Opting for Disclosure

Whistleblowers will often pop up when a home care company allegedly violates the rules and then ignores the problem. A company can reduce the likelihood of whistleblowing significantly by actively trying to fix the problem. Many times, however, it makes sense to disclose the problem to the DMERC or the government on a voluntary and proactive basis.

One key reason for voluntary disclosure is to forestall whistleblowing activities. The appropriateness of such a decision may be evaluated with a straightforward cost-benefit analysis. Consider the following:

Provider XYZ is a CPAP supplier. It submits 100 claims to Medicare at $275 per claim for a total of $27,500. Assume that Brenda Biller becomes aware that one of Provider XYZ’s sales agents submitted these claims for products that actually were never ordered and never shipped to the customer. Brenda notifies Elizabeth Executive of the problem.

Elizabeth Executive reasons as follows: Provider ABC on the other side of town may learn of the problem and turn in Provider XYZ. Alternatively, a disgruntled employee of Provider XYZ (or even Brenda Biller herself) may become a whistleblower and notify the government.

Provider XYZ could then be liable to the government for as much as $55,000 in treble damages, and over $1,000,000 in penalties. As a relator, Brenda Biller could receive from $100,000 to $300,000 as her share of a qui tam settlement. Provider XYZ’s reputation in the health care community, not to mention its continued status as a Medicare provider, could also be in serious jeopardy.

On the other hand, if Provider XYZ decides to disclose voluntarily to the government the fact of these overpayments, the cost could be as little as $55,000 (the original $27,500 inappropriately received, plus a fine equal to the overpayment). Indeed, if the error did not clearly rise to the level of fraud, mere repayment will likely be sufficient.

A company may choose voluntary disclosure for other reasons as well. First, of course, when a home care company discovers unequivocal evidence than an incorrect bill has resulted in an overpayment, no law or regulation permits the company legally to retain the overpayment. The company may argue that such overpayments are offset by undercharges, thereby creating no net gain. This may well be true, but any such adjustment may be made only after consultation with the government. Obviously, the government may not agree with the company’s assessment of undercharges or underpayments, and there is no general right to offset.

Second, a company’s decision to disclose improper payment sends a clear message to its employees, agents, etc.: We are ethical! This message may even warrant voluntary disclosure when the rules are unclear or uncertain, to show the company’s commitment to ethical behavior and to demonstrate that it is willing to “put its money where its words are” on the topic of compliance. This could be particularly important if employees have felt they were held to an ethical standard not shared by the company’s senior executives.

Third, many companies opt for disclosure in order to control the timing and nature of the communication. This option can be especially attractive when the home care company can articulate the circumstances of the problem so as to present the facts in their best light. Of course, all material facts must be disclosed fully. But, attorneys know full well how presentation can affect the way information is perceived and understood.

When the company is able to control the disclosure, it can gain credibility with the government during the subsequent negotiations over an appropriate settlement. This credibility may also extend to subsequent discussions between the company and the government on other issues.

Fourth, by controlling the timing and tone of the disclosure, an HME supplier will often have a better opportunity to shape and control how the problem is communicated to the media and the public. This can be a substantial benefit in many situations.

Neil Caesar is president of the Health Law Center (Neil B. Caesar Law Associates, PA), a national health law practice in Greenville, S.C. He also is a principal with Caesar Cohen Ltd., which offers compliance training, outsourcing and consulting and the author of the Home Care Compliance Answer Book. He can be reached by e-mail at [email protected] or by telephone at 864/676-9075.