Operational Silos can Increase False Claims Risk

Kathleen Spears, CISA, CHC

Aegis Compliance and Ethics Center, LLP

Operational Silos can Increase False Claims Risk

In May 2015, the Department of Justice (“DOJ”) settled False Claim Act (“FCA”) allegations with ambulance company Century Ambulance, as well as four hospitals in Florida. The government contended that the ambulance service up-coded their claims by billing for unnecessary transport services that were not medically justified. Although the claims were supported by signed Certificates of Medical Necessity (“CMN”s), the medical records and/or diagnosis of the patients did not support the transportation or levels of the subsequent billing claims.  The DOJ and the qui-tam relator alleged a wide scale scheme existed to fraudulently bill the government.

What Operational Forces were in Play?

As a compliance professional, I’m always interested in the operational “silos” at play in healthcare and how ignorance of complex billing rules and/or routine interactions between healthcare providers, can lead to unintended FCA allegations and hefty settlements.

There are many nuances to the emergent and non-emergent transport billing rules, however in my opinion, it is often questionable whether a a true scheme between the ambulance companies and the hospitals existed to perpetrate a fraud of this magnitude. As I read the press release, I started thinking, “How could this happen – especially across four hospitals”?

This thought led to others:

  • Did the emergency physicians understand the impact of signing the CMN certificates? Based on the fast work pace and trust with the EMS crews, could the physicians have just signed what was put in front of them to turn the beds faster?
  • Did hospital administrators realize their physicians were being asked to sign these CMNs? Did the through-put metrics influence any of the operational decisions on the floor?
  • Were the EMS crews motivated to just get their paperwork signed by the doctors so they could “turn and burn” for the next call?
  • Was the billing staff merely working from a check list and not understanding what was going on with the ER or EMS crews? Were claim production metrics at play?
  • Did compliance audit and monitor to review billing trends and patterns?

Unfortunately, institutional pressures exist in every area of healthcare delivery; resources are stretched, both clinically and administratively. We do not know if any of these scenarios occurred based on the DOJ press release, however the operational actions (or inaction) of the individual silos that may have resulted in a FCA violation is a risk we all face. From my experience, wide spread schemes are not always the cause in such scenarios. However, it is important to note that the absence of a scheme does not, on its own, alleviate FCA liability.

The Knowledge Factor and the FCA

Ignorance of regulations and billing policies is no defense against an FCA violation – whether it be front line physicians or billing staff –  and the DOJ has the means and resources to prosecute. But to do so, the government must show that a provider had knowledge of the false claim. Knowledge can either be (1) actual knowledge, (2) deliberate ignorance of the truth or falsity of the information, or (3) reckless disregard of the truth or falsity of the information. The full statute can be found here.

In this case, one of the ambulance companies and four area hospitals took a settlement of the False Claims allegations, rather than face a trial. They did not admit to any wrongdoing or liability under FCA and this settlement strategy is very common and often less costly or perilous than fighting the DOJ. There was one hold-out to the settlement – another ambulance company (Liberty Ambulance) originally named in the relator’s case. Fast forward to January 2016 and after the government’s first pass at prosecuting Liberty for FCA, the judge determined that there was insufficient evidence of the “unlawful scheme” as outlined in the allegations and that the government needed to file a new FCA complaint. The court dismissed the government’s case without prejudice. The government did not file an amended claim before the deadline, which could suggest the DOJ had difficulty proving that Liberty Ambulance had the required knowledge for an FCA violation. Please note, the decision to either settle or go to trial in a FCA case is best made between you, your organizational leaders and your legal counsel.


The Moral of the Story

When FCA allegations like the one above make headlines, a compliance professional should ask themselves the following questions: What operational failures need to occur for my organization to be featured in a similar fashion? Are all parties involved in the reimbursement cycle (from physicians to billing to EMS crews to auditors) aware of the seriousness of potential FCA penalties and how to actively prevent fraudulent billing? What operational silos exist in my organization that may fuel a potential compliance failure and how do I use my role in compliance (and the knowledge of my front-line staff) to break down these silos?

By asking yourself these questions, you have taken the first step in reducing your FCA liability risk.




Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s