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False Claims Policy

 

Policy Statement:

It is the policy of the Matheny Medical and Educational Center to obey all federal and state laws, to implement and enforce procedures to detect and prevent fraud, waste and abuse regarding payments to Matheny from federal or state healthcare programs, and to provide protections for those who report actual or suspected wrongdoing.

Further, pursuant to the requirements of Section 6032 of the Deficit Reduction Act of 2005, employees will be provided information about the Federal False Claims Act and other laws pertaining to civil or criminal penalties for false claims and statements, and whistleblower protections under such laws.  Employees will also be provided with Matheny’s policies and procedures for detecting and preventing fraud, waste and abuse.

Set forth below are summaries of certain statutes that provide liability for false claims and statements. These summaries are not intended to identify all applicable laws but rather to outline some of the major statutory provisions as required by the Deficit Reduction Act of 2005.

 

FEDERAL FALSE CLAIMS LAWS

 

Federal False Claims Act (“FCA”) (31 U.S.C. 3729-3733)

The FCA imposes civil liability on any person or entity who:

  • Knowingly presents a false or fraudulent claim for payment or approval;
  • Knowingly makes or uses a false record or statement material to a false or fraudulent claim;
  • Knowingly makes or uses a false record or statement material to an obligation to pay or transmit money or property to the federal government;
  • Knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the federal government; or
  • Conspires to commit a violation of any of the above.

“Knowingly” means that a person, with respect to information:

  • Has actual knowledge of the information;
  • Acts in deliberate ignorance of the truth or falsity of the information; or
  • Acts in reckless disregard of the truth or falsity of the information.

“Claim” means any request or demand for money or property that is (i) presented to an agent of the United States or (ii) is made to a person or entity where that money or property is to be spent or used on the federal government’s behalf or to advance a federal government program or interest and the federal government either provides a portion of the money or property requested or demanded or will reimburse such person or entity for a portion of the money or property requested or demanded.

“Obligation” means a duty arising from (i) a fee-based or similar relationship, (ii) statute or regulation, or (iii) the retention of any overpayment.

A person or entity found liable under the FCA is subject to a civil money penalty of between $5,000 and $10,000 plus three times the amount of damages that the government sustained because of the illegal act.  In healthcare cases, the amount of damages sustained is the amount paid for each false claim that is filed.

Anyone may bring a qui tam action under the FCA in the name of the United States in federal court.  The case is initiated by filing the complaint and all available material evidence under seal with the federal court. The complaint remains under seal for at least 60 days and will not be served on the defendant. 

During this time, the government investigates the complaint. The government may, and often does, obtain additional investigation time by showing good cause.  After expiration of the review and investigation period, the government may elect to pursue the case in its own name or decide not to pursue the case.  If the government decides not to pursue the case, the person who filed the action has the right to continue with the case on his or her own.

If the government proceeds with the case, the person who filed the action will receive between 15 percent and 25 percent of any recovery, depending upon the contribution of that person to the prosecution of the case.  If the government does not proceed with the case, the person who filed the action will be entitled to between 25 percent and 30 percent of any recovery, plus reasonable expenses and attorneys’ fees and costs.

Anti-discrimination

Anyone initiating a qui tam case may not be discriminated or retaliated against in any manner by his or her employer. The employee is authorized under the FCA to initiate court proceedings to make himself or herself whole for any job related losses resulting from any such discrimination or retaliation.

 

Program Fraud Civil Remedies Act (“PFCRA”) (31 U.S.C. 3801-3812)

The PFCRA creates administrative remedies for making false claims and false statements.  These penalties are separate from and in addition to any liability that may be imposed under the FCA.

The PFCRA imposes liability on people or entities who file a claim that they know or have reason to know:

  • is false, fictitious, or fraudulent;
  • includes or is supported by any written statement that contains false, fictitious, or fraudulent information;
  • includes or is supported by a written statement that omits a material fact, which causes the statement to be false, fictitious, or fraudulent, and the
  • person or entity submitting the statement has a duty to include the omitted fact; or
  • is for payment for property or services not provided as claimed.

A violation of this section of the PFCRA is punishable by a civil penalty of up to $5,000 for each wrongfully filed claim, plus an assessment of up to twice the amount of any unlawful claim that has been paid.

In addition, persons or entities violate the PFCRA if they submit a written statement which they know or should know:

  • asserts a material fact that is false, fictitious or fraudulent; or
  • omits a material fact that they had a duty to include, the omission caused the statement to be false, fictitious, or fraudulent, and the statement contained a certification of accuracy.

