Supreme Court Takes Action About Knowledge Required to Prove False Claims

CMS

by Elizabeth E. Hogue, Esq. | Jul 12, 2023 | CMS, Regulatory

by Elizabeth Hogue, Esq.

For providers to be liable under the federal False Claims Act, enforcers must prove that they knowingly submitted false claims. The U.S. Supreme Court recently issued an opinion in United States ex rel. Schutte v. SuperValu, Inc. [No. 21-1326 (U.S. June 1, 2023)], which defines what “knowingly” means. The Court decided that providers act knowingly depending on their “culpable state of mind” when they submitted alleged false claims; not what providers may have thought after submitting them. The requirement to prove knowledge, or “scienter,” said the Court, refers to providers’ knowledge and subjective beliefs; not to what objectively reasonable persons may have known or believed.

On June 30, 2023, the U.S. Supreme Court issued orders that revive two whistleblower lawsuits based on the opinion described above. Specifically citing the above decision, the Court granted whistleblower Troy Olbausen’s request to hear his case. The Court then vacated an Eleventh Circuit decision that dismissed Olhausen’s whistleblower lawsuit.

The Eleventh Circuit previously dismissed Olhausen’s suit against Arriva Medical because he could not prove that the defendants had knowledge of their submission of false claims in view of their objectively reasonable interpretation of the Medicare rules in question. The Supreme Court sent the case back to the Eleventh Circuit for further consideration based on its decision in Schuttte v. SuperValu, above [Olhausen v. Arriva Med., LLC, No. 22-374 (U.D. June 30, 2023)].

Likewise, on June 30, 2023, the Supreme Court sent a case back to the Fourth Circuit for further consideration in light of the Schutte case.

These actions make it clear that the new standard set by the Supreme Court in the Schutte case will make a difference in cases based on the federal False Claims Act. The Court said in the Schutte case:

“Both the text and the common law also point to what the defendant thought when submitting the false claim – not what the defendant may have thought after submitting it…As such, the focus is not, as respondents would have it, on post hoc interpretations that might have rendered their claims accurate. It is instead on what the defendant knew when presenting the claims…Culpability is generally measured against the knowledge of the actor at the time of the challenged conduct.”

The Court also said:

“Under the FCA, petitioners may establish scienter by showing that respondents:

actually knew that their reported prices were not their ‘usual and customary’ prices when they reported those prices;
were aware of a substantial risk that their higher, retail prices were not their ‘usual and customary’ prices and intentionally avoided learning whether their reports were accurate, or
were aware of such a substantial and unjustifiable risk but submitted the claims anyway…

If petitioners can make that showing, then it does not matter whether some other, objectively reasonable interpretation of ‘usual and customary’ would point to respondents’ higher prices. For scienter, it is enough if respondents believed that their claims were not accurate.”

Proving that providers submitted false claims just got tougher for enforcers.

See Ms. Hogue’s earlier report on this SCOTUS case in our June 7 edition: homecaretechreport.com/article/3587

©2023 by Rowan Consulting Associates, Inc., Colorado Springs, CO. All rights reserved. This article originally appeared in Home Care Technology: The Rowan Report. homecaretechreport.com One copy may be printed for personal use; further reproduction by permission only. editor@homecaretechreport.com

Crackdown is Coming: Are You Paying Overtime?

Admin

by Tim Rowan | May 17, 2023 | Admin, Regulatory

by Tim Rowan, Editor

he Department of Labor, Wage and Hour Division, has selected several southeastern states as targets for its investigation into a practice that appears to be quite common, underpaying in-home caregivers. It appears, based on early DoL reports, that some Home Care agency owners in Alabama, Florida, Georgia, Kentucky, Mississippi, North Carolina, South Carolina and Tennessee either do not understand the law, or simply try to get away with it.

According to a mid-February, 2023 report:

“From 2020 to 2022, Wage and Hour Division investigators identified violations in nearly 89 percent of more than 1,200 home care and nursing care investigations. These reviews led the agency to recover more than $16.2 million in back wages and liquidated damages for more than 13,000 workers.

The department produced an instructional webinar on federal wage and hour regulations for home care, residential care and nursing care industry employers, workers and other stakeholders in the Southeast. “Caring For Those Who Care: Fair Labor Standards Act Requirements in the Care Industry,” is part of the DoL’s ongoing education and enforcement initiative to improve compliance in those states.

