Gail Jankowski
Executive Editor
Loyola University Chicago School of Law, JD 2016
Although the DOJ reached 70 settlements involving 457 hospitals in 43 states for more than $250 million related to cardiac devices that were implanted in Medicare patients which violated coverage requirements, they were not done yet. Another batch of 51 hospitals settled $23 million on the same cardiac devices on February 17, 2016.
The settlements involve allegations of fraudulent billing for the implantation of implantable cardioverter defibrillators (ICD)s, electronic devices that detect and treat life-threatening heart rhythms. The device costs approximately $25,000, is governed by a National Coverage Determination (NCD 20.4), and is covered by Medicare only for patients with certain clinical characteristics and risk factors. CMS implemented the NCD based on clinical trials and the NCD only allows coverage after a waiting period for patients who have recently suffered a heart attack or recently had heart bypass surgery or angioplasty. Specifically, ICDs are not reimbursed by Medicare if they are implanted in patients prior to 40 days after a heart attack and prior to 90 days after a bypass or angioplasty. This time period allows a patient’s heart to improve function on its own to the point that an ICD may not be necessary. The NCD expressly prohibits coverage of ICDs during these waiting periods, with certain exceptions. However, the DOJ alleged that from 2003 to 2010, each of the settling hospitals implanted ICDs during the periods prohibited by the NCD and sought reimbursement from Medicare. DOJ investigated and pursued legal enforcement of these False Claims Act allegations as it pertains to Medicare coverage requirements and fraudulent billing.
Most of the defendants were named in a qui tam lawsuit (or whistleblower lawsuit) brought under the False Claims Act (FCA). The FCA permits private citizens to bring lawsuits on behalf of the United States and receive a portion of the proceeds of any settlement or judgment awarded against a defendant. So far, the whistleblowers have received more than $40 million from these settlements, and the DOJ continues to investigate additional hospitals and health systems. The DOJ has stated that this is one of the largest whistleblower lawsuits in the United States and represents one of this office’s most significant recoveries to date.
Today’s whistleblower is keenly aware of the increasingly strict regulatory landscape of health care compliance. A qui tam relator is not always merely pursuing a giant settlement award, and in fact, more often than not, he or she has tried to address the compliance issues internally and was rebuffed. Therefore, a health care organization must create a culture of compliance, from entry-level employees up to executives, in order to effectively navigate the increasingly intricate dangers of fraud and abuse risks.
Furthermore, the complexity of laws such as the False Claims Act makes this all the more important. With new and evolving regulations, stake are higher for these claims, and vigorous compliance programs become more essential. An organization’s compliance program should regularly check for problems internally, and compliance personnel should be vigilantly identify potential problems and establish proactive internal audit programs where necessary.
It does not seem that DOJ has finished it efforts in ferreting out fraud involving implantable cardiac devices. Many hospital compliance programs have taken these settlements as a signal to increase diligent efforts in auditing submission of claims for cardiac devices. The compliance program’s auditing plan provides an important mechanism to test whether the organization has reimbursement risk. If it does, then the organization must change its practices and clean up the past for any overpayments from federal health care programs or the hospital could be part of a third DOJ press release sometime in the likely not too distant future.
[1] October 30, 2015 press release [2] February 17, 2016 press release