US
Pharm. 2006;5:72-76.
Being charged with a
violation of the federal Anti-Kickback Statute1 can result in
termination of a provider's status to participate in the Medicare program. If
the situation involves payment to a participating pharmacy under the guise of
some other revenue source, the pharmacy may still be found in violation if it
can be shown that the recipient of Medicare payments routed money back to the
individuals who referred patients to a Medicare provider.
In a recent case,2
a federal Court of Appeals reviewed this statute and discussed how it should
be interpreted. The primary question for the court to decide was whether a
violation of the Anti-Kickback Statute can form the basis for a qui tam
action under the False Claims Act. This Latin term is an abbreviation of the
phrase "qui tam pro domino rege quam pro sic ipso in hoc parte
sequitur," meaning "one who sues on behalf of the king as well as for
himself." This provision allows a private citizen to file a suit in the name
of the
Facts
In December 2001,
the plaintiff, a former employee of a medical services company called
Haleyville Medical Supplies, owned by defendants Gerald and Frances Burleson,
filed a qui tam action against the Burlesons and four other medical
services companies that they owned, for violations of the False Claims Act.4
The companies included The City Pharmacy, Care Medical, Care Pharmacy, and
Winfield Medical.
As is common in this kind of
lawsuit, in 2002, the U.S. Attorney for the Northern District of Alabama
opened parallel criminal and civil investigations of the Burlesons'
activities. The plaintiff alleged that the defendants were Medicare providers
and that they violated the Anti-Kickback Statute1 by paying
kickbacks camouflaged as rental payments and commissions to pharmacists and
other individuals. The plaintiff claimed that the owners issued monthly checks
to referring pharmacists and others and in turn submitted invoices to Medicare
for reimbursement of services rendered to Medicare patients who had been
referred by the individuals receiving the kickbacks. The court held that the
government had alleged a valid claim against the owners.
Proceedings
While this qui
tam proceeding was in active litigation, the federal Department of
Justice--the administrative agency in charge of enforcing the False Claims
Act--filed itsintervention complaint for criminal and civil relief. Intervention
is the method used when the federal government wants to move in and take over
representation of the plaintiff. This is somewhat akin to a class action
lawsuit, where one or two plaintiffs sue for, and on behalf of, other
similarly situated individuals. In a qui tam case, the Department of
Justice lawyers represent both the government and the named plaintiff.
The government alleged that
the defendants violated the Anti-Kickback Statute and that compliance with
that statute was necessary for reimbursement under the Medicare program. The
government alleged that the owners had submitted claims for reimbursement
while knowing that they were ineligible for the payments. The government
identified numerous false claims that the owners had submitted to Medicare.
More specifically, the government claimed that the companies owned by the
defendants were Medicare providers and that they violated the Anti-Kickback
Statute by paying kickbacks camouflaged as rental payments and commissions to
pharmacists and other individuals. The Burlesons issued monthly checks to
referring pharmacists. The amount of the checks was a percentage, typically
20% to 25%, of the amount the Burlesons received from Medicare for services
provided to the patients referred by those pharmacists. To conceal the nature
of the kickback payments, the Burlesons characterized each check as "rent" in
the "memo" portion of the check.
The federal trial court
judge, hearing the qui tam case, ordered that the discovery
investigations be stopped pending the criminal investigation and any later
criminal proceedings, unless and until all defendants waived their Fifth
Amendment privilege against self-incrimination. Following this order, the
defendants filed an interlocutory appeal for review of a decision from
the
The government claimed that
Medicare providers are required to enter a provider agreement with the
government, and under the terms of the agreement, the Medicare provider
certifies that it will comply with all laws and regulations concerning proper
practices for Medicare providers. The government alleged that a Medicare
"provider's compliance with its provider agreement is a condition for receipt
of payments from the Medicare program."2
The government also alleged
that the defendants paid kickbacks to two respiratory therapists and a
doctor's patient representative for referring Medicare patients to their
operations. The government identified specific claims that the Burlesons had
submitted to Medicare for reimbursement of services that were rendered to
patients referred by the individuals receiving kickbacks.2
For example, they alleged
that an unnamed patient received a prescription dated April 24, 2001. Burleson
submitted the claim form on June 11 and/or 13, 2001, for reimbursement for the
patient. Another example of the said transactions was for a different patient
who received a prescription dated September 30, 2001. The defendants submitted
the claim form on November 16, 2001. The pharmacist received a commission for
the referral of both patients. Several examples of similar improper claims and
payments were also cited.
