An Examination of the Federal False

Claims ActSelf Study Module for

CPSA and Provider StaffJuly 2010

Module Contents

•Module Objectives

•Overview of the False Claims Act

•Violations of the Act

•Reporting Suspected Violations

•Module Review

Module Objectives This module is intended to educate and raise the awareness of all CPSA and Comprehensive Service Provider (CSP) and Service Provider (SP) staff regarding the problems of fraud and program

abuse. The purpose of this training is to minimize fraud and program abuse, while satisfying policy mandates:

CPSA educates its workforce and that of its CSPs and SPs on the provisions of the False Claims Act as it pertains to the prevention and detection of fraud, waste and program abuse - as set forth in Section 7.1.8 in the DBHS Provider Manual, and CPSA Policy #1.19.

All staff members are to be educated on the Act and receive a copy of or electronic access to Title 31 of the

U.S Code: False Claims Act CLICK HERE(please access this document now and review)

Module Objectives

The Purpose of This ModuleThe Federal False Claims Act is an important tool in ensuring the integrity of federally-funded health care programs. This training is

designed to answer key questions, including the following:

• What is the goal of the Act?

• On what entities does the False Claims Act focus?

• What is a Qui Tam Action?

• What are violations of the Act?

• How can a violation be reported?

• What protections are included in the Act?

• What does CPSA do to ensure the Act is followed?

Every professional in the public behavioral health system in Southern Arizona needs to understand the concepts of the Federal False Claims Act, including liability, qui tam actions, and whistleblower actions. It is your responsibility to minimize the impact of fraud and program abuse by reporting any violations or suspected violations.

State law requires providers and staff to report suspected fraud and program abuse (ARS 36-2918.01).

Therefore, you must read Title 31 of the U.S. Code: False Claims Act and verify this as part of the module post test.

Module Objectives

Your Responsibilities

• Health care fraud is a crime with significant impact on the public health care system.

• Fraud and program abuse is estimated to account for over 10% of annual federally funded health care costs (over $16 billion in 2005).

• Results of unchecked fraud and program abuse include higher taxes, higher insurance premiums, and reduced services.

What entities may commit these fraudulent activities?...

False Claims Act: An Overview

Why the Act is ImportantHealth care fraud burdens organizations and taxpayers with enormous financial costs, while threatening the quality of healthcare. Evidence illustrates the reality of its significant role…

Health Care EntitiesPublicly funded health care entities are the focus of the False Claims Act. These entities are not limited to direct care providers; in fact, all healthcare providers and suppliers are included.

The Social Security Act provides information and support to the False Claims Act. A clear definition of ‘health care entity’ is included as follows:

“any plan or program that provides health benefits, whether directly, through insurance, or otherwise, which is funded directly, in whole or in part, by the United States Government”

False Claims Act: An Overview

Let’s look briefly at the focus of the Act…

False Claims Act: An Overview

The Focus of the Act

The goal of the Act is three-fold:

1. Eliminate fraud and program abuse by supporting, protecting and rewarding those who report worker or entities conducting fraud.

2. Facilitate the cooperative effort among providers, facilities and vendors (coordination of care).

3. Ensure “clean” claims (which are legitimate, supported, necessary and accurate).

For more information on care coordination, see the self- study modules “Coordination of Care” and “Coordination of Benefits.”

False Claims Act: An Overview

The False Claims Act:• Is a federal law intended to protect the public by deterring the

submission of false or fraudulent claims against government entities, securing the restitution of government losses by fraud, and punishing those who defraud the government.

• Imposes liability on any individual or organization that knowingly presents or allows to be presented a false or fraudulent claim for payment or approval by the government.

• Applies, in part, to claims submitted under the federal MedicareApplies, in part, to claims submitted under the federal Medicare program, state administered Medicaid initiatives (in Arizona, AHCCCS), and private insurers who administer Medicare on behalf of the government.

A Look at the Act Act Summary (click on to Link)

False Claims Act: An Overview

• This Act allows a person to bring a claim alleging that a contractor to the federal government is committing fraud. These people usually have insider/first-hand knowledge about fraudulent conduct and false claims that are filed/submitted to the government.

• This filing of such actions is informally called “whistle-blowing”. Whistleblowers (also called ‘relators’) are protected from retaliation from the entity accused in the fraud claim.

• People who file claims on behalf of the government are eligible to receive as much as 30% of the fines levied and collected in the case.

• The Act does not cover: - mismanagement or waste that doesn’t rise to the level of fraud- tax fraud

A Look at the Act (continued…)

How did this Act come to be?...

False Claims Act: An Overview

Some Background: Then and Now• The Act was originally enacted in 1863 by President Lincoln who was upset with companies that sold faulty war supplies to the Union Army during the Civil War.

• In 1943 the Act was amended to reduce the relator’s (whistleblower’s) share of the recovered proceeds.

• The Act more recently became a focus of media attention in the 1980s, when fraud at the national government level (especially defense contractors) led to public outrage.

