Meet the new quality cop on the hospital beat.
He's not from the Joint Commission or the Leapfrog Group or the acronym soup of quality organizations. He's your friendly federal prosecutor, and he's aiming to train legal six-shooters on hospitals.
"We've seen increasing numbers of cases when providers have withheld or provided unnecessary services and then billed government programs," says Paul Murphy, associate deputy U.S. attorney general and healthcare fraud coordinator. "We've seen providers sacrificing the health and well-being of patients to pad the bottom line and rip off government health programs, and we find it a disturbing trend."
Murphy, who made his remarks at the recent American Bar Association's 13th Annual National Institute on Health Care Fraud in Las Vegas, says his office will look at the conduct of institutions, the nature and seriousness of the alleged offenses, and whether those practices extend to management.
"We're not going to refrain from charging a corporate entity just because it's a healthcare provider," he says. "We're certainly interested in quality of care."
While in the past hospitals may have worried that a failed surgery or gross medication error might result in a punishment from the Joint Commission on Accreditation of Healthcare Organizations or a messy malpractice lawsuit, patterns of negligent care, histories of unnecessary care and the repeated harming of patients now are drawing the heavy fire of federal fraud enforcement agencies and the unwelcome intrusion of government investigators.
Murphy says the U.S. Justice Department is increasingly focusing enforcement resources on quality-of-care issues. And government investigations, including information requests served to HCA-owned Cedars Medical Center in Miami and still-unsealed whistleblower lawsuits against hospitals around the country, indicate a growing interest by federal enforcement authorities in the quality of care delivered in hospitals.
For years government fraud enforcement officials have warned hospital administrators, compliance officers and their lawyers of a coming wave of investigations into the quality of care that facilities provide. They cautioned providers that the same tsunami that swept through the nursing home industry in the past five years--spurring dozens of False Claims Act whistleblower lawsuits that cost nursing homes millions of dollars in civil recoveries and even criminal pleas--could plow through the industry.
Recent high-profile raids and investigations demonstrate that the future is now and that regulators have begun acting on their threats. Government agencies are throwing the full weight of their administrative, civil and criminal powers at providers who fail to deliver a minimal standard of healthcare, citing the failure to do so as a potential civil or criminal offense.
At United Memorial Health Center in Greenville, Mich., which pleaded guilty to healthcare fraud, an anesthesiologist performed multiple nerve-blocking procedures on patients who didn't need the treatments. That doctor brought in millions of dollars to the hospital from the unnecessary surgeries. On one patient he billed for complex invasive nerve procedures he performed on a nerve that already had been extracted. On a different patient he performed delicate surgeries on the lumbar part of the spine when diagnostic tests indicated the problem was in the cervical spine. One patient became a paraplegic after a botched surgery and still another died before hospital administrators acted.
"Multiple patients suffered respiratory disorders after unnecessary surgery was performed," says Glenn Martin, assistant U.S. attorney in Lansing, Mich., who prosecuted and convicted the doctor, Jeffrey Askanazi. In a plea agreement, the hospital paid a $1.05 million fine and reimbursed insurers more than $750,000. The hospital admitted it falsely billed insurers for pain management procedures it knew were unnecessary and placed patients at risk.
"He was running a surgical mill and many of the procedures should never have been performed, and the hospital knew it."
Increasingly federal prosecutors are viewing as potential false billings those claims that are submitted when a patient has been harmed or injured as a result of treatment. The legal theory driving these investigations, which has not been widely tested in courts, is that if hospitals do not deliver the minimum level of healthcare quality and still bill government health insurance programs such as Medicare and Medicaid, they are submitting false claims.
The tools government agencies possess are formidable. The most frightening weapons are a series of criminal laws. Although there are no laws with explicit punitive provisions for specifically punishing poor quality of care, charging government programs for unnecessary surgery, services not provided or inappropriately rendered services may trigger criminal healthcare fraud laws. Often federal income tax laws and wire and postal fraud statutes can be invoked. And prosecutors say it's easier to make a case under those statutes. If hospital administrators and corporate board members either fail to act upon information when informed or falsely certify compliance with Medicare conditions of participation, they may invoke the recently enacted Sarbanes-Oxley Act and other corporate malfeasance laws.
One of the most powerful weapons for federal officials--and potentially the most expensive for healthcare providers--is the federal False Claims Act. Although it's a civil statute, it allows the government to seek triple the amount of alleged false claims and up to $10,000 per alleged fraudulent bill, potentially costing hospitals millions of dollars in penalties. And civil suits under that law can be filed not only by government officials but also by private citizens.
