FCA and ACA Pose Perils for Med-Mal Defendants

In last month's newsletter, we introduced a topic that should be of increasing concern to health care facilities and their counsel: Changes to the Patient Protection and Affordable Care Act (ACA) now make it easy for individuals who have gained information during the discovery process in a medical malpractice suit to use that information to bring a qui tam action under the False Claims Act (FCA). The discussion continues herein.

The False Claims Act and The Quality of Care

The changes to the False Claims Act appear at a time when federal reimbursement for medical care is increasingly tied to the quality of care, when new incentives and disincentives tied to care quality are being created and implemented by the federal government, and when complicated care measurement and reporting systems are being fashioned and implemented.

One particularly straightforward example of this is Medicare's policy preventing hospitals from receiving increased reimbursement for preventable hospital-acquired conditions (known as HACs). See generally Department of Health and Human Services Office of the Inspector General, Adverse Events in Hospitals: National Incidence Among Medicare Beneficiaries (November 2010), available at http://oig.hhs.gov/oei/reports/oei-06-09-00090.pdf. Often, an inpatient hospital stay is assigned a higher reimbursement level if a second, complicating condition is listed as an additional diagnosis. However, if the second complicating diagnosis was not present on admission, and if the complication is one of the designated HACs, the hospital is entitled to be reimbursed only at the lower level tied to the primary diagnosis alone.

It is not hard to see how this could add a qui tam claim to what would otherwise be a straightforward medical malpractice case.

A Hypothetical

Consider a Medicare patient, Mrs. A., who receives a transfusion of a mismatched blood product during an inpatient hospital stay. She suffers an incompatibility reaction that requires an additional week in the hospital and significant follow-up care. Mrs. A. might well have a medical malpractice claim worth pursuing. Routine discovery of billing records might reveal that the hospital submitted a billing record inaccurately identifying the incompatibility reaction as a condition that was present on the patient's arrival. Because a blood type mismatch is one of the identified HACs for which increased reimbursement is not allowed, an accurate billing record would have resulted in a lower payment, and the hospital was overpaid.

The ACA establishes that once an error such as this is identified, the healthcare provider must report and return the overpayment within 60 days of the date the overpayment is identified. ACA ' 6402 (portion codified at 42 U.S.C. ' 1128J(d)(2)). Failing to return the overpayment within 60 days can trigger liability under the FCA. 31 U.S.C. ' 3729(b)(4). Locating these issues and ensuring that they are addressed might not be something that is an everyday concern among the defense malpractice bar, but failing to be aware of this issue could create significant FCA liability. There is nothing in federal law expressly requiring a victim's attorney to identify a billing error as a violation of federal law, as a prerequisite to the 60-day repayment obligation. It is likely that notification of the mistake alone would start the 60-day clock, which would in turn trigger possible FCA liability on the 61st day. The fact that the hospital's malpractice lawyer was unaware of the ACA's affirmative repayment obligation would be no defense to FCA liability.

These issues need not be patient-specific, even if they arise in the context of a case involving a single patient. For example, as a condition of their participation in the Medicare program hospitals are required to have, and to implement and maintain, a Quality Assessment and Performance Improvement Program (QAPI). 42 C.F.R. ' 482.21. There are specific federal standards for the scope and activities of this program, and federal regulations expressly require that the hospital's governing body be responsible and accountable for the program. If past experience is any guide, the deposition of a hospital's CEO in an individual patient safety case might reveal that the involvement, accountability, and responsibility of senior management are not what federal regulations appear to require. That might call into question the hospital's compliance with regulatory requirements and its promise, to the federal government, that it had and was carrying out a QAPI program.

Before the ACA

Before the ACA, it was potentially more difficult to pursue a qui tam case based on this kind of broken promise or regulatory shortcoming ' in part because it was sometimes difficult to establish a causal connection between a particular deficiency and a particular federal payment. See, e.g., Mikes v. Straus, 274 F.3d 687 (2d Cir. 2001). The ACA makes this hurdle easier to clear because it conditions federal participation on the accuracy of all statements and representations to the government, not just those directly tied to a particular claim for reimbursement. ACA ' 6402. Thus, a single-patient malpractice case could potentially be transformed into a qui tam case that poses not only a risk of substantial damages, but also a more systemic risk to a hospital's business.

Conclusion

Comprehensively listing all the ACA provisions that are intended to affect patient safety and might be implicated in a particular medical malpractice case is far beyond the scope of this article. There are a lot of them, and a few examples will suffice to illustrate the point. The ACA requires the development of, and ultimately the reporting of, measures of quality and outcome. ACA ” 3013, 3015, 10303. It provides for financial incentives to Medicare patients who choose high-quality providers. ACA ' 10331. It aims to create “accountable care organizations,” which are groups of providers who work together to manage and coordinate care, and who can share cost-savings. ACA ' 3022. These provisions, and many others like them, will impose significant affirmative obligations on providers, including an obligation to accurately report data to federal authorities.

These programs depend, of course, on self-reporting. It is hardly reasonable to expect that federal regulatory authorities will catch every error, and the prospect of informed patients and patient attorneys can only assist in efforts to ensure the integrity of federal Medicare and Medicaid programs.

To put it another way, if the ultimate goal of these initiatives is to affect care delivered at a patient's bedside, then it only makes sense to create and expand the incentives that will lead private attorneys and individuals ' those who are actually in the patient's bed ' to understand the scope and extent of these obligations.

While it is of course not possible to predict with any certainty what form the changes worked by the ACA will take, it does seem certain that lawyers on both sides of malpractice cases will need to develop an awareness of the funding landscape and federal requirements, and the opportunities and perils they present.

Gregory B. Heller is a partner in Philadelphia's Young Ricchiuti Caldwell and Heller LLP.