A violation of this section of the PFCRA carries a civil penalty of up to $5,000 for each such statement in addition to any other remedy allowed under other laws.

 

NEW JERSEY FALSE CLAIMS LAWS


New Jersey False Claims Act (“NJFCA”)(N.J.S.A. 2A:32C-1 et seq.)

The NJFCA imposes civil liability on any person who:

Knowingly presents or causes to be presented to an employee, officer or agent of the State of New Jersey, or to a recipient of State funds, a false or fraudulent claim for payment or approval;

Knowingly makes uses or causes to be made or used a false record or statement to get a false or fraudulent claim paid or approved by the State;

  • Conspires to defraud the State by getting a false or fraudulent claim allowed or paid by the State;

Has possession, custody, or control of public property or money used or to be used by the State and knowingly delivers or causes to be delivered less property than the amount for which the person receives a certificate or receipt;

  • Intending to defraud an entity, makes or delivers a document certifying receipt of property to be used by the State without completely knowing that the information on the receipt is true;
  • Knowingly buys, or receives as a pledge of an obligation or debt, public property from any person who lawfully may not sell or pledge the property; or
  • Knowingly makes, uses, or causes to be made or used a false record or statement to conceal, avoid or decrease an obligation to pay or transmit money or property to the State.
“Knowingly” means that a person:
  • Has actual knowledge of the information; or
  • Acts in deliberate ignorance of the truth or falsity of the information; or
  • Acts in reckless disregard of the truth or falsity of the information.

A person found liable under the NJFCA is subject to the civil penalties contained in the FCA for each false or fraudulent claim, plus three times the amount of damages that the State sustains (unless reduced by the court to not less than two times the damages if it determines that the defendant cooperated sufficiently).

Any person may bring a civil action for violation of the NJFCA.  The Attorney General may elect to intervene and take over the proceeding.  If the Attorney General decides not to proceed with the case; the person initiating the proceeding has the right to conduct the action.

If the Attorney General proceeds with the action, the person filing the case may receive between 15 and 25 percent of the recovery, depending upon the extent to which the person substantially contributed to the prosecution of the action.  If the court determines that the case is based primarily on information not provided by the person bringing the action, the court may award the person an amount that it deems appropriate.

If the Attorney General does not proceed with the action, the person filing the case will be entitled to between 25 and 30 percent of any recovery, plus reasonable attorney’s fees, expenses and costs.

If the court determines that the person bringing the case was involved in any way in the violation of the NJFCA, it may reduce or eliminate the proceeds of the action to which that person would otherwise be entitled.   

  

New Jersey Medical Assistance and Health Services Act (“NJMAHSA”) (N.J.S.A. 30:4D-1 et seq.)

Under this Act,

  • A person who willfully obtains benefits to which he or she is not entitled and any provider who willfully receives payments to which the provider is not entitled, and
  • A person, entity or provider who:
    • knowingly and willfully makes or causes to be made a false statement or representation of a material fact in any cost study, claim form or document necessary to apply for or receive a benefit or payment under the Act, or
    • knowingly and willfully makes or causes to be made any false statement of a material fact for use in determining rights to such benefit or payment, or
    • conceals or fails to disclose the occurrence of an event that affects the initial or continued right to any such benefit or payment with an intent to fraudulently secure benefits or payments not authorized under the Act, or
    • knowingly and willfully converts benefits or payments to a use other than for which it was received  is guilty of a high misdemeanor and, upon conviction, will be liable for a penalty of up to $10,000 for the first and each subsequent offense or for imprisonment for up to three years or both.
  • Any person, entity or provider who solicits, offers or receives any kickback, rebate or bribe in connection with the furnishing of items or services for which payment may be made or whose cost may be reported in order to obtain benefits or payments under the Act or in connection with the receipt of any benefit or payment under the Act, will be liable for a penalty of up to $10,000 or for imprisonment up to three years or

Whoever knowingly and willfully makes, causes to be made or induces or seeks to induce the making of a false statement of material fact with respect to conditions or operations of a facility in order that the facility may qualify upon certification or recertification as a hospital or intermediate care facility, will be guilty of a high misdemeanor and will be

  • liable for a penalty of up to $3,000 or for imprisonment up to one year or both.
  • Any person, entity or provider who violates any of the above provisions shall also be liable for civil penalties of (i) interest at the maximum legal rate on the excess benefits or payments, (ii) an amount up to three-fold the amount of the excess benefits, and (iii) an amount not less than or more than the civil penalty allowed under the federal False Claims Act (31 U.S.C. s.3729 et seq.), which may be adjusted for inflation.    
  • Any person, entity or provider who, without intent to violate the Act, obtains benefits or payments in excess of the entitled amount, may be liable for a civil penalty of the payment of interest on the excess benefits or payments at the maximum legal rate.
  • A provider or person participating in a benefit program or acting as agent, employee or independent contractor of a provider may be suspended, debarred or disqualified for good cause.

