Federal Deficit Reduction Act / False Claims Act
To provide information about the role of certain federal and state laws in preventing and detecting fraud, waste, and abuse in state and federal health care programs.
It is the policy of Robert Wood Johnson University Hospital to provide health care services in a manner that complies with applicable federal and state laws and that meets the highest standards of business and professional ethics. To further this policy, and in compliance with Section 6032 of the Federal Deficit Reduction Act of 2005, Robert Wood Johnson University Hospital provides the following information about its policies and procedures and the role of certain federal and state laws in preventing and detecting fraud, waste, and abuse in federal health care programs.
I. Summary of Federal and State Laws
Federal False Claims Act, 31 U.S.C. §§ 3729-3733
The Federal False Claims Act imposes liability on any person who:
(1) knowingly files a false or fraudulent claim for payment to Medicare, Medicaid, or any other federally funded health care program;
(2) knowingly uses a false record or statement to obtain payment on a false or fraudulent claim from Medicare, Medicaid, or any other federally funded health care program; or
(3) knowing and improper retention of an overpayment
(4) does any of the above to obtain federally funded health care program money regardless of whether the claim was submitted directly to the government; or
(5) conspires to violate any requirement of the Federal False Claims Act.
“Knowingly” means (1) having actual knowledge that the information on the claim is false; (2) acting in deliberate ignorance of whether the claim is true or false; or (3) acting in reckless disregard of whether the claim is true or false.
A person or entity found liable under the Federal False Claims Act is generally subject to civil money penalties of between $5,500 and $11,000 per claim plus three times the amount of damages that the government sustained because of the illegal act plus the government cost in recovering penalties and damages. In health care cases, the amount of damages sustained is the amount paid for each claim that is filed that is determined to be false.
Anyone may bring a qui tam action under the Federal False Claims Act in the name of the United States. The case is initiated by filing the complaint and all available material evidence under seal with a federal court. The complaint remains under seal for at least 60 days and will not be served on the defendant. During this time, the government investigates the complaint. The government may also request additional investigation time beyond 60 days. After expiration of the review and investigation period, the government may elect to pursue the case in its own name or decide not to pursue the case. If the government decides not to pursue the case, the person who filed the action has the right to continue with the case on his or her own.
If the government proceeds with the case, the person who filed the action will generally receive between 15% and 25% of any recovery, depending on the contribution of that person to the prosecution of the case. If the government does not proceed with the case, the person who filed the action will be entitled to between 25% and 30% of any recovery, plus reasonable expenses and attorneys’ fees and costs.
Federal Program Fraud Civil Remedies Act, 31 U.S.C. §§3801-3812
The Federal Program Fraud Civil Remedies Act (“PFCRA”) creates administrative remedies for making false claims and false statements. These penalties are separate from and in addition to any liability that may be imposed under the False Claims Act.
The PFCRA imposes liability on people or entities that file a claim that they know or have reason to know:
(1) is false, fictitious, or fraudulent;
(2) includes or is supported by a written statement that contains false, fictitious, or fraudulent information;
(3) includes or is supported by a written statement that omits a material fact, which causes the statement to be false, fictitious, or fraudulent, and the person or entity submitting the statement has a duty to include the omitted fact; or
(4) is for payment for property or services not included as claimed.
A violation of this section of the PFCRA is punishable by a $5,500 civil penalty for each wrongfully filed claim, plus an assessment of twice the amount of any unlawful claim that has been paid.
In addition, a person or entity who violates the PFCRA by submitting a written statement that the person or entity knows or should know (1) asserts a material fact that is false, fictitious, or fraudulent; or (2) omits a material fact that they had a duty to include, the omission caused the statement to be false, fictitious, or fraudulent, and the statement contained a certification of accuracy.
A violation of this section of the PFCRA carries a civil penalty of up to $5,500 in addition to any other remedy allowed under other laws.
“New Jersey False Claims Act, N.J.S.A. 2A:32C-1 to 2A:32C-17
This law was enacted on January 13, 2008 and took effect on March 13, 2008. It authorizes the New Jersey Attorney General and whistleblowers to file false claims lawsuits similar to what is authorized under the Federal False Claims Act. It also says that violations of the New Jersey False Claims Act also create liability under the New Jersey Medical Assistance and Health Services Act, discussed below.”