On October 13, 2022, the DoL published a Notice of Proposed Rulemaking to revise the Department’s guidance on how to determine who is an employee or independent contractor under the Fair Labor Standards Act. The NPRM proposes to rescind the rule, Independent Contractor Status Under the Fair Labor Standards Act (2021 IC Rule), that was published in the closing days of the previous administration, January 7, 2021, and replace it with an analysis for determining employee or independent contractor status that is more consistent with the FLSA as interpreted by longstanding judicial precedent. The Department believes that its proposed rule would reduce the risk that employees are misclassified as independent contractors, while providing added certainty for businesses that engage (or wish to engage) with individuals who are in business for themselves.

A DoL publication explained this targeted effort aligns with the agency’s initiative to protect essential workers in the Southeast. See an April 28 update on progress of the proposed rule here.

Writing for a Polsinelli Law firm bulletin, home care attorney Angelo Spinola stated, along with the caveat that this is not to be construed as legal advice, “The DOL is not required to give employers prior notice of an audit. In fact, WHD investigators often initiate unannounced investigations to observe normal business operations. As such, the best way to prepare for a DOL audit is to conduct regular and periodic internal audits of employment records and policies to ensure compliance with the FLSA. Internal audits typically include a review of exempt employee classifications, independent contractor classifications, payroll and time records, and FMLA and other leave law compliance. It is advisable to work with knowledgeable employment attorneys who can counsel employers on current wage and hour laws and best practices.”

Abuse Found to be Widespread

From 2020 to 2022, Wage and Hour Division investigators identified violations in nearly 89 percent of more than 1,200 home care and nursing care investigations. These reviews led the agency to recover more than $16.2 million in back wages and liquidated damages for more than 13,000 workers. In addition, the division assessed employers a total of $156,404 in civil money penalties. The February DoL report cited two recent North Carolina cases as examples of the practices it uncovered throughout the South:

Gentle Shepherd Care – which provides home healthcare services in the Charlotte area – failed to combine hours when employees worked at more than one of its locations during the same workweek. By doing so, the employer did not pay the affected workers their additional half-time premium rate for overtime for hours over 40 in a workweek. The Fair Labor Standards Act requires all hours worked in a workweek be combined when calculating wages, regardless of where employees performed the work. Back wages and liquidated damages recovered: $193,768 for 98 workers.

A separate investigation found Greenville”s At Home Personal Care paid employees straight-time rates for all hours worked, including hours over 40 in a workweek. By doing so, the employer did not pay the additional half-time premium rate for overtime as the FLSA requires. In addition, the employer failed to pay for travel time between the clients’ homes when the employees visited multiple clients during the same day. The agency also did not keep accurate records as required. Back wages and liquidated damages recovered: $187,148 for 28 workers.

North Carolina Wage and Hour Division District Director Richard Blaylock stated, “Workers who provide home healthcare services deserve to be paid every penny of their hard-earned wages as they care for our loved ones. When employers choose to ignore the law, they deny workers the wages they earned and need to support their families. Employers must use this investigation’s outcome as a reminder to review their pay practices to ensure they comply with the law.”

Employers can contact the Wage and Hour Division at its toll-free number, 1-866-4-US-WAGE. The division also offers online resources for employers, such as a fact sheet on Fair Labor Standards Act wage laws overtime requirements. Workers who feel they may not be getting the wages they earned may contact a Wage and Hour Division representative in their state through a list and interactive online map on the agency’s website. Workers and employers alike can help ensure hours worked and pay are accurate by downloading the department’s Android Timesheet App for free. Learn more about Wage and Hour Division.

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Tim Rowan is a 30-year home care technology consultant who co-founded and served as Editor and principal writer of this publication for 25 years. He continues to occasionally contribute news and analysis articles under The Rowan Report’s new ownership. He also continues to work part-time as a Home Care recruiting and retention consultant. More information: RowanResources.com
Tim@RowanResources.com

©2024 by The Rowan Report, Peoria, AZ. All rights reserved. This article originally appeared in Healthcare at Home: The Rowan Report.homecaretechreport.com One copy may be printed for personal use: further reproduction by permission only. editor@homecaretechreport.com

CMS News: New Rule Cracks Down on Medicare Advantage Upcoding

CMS

by Tim Rowan | Feb 1, 2023 | CMS, Medicare Advantage, Regulatory

by Tim Rowan, Editor

CMS Rule to Protect Medicare

The U.S. Department of Health and Human Services, through the Centers for Medicare & Medicaid Services, finalized the policies for the Medicare Advantage “Risk Adjustment Data Validation” program, which is CMS’s primary audit and oversight tool of MA program payments.

