The inspector generals office of HHS wants healthcare executives to know it will go after them for the sins of their organizations and spend whatever time and resources are needed to investigate allegations and litigate the penalties imposed.
The office last week touted victory in a case launched 10 years ago against officers of a home-care agency that has since been sold. Stephen Godek, senior counsel for the office and the one who led the case, said the win should be viewed broadly as a signal of HHS willingness to pursue its administrative enforcement through the courts.
Its the first time, he said, that a circuit court has ruled on the offices use of enforcement tools under the Civil Monetary Penalties Law.
HHS Inspector General Daniel Levinson in a written statement called the decision an important affirmation of the OIGs use of our administrative enforcement tools against corporate owners and executives who are responsible for Medicare and Medicaid fraud.
On Aug. 7, the 8th U.S. Circuit Court of Appeals in St. Louis affirmed sanctions that HHS levied against executives of a home-care agency that submitted cost reports with 192 items or services the inspector generals office determined had nothing to do with patient care or reasonable operations.
Nearly all of dozens of HHS enforcement actions since 2001 have led to agreements with the targeted providers, who dispose of the allegations with a mix of fines, integrity agreements and periods of exclusion from federal programs, but maintain they never did anything wrong.
Also of note, Godek said, the punishment was meted out to people rather than the company. Were holding individuals accountable for their conduct.
The individuals in question were running Hawkeye Health Services, which at the time was the largest home-care company in Iowa, according to the 8th Circuit opinion. Working off tips from a former employee and the ex-wife of chief executive officer and owner Thomas Horras in 1997, HHS determined that Horras submitted or caused to be submitted cost reports that included lease payments for luxury vehicles, club dues and professional fees for business valuation needed in his divorce proceedings.
HHS fined Horras $38,000, assessed another $784,000 for damages and banned him from billing Medicare or Medicaid for seven years. The companys finance director was held accountable as well, with lesser penalties in each category. An administrative law judge upheld the result in 2005 and the case wended through departmental review and up to the 8th Circuit.
In the meantime, Hawkeye was part of a multipronged merger in 1999 that yielded Austin, Texas-based Auxi Health.
Healthcare lawyers who observed HHS announcement of the Hawkeye decision said the win may embolden the inspector generals office even if it doesnt significantly change the legal landscape. The OIG is fond, if you will, of taking advantage of favorable press, said Brian Annulis, a partner in Katten Muchin Rosenman in Chicago. If you believe what was alleged to be true, hopefully thats not something thats going on on a regular basis anyway.
But Robert Homchick, a partner at Davis Wright Tremaine in Seattle, said HHS may be encouraged to be more aggressive in the way it wields its enforcement authority. The government has had little luck convicting individuals of late, so it may be that the CMP (civil monetary penalties) route will start to look more attractive, Homchick said.