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Compliance
with Applicable Federal and State False Claims Acts; Overview of
Laws Regarding False Claims and Whistleblower Protections
The Bronx Lebanon Hospital Center (the “Hospital”)
is committed to complying with the requirements of Section 6032
of the Federal Deficit Reduction Act of 2005, and preventing and
detecting any fraud, waste, or abuse in the Hospital. To this end,
the Hospital maintains a compliance program and strives to educate
its work force on fraud and abuse laws, including the importance
of submitting accurate claims and reports to the Federal and State
governments.
The
Hospital has instituted various procedures, which are set forth
in the our Compliance Manual, to ensure compliance with these laws
and to assist us in preventing fraud, waste and abuse in federal
health care programs. In furtherance of this policy and to comply
with the Deficit Reduction Act, the Hospital disseminates this policy
to all employees (including management, contractors and other agents)
to ensure that such persons are aware of certain relevant Federal
and State laws, and that submission of a false claim can result
in significant administrative and civil penalties under the Federal
False Claims Act and other New York State laws.
POLICY
To
assist the Hospital in meeting its legal and ethical obligations,
any employee who reasonably suspects or is aware of the preparation
or submission of a false claim or report or any other potential
fraud, waste, or abuse related to a Federal or State funded health
care program is required to report such information to his/her supervisor
and the Compliance Officer (or Compliance Liaison). Any employee
who reports such information will have the right and opportunity
to do so anonymously and will be protected against retaliation for
coming forward with such information both under our internal compliance
policies and procedures and Federal and State law. However, the
Hospital retains the right to take appropriate action against an
employee who has participated in a violation of Federal or State
law or Hospital policy or intentionally and maliciously reports
a false claim.
The
Hospital commits itself to investigate any suspicions of fraud,
waste, or abuse swiftly and thoroughly and requires all employees
to assist in such investigations. If an employee believes that the
Hospital is not responding to his or her report within a reasonable
period of time, the employee shall bring these concerns about the
Hospital’s perceived inaction to the Corporate Compliance Officer
or Compliance Liaison. Failure to report and disclose or assist
in an investigation of fraud and abuse is a breach of the employee’s
obligations to the Hospital and may result in disciplinary action,
up to, and including termination.
RELEVANT LAWS RELATING TO FILING FALSE CLAIMS:
I. FEDERAL LAWS
A. The Federal False Claims Act (31 USC §§3729-3733)
The
False Claims Act ("FCA") provides, in pertinent part, that:
1)
any person who
(A) knowingly presents, or causes to be presented, a false or fraudulent
claim for payment or approval;
(B)
knowingly makes, uses, or causes to be made or used, a false record
or statement material to a false or fraudulent claim;
(C)
conspires to commit [the above violations]; . . . or
(G)
knowingly makes, uses, or causes to be made or used, a false record
or statement material to an obligation to pay or transmit money
or property to the Government, or knowingly conceals or knowingly
and improperly avoids or decreases an obligation to pay or transmit
money or property to the Government,
***
is
liable to the United States Government for a civil penalty of
not less than $5,000 and not more than $10,000, plus 3 times the
amount of damages which the Government sustains because of the
act of that person...
For
purposes of this section,
(1)
the terms "knowing" and "knowingly"
(A) mean that a person, with respect to information--
(i) has actual knowledge of the information;
(ii)
acts in deliberate ignorance of the truth or falsity of the
information; or
(iii)
acts in reckless disregard of the truth or falsity of the information;
and
(B)
require no proof of specific intent to defraud; and
(2)
the term “claim”
(A) means any request or demand, whether under a contract
or otherwise, for money or property and whether or not the United
States has title to the money or property, that--
(i) is presented to an officer, employee, or agent
of the United States; or
(ii)
is made to a contractor, grantee, or other recipient, if the
money or property is to be spent or used on the Government's
behalf or to advance a Government program or interest, and if
the United States Government (I) provides or has provided any
portion of the money or property requested or demanded; or
(B)
will reimburse such contractor, grantee, or other recipient for
any portion of the money or property which is requested or demanded;
and
(3)
the term “obligation” means an established duty, whether or not
fixed, arising from an express or implied contractual, grantor-grantee,
or licensor-licensee relationship, from a fee-based or similar
relationship, from statute or regulation, or from the retention
of any overpayment; and
(4)
the term “material” means having a natural tendency to influence,
or be capable of influencing, the payment or receipt of money or
property. 31 U.S.C. § 3729.