The False Claims Act is a Civil War-era law aimed at preventing and prosecuting fraud among government contractors. It was revised in 1986 to encourage whistleblowers with intimate knowledge of fraudulent activity to report that conduct to authorities. If the government intervenes in the allegations, it takes over the case and rewards the whistleblower up to 25% of the settlement recovery, giving a whistleblower an enticing incentive to report crooked behavior.
In addition, HHS' inspector general can invoke civil monetary penalties and use its power to exclude providers from federal healthcare plans such as Medicare and Medicaid--the kiss of death to healthcare organizations dependent upon government reimbursements. Exclusions are limited to extreme cases and seldom are used against hospitals, although last year a California hospital was excluded for one week.
Federal authorities say in current investigations, government investigators and prosecutors are asking if nurse-staffing shortages may have contributed to error or injury. They say the repeated failure to provide nutrition, monitor medication, deliver safe and consistent wound care and keep patients free of infection could qualify as potential violations of Medicare's conditions of participation. The legal theory behind the ongoing probes stemmed from failure to care for nursing home patients. Just how these investigations will affect hospitals remains unknown.
American Hospital Association spokesman Richard Wade says the government will find far fewer egregious cases of poor healthcare quality than investigators believe. "The whole issue of hospital quality and safety has risen to the top of every hospital administrator's agenda," Wade says. "I think if you look at the Joint Commission's sentinel-events policy, tighter risk management programs, internal quality programs and the peer-review system, you'll see hospitals have enormous incentive to be tougher on doctors within their medical staffs."
Wade says that when the government finds flagrant cases it should prosecute them vigorously. "They have a duty to pursue that," he says. "But we've always felt the False Claims Act was the wrong vehicle for doing this. A Civil War law involving horses is not appropriate. It is not the right vehicle to go after billing errors and it's not the right vehicle to go after quality-of-care issues."
Driven by quality issues
Fort Lauderdale, Fla.-based healthcare fraud lawyer Gabriel Imperato of the firm Broad and Cassel says some government investigations have quality-of-care implications and may have been driven by quality issues, even when the settlement or criminal plea doesn't directly cite those as factors.
"The theory of invoking the False Claims Act violation because of worthless services is easily transferrable to any other segment of the healthcare provider community," Imperato says. "This is an enforcement phenomenon that is gaining momentum and we may be seeing the beginning of a more directed effort by whistleblowers and government prosecutors to make healthcare quality the end goal. If I were a hospital administrator, I'd be really concerned."
Imperato--who has defended hospitals, health systems and other providers and served as an expert witness or consultant in several prominent healthcare cases, including the trial of convicted Kansas City, Mo., hospital executive Dan Anderson and the Olsten Corp.-Columbia/HCA Healthcare Corp. federal investigation--points to the United Memorial case as an example of government enforcement efforts in healthcare quality and corporate accountability.
Earlier this year, that hospital pleaded guilty to defrauding Medicare, Medicaid and two private insurers and one of its star physicians, Askanazi, was convicted of 33 counts of mail fraud for falsely billing Medicare and Medicaid for unnecessary surgeries and other procedures. Askanazi left the hospital after a patient died in 1996 and two years later he was convicted of fraud.
Askanazi "did some pretty horrible things to his patients," Imperato says. "I've always looked at it as a quality-of-care case."
Martin says the government isn't just huffing and puffing on the topic of quality. "There are other cases like this going forward around the country."
But Martin concedes that federal authorities proceed cautiously because of the potential collateral consequences. "U.S. attorneys are reluctant to bring criminal indictments against healthcare institutions if there is an alternative remedy possible, knowing that the result may be the providers are disbarred from Medicare and effectively put out of business," he says, which could greatly disrupt healthcare services within a community.
James Sheehan, the assistant U.S. attorney in Philadelphia whose office began the series of False Claims Act lawsuits against local nursing homes in the 1990s, says the category of providers has expanded beyond nursing homes to residential psychiatric treatment centers, dialysis centers and other institutions where patient healthcare options are limited.
"I think hospitals should expect to see prosecutorial interest in this area as well," Sheehan says. He says the government is looking into violations of personal autonomy, such as the use of straitjackets and other forms of chemical and physical restraints and whether patient rights have been abused or ignored. He says patients have been involved in research projects without their consent, another area of government interest.
Regulators are looking into healthcare treatment rendered by unlicensed hospital personnel, particularly when adverse events occur in patterns, he says, adding that investigators are examining issues such as staffing shortages that can affect healthcare quality. Sheehan says providers who bill for worthless, unnecessary or incorrectly performed services also can expect to hear from authorities.
"I see this as a coming attraction in the years ahead," Sheehan says.
