Pushed by other industry groups and lawmakers, the American Hospital Association is looking for a way to end an increasingly bitter dispute with the U.S. Justice Department. The AHA is seeking a deal that would give federal fraud fighters guidelines on the use of the False Claims Act in investigations of hospitals but leave the law itself unchanged.
In a letter sent last month to Eric Holder, deputy attorney general at the Justice Department, the AHA suggested that federal officials "develop and publish national enforcement guidelines concerning investigations of hospitals, whether under the FCA or any other federal law."
MODERN HEALTHCARE obtained a copy of the confidential correspondence last week.
Guidelines could allow both the AHA and the Justice Department to save face in their dispute. The AHA would get some parameters on the use of the False Claims Act. In turn, the law would be left intact -- a bottom-line requirement for the Justice Department.
The False Claims Act allows authorities to tack on penalties of three times the actual damages. Providers complain that the threat of penalties often forces them to agree to settlements rather than risk losing a court fight (See box, p. 6).
"The AHA has to find a way to make this a win-win situation because they can't beat the (Justice Department)," said one hospital lobbyist, who asked not to be identified.
The AHA isn't the only organization looking for a compromise.
Last week a House Judiciary subcommittee held a hearing on a bill that would curb the use of the False Claims Act against hospitals. The AHA-backed bill has more than 120 sponsors in the House. A companion version was introduced last week in the Senate by Sens. Thad Cochran (R-Miss.) and Ernest Hollings (D-S.C.).
Rep. Lamar Smith (R-Texas), chairman of the subcommittee, privately asked the AHA to work with Justice Department officials on a compromise, according to AHA sources. In his opening statement at the hearing, Smith said both sides "would benefit from having written procedures."
The American Association of Retired Persons said in testimony that "it would not be appropriate or necessary for Congress to change the False Claims Act. It would make sense, however, for standards to be established to guide enforcement authorities."
Despite a lack of empirical evidence that federal antitrust laws or enforcement policies were stifling healthcare mergers and acquisitions, the AHA and other provider groups threatened to pursue federal legislation that would diminish the Justice Department's and FTC's antitrust authority. Fearing a loss of power, the agencies released guidelines and later expanded them, again under industry pressure.
According to John Rother, the AARP's director of legislation, research and public policy, the association plans to talk with both sides about finding a solution to the latest fight.
One stumbling block is the AHA's request that the Justice Department include nearly everything in the fraud guidelines that now is in its proposed legislation. Among the provisions sought is a "materiality threshold" letting hospitals with less than $100,000 in improper claims refund the overpayment without threat of damages. The AHA also wants the Justice Department to agree to "state that no threats of criminal prosecution may be used to force hospitals to accept civil settlements."
In an April 24 response, Holder said the Justice Department could not agree to any safe harbors or to the materiality threshold. Holder also chided the AHA for charges against the Justice Department that "reflect incomplete or inaccurate information about the Department's enforcement activities."
Holder added, however, that the Justice Department was creating task forces that would "develop best practice guidance and basic parameters" for federal fraud investigations.
D. McCarty Thornton, chief counsel to HHS' inspector general's office, also said federal officials aren't likely to agree to everything the AHA seeks. "We have trouble establishing `free-fraud' zones," Thornton said.