*. The physical therapist alleged that
Moosehead’s Director often met with the physical therapist and demanded that
she change her documentation in order to increase the billing code for certain
services rendered to the residents.  The physical therapist claimed that
she always refused because she was aware that improper documentation could
result in upcoding and improper payments for services rendered by the physical
therapist.  Moosehead’s Director, of course, denied ever pressuring the
physical therapist into falsifying her documentation. The Director correctly
acknowledged that false documentation and upcoding would violate federal and NJ
laws that required Moosehead to bill only for services actually provided. 
Eventually the Director fired the physical therapist.

The physical therapist sued Moosehad Physical Therapy for
wrongful termination claiming that the Physical Therapy Director had fired her
for refusing to falsify documentation that would have resulted in upcoding
certain services rendered which, in turn, would have increased
reimbursement.  She also simultaneously filed a NJ False Claims Act
lawsuit and a federal False Claims Act lawsuit against only Beavertail Nursing
Home claiming that the nursing home had benefited from years worth of
fraudulent upcoding and unlawful reimbursement.

The wrongful termination lawsuit settled; however the NJ
False Claims Act and federal False Claims Act lawsuits still needed to be
addressed. Beavertail found out about these lawsuits, even though they were
under seal, during the employment lawsuit settlement negotiations. The US
Attorneys’ office and the NJ Medicaid Fraud Unit ultimately declined to
“intervene” or “take on” these false claims lawsuits. Their primary reason was
the fact that Beavertail Nursing Home had an effective compliance program.

A nursing home is ultimately responsible for everything that
takes place in its rehab department including the quality of care provided and
the billing for services rendered; however, very few nursing homes actually
oversee what the rehab department does. A compliance program can provide real
protection for a nursing home and still allow the rehab department to function
somewhat autonomously.

The key to persuading federal and state fraud units to walk
away from a false claims lawsuit brought against your nursing home by a
resident, family member or employee, is to have an effective compliance
program.  Your compliance program must have the following basic components
to be deemed effective:

1. You
   must designate a compliance officer and compliance committee;


2. You
   must have effective communication between your employees and upper
   management, including some sort anonymous reporting system, like an 800
   telephone number, to report complaints.


3. You
   must create a system for maintaining complete and accurate medical record
   documentation.


4. You
   must conduct effective compliance training and education for staff.


5. You
   must require employees to promote and adhere to the elements of the
   compliance program as part of evaluating the performance of all employees.
   


6. You
   must enforce the compliance program standards through well-publicized
   disciplinary guidelines.


7. You
   must create an auditing and monitoring system. I strongly recommend that
   you insist that your rehab companies provide you a copy of their monthly
   internal audits as well as report on their audits during your quarterly QA
   meetings.


8. You
   must respond to detected offenses and develop corrective action plans.


9. You
   must periodically assess your compliance program.

   10.You must have policies and procedures,
including a  statement of corporate philosophy and code of conduct.

For further information on how we can assist and guide you
in developing an effective compliance program please contact us.

*Not the true names of the firms written about in this
article.