New Jersey Medical Assistance and Health Services Act, N.J.S.A. §§ 30:4D-1, et seq.
The New Jersey Medical Assistance and Health Services Act (“NJMAHSA”) makes it a misdemeanor for:
(1) any person to willfully obtain benefits to which he or she is not entitled and any provider to willfully receive payments to which the provider is not entitled, and;
(2) a person, entity, or provider to:
A. knowingly and willfully make or cause to be made a false statement or representation of a material fact in any cost study, claim form, or document necessary to apply for or receive a benefit or payment under the NJMAHSA, or;
B. knowingly and willfully make or cause to be made a false statement of material fact for use in determining rights to such benefit or payment, or;
C. conceal or fail to disclose the occurrence of an event that affects the initial or continued right to any such benefit or payment with an intent to fraudulently secure benefits or payments not authorized under the NJMAHSA, or;
D. knowingly and willfully convert benefits or payments to a use other than for which they were received.
A conviction carries a penalty of up to $10,000 for the first and each subsequent offense and/or imprisonment for up to three years.
In addition, any person, entity, or provider who solicits, offers, or receives any kickback, rebate, or bribe in connection with the furnishing of items or services for which payment may be made or whose cost may be reported in order to obtain or in connection with the receipt of benefits/payments under the NJMAHSA, will be liable for a penalty of up to $10,000 and/or up to three years imprisonment.
Whoever knowingly and willfully makes, causes to be made, or induces or seeks to induce the making of a false statement of material fact with respect to conditions or operations of a facility so that the facility may qualify as a hospital, skilled nursing facility, intermediate care facility, or health agency will be guilty of a high misdemeanor and will be liable for a penalty of up to $3,000 and/or up to one year in prison.
Any person, entity or provider who violates any of the above provisions will also be liable for civil penalties of (1) interest at the maximum legal rate on the benefits or payments, (2) an amount of up to three times the amount of the benefits, and (3) an amount equal to the civil money penalties provided for under the Federal False Claims Act, currently between $5,500 and $11,000 per improper claim for benefits or payment.
Any person, entity or provider who, without intent to violate the NJMAHSA, obtains benefits or payments in excess of the entitled amount, may be liable for a civil penalty of the payment of interest on the excess benefits or payments at the maximum legal rate.
A provider or person participating in a benefit program or acting as agent, employee or independent contractor of a provider may be suspended, debarred or disqualified for good cause.
New Jersey Health Care Claims Fraud Act, N.J.S.A. §§ 2C:21-4.2, 4.3; 2C:51-5
The New Jersey Health Care Claims Fraud Act (“NJHCCFA”) makes it (1) a second-degree crime for any “practitioner” to knowingly commit health care claims fraud in the course of providing professional services, and (2) a third-degree crime for any “practitioner” to recklessly commit health care claims fraud in the course of providing professional services.
The NJHCCFA further makes it (1) a third-degree crime for non-practitioners to knowingly commit health care claims fraud, (2) a second-degree crime for non-practitioners to knowingly commit five or more acts of health care claims fraud if the aggregate pecuniary benefit obtained or sought is $1,000 or more, and (3) a fourth-degree crime for non-practitioners to recklessly commit health care claims fraud.
A person convicted under this statute may also be subject to a fine of up to five times the pecuniary benefit obtained or sought, as well as, in the case of an offending practitioner, suspension or forfeiture of his or her professional license.
“Practitioner” means a person licensed, registered, or certified by any state agency to practice a profession or occupation in New Jersey or another jurisdiction.
“Recklessly” means consciously disregarding a substantial and unjustifiable risk that the fraud exists or will result from the person’s conduct. The risk must be such that its disregard involves a gross deviation from the standard of conduct that a reasonable person would observe in the actor’s situation.
Protections Against Retaliation
Individuals within an organization who observe activities or behavior that may violate the law in some manner and who report their observations either to management or to governmental agencies are provided protections under certain laws.