In last month's newsletter, we introduced a topic that should be of increasing concern to health care facilities and their counsel: Changes to the Patient Protection and Affordable Care Act (ACA) now make it easy for individuals who have gained information during the discovery process in a medical malpractice suit to use that information to bring a qui tam action under the False Claims Act (FCA). The discussion continues herein.

The False Claims Act and The Quality of Care

The changes to the False Claims Act appear at a time when federal reimbursement for medical care is increasingly tied to the quality of care, when new incentives and disincentives tied to care quality are being created and implemented by the federal government, and when complicated care measurement and reporting systems are being fashioned and implemented.

One particularly straightforward example of this is Medicare's policy preventing hospitals from receiving increased reimbursement for preventable hospital-acquired conditions (known as HACs). See generally Department of Health and Human Services Office of the Inspector General, Adverse Events in Hospitals: National Incidence Among Medicare Beneficiaries (November 2010), available at http://oig.hhs.gov/oei/reports/oei-06-09-00090.pdf. Often, an inpatient hospital stay is assigned a higher reimbursement level if a second, complicating condition is listed as an additional diagnosis. However, if the second complicating diagnosis was not present on admission, and if the complication is one of the designated HACs, the hospital is entitled to be reimbursed only at the lower level tied to the primary diagnosis alone.

It is not hard to see how this could add a qui tam claim to what would otherwise be a straightforward medical malpractice case.

A Hypothetical

Consider a Medicare patient, Mrs. A., who receives a transfusion of a mismatched blood product during an inpatient hospital stay. She suffers an incompatibility reaction that requires an additional week in the hospital and significant follow-up care. Mrs. A. might well have a medical malpractice claim worth pursuing. Routine discovery of billing records might reveal that the hospital submitted a billing record inaccurately identifying the incompatibility reaction as a condition that was present on the patient's arrival. Because a blood type mismatch is one of the identified HACs for which increased reimbursement is not allowed, an accurate billing record would have resulted in a lower payment, and the hospital was overpaid.

The ACA establishes that once an error such as this is identified, the healthcare provider must report and return the overpayment within 60 days of the date the overpayment is identified. ACA ' 6402 (portion codified at 42 U.S.C. ' 1128J(d)(2)). Failing to return the overpayment within 60 days can trigger liability under the FCA. 31 U.S.C. ' 3729(b)(4). Locating these issues and ensuring that they are addressed might not be something that is an everyday concern among the defense malpractice bar, but failing to be aware of this issue could create significant FCA liability. There is nothing in federal law expressly requiring a victim's attorney to identify a billing error as a violation of federal law, as a prerequisite to the 60-day repayment obligation. It is likely that notification of the mistake alone would start the 60-day clock, which would in turn trigger possible FCA liability on the 61st day. The fact that the hospital's malpractice lawyer was unaware of the ACA's affirmative repayment obligation would be no defense to FCA liability.

These issues need not be patient-specific, even if they arise in the context of a case involving a single patient. For example, as a condition of their participation in the Medicare program hospitals are required to have, and to implement and maintain, a Quality Assessment and Performance Improvement Program (QAPI). 42 C.F.R. ' 482.21. There are specific federal standards for the scope and activities of this program, and federal regulations expressly require that the hospital's governing body be responsible and accountable for the program. If past experience is any guide, the deposition of a hospital's CEO in an individual patient safety case might reveal that the involvement, accountability, and responsibility of senior management are not what federal regulations appear to require. That might call into question the hospital's compliance with regulatory requirements and its promise, to the federal government, that it had and was carrying out a QAPI program.

Before the ACA

Before the ACA, it was potentially more difficult to pursue a qui tam case based on this kind of broken promise or regulatory shortcoming ' in part because it was sometimes difficult to establish a causal connection between a particular deficiency and a particular federal payment. See, e.g., Mikes v. Straus , 274 F.3d 687 (2d Cir. 2001). The ACA makes this hurdle easier to clear because it conditions federal participation on the accuracy of all statements and representations to the government, not just those directly tied to a particular claim for reimbursement. ACA ' 6402. Thus, a single-patient malpractice case could potentially be transformed into a qui tam case that poses not only a risk of substantial damages, but also a more systemic risk to a hospital's business.

Conclusion

Comprehensively listing all the ACA provisions that are intended to affect patient safety and might be implicated in a particular medical malpractice case is far beyond the scope of this article. There are a lot of them, and a few examples will suffice to illustrate the point. The ACA requires the development of, and ultimately the reporting of, measures of quality and outcome. ACA ” 3013, 3015, 10303. It provides for financial incentives to Medicare patients who choose high-quality providers. ACA ' 10331. It aims to create “accountable care organizations,” which are groups of providers who work together to manage and coordinate care, and who can share cost-savings. ACA ' 3022. These provisions, and many others like them, will impose significant affirmative obligations on providers, including an obligation to accurately report data to federal authorities.

These programs depend, of course, on self-reporting. It is hardly reasonable to expect that federal regulatory authorities will catch every error, and the prospect of informed patients and patient attorneys can only assist in efforts to ensure the integrity of federal Medicare and Medicaid programs.

To put it another way, if the ultimate goal of these initiatives is to affect care delivered at a patient's bedside, then it only makes sense to create and expand the incentives that will lead private attorneys and individuals ' those who are actually in the patient's bed ' to understand the scope and extent of these obligations.

While it is of course not possible to predict with any certainty what form the changes worked by the ACA will take, it does seem certain that lawyers on both sides of malpractice cases will need to develop an awareness of the funding landscape and federal requirements, and the opportunities and perils they present.

Gregory B. Heller is a partner in Philadelphia's Young Ricchiuti Caldwell and Heller LLP.