HMA lawsuits, indictment highlight whistleblower risk
Allegations brought by insiders claiming kickbacks, sham business deals
The eight False Claims Act lawsuits being pursued against Health Management Associates (HMA) illustrate the risk that hospital executives take when they aggressively seek increased revenue without adequately assessing the potential for fraud charges, say healthcare fraud experts who are watching the case closely.
The government has intervened in eight False Claims Act lawsuits against the Naples, FL-based hospital chain. It alleges that HMA billed federal healthcare programs for medically unnecessary inpatient admissions from the emergency departments at HMA hospitals and paid remuneration to physicians in exchange for patient referrals, the Justice Department announced recently.
The government also has joined in the allegations in one of these lawsuits that Gary Newsome, HMA’s former CEO, directed HMA’s corporate practice of pressuring emergency department physicians and hospital administrators to raise inpatient admission rates, regardless of medical necessity. (See the stories on p. 39 and p. 40 for more on the allegations.)
HMA operates 71 hospitals in 15 states: Alabama, Arkansas, Florida, Georgia, Kentucky, Mississippi, Missouri, North Carolina, Oklahoma, Pennsylvania, South Carolina, Tennessee, Texas, Washington and West Virginia.
HMA’s practices violated the Anti-Kickback Statute, which prohibits offering, paying, soliciting, or receiving remuneration to induce referrals of items or services covered by Medicare, Medicaid, and other federally funded programs, the government claims. The Stark Statute prohibits a hospital from submitting claims for patient referrals made by a physician with whom the hospital has an improper financial arrangement, the government says.
Everyone can blow the whistle
One of the most important lessons for risk managers from the HMA case concerns the risk posed by whistleblowers, says John G. Martin, JD, an attorney with the law firm Garfunkel Wild in Great Neck, NY. Under the False Claims Act, whistleblowers can get rich by turning in providers committing fraud.
The volume of whistleblowers has increased exponentially in recent years, Martin says. He has heard reports that some U.S. Attorney’s offices receive as many as five false claims allegations each day.
"In addition to government watchdogs reviewing your bills, you have to realize that everybody who works in your healthcare practice is a potential government investigator," Martin says. "Once they learn that if there is anything questionable and they might get rich off of it, they’re all looking for something to investigate. The idea that if the government is not looking at some policy or practice, you’re OK, that’s no longer valid in the healthcare field. Everyone is looking at it."
An HMA effort to encourage admissions and keeping scorecards on physician performance was at the heart of some of the False Claim allegations, but Martin cautions that the concept is not invalid. Many providers have a similar program to track "productivity" of physicians. The problem, he says, appears to be how HMA carried it out.
"It has to be done completely on the up and up, and vetted by an attorney or an experienced compliance officer," Martin says. "So many things that are natural to a business person in another area of work are forbidden in healthcare. Rewarding productivity is completely uncontroversial in any other field, and you can do it in healthcare, but only if you’re very careful about it."
Vet any revenue plans
Risk managers should insist that any program intended to make more money be analyzed for potential violations of the law, Martin says. Healthcare regulations are far more complex than the strictures placed on other businesses, and healthcare executives should not be overconfident about their ability to assess compliance, he says.
Having your plan reviewed by counsel will greatly reduce the repercussions, even if the government decides later that you were in violation of a law or regulation, Martin says. The effort to ensure legality goes a long way and can mean the difference between merely paying back money and being subject to a full-fledged fraud investigation with criminal charges, he says.
It appears the HMA leadership had a chance to respond to concerns posed by executives about the legality of the revenue improvement efforts, Martin says, but the lawsuits suggest they tried to get rid of the people who complained. Disclosing the ill-conceived plans and reimbursing the government would have resulted in much less damage to the company, Martin says.
Martin also warns strongly against any type of cover-up.
"Covering something up is like waving a red flag in front of the U.S. attorney," says Martin, who was a U.S. attorney for five years and a state prosecutor for 18 years. "Nothing got my blood boiling more than someone who covered up or somehow obstructed the investigation. I don’t think people understand how that lights a fire under the U.S. attorney. It convinces them that there is something here that must be prosecuted."
Oversee documents carefully
The HMA case also points to a lack of internal controls on responding to subpoenas and fraud investigations, says Jonathan Feld, JD, an attorney with the Dykema law firm who works in Chicago and Washington, DC. He went to the firm after serving as the Department of Justice’s associate deputy attorney general. The HMA executive who was indicted is alleged to have forged a document from a physician, and if guilty, that forgery would indicate poor oversight by the compliance program, Feld says.
"There should be a procedure for knowing where documents come from, how they are logged in, and how they are maintained for review. Risk managers need these internal controls to protect their institutions," Feld says. "We don’t know yet, but it appears to be either a lapse that led to allegations of intent to defraud, or the executive did in fact insert the document intending to defraud investigators. Either way, it shouldn’t have been allowed to happen."
Feld notes that such charges of obstruction can arise from sloppy or misguided efforts by those involved, rather than actual intent to deceive. Investigators can see obstruction where none was intended, notes Henry R. Fenton, JD, co-founder of the law firm Fenton Nelson in Los Angeles.
"If a risk manager makes it difficult for an investigator to communicate with employees or represents that an employee does not want to talk when that is not completely accurate, those things are going to be considered obstructing the investigation," Fenton says. "Any charge of obstructing is completely separate from the underlying allegations, so you’ve created a new problem."
- John G. Martin, JD, Garfunkel Wild, Great Neck, NY. Telephone: (516) 393-2214. Email: [email protected]
- Jonathan Feld, JD, Dykema, Chicago. Telephone: (312) 627-5680. Email: [email protected].
- Henry R. Fenton, JD, Co-founder, Fenton Nelson, Los Angeles. Telephone (310) 444-5244. Email: [email protected].
Executive Summary
Health Management Associates, a hospital chain based in Naples, FL, is facing several whistleblower lawsuits. The allegations suggest that the chain might have underestimated the potential fraud charges from an aggressive effort to increase revenue.
The whistleblowers include top executives and a compliance officer.
Some of the allegations involve "sham" co-management agreements with physicians.
An executive was indicted for allegedly altering or forging a document related to the case.