New Jersey Health Care Claims Fraud Act (“NJHCCFA”) (N.J.S.A. 2C:21-4.2, 4.3; 2C:51-5)

The NJHCCFA provides the following:
With respect to “practitioners”, defined as anyone licensed, registered or certified by any state agency to practice a profession or occupation in New Jersey or another jurisdiction:
  1. It is a crime of the second degree to knowingly commit health care claims fraud in the course of providing professional services.
  2. It is a crime of the third degree if that person recklessly commits health care fraud in the course of providing professional services. (“Recklessly” means consciously disregarding a substantial and unjustifiable risk that the fraud exists or will result from his or her conduct.  The risk must be such that its disregard involves a gross deviation from the standard of conduct that a reasonable person would observe in the actor’s situation.) 

In addition to all criminal penalties allowed by law, a person convicted under these provisions may be subject to a fine of up to five times the pecuniary benefit obtained or sought to be obtained, and suspension or forfeiture of the professional license.

With respect to persons who are not “practitioners”:

  1. It is a crime of the third degree if that person knowingly commits health care fraud.
  2. It is a crime of the second degree if that person knowingly commits five or more acts of health care fraud and the aggregate pecuniary benefit obtained or sought is at least $1,000.
  3. It is a crime of the fourth degree if that person recklessly commits health care fraud.
In addition to all criminal penalties allowed by law, a person convicted under these provisions may be subject to a fine of up to five times the pecuniary benefit obtained or sought to be obtained.   

New Jersey Early Intervention System (“NJEIS”)(Policy #15) Fraud, Waste, and Abuse

The NJEIS policy prohibits:

  • Billing New Jersey’s Early Intervention System for services or goods not provided
  • Billing New Jersey’s Early Intervention System for undocumented services
  • Making inaccurate, false or improper entries in medical records, cost reports and any other records used to support reimbursement
  • Billing New Jersey’s Early Intervention System for services that are medically unnecessary
  • Characterizing non-covered services or costs in a way that secures reimbursement from New Jersey’s Early Intervention System
  • Assigning an incorrect code to a service in order to obtain a higher reimbursement Offering services in a way that wastes system resources
  • Only offering services based upon clinician availability
  • Participating in kickbacks
  • Charging in excess of the allowable rate

 

ANTI-RETALIATION “WHISTLEBLOWER” PROTECTIONS

Individuals within an organization who observe activities or behavior that may violate the law in some manner and who report their observations either to management or to governmental agencies are provided protections under certain laws.8

For example, protections are afforded to people who file qui tam lawsuits under the Federal False Claims Act, which is discussed above.  The Federal False Claims Act states that any employee who is discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of employment because of lawful actions taken in furtherance of a qui tam action is entitled to recover damages.  He or she is entitled to “all relief necessary to make the employee whole,” including reinstatement with the same seniority status, twice the amount of back pay (plus interest), and compensation for any other damages the employee suffered as a result of the discrimination.  The employee also can be awarded litigation costs and reasonable attorneys’ fees.

In addition, the New Jersey Conscientious Employee Protection Act prohibits an employer from retaliating against an employee because the employee (i) discloses or threatens to disclose an activity that the employee reasonably believes is in violation of law, or is fraudulent or criminal, or (for employees who are certified or licensed health care professionals) constitutes improper quality of patient care, (ii) provides information to a public body conducting an investigation, hearing or inquiry into any violation of law, or (for employees who are certified or licensed health care professionals) into the quality of patient care, or (iii) objects to or refuses to participate in  an activity that the employee reasonably believes to be a violation of law, is fraudulent or criminal, is incompatible with a clear mandate of public policy, or (for employees who are certified or licensed health care professionals) constitutes improper quality of patient care.   Available remedies may include an injunction restraining a continuing violation, reinstatement of the employee including full fringe benefits and seniority rights, compensation for lost wages, benefits and other remuneration, punitive damages, a civil fine, and payment by the employer of reasonable costs and attorney’s fees.

