Case Examples of the OIG Holding Individuals Personally Liable

In September 2015, the DOJ signaled in the Yates memo a dedication to enforcing individual accountability for corporate wrongdoing. Since that time, cases against physicians as well as hospital executives have been settled. The risks of holding or negotiating noncompliant physician contracts are too great for any organization or individual to ignore.

Background: The Yates Memo

The Yates memo emphasizes that the DOJ is dedicated to finding and prosecuting those who defraud the government. It used to be that only a corporation who defrauded the government was held liable, however, the Yates memo identifies that also holding individuals accountable is important because “it incentivizes changes in corporate behavior, it ensures that the proper parties are held responsible for their actions, and it promotes the public's confidence in our justice system.”

The Yates memo outlines six key principles. They are:

  1. To be eligible for any cooperation credit, corporations must provide to the Department [of Justice] all relevant facts about the individuals involved in corporate misconduct.
  2. Both criminal and civil corporate investigations should focus on individuals from the inception of the investigation.
  3. Criminal and civil attorneys handling corporate investigations should be in routine communication with one another.
  4. Absent extraordinary circumstances, no corporate resolution will provide protection from criminal or civil liability for any individuals.
  5. Corporate cases should not be resolved without a clear plan to resolve related individual cases before the statute of limitations expires and declinations as to individuals in such cases must be memorialized.
  6. Civil attorneys should consistently focus on individuals as well as the company and evaluate whether to bring suit against an individual based on considerations beyond that individual's ability to pay.

The DOJ is emphasizing the fact that corporate actions (and wrongdoing) depend on the actions of individuals and those individuals will be held liable in accordance. Because the healthcare industry is complicated and multi-layered, pursuing suspected cases of fraud is difficult. In healthcare cases, it is a challenging to determine what an individual knew or intended. The DOJ must carefully sift through internal documents to determine if an executive knew of the misconduct.

Physician Accountability

In 2015, while Columbus Regional Healthcare System settled with the DOJ for claims for improper billing, Dr. Andrew Pippas, the medical director of the cancer center in question, personally settled billing claims against him for $425,000. This was one of the first instances where physicians were fined in the same case as an organization, but held individually accountable. This is one example of many where personal responsibility matters.

Most physicians believe that Stark regulations and compliance risks apply to a hospital or organization, not the physician herself. However, OIG actions over the past two years have made it clear that both the healthcare organization and the contracting physician are at risk if the contract or employment agreement does not pass fair market value and commercially reasonable.

On the flip side, hospital executives sometimes believe that physicians push hospitals to pay them as much as possible and it is up to the hospital to draw the line on what is fair market value. In today’s reality, physicians must be aware if their arrangements with hospitals are above fair market value. MD Ranger has seen an increase in the number of physicians who are interested in market data as a basis for their contract negotiations.

What else can physicians do to hold themselves accountable? Here are some suggestions:

  1. When possible, check data sources before negotiating your rate(s) with your hospital(s). Over the past six months, we have noticed an uptick in physicians purchasing data for their specialty for hospital negotiations, reflecting the trend of being both knowledgeable and accountable.
  2. Defend your position in the market range with concrete and fair examples, such as years of experience. Never take into account the value of your referrals to the organization.
  3. Listen as the hospital’s executive team discusses their position and reasoning for the rate(s) they propose. Understand the constraints and challenges they cite. Should they negotiate deals that are not fair market value, they put both their hospital and themselves on the line.

Executive Accountability

It is clear that hospital executives are at risk. In October 2016, Tuomey Healthcare's CEO was personally fined $1 million for the hospital's improper payments. Not only that, but he cannot work for any healthcare entity that receives federal reimbursements for the next four years. Hospital executives are ultimately responsible for protecting their organization, and themselves, from violations and fines.

In order to reduce the possibility of violations occurring, we suggest executives:

  1. Take a hands-on approach to working with their team to ensure compliance processes and procedures are effective.
  2. Use robust, apples to apples market data in every situation and negotiation.
  3. Be sure that everyone within the organization understands the importance of documentation. Cut no corners with documentation.
  4. Understand the steps that are being taken to ensure the organization is compliant.

While many hospital organizations have few resources to spare, negotiating compliant arrangements are a must; not only for the hospital's sake, but your own. Though it may be difficult to garner resources, make sure contracting processes exist and documentation occurs for each contract to ensure that no individual is fined in the event of an investigation.

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