Healthcare workers reviewing compliance documents on a laptop.
    Article highlights
  • Understanding qui tam and false claims litigation.
  • Seven ways to protect your organization.

Every year, healthcare organizations pay the federal government billions of dollars as part of False Claims Act lawsuits.

The False Claims Act (FCA) is a federal law that punishes people or organizations who file false claims for funds from government programs.

Under the FCA, the organization is liable for up to three times the amount they filed a claim for. On top of that, they may get hit with civil penalties.

The range for civil penalties recently doubled, so organizations can now get charged between $10,781 and $21,562 for each claim.

The FCA allows individuals to file false claim act lawsuits on behalf of the government. A lawsuit filed by an individual whistleblower is called a qui tam lawsuit.

Whistleblowers are often former employees or unhappy employees.

Individuals who file qui tam lawsuits can receive up to 30 percent of the total payout. This can be a significant incentive.

In the fiscal year 2016, the government recovered $4.7 billion from false claims cases. More than half of that came from healthcare organizations.

Qui tam lawsuits have been on the rise, especially in the healthcare industry. And between the FCA and similar state laws, qui tam lawsuits can do significant damage to healthcare organizations.

Laws such as the Fraud Enforcement and Recovery Act of 2009 and the Patient Protection and Affordable Care Act expanded the definition of a false claim. Individuals can now file qui tam lawsuits over things such as the quality of care, a failure to report an overpayment within 60 days, or violations of Medicare or Medicaid regulations.

Healthcare employees juggle numerous responsibilities. Organizations must keep track of piles of paperwork including patient records, insurance information, payments, staff certifications and much more. In the midst of all of this, FCA violations may happen unintentionally.

Qui tam lawsuits can be expensive and put healthcare organizations at risk. Here are some practical ways to protect your organization:

1. Implement clear policies and procedures

The best way to avoid a qui tam lawsuit is by providing quality care to every patient. Federal and state programs such as Medicare and Medicaid establish regulations and standards of care for each patient.

In many cases, courts have ruled that the False Claim Act applies to cases where an organization billed a government program for services but failed to comply with that program’s “quality of care” regulations.

For example, in 2014, a long-term care provider paid $38 million in a settlement of a failure-of-care case brought forward by two whistleblowers.

In a statement on the case, Stuart F. Delery, the acting associate attorney general at the time, said, “Operators who bill Medicare and Medicaid while failing to provide essential services or bill for services so grossly substandard as to be effectively worthless will be pursued for false claims.”

Healthcare workers reviewing files together.

This means that in order to avoid qui tam lawsuits, your organization must make sure to comply with regulations and provide good care to patients.

Good policies and procedures ensure consistency in procedures across your organization, meaning every patient receives high-quality care.

FCA policies

Policies and procedures should also cover processes for record-keeping, billing, and filing claims. Policies should include measures to detect and prevent fraud.

In fact, depending on the size of your organization, these policies may be required by law. The Deficit Reduction Act requires any facility that receives more than $5 million in Medicaid funds to have written compliance policies to educate employees and contractors about the False Claims Act and other anti-fraud laws.

Of course, simply having a policy or procedure in place doesn’t guarantee that employees will follow it.

Healthcare organizations can further limit liability by making sure every employee reads and signs off on policies. If a lawsuit does arise, this can protect your organization by showing that you have properly instructed and trained employees to comply with the law.

2. Conduct compliance training

Even the best policies and procedures don’t do any good if employees don’t know how to apply them in their day-to-day responsibilities.

Employees may not intentionally violate the False Claims Act, but ignorance will not protect against qui tam lawsuits.

Therefore, along with creating solid policy, your organization must also provide regular compliance training.

FCA compliance should be a part of onboarding new employees at all levels of the organization. It should also be included in regular retraining, especially since FCA laws and standards are always evolving.

Training should cover policies and procedures, billing requirements, and patient care. When possible, it should include examples of real-world scenarios that will help employees see how laws and policies apply to their work.

Training should help employees identify potential fraud, waste, or abuse and educate them on how to report suspected misconduct.

3. Create a transparent and professional environment

Over the past decade, qui tam lawsuits have made up about 80 percent of all False Claims Act cases. And in most qui tam lawsuits, the whistleblower is an employee or former employee.