While
the False Claims Act imposes liability only when the claimant acts “knowingly,” it
does not require that the person submitting the claim have actual
knowledge that the claim is false. A person who acts in reckless
disregard or in deliberate ignorance of the truth or falsity of
the information, also can be found liable under the Act. 31 U.S.C.
3729(b).
In
sum, the False Claims Act imposes liability on any person who submits
a claim to the federal government or a contractor of the federal
government that he or she knows (or should know) is false. An example
may be a physician who submits a bill to Medicare for medical services
she knows she has not provided.
The
False Claims Act also imposes liability on an individual who may
knowingly submit a false record in order to obtain payment from
the government. An example of this may include a government contractor
who submits records that he knows (or should know) are false and
that indicate compliance with certain contractual or regulatory
requirements.
The
third area of liability includes those instances in which someone
may obtain money from the federal government to which he may not
be entitled, and then uses false statements or records in order
to retain the money. An example of this so-called “reverse false
claim” may include a hospital who obtains interim payments from
Medicare throughout the year, and then knowingly files a false cost
report at the end of the year in order to avoid making a refund
to the Medicare program.
In
addition to its substantive provisions, the FCA provides that private
parties may bring an action on behalf of the United States. 31 U.S.C.
3730 (b). These private parties, known as “qui tam relators,” may
share in a percentage of the proceeds from an FCA action or settlement.
Section
3730(d)(1) of the FCA provides, with some exceptions, that a qui
tam relator, when the Government has intervened in the lawsuit,
shall receive at least 15 percent but not more than 25 percent of
the proceeds of the FCA action depending upon the extent to which
the relator substantially contributed to the prosecution of the
action. When the Government does not intervene, section 3730(d)(2)
provides that the relator shall receive an amount that the court
decides is reasonable and shall be not less than 25 percent and
not more than 30 percent.
B. Administrative Remedies for False Claims
(31 USC §§3801– 3812)
This
statute allows for administrative recoveries by federal agencies.
If a person submits a claim that the person knows is false or contains
false information, or omits material information, then the agency
receiving the claim may impose a penalty of up to $5,000 for each
claim. The agency may also recover twice the amount of the claim.
Unlike
the False Claims Act, a violation of this law occurs when a false
claim is submitted, not when it is paid. Also unlike the False
Claims Act, the determination of whether a claim is false, and
the imposition of fines and penalties is made by the administrative
agency, not by prosecution in the federal court system.
II. NEW YORK STATE LAWS
New
York’s false claims laws fall into two categories: civil and administrative;
and criminal laws. Some apply to recipient false claims and some
apply to provider false claims, and while most are specific to healthcare
or Medicaid, some of the “common law” crimes apply to areas of interaction
with the government.
A. Civil And Administrative Laws
1. NY False Claims Act (State Finance Law, §§187-194) --
The NY False Claims Act closely tracks the federal False Claims
Act. It imposes penalties and fines on individuals and entities
that file false or fraudulent claims for payment from any state
or local government, including health care programs such as Medicaid.
The penalty for filing a false claim is $6,000 -$12,000 per claim
and the recoverable damages are between two and three times the
value of the amount falsely received. In addition, the false claim
filer may have to pay the government’s legal fees.
The
Act allows private individuals to file lawsuits in state court,
just as if they were state or local government parties. If the
suit eventually concludes with payments back to the government,
the person who started the case can recover 25-30% of the proceeds
if the government did not participate in the suit of 15-25% if
the government did participate in the suit.