• In the 1990’s the focus of the Act shifted to health care fraud.

• In February 2006, the Executive Office signed into law the Deficit Reduction Act of 2005 (PL 109-117). A section of this Act mandates that all health care organizations receiving more than $5 million in federal funding provide staff education on the False Claims Act.

False Claims Act: An Overview

The Act is set up to encourage reporting of fraud or abuse by allowing those who know of the fraud/abuse - ‘whistle blowers’ or ‘relators’ - to bring a suit against the entity in the name of the state or federal government (qui tam actions).

The whistle-blower is awarded a portion of the monies recovered in the suit, once these monies are recovered by the government.

The whistle-blower is protected against retaliation by the entity named in the suit.

Why the Act Works

Let’s take a closer look at ‘qui tam’ actions…

Qui Tam…A term you are probably not familiar with…

Question: What is ‘qui tam’?

a) A term used when making a will.

b) A term used in sonnets by Shakespeare.

c) A legal maneuver used by lawyers when selecting jury members.

d) A lawsuit/action brought by an informer (any private citizen) under a statute which establishes a penalty for the committed act.

See next slide for answer…

False Claims Act: An Overview

What is qui tam?

Qui tam is a shortened version of a Latin phrase that means “he who brings an action for himself as well as for the King.” A qui tam action is a lawsuit brought by an informer (any private citizen), under a statute which establishes a penalty for the committed act.

Qui tam also provides that a portion of the recovered funds will be provided to the informer. The remainder will go to the state or other appropriate entity. Note: An award is provided to the informer, or relator, if and after the government recovers the money from the defendant.

False Claims Act: An Overview

Qui Tam Actions

Merely reporting a violation of the False Claims Act is not enough to result in the informer receiving an award upon a successful litigation. A lawsuit must be filed for this result - this lawsuit is sometimes referred to as a “whistleblower lawsuit.”

Generally, the court may award 15-30% of the total recovery from the defendant, through a favorable judgment or a settlement. The amount of the award depends on the participation of the government in the suit and the extent of the informer’s contributions.

False Claims Act: An Overview

Qui Tam Actions (continued)…

False Claims Act: An Overview

The Federal False Claims Act is a remarkable law. It says to citizens of the U.S. - if you have information about corporations that are defrauding the federal government, come forward, tell

federal prosecutors about it, and if your claim can be verified, they will join with you and sue the corporation to recover the defrauded monies (plus substantial penalties). And you, ordinary citizen, will

get a cut of the recovery - anywhere from 15 to 30 percent.

“Over the past 20 years, I’ve seen whistleblowers use the False Claims Act to recover more than $17 billion in tax

dollars. With these new provisions, the Act is evolving to help fight fraud and abuse for another 20 years and beyond.”

- Sen. Charles Grassley (R-IA) on fraud-fighting amendments to the Deficit Reduction Act of 2005

Now that we have examined the Act, let’s look at Act violations…

General ‘Violation’ Information

Anyone who knowingly submits, or causes another person/entity to submit false claims for payment of government funds is liable for three times the government’s damages plus substantial civil penalties.

‘Knowingly’ means having actual knowledge that the information on the claim is false; acting in deliberate ignorance of whether the claim is true or false; or acting in reckless disregard of whether the claim is true or false.

False Claims Act: Violations

General Violation Information (continued…)

Per the AZ DBHS Provider Manual Section 7.1:Fraud is an act of purposeful deception committed by a person or behavioral health provider to gain an unauthorized benefit.

Program Abuse committed by a behavioral health provider means activities that are inconsistent with standard fiscal business or medical practices that result in unnecessary cost to the AHCCCS and/or ADHS/DBHS programs.

False Claims Act: Violations

Common types of fraud in the health and mental health care industries often are provider fraud and claims or encounter fraud. Some examples of fraudulent conduct:

• Billing for services not rendered or for ‘ghost patients’ - patients that do not exist.

• Kickbacks and improper payments for referrals, contracts, etc.

• Up-Coding - billing for a more expensive treatment or test than was actually provided.

• Submitting reimbursement claims for services that are not a medical necessity.

• Submitting encounters without, or with insufficient, supporting documentation.

• Inflating cost or expense reports.

False Claims Act: Violations

In February 2000, the University Medical Center of Tucson agreed to pay $309,000 to settle a federal ‘qui tam’ lawsuit filed in Arizona. The suit alleged the University overcharged for outpatient clinical laboratory services in part by double-billing.

Abbott Laboratories has agreed to pay $28 million to settle Medicaid-fraud charges under the Texas False Claims Act. Abbott misreported drug prices to Medicaid, causing the state to significantly overpay for prescription drugs.

HealthSouth and two doctors agreed to pay $14.9 million ($14.2 million to be paid by the company and $700,000 to be paid by the two doctors) to settle charges the company was submitting false claims to Medicare and paying illegal kickbacks to referring physicians.

