SESSION 6B
CASE SCENARIO
QUI TAM – DEVELOPMENT OF A CASE AND HOW IT COULD HAVE BEEN PREVENTED.
This presentation presents a developing case scenario from two perspectives, that of a compliance officer as well as from the perspective of a relator’s counsel. The fact pattern will be developed and the presenters will use audience participation to assist in the identification of the issues as well as the import each of the parties places on them. The final analysis will include steps along the way that may have prevented and/or limited some or all of the issues at hand.
September 2000
HCCA’s Annual Compliance Institute
Barbara
Bowman
843-229-8873
and
202-223-1694
QUI TAM CASE SCENARIO
September
2000
HCCA’s
Annual Compliance Institute
Barbara
Bowman
843-229-8873
and
202-223-1694
Barbara
has been hired within the past month as the compliance officer at ‘Checkered
Ambulance System,’ a system that provides ambulance services for several
hospitals. ‘Checkered’ uses an outside
billing service, ‘MagnaBill,’ who submits their bills to Medicare for
Checkered’s services.
Along
with hiring Barbara, Checkered has instituted a compliance program (which they
took from a specialty society) which includes a hotline on which employees can
anonymously report concerns about potential compliance issues. A month after starting at Checkered, Barbara
came back to her phone and retrieved a message on the hotline. In the message, an anonymous caller stated
that ‘he was an employee of Checkered, and that he had observed Checkered
ambulances transporting a patient for a regular dialysis treatment, where the
patient would typically be riding a golf cart around his lawn, park the cart
when the ambulance arrived, and then walk to the ambulance and climb onto a
stretcher in the back.’
Meanwhile,
shortly after Barbara received her phone call, Rob, a lawyer who specializes in
representing ‘disgruntled employees’ and ‘whistleblowers,’ gets a call from a
person named ‘Jason’ who says he was recently terminated by Checkered for
‘blowing the whistle on a fraud.’ Jason
says that he complained about transporting patients who did not need to be
using an ambulance but, instead, should have used a regular car or taxi. Jason
says he also has heard that Checkered has been ‘charging Medicare patients more
than they should be charged for transportation services.’ Jason says that he already has gotten a new
job at a different ambulance service in the area, at about the same level of
pay as his old job. Rob and Jason agree
that they will meet the following day.
Rob’s
Meeting With Jason
In their
meeting, Rob explains to Jason that, because Jason is consulting Rob in his
capacity as an attorney and seeking legal advice, their conversation is privileged. Rob also explains that Jason should not be
discussing the contents of their conversation to anyone else, or else he could
be waiving the privilege.
Rob
explains to Jason that there are two possible kinds of claim they need to
explore: (1) a qui tam claim; and (2) a wrongful termination claim.
Rob
describes the qui tam provisions of the False Claims Act (31 U.S.C. § 3730),
including: that the case is a civil lawsuit for money; the government’s role in
investigating and determining whether to intervene in the case; that the case
is filed under seal and can remained sealed for a lengthy period of time; and
that the ‘relator’ is generally entitled to receive a percentage of the
government’s recovery if the government ultimately recovers.
Rob
explains that there are several major topics that a ‘whistleblower’ and his
attorney must explore before deciding to file a ‘qui tam case.’ These include: (1) the defendant’s ability
to pay a judgment; (2) the basis for concluding the defendant has violated the
False Claims Act; (3) the extent of the Government’s damages; and (4) the
personal risks to the ‘relator’ that may result from filing suit.
Jason
tells Rob that the Checkered has ‘plenty of money, and in fact has just
purchased the expensive building in which it has its office.’
Turning
to the issues in the case, Rob asks about the patients who did not need to be
transported by ambulance. Jason
explains that he was on a crew that transported a patient for a regular
dialysis treatment. When the ambulance
arrived, the patient would sometimes be riding a golf cart around his
lawn. The patient would park the cart,
walk to the ambulance and climb onto a stretcher in the back. Jason said he was aware of a rule against
Medicare paying for the transportation of patients who did not have a medical
emergency when the patients were ambulatory.
Rob asks
whether Jason was aware of other patients in similar circumstances, i.e.,
ambulatory patients who were transported by ambulance to regularly scheduled
appointments. Jason said he knew of
others, but he could not remember their names at that time. Jason tells Rob that he worked for Checkered
for about a year prior to his termination.
Rob then asks Jason what he knows about Checkered’s billing practices. Jason explains that he has a friend named ‘Sarah’ who works in the main office of Checkered, and that they frequently eat lunch together. Sarah has told Jason that, for the past year, Checkered has used a billing service called ‘MagnaBill’ to bill Medicare for Checkered’s ambulance services. Sarah has said that MagnaBill always seems to ‘charge more for the ambulance services than she thinks is right.’ She also said that, during the year that Checkered has been using MagnaBill, Checkered’s revenues have grown by ‘over 50 percent, from $4,000,000 to $6,000,000.’ Jason believes that most of the revenues are from Medicare. Jason does not know the payment arrangements between Checkered and MagnaBill.
