Civil monetary penalties rush in to fill the void
They are the fed’s newest weapon
The federal government recently lost its ability to prosecute state entities under the False Claims Act when the Supreme Court ruled the practice unconstitutional. Now the government is filling that vacuum with expanded use of civil monetary penalties (CMPs).
"Legally, we still have a viable action under the civil monetary penalties law against states and state entities, regardless of whether such actions can be pursued under the False Claims Act," says Gregory Demske, a counsel in the Health and Human Services’ Office of Inspector General (OIG).
The OIG is stepping up its involvement in cases where state entities are not pursued in the wake of the Supreme Court’s decision in the Stevens v. Vermont case, according to Demske. In that case, the court ruled that states and state entities are not persons subject to liability under the False Claims Act.
Demske says the OIG also is working on an increasing number of cases involving CMPs for kickbacks. "We have a civil monetary penalty up to three times the amount of the kickback and up to $50,000 per violation," he explains. "That is obviously a significant penalty that we can bring and we are working on quite a few of those cases."
Demske also warned health care attorneys at the American Health Lawyers Association’s annual conference in Washington, DC, last Nov. 2 to expect more exclusion actions. The OIG’s 3,350 exclusions in the just-completed fiscal year marked a record. But the OIG’s commitment to processing cases brought by the OIG and other agencies has not abated, according to Demske. Most of the exclusions came from providers who lost their license in a particular state, as well as mandatory exclusions based on convictions. "There are several other categories and they are all basically going up over time," he reports.
Since the Health Insurance Portability and Accountability Act of 1996 (HIPAA) passed, the government has had far more resources at its disposal to investigate cases and impose administrative sanctions, Demske adds. That is reflected in the OIG’s final statistics for FY 2000, which include more than 200 successful prosecutions and total monetary recoveries of more than $1.2 billion (including criminal and CMPs).
The OIG also raked in more than $1 million for Emergency Medical Treatment and Active Labor Act violations, otherwise known as patient-dumping cases, for the third year in a row. With the maximum fine standing at $50,000, that represents 48 judgments or settlements, notes Demske. But that is actually a slight decline from 61 settlements and judgments worth $1.72 million in FY99 and 53 settlements and judgments that pulled in $1.8 million in FY98.
Demske says corporate integrity agreements (CIAs) also are undergoing significant changes. He says the agreements reached in FY00 reveal several themes. For example, now that most providers entering CIAs have existing compliance programs, he says it has become "paramount" to take into consideration the effectiveness of these agreements.
"The existence of a compliance program is one thing, but we really can’t tell just by its existence how effective it is," he explains.
On the other hand, when self-disclosure occurs, Demske says, the OIG assumes the program is effective and is therefore more deferential in determining whether a CIA is appropriate and what terms should be required. That follows the OIG’s open letter regarding self-disclosure issued in March, which suggested that CIAs might not be required when self-disclosure occurs.
Moreover, Demske says that when the OIG does impose a CIA against a self-disclosure, it is typically much more flexible, especially in the audit provisions.
"We have deviated quite a bit from our normal standards for audit provisions in our self-disclosure cases by allowing a greater role for internal audit as opposed to an independent review organization," Demske reports. The scope of the audits sometimes is narrower, and existing audit methodologies are permitted if providers can show they are using reliable methods.
Finally, he says the OIG typically forgoes the remedy of exclusion for breach of the CIA when self-disclosure takes place. "There is no magic number for what the OIG considers a low error rate," Demske cautions. But self-disclosure shows that a provider has been doing self-audits, which makes the OIG more comfortable with its audit methodology, he explains.
Over the last year, Demske says there also has been an increasing level of sophistication and detail in the audit provision of the CIAs. "Those are generally the most costly part of the CIA," he adds. "Over time, we think the requirements have become better because they have become more specific, particularly with regard to providers who have developed sophisticated work plans about where and how audits should be done."
The OIG’s future guidance documents are likely to be smaller documents that focus only on the risk areas for particular sectors of the health care industry, Demske says. That was the approach the OIG recently adopted in soliciting comments on risk guidelines for ambulances. "We probably won’t go through the entire litany of the seven elements for each of our future guidance documents."
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