LUTHERAN HEALTHCARE
INCLUDING
LUTHERAN MEDICAL CENTER
LUTHERAN FAMILY HEALTH CENTERS
LUTHERAN AUGUSTANA CENTER FOR EXTENDED CARE AND
REHABILITATION

POLICY PURSUANT TO

THE FEDERAL DEFICIT REDUCTION ACT OF 2005

Detection and Prevention of Fraud, Waste, and Abuse
and Applicable Federal and State Laws

SUMMARY

Lutheran HealthCare is committed to preventing and detecting any fraud, waste, or abuse, especially as related to Federal and State health care programs.  To this end, Lutheran maintains a vigorous compliance program and strives to educate its work force on fraud and abuse laws, including the importance of submitting accurate claims and reports to the Federal and State governments.  In furtherance of this commitment and to comply with Section 6032 of the Deficit Reduction Act of 2005, Lutheran 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.

Lutheran has instituted policies and procedures and a compliance program for detecting and preventing fraud.  The Compliance Officer oversees these programs and, depending on the nature of the allegations, works collaboratively with the Office of the General Counsel or other departments to conduct investigations in these areas.

As part of Lutheran’s commitment to ethical and legal conduct, employees are required to immediately bring to the attention of their supervisor, the Compliance Officer, or the Legal Department, any information regarding suspected improper conduct.  Employees may also call the Compliance Helpline at 877-77-COMPLY to discuss or report concerns about possible violations of the law or institutional policy.  Lutheran is committed to investigating any such allegation of fraud, waste, or abuse swiftly and thoroughly and will do so through its internal compliance programs and processes.  To ensure that the allegations are fully and fairly investigated, Lutheran requires that all employees fully cooperate in such investigations.

The Compliance Program is very important and Lutheran devotes substantial resources to investigate allegations of fraud and abuse.  Therefore, all employees should bring their concerns to the institution first so it can investigate and correct any fraudulent or improper activity.  Any employee of Lutheran who reports such information can choose to do so anonymously, and will also be protected against retaliation for coming forward with such information both under Lutheran’s internal compliance policies and procedures and Federal and State law.  Obviously, however, Lutheran retains the right to take appropriate action against an employee who has participated in a violation of Federal or State law or hospital policy.

Lutheran employees have a duty to bring their concerns to Lutheran so that it may investigate and correct any problems that may exist.  However, certain State and Federal laws, discussed more fully below, provide that any private citizen may bring their concerns of fraud and abuse directly to the government. 

Further information and materials relating to Lutheran’s policies for detecting and preventing fraud are listed on the institution’s Intranet in the Compliance Section.

RELEVANT FEDERAL AND STATE STATUTES

The following is a summary of the Federal False Claims Act, the Program Fraud Civil Remedies Act and certain relevant State laws.

Federal False Claims Act

The Federal False Claims Act is a federal law that prohibits certain fraudulent acts against the Government, including:

• knowingly presenting or causing to be presented a false or fraudulent claim to the Federal government for payment;
• knowingly making, using, or causing to be made or used, a false statement to get a false or fraudulent claim paid by the Federal government; or
• conspiring to defraud the Federal government by getting a false or fraudulent claim allowed or paid.

Under the Federal False Claims Act, a person acts “knowingly” if he or she:

• has actual knowledge that the information is false or fraudulent;
• acts in deliberate ignorance of the truth or falsity of the information; or
• acts in reckless disregard of the truth or falsity of the information.

Under the Federal False Claims Act, a “claim” is any request or demand for money or property if the Federal government provides any portion of the money or property in question. This includes requests or demands submitted to a contractor of the Government and includes Medicaid and Medicare claims. 

A violation of the Federal False Claims Act results in a civil penalty between $5,500 and $11,000 for each false claim submitted (for example, a claim for one patient is one claim, even if the same scheme is used for multiple claims), plus up to three times the amount of the damages sustained by the Government because of the violation. In addition, the Government may exclude the violator from participation in all Federal health care programs.  This would be disastrous for Lutheran.

The False Claims Act allows a private person to file a qui tam lawsuit on behalf of the Federal government. This person, also called a “whistleblower,” must file his or her lawsuit under seal in a federal district court.  The Government may decide to intervene the lawsuit and become the plaintiff and prosecute the case.  If the Government does not decide to intervene, the whistleblower may still continue the lawsuit independently.