 

ROLE OF FALSE CLAIMS LAWS

The laws described in this policy create a comprehensive scheme for controlling waste, fraud and abuse in federal and state healthcare programs by giving appropriate governmental agencies the authority to seek out, investigate and prosecute violations.  Enforcement activities are pursued in three available forums - criminal, civil and administrative.  This provides a broad spectrum of remedies to battle this problem.

Anti-retaliation protections for individuals who make good faith reports of waste, fraud and abuse encourage reporting and provide broader opportunities to prosecute violators.  Statutory provisions, such as the anti-retaliation provisions of the Federal False Claims Act, create reasonable incentives for this purpose. 

Employment protections create a level of security employees need to assist with the prosecution of these cases.

 

MATHENY’S MECHANISMS FOR DETECTING AND PREVENTING FRAUD

All departments at Matheny that bill for services rendered are responsible for reviewing all billing documents and claims before submission. Corporate Compliance shall schedule periodic audits to review Matheny billing processes.

Matheny Medical and Educational Center maintains a Corporate Compliance Program detailed in Policies #140-7.1 and 140-7.2.  The program is overseen by a Corporate Compliance Officer.  The Corporate Compliance Program includes:

  • provisions for educating staff, at the time of hire and periodically thereafter, about ethical issues in the business of healthcare;
  • mechanisms for the reporting of possible breaches of ethics, including a toll-free compliance hotline;
  • means for providing guidance to staff who have questions about compliance-related issues; and
  • investigation of allegations of regulatory non-compliance.

Procedure:

Matheny staff, and contractors and other agents of Matheny who act on behalf of Matheny in furnishing, authorizing or monitoring services paid for by federal or state funds or who perform billing and coding functions, will be informed about the False Claims Act, related federal or state laws, and Matheny’s mechanisms for detecting and preventing fraud and abuse through:

  • inclusion of such information in Matheny’s Employee Manual (initially as an addendum to the Employee Manual until such time as a revised Manual is issued);
  • inclusion of such information in new employee orientation;
  • other means of staff education as deemed appropriate; and
  • provision of such information to contractors and agents who act on behalf of Matheny in furnishing, authorizing or monitoring services paid for by federal or state funds or who perform billing and coding functions.

In addition, it is the responsibility of Matheny administrative staff, practitioners, and families to report incidents of suspected fraud, waste or abuse.  It is required that all involved parties cooperate with any investigation.  Upon receipt of an allegation of fraud, waste, or abuse in the NJ Early Intervention System, an immediate notice will also be sent to the Part C Coordinator of the NJEIS by the investigating parties (Compliance Officer and Director of Community Services) including the details of the allegation, the status of the investigation and anticipated timeline for completion.  This notification cannot exceed 2 business days from the receipt of the allegation.  Upon completion of the investigation, not to exceed 45 days from the initial receipt of allegation, the investigation summary will be forwarded to the Part C Coordinator by the investigating parties (Compliance Officer and Director of Community Services).

All families, employees and contractors can report fraud, waste, or abuse confidentially by calling the toll NJ Fraud and Abuse Hotline at 1-888-9FRAUD5 (1-888-937-2835); the toll free hotline established by the Federal Office of Inspector General in the U.S. Department of Health and Human Services 1-800-HHH-TIPS (1-800-447-8477); or by calling the Corporate Compliance National Hotline at 1-877-631-0014 to provide anonymous information of Matheny’s Corporate Compliance Officer.

 

References:  Section 6032 of the Deficit Reduction Act of 2005; Federal False Claims Act (31 U.S.C.  3729-3733); Program Fraud Civil Remedies Act (31 U.S.C. 3801-3812); New Jersey False Claims Act (“NJFCA”)(N.J.S.A. 2A:32C-1 et seq.); New Jersey Medical Assistance and health Services Act (N.J.S.A. 30:4D-1 et seq.); New Jersey Health Care Claims Fraud Act (N.J.S.A. 2C:21-4.2,4.3;2C:51-5); New Jersey Conscientious Employee Protection Act (N.J.S.A. 34:19-1 et seq.). 
Policy Code: ADM-433
Reviewed:
Revised: 3/13/08, 7/23/08, 8/18/08, 10/30/09, 9/1/2011