The government alleged that
by virtue of these acts, the Burlesons knowingly presented, or knowingly
caused to be presented, false or fraudulent claims for payment in violation of
the False Claims Act.
Appellate Decision
The Court of
Appeals first noted that the False Claims Act is the primary law on which the
federal government relies to recover losses caused by fraud. The Act creates
civil liability for making a false claim for payment by the government against
"any person who (1) knowingly presents, or causes to be presented, to an
officer or employee of the United States government or a member of the Armed
Forces of the United States a false or fraudulent claim for payment or
approval or (2) conspires to defraud the government by getting a false or
fraudulent claim allowed or paid."4 This same act also
permits private citizens to bring qui tam suits to enforce the act.
Furthermore, the statute makes it a felony to offer kickbacks or other
payments in exchange for referring patients "for the furnishing of any item or
service for which payment may be made in whole or in part under a federal
health care program."1
Interestingly enough,
neither party disputed the fact that compliance with federal health care laws,
including the statute, is a condition of payment by the Medicare program. The
defendants did not complain that their failure to comply with the statute, if
true, disqualified them from receiving payment as part of a Medicare program.
Instead, the defendants argued that the government seeks to hold them liable
for nothing more than falsely certifying on a Medicare enrollment form that
they would comply with the statute. The defendants contended that the
government had failed to identify a false claim. This panel of Appellate Court
judges disagreed. In this opinion, they stated:
When a violator of
government regulations is ineligible to participate in a government program
and that violator persists in presenting claims for payment that the violator
knows the government does not owe, that violator is liable, under the Act, for
its submission of those false claims. "The False Claims Act does not create
liability merely for a health care provider's disregard of government
regulations or improper internal policies unless, as a result of such acts,
the provider knowingly asks the Government to pay amounts it does not owe."5
The violation of the regulations and the corresponding submission of claims
for which payment is known by the claimant not to be owed makes the claims
false.2
Accordingly, the court held
that the government had alleged a valid complaint through evidence that the
defendants violated the Anti-Kickback Statute, because compliance with the
statute is necessary for reimbursement under the Medicare program. The court
also held that the defendants had submitted claims for reimbursement knowing
that they were ineligible for the payments demanded in those claims. This
allegation is not general or speculative. The government identified several
false claims that the defendants made to the federal government. Therefore,
the district court properly denied the defendants' motion to dismiss.
Analysis
This case
reaffirms the cliché that if it's too good to be true, it is too
good to be true. There seem to be an endless number of ways that folks can
come up with to get extra money out of government-sponsored health care
programs. Pharmacists should understand that they too can be held personally
responsible for accepting funds that were generated illegally. In this case,
the pharmacies took commission for referrals disguised as rent payments. Do
not even consider these kinds of offers. Maybe it's true that you may never
get caught, especially if you are not greedy and only siphon off a small
amount of income. But is that amount worth it if you do get caught, especially
knowing that if you are "departicipated" (i.e., kicked out of the Medicare
program), you could lose your right to interact in any way in a program that
provides dollars from governmental programs forever? If something
smells fishy, run, or at least walk quickly, away. The other point this case
should cause us all to ponder is that an employee turned in his employers for
their fraudulent behavior. Sometimes your own associates can be your worst
enemies if they know where the skeletons are hidden.
REFERENCES
1. 42 U.S.C.S. §
1320a-7b(b).
2. McNutt v.
Haleyville Medical Supplies, Slip Op No 04-14458 (September 9, 2005), 2005
Lexis 19482.
3. See
www.quitam.com. The Qui Tam Information. Accessed April 12, 2005.
4. 31 U.S.C. §
3729(a).
5. United States
ex rel. Clausen v. Laboratory Corp. of America, Inc., 290 F.3d 1301, 1311
(11th Cir. 2002).
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Published May 16, 2006