If a qui tam lawsuit is successful, the whistleblower may receive between 10 to 30% of the recovery, depending on many factors, as well as reasonable attorney’s fees and costs. In addition, there can be no retaliation against the whistleblower for filing or participating in the lawsuit in good faith.  At the same time, however, any person who brings a clearly frivolous case can be held liable for the defendant’s attorney’s fees and costs, and other sanctions.

Federal Program Fraud Civil Remedies Act of 1986

The Program Fraud Civil Remedies Act of 1986 is similar to the False Claims Act, establishing an administrative remedy against any person who presents or causes to be presented a claim or written statement that the person knows or has reason to know is false, fictitious, or fraudulent to certain Federal agencies, and again, includes Medicaid and Medicare claims.

Similar to the False Claims Act, a person who “knows or has reason to know” is defined as one who:

1. has actual knowledge of the falsity of the information;
2. acts in deliberate ignorance of the truth or falsity of the information; or
3. acts in reckless disregard of the truth or falsity of the information.

A violation of the Program Fraud Civil Remedies Act can result in a civil monetary penalty of up to $5,500 per false claim and an assessment of twice the amount of the false claim. The penalty can be imposed through an administrative hearing rather than a court case.

New York State Laws

New York State does not currently have a State False Claims Act that allows for participation by private persons as whistleblowers.  However, New York State law prohibits false claims. Certain relevant portions of the New York State laws are summarized below.

Under New York Social Services Law §145-b, it is unlawful to knowingly make a false statement or representation, or to deliberately conceal any material fact, or engage in any other fraudulent scheme or device, to obtain or attempt to obtain payments under the New York State Medicaid program. For a violation of this law, the local Social services district or the State has a right to recover civil damages equal to three times the amount by which any figure is falsely overstated. In the case of non-monetary false statements, the local Social Service district or State may recover three times the damages (or $5,000, whichever is greater) sustained by the Government due to the violation.

A monetary penalty may be imposed if a person causes Medicaid payments to be made if the person knew or had reason to know that:

• the payment involved care, services, or supplies that were medically improper, unnecessary, or excessive;
• the care, services or supplies were not provided as claimed;
• the person who ordered or prescribed the improper, unnecessary, or excessive care, services, or supplies was suspended or excluded from the Medicaid program at the time the care, services, or supplies were furnished; or
• the services or supplies were not in fact provided.

The monetary penalty can be up to $2,000 for each item or service in question, unless it is not the first offense, in which case the penalty can be up to $7500 per item or service.

Under New York Social Services Law §366-b(2), any person who, with intent to defraud, presents for allowance or payment any false or fraudulent claim for furnishing services or merchandise, or knowingly submits false information for the purpose of obtaining compensation greater than that to which he or she is legally entitled for furnishing services or merchandise is guilty of a crime and is subject to imprisonment.

In addition, New York Penal Law §177 establishes the crime of Health Care Fraud. A person commits such a crime when, with the intent to defraud Medicaid (or other health plans, including non-governmental plans), he or she knowingly and willfully provides false information or omits material information for the purpose of requesting payment for a health care item or service and, as a result of the false information or omission, receives such a payment in an amount to which he or she is not entitled. Health Care Fraud is punished with fines and imprisonment. 

New York law also provides protection for whistleblowers, that is, employees who report inappropriate activities. Under New York Labor Law §740, an employer may not take any retaliatory personnel action against an employee because the employee:

• discloses, or threatens to disclose, to a supervisor or to a public body an activity, policy or practice of the employer that is in violation of law, rule or regulation which violation creates and presents a substantial and specific danger to the public health or safety, or which constitutes health care fraud;
• provides information to, or testifies before, any public body conducting an investigation, hearing or inquiry into any such violation of a law, rule or regulation by such employer; or
• objects to, or refuses to participate in any such activity, policy or practice in violation of a law, rule or regulation.

To bring an action under this provision, the employee must first bring the alleged violation to the attention of the employer and give the employer a reasonable opportunity to correct the allegedly unlawful practice.  The law allows employees who are the subject of a retaliatory action to bring a civil action in court and seek relief such as injunctive relief to restrain continued retaliation; reinstatement, back-pay and compensation of reasonable costs.  The law also provides that employees who bring a meritless action may be held liable to the employer for its attorneys fees and costs.