Jason and
Rob next discuss the circumstances of Jason’s termination from Checkered. Jason explains that he, along with another
member of his crew named Ron, complained about the transportation of the
patient who used the golf cart, and the very next day they were both terminated. Jason and Ron were not close, and Jason did
not think Ron had good judgment about things.
In fact, Ron had been having a lot of problems at work during the past
few months, calling in sick on numerous occasions. On the other hand, Jason had not had any problems prior to this
incident. Jason had some friends who
worked with another ambulance company, and with their help, he quickly got a
new job at that company. His pay at the
new job is comparable to what he was getting from Checkered.
Rob
advises Jason that, although Checkered might be liable for wrongful
termination, either under State law or the whistleblower protection provision
of the False Claims Act (31 U.S.C. § 3730(h)), Jason would not be able to
establish that he suffered substantial damages. Jason agreed that he should not pursue the claim for wrongful
termination.
Rob and
Jason then discuss the pros and cons of filing a qui tam suit. Rob explains that by pursuing such a suit,
Jason could make it harder for him to find a job in the future, and he might
alienate his friends and colleagues who might consider him a ‘snitch.’ Jason says that no one likes the
owners/managers of Checkered anyway, and he thinks ‘they need to be brought
down.’
Rob
questions the magnitude of any claim against Checkered for providing unnecessary
services, in light of the likely need to prove that unnecessary services were
rendered and billed for on a case-by-case basis. However, Rob is particularly interested in exploring the billing
issues involving MagnaBill, since that seems to be a systemic problem that
could involve significant damages.
Jason says that he is going to have lunch with his friend Sarah later in
the week, and he will attempt to learn more details about that situation. Rob and Jason agree to speak again after
Jason meets with Sarah.
Barbara’s
Next Steps
Barbara
calls the manager of the paramedics and asks whether this is happening, and the
manager unequivocally states that it is not.
The manager tells Barbara that some disgruntled employees have been
complaining about things lately, and that the manager had fired two of them
last week for having a ‘bad attitude’ and ‘poor productivity.’
Barbara asks the manager what types of things the
employees were complaining about. The
manager responds that it wasn’t anything important and that Barbara ‘shouldn’t
worry about it because it wasn’t any of her business anyway. It’s a management and operations issue, not
compliance.’
Barbara decides she should look
into this further to determine whether or not a problem exists, because she
definitely would not be finding it out from the manager. She contacts the HR department for the
roster of paramedics that have worked for the organization past and present
within the past 12 months. She notices
that turn-over is a problem: most of Checkered’s workforce has been employed
there for less than 6 months, and the only truly ‘long-term’ employees are the
manager and the two shift supervisors.
In reviewing the personnel records, Barbara finds that most of the
employees quit after just a few months or were terminated for ‘poor
performance’ and/or ‘bad attitude.’ In
speaking with the HR staff, Barbara learns that, contrary to what was required
by the compliance plan, the HR staff was not conducting exit interviews of the
employees, and furthermore, the HR staff did not even know the organization had
a compliance plan.
Barbara decides she should
review billings for ESRD transported patients.
She learns that Checkered uses a billing company, ‘MagnaBill,’ to do the
billings. Under the contract between
Checkered and MagnaBill, Checkered pays MagnaBill 15 percent of its net
revenues for patients, including Medicare patients. The payer remits payment directly to MagnaBill, which subtracts
its 15 percent fee and then remits the remaining 85 percent to Checkered.
Barbara asks MagnaBill to
provide the bills it submitted for the patients, but Magnabill refuses to
provide this information, stating that it was ‘proprietary.’ MagnaBill agrees to release financial data
and productivity reports, but it argues that the individual claims are
proprietary because MagnaBill coded the claims from the run-sheets. MagnaBill further agreed to release its
‘standard’ policy for coding and reporting services to Barbara for her
reference and understanding of how MagnaBill does things. MagnaBill’s representative states that its
15% fee for services does not include the preparation of individual claims
information for Checkered. Barbara reviews
the contract again and finds, to her surprise, that MagnaBill’s position is
supported by the contract.
After further discussions,
MagnaBill offers to run specialized reports for an additional fee. Barbara asks for a report of all ESRD
patient names with repetitive services within the past 6 months on a scheduled
basis including all codes submitted and monies received. MagnaBill agrees to prepare a report
including the names of the patients and summary information of the total monies
applied to their accounts, but MagnaBill refuses to release the line item
detail of the coding information. Barbara
is told that line item detail of payments to codes is not possible because they
do not do line item posting.