Act Violation ‘Real-life’ Examples…

False Claims Act: Violations

Penalties for Violations of the False Claims Act

The penalties associated with violating the Federal False Claims Act are severe.

For each false claim, the penalty ranges from $5,500 to $11,000.Large amounts of money are involved. Repayment of 3x the amount of damages to the government PLUS a mandatory civil penalty of at least $5,500, but no more than $11,000 per claim is established by the Act.

Let’s consider an example to better understand these

liability penalties…

False Claims Act: Violations

The U.S. Department of Justice reports that $1.34 billion in settlements and judgments were secured through the False Claims Act in the fiscal year ending 9/30/08.

Financial Liability: An Example

Consider the submission by a mental health provider of 50 false claims for $50 each, which means the total government damage = $2,500. The liability this provider faces is quite substantial.

The significance of a violation is emphasized by its resulting liability. Next we’ll look at the reporting of violations…

False Claims Act: Violations

Minimum Liability: $282,500 $2,500 x 3 (government damages x 3) +$5,500 x 50 (min. civil penalty x # of claims)

Maximum Liability: $557,500$2,500 x 3 (government damages x 3) +$11,000 x 50 (max. civil penalty x # of claims)

Liability Range:

Reporting Suspected Violations

It is up to every professional in the public behavioral health system to support the Federal False Claims Act. The Act helps

to reduce fraud and program abuse only if behavioral health staff are diligent in their awareness of this issue.

It is your responsibility to minimize the impact of fraud and program abuse by

reporting any violations or suspected violations.

And remember, CPSA policy and state law require providers and staff to report suspected fraud and program abuse.

(ARS 36-2918.01)

So, if you witness, or even suspect fraud or program abuse, what should you do? Read on…

• Contact the CPSA Fraud & Abuse HELPLINE: (520) 318-6964• Contact the CPSA Compliance Officer: (520) 318-6924• Send a letter to: CPSA Compliance Officer, 535 N. Wilmot Rd.

Suite 201, Tucson AZ 85711• Contact the AHCCCS Office of Program Integrity: (888) 487-6686• Contact the ADHS/DBHS Fraud and Abuse Hotline: (866) 563-4927

If you know of or suspect fraud and/or program abuse are being committed at your agency, first contact your supervisor or your supervisor’s supervisor. You may also talk with your Human Resources Department or your Compliance Officer.

If these avenues are inappropriate for your situation, reports may be made anonymously via the following methods:

Reporting Suspected Violations

Whistleblower/Anti-Retaliation ProtectionsUnder Section 3730(h) of the False Claims Act, any employee who is discharged, harassed, or otherwise discriminated against because of lawful acts by the employee in reporting a violation of the Act is entitled to any relief in terms of appropriate restitution.

This may include reinstatement, twice the amount of back pay plus interest, and compensation for any damages. Litigation and attorney costs may also be awarded.

An individual who reports a violation of the False Claims Act is protected by the Act.

Reporting Suspected Violations

Should you worry about making a report?

The False Claims Act is a Federal Code (31 USC Sec. 3729) aimed at reducing fraud and program abuse by government contractors. This is done by imposing substantial penalties for committing fraud and abuse, and protecting those that report these illegal actions.

These claims are often initiated by ‘whistleblowers’ (relators) who have knowledge of violations. Through qui tam actions, these whistleblowers may receive part of monetary damages if recovered by the government. The Act also protects these whistleblowers from retaliation from the entity accused of the fraud or program abuse.

Your responsibility is to report suspected or actual fraud and program abuse to your agency’s management, to CPSA, or to the appropriate state authority.

False Claims Act: Module Review

Let’s reflect on what we’ve learned…

a. ARS 13-1802: Theft; classification

b. ARS 13-2002: Forgery; Classification

c. ARS 13-2310: Fraudulent schemes and artifices; classification; definition

d. ARS 13-2311: Fraudulent schemes and practices; willful concealment; classification; and

e. ARS 36-2918.01: Duty to report fraud

False Claims Act: Module Review

The Arizona Revised Statutes (ARS) are the continuously updated laws of the state. The ARS includes several statutes that pertain to false claims. These are highlighted below.

Arizona Requirements & CPSA

CPSA is required to ensure that all staff, Comprehensive Service Provider, and Service Provider workforce members and contractors are educated on the False Claims Act and their responsibilities surrounding this Act.

All workforce members are to successfully complete this module and access/receive a copy of or electronic access to Title 31 of the U.S. Code: False Claims Act (please click on link to access this document).

False Claims Act: Module Review

False Claims Act: Module Review

Information has been provided which addresses the questions identified in the ‘Objectives’ section

of this module:

• What is the goal of the Act?

• On what entities does the False Claims Act focus?

• What is a Qui Tam Action?

• What are violations of the Act?

• How can a violation be reported?

• What protections are included in the Act?

• What does CPSA do to ensure the Act is followed?

Congratulations!

You’ve come to the conclusion of this self-study module.

False Claims Act: Module Review

Please continue to the test section of the module and complete the

post-test/final exam