For example, the Federal False Claims Act includes protections for people who file qui tam lawsuits as described above. The Federal False Claims Act states that any employee who is discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of employment because of lawful actions taken in furtherance of a qui tam action is entitled to recover damages, as well as all relief necessary to make the employee whole, including two times the amount of back pay owed to the employee. The employee can also be awarded litigation costs and reasonable attorneys’ fees.
(1) “The Federal False Claims Act also provides that employees, agents and contractors engaged in other efforts to stop a violation of the Federal False Claims Act may recover damages for retaliation against them that occurs because of those efforts.”
(2) “The New Jersey False Claims Act has whistleblower protections similar to those provided by the Federal False Claims Act.”
Likewise, the New Jersey Conscientious Employee Protection Act (“CEPA”), N.J.S.A. §§ 34:19-1, et seq., prohibits an employer from retaliating against an employee because the employee:
(1) discloses or threatens to disclose an activity that the employee reasonably believes violates the law, is fraudulent or criminal, or (for employees who are certified or licensed health care professionals) constitutes improper quality of patient care;
(2) provides information to or testifies before a public body conducting an investigation, hearing, or inquiry into any violation of law, or (for employees who are certified or licensed health care professionals) into the quality of patient care; or;
(3) objects to or refuses to participate in an activity that the employee reasonably believes to be a violation of law, fraudulent, criminal, incompatible with a clear mandate of public policy, or (for employees who are certified or licensed health care professionals) improper quality of patient care.
Available remedies may include an injunction restraining a continuing violation, reinstatement of the employee including full fringe benefits and seniority rights, compensation for lost wages, benefits, and other remunerations, punitive damages, a civil fine, and payment by the employer of reasonable litigation costs and attorneys’ fees.
II. Role of False Claims Laws
The false claims laws discussed above are an important part of preventing and detecting fraud, waste, and abuse in federal and state health care programs because they provide governmental agencies the authority to seek out, investigate, and prosecute fraudulent activities. Enforcement activities take place in the criminal, civil, and administrative arenas. This provides a broad spectrum of remedies to combat these problems.
Anti-retaliation protections for individuals who make good faith reports of waste, fraud, and abuse encourage reporting and provide broader opportunities to prosecute violators. Statutory provisions, such as anti-retaliation provisions of the Federal False Claims Act, create reasonable incentives for this purpose. Employment protections create a level of security employees need in order to help in prosecuting these cases.
This policy applies to all employees (including management), contractors, and agents of Robert Wood Johnson University Hospital.
Procedures for Detecting and Preventing Fraud, Waste, and Abuse
Any employee who knows of or reasonably suspects an incident of fraud, waste, or abuse regarding Medicare, Medicaid, or any other federal or state health care program, or a violation of any of the laws outlined in this policy, by any Hospital employee, supervisor, contractor, or agent is required as a condition of employment to immediately report such incident to their immediate supervisor, any member of senior management, or the Hospital’s Corporate Compliance Officer at 732-937-8778 or the RWJ Corporate Compliance HelpLine at 1-800-238-4139. Likewise, any employee of a contractor, vendor, or agent of the Hospital who has concerns about the work he or she does for the Hospital or work done by the Hospital should report these concerns to the Hospital’s Corporate Compliance Officer.
The Hospital will not tolerate any intimidating or retaliatory act against an individual who in good faith reports practices reasonably believed to be a violation of this policy.
The Hospital will make this policy available to all Hospital employees, including management, as well as all Hospital contractors and agents. Furthermore, the Hospital will maintain its internal systems and controls to monitor its coding and billing practices on an ongoing basis to ensure compliance with the laws outlined in this policy.
The principles and guidelines articulated in this policy are further embodied in the Hospital’s Corporate Compliance Code of Conduct and related policies, specifically those sections addressing:
- Quality of Care and Services
- Workplace Behavior and Equal Opportunity
- Business Ethics and Compliance with Laws and Regulations
- Coding and Billing
- Employee Issues and Concerns
- Conflicts of Interest
Questions regarding the Code of Conduct should be addressed to the Corporate Compliance Officer.