Lewis Morris, chief counsel to HHS' inspector general, says his agency is expanding its enforcement efforts into healthcare quality. "One of the reasons we have prioritized kickback cases is simple: When you bribe a doctor there are not only financial implications, but the arrangements also distort physician decisionmaking," Morris says. "If the reason for prescribing a drug has less to do with the patient's condition and more to do with a free trip to Phoenix, then to us that becomes a quality-of-care issue."
Like Imperato, Morris says quality of care may not appear prominently in the complaint, but that doesn't mean it's not an underlying issue.
"I can tell you it's one of the driving forces moving these cases, motivating prosecutors and driving settlements," he says. Morris recalled a case against a nursing home owner who didn't pay suppliers, so they refused to deliver goods. "He himself never provided care," Morris says, "but as owner he was liable for the delivery of substandard care. He agreed to settle the case and be excluded from Medicare and Medicaid based on his causing the submission of claims we believe were false."
Morris says the inspector general's office has taken a keen interest in hospital quality of care, particularly if patients were harmed by unnecessary procedures and if management knew about the problems but failed to act to protect patients. Although Morris declines to comment on pending cases, a Tenet Healthcare Corp. spokesman earlier this month confirmed that the inspector general has sent administrative subpoenas regarding the Redding, Calif., case. Those information requests also threaten to exclude physicians who deliver negligent care and even a hospital if it allowed substandard care to be delivered with management's knowledge.
"Yes, we are pursuing quality-of-care cases outside of the long-term-care context," Morris says. "There are actual cases being brought and we are applying the theories to hospital settings and have matters under review. ... They have a fiduciary duty to present the best possible care."
At the law firm Ropes & Gray, Boston lawyer Dan Roble and his Washington colleague, Paul Danello, each work on quality-of-care issues. Roble represents organizations such as the Leapfrog Group, the Jackson Hole Group and the Foundation for Accountability, leaders of the growing evidence-based medicine and quality-improvement movement. Danello, a former lawyer with HHS' inspector general's office, defends healthcare providers charged with failure to provide appropriate care.
Roble says the organizations he represents seek to affect healthcare quality through a variety of incentive programs aligning the interests of doctors and hospitals.
"We've had the impediments of the inspector general's opinions on gain-sharing, but if you take quality measurements and evidence-based medicine and make those part of a quality program in hospitals that produces quality outcomes, you can prove that you've improved the quality of care and won't be violating the gain-sharing prohibitions," he says.
Gain-sharing programs align hospital and physician interests by offering incentives to achieve cost savings, but HHS' inspector general has severely restricted the practice.
"We believe that one of the very best ways to confront this issue of civil and criminal offenses is by putting quality programs in place in hospitals to eliminate those concerns," Roble says.
He says hospital chief executive officers are fighting daily battles and don't have the time or resources to look far down the road. "Outside pressures from government regulators could help create the environment that this is a dilemma they must face up to."
Danello says the inspector general's office and other federal enforcers are focusing on quality and have identified more than a dozen areas of interest. "This hasn't been announced as a national initiative, like the clinical lab investigations or DRG upcoding. It's not a formal policy and is much more open-ended. But there is an interest in attacking these problems as opportunities present themselves."
He says that as budget deficits grow and financial resources available for healthcare diminish, enforcement agencies look to quality of care not only to ensure that Medicare and Medicaid beneficiaries are receiving care appropriately, but that the money isn't squandered.
"I think this is a winning issue and a winning argument," Danello says. "It's not just a reimbursement issue, but a quality issue examining how outcomes are tied to reimbursements. I think hospitals would be wise to note the attention this has attracted."
Jim Moriarty is a Houston lawyer representing hundreds of Redding (Calif.) Medical Center patients who are suing two doctors, the hospital and the hospital's owner, Tenet, over allegedly unnecessary heart surgeries. He says the focus of the lawsuits isn't medical malpractice but fraud and breach of fiduciary duty. He says many can be harmed when hospitals and health systems pre-empt the medical integrity of the patient relationship.
"Those who get surgery don't know if they can trust the doctors, people who get surgery they don't need are harmed, and those who receive surgery they don't need in lieu of treatment they require can be harmed the most," says Moriarty, who successfully sued Tenet predecessor National Medical Enterprises on behalf of hundreds of patients who were hospitalized against their will in Texas.
Los Angeles whistleblower lawyer Mark Kleiman says government interest in quality-of-care issues was provoked by what he calls "the Enronization of healthcare."
"In a world where patients are thought of as mass-produced commodities like tacos or soft drinks, injury or harm to patients is considered collateral damage," Kleiman says. "The government has noticed and recognized that if they don't intervene, nobody else will. They've seen decisions driven by money and not patient welfare and that concerns them."
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