Under this program, CMS identifies improper risk adjustment payments made to Medicare Advantage Organizations in instances where medical diagnoses submitted for payment were not supported in the beneficiary’s medical record. The commonsense policies finalized in the RADV final rule (CMS-4185-F) will help CMS ensure that people with Medicare are able to access the benefits and services they need, including in Medicare Advantage, while responsibly protecting the fiscal sustainability of Medicare and aligning CMS’s oversight of both Traditional Medicare and MA programs.

In Other Words, Fraud

As required by law, CMS’s payments to MAOs are adjusted based on the health status of enrollees, as determined through medical diagnoses reported by MAOs. Studies and audits done separately by CMS and the HHS Office of Inspector General have shown that Medicare Advantage enrollees’ medical records do not always support the diagnoses reported by MAOs, which leads to billions of dollars in overpayments to plans and increased costs to the Medicare program as well as taxpayers.

No Overpayments Collected Since 2007

“Protecting Medicare is one of my highest responsibilities as Secretary, and this commonsense rule is a critical accountability measure that strengthens the Medicare Advantage program. CMS has a responsibility to recover overpayments across all of its programs, and improper payments made to Medicare Advantage plans are no exception. For years, federal watchdogs and outside experts have identified the Medicare Advantage program as one of the top management and performance challenges facing HHS, and today we are taking long overdue steps to conduct audits and recoup funds. These steps will make Medicare and the Medicare Advantage program stronger.”

Xavier Becerra

Secretary, Department of Health and Human Services

“CMS is committed to protecting people with Medicare and being a responsible steward of taxpayer dollars,” said CMS Administrator Chiquita Brooks-LaSure. “By establishing our approach to RADV audits through this regulation, we are protecting access to Medicare both now and for future generations. We have considered significant stakeholder feedback and developed a balanced approach to ensure appropriate oversight of the Medicare Advantage program that aligns with our oversight of Traditional Medicare.”

The RADV final rule reflects CMS’s consideration of extensive public comments and robust stakeholder engagement after the release of the 2018 Notice of Proposed Rulemaking. The finalized policies will also allow CMS to continue to focus its audits on those MAOs identified as being at the highest risk for improper payments. The RADV final rule can be accessed at the Federal Register.

Pre-Implementation Performance Report

The January 2023 Pre-Implementation Performance Report is now available to download from the Internet Quality Improvement Evaluation System (iQIES).

Instructions on how to access the PIPR are available below and on the Expanded HHVBP Model webpage under “Model Reports.”

Background

To support home health agencies during this first performance year, CMS issued PIPRs in November 2022 and January 2023 to all active HHAs. The PIPR provides HHAs with data on their quality measure performance used in the expanded HHVBP Model, in comparison to HHAs nationally within peer cohorts, in advance of the first Interim Performance Reports (IPRs) in July 2023. The PIPRs do not contain calendar year (CY) 2023 data. The January 2023 PIPR includes a new tab containing preliminary achievement thresholds and benchmarks by volume-based cohort.

Need Help Understanding Your PIPR?

To assist HHAs in understanding the purpose, content, and use of the PIPRs, the HHVBP Technical Assistance Team created an on-demand video and downloadable resource, “Introduction to the Pre-Implementation Performance Report,” available on the Expanded HHVBP Model webpage. The video is also available on the Expanded HHVBP Model YouTube channel.

Additionally, the December 2022 edition of the “Expanded HHVBP Model Frequently Asked Questions” includes questions regarding the PIPR. If you do not see an answer to your specific question, please email the HHVBP Model Help Desk at HHVBPquestions@lewin.com.

If you experience an issue with accessing resources on the Expanded HHVBP Model webpage, first try refreshing the webpage. If that does not work, please try closing and reopening the browser. If you continue to experience issues, please try clearing the cache/cookies—links to instructions are below.

Locating the PIPR in iQIES

Log into iQIES at iqies.cms.gov.
Select the My Reports option from the Reports
From the My Reports page, select the HHA Provider Preview Reports
Select the HHVBP file to view the desired report. To quickly locate the most recently published report, select the down arrow adjacent to the Created Date label at the top of the table. This will order the reports in the folder from newest to oldest.
Select the file name link and the contents of the file will display.

Help Desk Information

Should you experience difficulty locating the HHVBP file or with downloading, please contact the iQIES Help desk staff by email at iQIES@cms.hhs.gov or by phone at (800) 339-9313.

For questions about the content of the expanded HHVBP Model reports, please contact the HHVBP Help Desk staff by email at HHVBPquestions@lewin.com.