2. Social Services Law §145-b -- False Statements
It is a violation to knowingly obtain or attempt to obtain payment
for items or services furnished under any Social Services program,
including Medicaid, by use of a false statement, deliberate concealment
or other fraudulent scheme or device. The State or the local Social
Services district may recover three times the amount incorrectly
paid. In addition, the Department of Health may impose a civil
penalty of up to $2,000 per violation. If repeat violations occur
within 5 years, a penalty up to $7,500 per violation may be imposed
if they involve more serious violations of Medicaid rules, billing
for services not rendered or providing excessive services.
3. Social Services Law §145-c -- Sanctions If
any person applies for or receives public assistance, including
Medicaid, by intentionally making a false or misleading statement,
or intending to do so, the person’s, the person’s family’s needs
are not taken into account for 6 months if a first offense, 12
months if a second (or once if benefits received are over $3,900)
and five years for 4 or more offenses.
B. Criminal Laws
1. Social Services Law §145 -- Penalties
Any person who submits false statements or deliberately conceals
material information in order to receive public assistance, including
Medicaid, is guilty of a misdemeanor.
2. Social Services Law § 366-b -- Penalties for
Fraudulent Practices
(a) Any person who obtains or attempts to obtain, for
himself or others, medical assistance by means of a false statement,
concealment of material facts, impersonation or other fraudulent
means is guilty of a Class A misdemeanor.
(b)
Any person who, with intent to defraud, presents for payment and
false or fraudulent claim for furnishing services, knowingly submits
false information to obtain greater Medicaid compensation or knowingly
submits false information in order to obtain authorization to
provide items or services is guilty of a Class A misdemeanor.
3. Penal Law Article 155, Larceny -- The crime
of larceny applies to a person who, with intent to deprive another
of his property, obtains, takes or withholds the property by means
of trick, embezzlement, false pretense, false promise, including
a scheme to defraud, or other similar behavior. It has been applied
to Medicaid fraud cases.
(a) Fourth degree grand larceny involves property valued
over $1,000. It is a Class E felony.
(b)
Third degree grand larceny involves property valued over $3,000.
It is a Class D felony.
(c)
Second degree grand larceny involves property valued over $50,000.
It is a Class C felony.
(d)
First degree grand larceny involves property valued over $1 million.
It is a Class B felony.
4. Penal Law Article 175, False Written Statements --Four
crimes in this Article relate to filing false information or claims
and have been applied in Medicaid fraud prosecutions:
(a) §175.05, Falsifying business records involves entering
false information, omitting material information or altering an
enterprise’s business records with the intent to defraud. It is
a Class A misdemeanor.
(b) § 175.10, Falsifying business records in the first degree
includes the elements of the §175.05 offense and includes the
intent to commit another crime or conceal its commission. It is
a Class E felony.
(c) §175.30, Offering a false instrument for filing in the second
degree involves presenting a written instrument (including a claim
for payment) to a public office knowing that it contains false
information. It is a Class A misdemeanor.
(d) §175.35, Offering a false instrument for filing in the first
degree includes the elements of the second degree offense and
must include an intent to defraud the state or a political subdivision.
It is a Class E felony.
5. Penal Law Article 176 -- Insurance Fraud Applies
to claims for insurance payment, including Medicaid or other health
insurance and contains six crimes.
(a) Insurance Fraud in the 5th degree involves intentionally
filing a health insurance claim knowing that it is false. It is
a Class A misdemeanor.
(b)
Insurance fraud in the 4th degree is filing a false insurance
claim for over $1,000. It is a Class E felony.
(c)
Insurance fraud in the 3rd degree is filing a false insurance
claim for over $3,000. It is a Class D felony.
(d)
Insurance fraud in the 2nd degree is filing a false insurance
claim for over $50,000. It is a Class C felony.
(e)
Insurance fraud in the 1st degree is filing a false insurance
claim for over $1 million. It is a Class B felony.