Filing a lawsuit is usually a last resort. It comes after the frustrated employee has tried to resolve problems internally, perhaps reporting perceived issues to a supervisor.

After several reports, if the employee doesn’t see any actions taken to resolve the issue, they may turn to the legal system.

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This should be instructive for healthcare organizations looking to avoid qui tam lawsuits. If your organization encourages transparency, open communication, and accountability, you’ll be able to effectively address issues internally and avoid litigation.

In an article in the Journal of Health Care Compliance, attorneys Jesse A. Witten and Patrick H. Thompson instruct healthcare organizations to require employees to report violations internally:

Employees should be encouraged to report in the first instance to their supervisor but be directed to report to the Compliance Department if they prefer or if they are not satisfied with how the supervisor has responded.

Providers should give employees notice that the failure to report a regulatory violation of which they are aware can lead to disciplinary action. At the same time, however, employees also should be assured that good faith internal reports will not lead to retaliation against them.

All of this is essential.

Employees must know that they can trust management to address their concerns and that they won’t be punished for reporting.

4. Develop a plan to respond to all complaints

Of course, having employees report violations internally won’t do much to head off qui tam lawsuits if your organization doesn’t do anything to address those concerns.

Potential whistleblowers need to know that their claims will be taken seriously.

Some reports may seem frivolous at first, but even seemingly small mistakes could expand into big problems if not addressed.

Your organization should take the time to investigate every complaint. In some cases, your organization will be able to do an internal investigation. But you may want to bring in outside counsel to investigate serious or far-reaching allegations.

Proactively investigating these claims can reduce liability risks.

Healthcare workers looking at computers together.

If you do find FCA violations, you can address them, discipline those involved, and even potentially self-report to the government to reduce damages.

Even if you don’t find a violation, the investigation may uncover potential problem areas. You can establish preventive measures and improve operations.

Either way, your organization should communicate the results of the investigation with the employee who made the complaint.

Whatever the results of the investigation, thank the employee for coming forward and let them know of any changes you made as a result of the report. This transparency builds trust and makes employees less likely to pursue qui tam lawsuits.

5. Regularly monitor compliance

Ideally, your organization will have practices in place to discover and address problem areas before it comes to legal action.

An article by the Metropolitan Corporate Counsel (MCC) advises organizations to take measures to check for problems internally:

Be persistently vigilant about attempting to identify potential problems before any employee feels the need to report outside the company. Establish proactive internal audit programs where necessary.

There are many ways to identify issues.

Work with your HR department to help enforce compliance. Regularly send out anonymous questionnaires to employees instead of waiting for them to come to you. Ask outgoing employees to share any concerns in their exit interviews.

MCC also suggests having exiting employees sign a certification saying they are not aware of any illegal activity.

Gathering employee feedback and monitoring compliance can help your organization avoid qui tam lawsuits. But these actions can also help your organization continuously improve overall.

When you’re aware of every facet of operations, you can identify places where you can reduce waste and increase efficiency. You can make sure your organization is providing patients with the best possible care, treating employees well, and operating with integrity.

Doctor reviewing information on a tablet.

6. Appoint a compliance officer or department

While many different leaders and employees can help monitor compliance, it’s helpful to have one person or team specifically responsible for compliance.

Small organizations can bring together a compliance officer, HR professionals, and accreditation managers to form a compliance department.

This team will make sure employees are properly following policies and procedures. They will lead compliance training and address any questions or concerns related to compliance.

They will also document compliance-related activities and take steps to improve compliance in every realm of the organization.

7. Seek legal counsel

As your healthcare organization seeks to comply with the False Claims Act and avoid qui tam lawsuits, be sure to consult with lawyers at all stages of the process.

Legal counsel can conduct a risk assessment to show potential problem areas. Lawyers who are well-versed in false claims law can help craft effective policies and training content. They can also help investigate contentious complaints and offer advice on difficult issues that arise.

Legal counsel can be expensive, but it’s a worthwhile investment for healthcare organizations. In the long run, legal counsel can save money for your organization by avoiding costly litigation such as qui tam lawsuits.

Qui tam lawsuits in are on the rise in healthcare, and they can do significant damage to your organization.

Proactively addressing potential issues can help your organization reduce liability risks. Things such as crafting good policies and procedures, conducting training, monitoring compliance, and more can also help improve your organization, making it more effective overall.

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