Barbara
Contacts Legal Counsel
Barbara contacts the CEO of Checkered and informs
him that she has an issue for which she would like a legal opinion and that,
per the compliance plan, she is providing him notification of such. He states he is not aware of such a
provision in the plan -- and in fact, always ‘meant to read it’ -- but gives
his permission and the name of the corporation’s counsel anyway.
Barbara contacts the attorney by phone,and she finds
that he was not involved in the development or implementation of the compliance
plan, but he was happy that they ‘had gone ahead with one because of their past
history.’ When questioned about the
‘past history’ reference, Barbara learns that the current President of the
organization had recently had to buy out his brother as co-owner because of
‘business dealings that the government didn’t like.’ Barbara learns, however, that the President’s brother, who was
the ‘brains’ behind the outfit, continued to be very involved ‘behind the
scenes.’ Barbara is told little else except that the problem with the
Government was not related to the ambulance company, but instead,to another enterprise
over which the brother had sole ownership and control. Barbara also realizes that the attorney has
little health care experience and usually handles their tax issues. She tells the attorney that she will get
back to him, and she then goes back to the CEO. After a lengthy discussion, the CEO grants her permission to
contact a highly-regarded (and very expensive) health care attorney ‘for an
opinion’ only.
At a meeting with the health care attorney, Barbara
lays out the information she has obtained, the allegation against the ambulance
company, and her regulatory concerns.
The health care lawyer and Barbara agree that a more thorough inquiry is
necessary, but for a variety of reasons, such an inquiry should be performed
under the attorney-client privilege.
The health care lawyer agrees to meet with the CEO to help him
understand the issues and the need for the lawyer’s involvement. The lawyer quickly grasps the need to learn
about the ‘past history’ of the brother and the brother’s current role in the
ambulance company’s operations and ownership.
The CEO agrees to retain the health care attorney
and explains to him that his brother’s past difficulty was related to a DME
business. The settlement agreement,
which did not include monetary penalties, required the brother to divest his
interests in all Medicare-related business entities. The CEO states that his brother is ‘not very involved’ in the EMS
company.
Barbara’s Interviews
Under the direction of the health care attorney, who
is retained for this investigation and potential legal case, Barbara identifies
five paramedics to be interviewed.
These paramedics include two current employees of Checkered, one who
resigned, and the two employees who were recently terminated. Barbara contacts the employees to schedule
the interviews. One of the
recently-terminated employees, named ‘Jason,’ refuses to meet with her.
During the interviews, Barbara and the attorney
learn that the paramedics have a low overall morale because the manager and
shift supervisors have been asking them to do ‘shady things.’ If the paramedics failed to do as they were
told, they were given poor performance reviews or written up for minor
things. Two of the paramedics told
Barbara they had been given previously completed run-sheets back with the
expectation that they were to re-create them because the sheets did not
indicate that the patients were ‘bed-ridden’ and ‘homebound’(which, in fact,
these patients were not), so the services would not be reimbursed. If an employee flat-out refused to do what
he was asked, he was quickly terminated.
All of the paramedics felt that they should not be
expected to do some of the things there were being asked to do ‘because they
just aren’t right.’ Frequently, paramedics would choose to lose their jobs
rather than do something they knew was not appropriate. Moreover, if one paramedic refused to change
a run-sheet, another paramedic would be asked to make the change. The two
current employees stated that they are looking for other jobs. They were able to identify patients who were
‘frequent flyers’ for whom the paramedics had been required to add or change
information on run-sheets. The
paramedics agreed to participate in follow-up interviews and stated that they
could identify run-sheets which they had prepared. The employees all knew of a confidential hotline/reporting
mechanism based on a piece of paper found posted on the bulletin board.
The health care attorney contacts the corporate
counsel of MagnaBill and persuades her that it would be in MagnaBill’s best
interest to release to Checkered a report detailing the individual coding that
had been submitted for the identified ‘frequent flyer’ patients for the past 6
months and all associated revenues to the most specific detail possible. The health care attorney also learns that
MagnaBill is a national billing company that specializes in EMS billing and
guarantees an increase in revenue to their clientele if the clients ‘did as
they were instructed.’ Their standard
contract includes a percentage billing arrangement with total assignment to
Magna Bill. They are able to ‘get
around the government’ by having the funds go to an account in the client’s
name, but they retain sole control of the funds, not the EMS client. After deducting its 15% fee, MagnaBill
remits the remainder to the EMS client. MagnaBill has a fairly large client
base and has been around for several years.
Its current year’s revenues are expected to exceed $15 million.
DISCUSSION OF ISSUES AND DEVELOPMENTS
NOTES