(f)
Aggravated insurance fraud is committing insurance fraud more
than once. It is a Class D felony.
6. Penal Law Article 177 -- Health Care Fraud
Applies to claims for health insurance payment, including Medicaid,
and contains five crimes:
(a) Health care fraud in the 5th degree is knowingly
filing, with intent to defraud, a claim for payment that intentionally
has false information or omissions. It is a Class A misdemeanor.
(b)
Health care fraud in the 4th degree is filing false claims and
annually receiving over $3,000 in aggregate. It is a Class E felony.
(c)
Health care fraud in the 3rd degree is filing false claims and
annually receiving over $10,000 in the aggregate. It is a Class
D felony.
(d)
Health care fraud in the 2nd degree is filing false claims and
annually receiving over $50,000 in the aggregate. It is a Class
C felony.
(e)
Health care fraud in the 1st degree is filing false claims and
annually receiving over $1 million in the aggregate. It is a Class
B felony.
III. WHISTLEBLOWER PROTECTION
A. Federal False Claims Act (31 U.S.C. §3730[h])
The
FCA provides protection to any employee, contractor, or agent
who is discharged, demoted, suspended, threatened, harassed, or
in any other manner discriminated against in the terms and conditions
of their employment as a result of their lawful acts in furtherance
of other efforts to stop violations of the FCA. Remedies include
reinstatement with comparable seniority as the employee, contractor,
or agent would have had but for the discrimination, two times
the amount of any back pay, interest on any back pay, and compensation
for any special damages sustained as a result of the discrimination,
including litigation costs and reasonable attorneys’ fees.
B.
NY False Claim Act (State Finance Law §191)
The
New York State False Claim Act also provides protection to qui
tam relators who are discharged, demoted, suspended, threatened,
harassed, or in any other manner discriminated against in the terms
and conditions of their employment as a result of their furtherance
of an action under the Act. Remedies include reinstatement with
comparable seniority as the qui tam relator would have had but
for the discrimination, two times the amount of any back pay, interest
on any back pay, and compensation for any special damages sustained
as a result of the discrimination, including litigation costs and
reasonable attorneys’ fees.
C.
New York Labor Law §740
An
employer may not take any retaliatory action against an employee
if the employee discloses information about the employer’s policies,
practices or activities to a regulatory, law enforcement or other
similar agency or public official. Protected disclosures are those
that assert that the employer is in violation of a law that creates
a substantial and specific danger to the public health and safety
or which constitutes health care fraud under Penal Law §177 (knowingly
filing, with intent to defraud, a claim for payment that intentionally
has false information or omissions). The employee’s disclosure
is protected only if the employee first brought up the matter with
a supervisor and gave the employer a reasonable opportunity to
correct the alleged violation. If an employer takes a retaliatory
action against the employee, the employee may sue in state court
for reinstatement to the same, or an equivalent position, any lost
back wages and benefits and attorneys’ fees. If the employer is
a health provider and the court finds that the employer’s retaliatory
action was in bad faith, it may impose a civil penalty of $10,000
on the employer.
D.
New York Labor Law §741
A
health care employer may not take any retaliatory action against
an employee if the employee discloses certain information about
the employer’s policies, practices or activities to a regulatory,
law enforcement or other similar agency or public official. Protected
disclosures are those that assert that, in good faith, the employee
believes constitute improper quality of patient care. The employee’s
disclosure is protected only if the employee first brought up the
matter with a supervisor and gave the employer a reasonable opportunity
to correct the alleged violation, unless the danger is imminent
to the public or patient and the employee believes in good faith
that reporting to a supervisor would not result in corrective action.
If an employer takes a retaliatory action against the employee,
the employee may sue in state court for reinstatement to the same,
or an equivalent position, any lost back wages and benefits and
attorneys’ fees. If the employer is a health provider and the court
finds that the employer’s retaliatory action was in bad faith,
it may impose a civil penalty of $10,000 on the employer.
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