*Please include your name, agency name, and the CCN when contacting the help desks.

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©2023 by The Rowan Report, Peoria, AZ. All rights reserved. This article originally appeared in The Rowan Report. One copy may be printed for personal use: further reproduction by permission only. editor@therowanreport.com

Bi-Partisan Congressional Committees Demand CMS Administrator Repay Misspent Funds

CMS

by Tim Rowan | Sep 16, 2020 | CMS, Regulatory

Bi-Partisan Congressional Committees Demand CMS Administrator Repay Misspent Funds

his month, two House committees and two Senate committees published a report of a joint investigation into Centers for Medicare and Medicaid Services Administrator Seema Verma’s spending of taxpayer funds. The complete 56-page report is available in our “Partner News” section in the footer of our web site. For convenience, we reprint highlights from the report’s Executive Summary here.

The House Committee on Energy and Commerce, House Committee on Oversight and Reform, Senate Committee on Finance Minority, and Senate Committee on Health, Education, Labor, and Pensions Minority (the Committees) conducted a year-long investigation into Centers for Medicare & Medicaid Services (CMS) Administrator Seema Verma’s use of taxpayer funds to retain communications consultants with strong Republican political ties.

The Committees’ investigation shows that Administrator Verma and her top aides abused the federal contracting process to stock CMS with handpicked Republican consultants who billed the government hourly rates of up to $380. In less than two years, Administrator Verma’s consultants charged CMS nearly $6 million for work that included boosting her public profile and personal brand, serving as her preferred communications advisors, arranging private meetings for her with media personalities and other high-profile individuals, and routinely traveling with her to events across the country. By retaining these consultants, Administrator Verma misused funds appropriated by Congress, wasting taxpayer dollars intended to support federal health care programs.

The evidence obtained by the Committees expands on the findings of a recent audit conducted by the Department of Health and Human Services (HHS) Office of Inspector General (OIG) and demonstrates that Administrator Verma’s expenditures potentially exceeded the scope of CMS’s authority under the applicable appropriations. Congress appropriated taxpayer funds to CMS to ensure that Americans have access to and are aware of opportunities to enroll in federal health care programs, including Medicare, Medicaid, and the Affordable Care Act. Congress did not intend for Administrator Verma or other senior CMS officials to use taxpayer dollars to stockpile CMS with handpicked consultants or promote Administrator Verma’s public profile and personal brand. Given the reckless disregard she has shown for the public’s trust, Administrator Verma should reimburse the taxpayers for these inappropriate expenditures.

During the course of the investigation, the Committees obtained tens of thousands of pages of documents from HHS and private parties, conducted interviews and briefings with employees and executives from two of the consulting firms used by CMS, and collected additional information from databases, court records, and press reports, among other sources. The Committees’ investigation shows:

- Administrator Verma and her top aides misused federal contracts CMS held with consulting firms to bring handpicked Republican communications consultants into CMS operations.

- Administrator Verma and her top aides built a shadow operation that sidelined CMS’s Office of Communications in favor of the handpicked consultants.

- Consultants — particularly Pam Stevens — worked to promote Administrator Verma’s public profile and personal brand beyond her role as CMS Administrator, while also expanding the Administrator’s network.
- Administrator Verma’s consultants charged CMS nearly $6 million in less than two years.

- After CMS issued a stop-work order in April 2019, consulting firm Porter Novelli continued working for CMS under other task orders to pitch profile pieces on Administrator Verma to media outlets, including lifestyle magazines targeted in Pam Stevens’s Executive Visibility Proposal.

OIG issued an audit on July 16, 2020 (OIG Audit) containing findings consistent with the Committees’ investigation and concluding that CMS violated federal contracting requirements. The OIG Audit, which was requested by the Committees, found:
- - Administrator Verma and senior CMS officials allowed consultant Marcus Barlow to perform inherently governmental functions, such as making managerial decisions and directing CMS employees, thereby violating the Federal Acquisition Regulation (FAR).
- - CMS improperly administered certain contracts it held with consulting firms as personal services contracts. In doing so, CMS officials exerted a level of control over the consultants’ work that created an improper employer-employee relationship, exceeding what was permissible under the contracts.
- CMS did not comply with the FAR and other federal requirements in managing contract deliverables, approving the use of a subcontractor, maintaining complete working files, and paying questionable

©2020 by Rowan Consulting Associates, Inc., Colorado Springs, CO. This article originally appeared in Home Care Technology: The Rowan Report. Click here to subscribe. It may be freely reproduced provided this copyright statement remains intact. editor@homecaretechreport.com

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