When a Georgia-based nurse anesthesia group paid more than $1 million in August in a civil settlement related to violations of the Federal Anti-Kickback Statute and Medicaid policies, the organization, which operates in ambulatory surgery centers, joined a long list of healthcare companies that have run afoul of the False Claims Act.
In fiscal year 2015, the Department of Justice collected more than $3.5 billion in settlements and judgments related to the False Claims Act. It was the fourth continuous year that these settlements topped $3.5 billion. Total recoveries since January 2009 to the end of last year were $26.4 billion, according to the DOJ.
Most of the settlements come from healthcare organizations. In 2015, nearly four out of five organizations with settlements were healthcare related, according to a False Claims Act Settlements 2000-2015 chart.
Federal law is very clear that companies that receive federal money are not permitted to give or receive kick-backs based on referrals.
“I’m always amazed that people continue to get this thing wrong or that they choose not to believe that the federal laws apply to them,” says Thomas Pliura, MD, JD, a physician and attorney at law at Thomas Pliura law firm in Le Roy, IL. “In this case, a group of nurse anesthetists were directly or indirectly providing monetary benefits to a company for referral of patients covered by the Medicare and Medicaid program.”
The nurse anesthesia group provided free anesthesia drugs to surgery centers, which is an improper inducement to steer referrals back to the anesthesia provider, Pliura says.
“It’s just like I could not pay you for a dollar for every patient you referred to me, and I couldn’t buy you gas for your car, and I would be prohibited from sending you steaks every week or giving you free tickets to a ball game,” Pliura explains.
Sweet Dreams Nurse Anesthesia Group of Swainsboro, GA, reached a civil settlement in August 2016, agreeing to pay the United States $1.034 million and the state of Georgia $12,079, according to the Department of Justice, U.S. Attorney’s Office, Middle District of Georgia.
The settlement was to resolve allegations that Sweet Dreams violated the False Claims Act and the Georgia False Medicaid Claims Act by paying unlawful kickbacks to healthcare providers with the intention of inducing referrals of Medicaid and Medicare patients, the DOJ said.
“Sweet Dreams Nurse Anesthesia (SDNA) vigorously denies any wrongdoing,” according to the company’s statement about the settlement.
“SDNA entered into the settlement agreement as a business decision in order to avoid the cost and expense of litigating the matters to vindication,” SDNA officials said. “Given the complexity of the issues, SDNA legal fees alone would have exceeded the settlement amount.”
DOJ officials investigated the anesthesia group for nearly two years in response to a lawsuit by Adam Nauss, under the whistleblower provisions of the False Claims Act and the False Medicaid Claims Act. Nauss will receive a share of the settlement.
“A disgruntled ex-affiliate of SDNA filed the whistleblower action with numerous meritless claims,” SDNA officials said.
Federal officials also said the nurse anesthesia group’s affiliate allegedly agree to fund the construction of an ambulatory surgery center (ASC) in Marietta, GA, in exchange for contracts for Sweet Dreams’ selection as the exclusive anesthesia provider at that facility and a number of other podiatry-based ambulatory surgery centers that are affiliated with the Marietta ASC.
“The giving of a kickback by one provider to induce referrals from another negatively impacts patient choice and fair competition among providers,” said U.S. Attorney G.F. Peterman in a news statement.
“For that reason, Medicare and Medicaid prohibit taxpayer money from being used to pay for services that arise out of arrangements that violate the Anti-Kickback Statute,” Peterman said. “By diligently enforcing the Anti-Kickback Statute in this district, our office protects the integrity of many federal programs and ensures that when a healthcare provider in Middle Georgia refers a patient to another provider, the referral is based on what is best for the patient rather than the provider’s own self-interest.”
“During the course of SDNA’s investigation and full cooperation with the government, however, two issues arose,” SDNA officials said.
Those two issues were:
- “A program where SDNA would purchase Propofol for use in ASCs where SDNA would bill applicable third-party payors for the Propofol when allowed by the applicable payor policies, and
- “A failed joint venture to own and operate an ASC.”
The case is complicated – not a black and white issue, SNDA officials said.
“With regard to the Propofol Program, there was a short period of time where SDNA, due to administrative glitches, did not invoice the ASCs for the minimal Propofol costs for the use in surgery on Medicare patients (i.e., Propofol used in cases where it was bundled into ASC payment).”
Also, the failed ASC joint venture was a situation in which SDNA acted under the advice of previous legal counsel with respect to the venture.
“Unfortunately, SDNA’s joint venture partner failed to uphold their end of the bargain. The government alleged that the JV partner’s failure was a kickback,” SDNA officials explained. “Note that SDNA is currently in active litigation/arbitration with the joint venture partner.”
DOJ and Georgia justice officials made no comment about whether or not they were investigating the ambulatory surgery centers that received allegedly illegal incentives, but typically they would be subject to penalties, as well, Pliura notes.
Providers often think they can find a way to get around the law, and this type of thinking can get them in trouble if they fail to seek proper legal advice before taking some kind of unusual action, he says.
“You’d be surprised at how many providers call me and say, ‘Dr. Pliura, here’s what I want to accomplish,’ and what I say is, “What that sounds like, smells like, is the fragrance of a violation of anti-kickback laws,’” Pliura says. “I say, ‘Do you want to find a way around anti-kickback laws that prohibit you from paying for referrals?’ and there’s a pause on the phone.”
Pliura steers providers away from such deals by pointing out that the penalties cannot only involve millions of dollars, but also result in prison sentences. (See descriptions of federal laws about healthcare fraud, in this issue.)
It’s far better to ask for legal clarification before attempting something new that could be a problem, Pliura suggests.
“Call a reputable law firm that deals with federal anti-kickback or Stark laws,” he says.
The goal is to request from the federal government an advisory opinion ruling in which you lay out the proposal completely, telling the federal government what is planned, and asking the government whether or not it is legal, Pliura says.
“They’ll give you an opinion and say whether or not it violates the laws,” he says.
The government also might say that it would violate the law, but under certain conditions would be acceptable, he adds. “So you have the ‘good housekeeping’ approval certificate, so long as you laid your soul bare to the federal government ahead of time.”
Pliura has obtained these advisory opinion rulings multiple times, and they’ve worked well – although they can take a year or longer, he says.
“For example, we had a primary care group that was exempt from federal Stark law from investing in a surgery center,” Pliura says. “Normally, it would be improper for a primary care provider to own interest in a surgery center and refer cases to their surgeons because it’s a conflict of interest. But there are certain exemptions, and you can lay out all of that through an advisory opinion process.”
- Comparison of the Anti-Kickback Statute and Stark Law. Accessed at http://bit.ly/2eUHB6X.
- False Claims Act Settlements 2000-2015. Accessed at http://bit.ly/2fEl4wr.
- Thomas Pliura, MD, JD, Physician and Attorney at Law, Thomas Pliura law firm, Le Roy, IL. Email: firstname.lastname@example.org.