In the largest settlement ever in Arizona for a violation of the False Claims Act, Carondelet Health Network, an Arizona nonprofit corporation doing business as Carondelet St. Mary’s Hospital and Carondelet St. Joseph’s Hospital (Tucson) has paid $35 million to settle allegations that it had submitted false claims for inpatient rehabilitation facility (IRF) services. Whistleblower Jacqueline Bloink, a Carondelet employee who worked as a corporate responsibility coordinator, filed the lawsuit in November 2011. Bloink will receive $5.95 million for her part in the suit in addition to payment for her attorneys’ fees and related costs. Corporate Compliance Office Knew About the Overpayments What makes this case interesting and important for compliance officers working in large health systems is that Carondelet had a corporate compliance program in place and that the corporate compliance officer has known about the problems since at least 2008, according to court documents. Carondelet had conducted audits in 2008, 2009, 2010, and 2011 that consistently identified the problem claims and the overpayments due the Medicare and other government programs as a routine part of the audit provisions of their own compliance program. The results of these audits were discussed among management-level employees and corrective actions were put […]
In the largest settlement ever in Arizona for a violation of the False Claims Act, Carondelet Health Network, an Arizona nonprofit corporation doing business as Carondelet St. Mary’s Hospital and Carondelet St. Joseph’s Hospital (Tucson) has paid $35 million to settle allegations that it had submitted false claims for inpatient rehabilitation facility (IRF) services.
Whistleblower Jacqueline Bloink, a Carondelet employee who worked as a corporate responsibility coordinator, filed the lawsuit in November 2011. Bloink will receive $5.95 million for her part in the suit in addition to payment for her attorneys’ fees and related costs.
Corporate Compliance Office Knew About the Overpayments
What makes this case interesting and important for compliance officers working in large health systems is that Carondelet had a corporate compliance program in place and that the corporate compliance officer has known about the problems since at least 2008, according to court documents. Carondelet had conducted audits in 2008, 2009, 2010, and 2011 that consistently identified the problem claims and the overpayments due the Medicare and other government programs as a routine part of the audit provisions of their own compliance program. The results of these audits were discussed among management-level employees and corrective actions were put into place.
Carondelet is a member of the Ascension Health system and uses the Corporate Responsibility Program Effectiveness Assessment protocol designed by the Ascension Health Corporate Responsibility Department. While the audits are required by Ascension’s corporate responsibility department, Ascension does not see the results of the audits. In 2010, Corporate Responsibility Coordinator Rachel Harnish completed an IRF audit. This was prior to the audits conducted by Bloink. Harnish’s audits revealed error rates similar to Bloink’s. One problem area was with the intensity of therapy. Intensity requirements must be met unless there is a patient related reason to miss a therapy session. According to the court documents, the majority of cases lacking intensity were due to staffing issues, not patient inability to participate.
Despite the consistent failure of the corrective actions and the repeated audits that demonstrated that overpayments were being received, Carondelet failed to repay Medicare until 2010 when it refunded $24 million, just prior to becoming aware of the whistleblower lawsuit. Even though it was a substantial amount, it was too little and it was way too late. Further, a subsequent audit conducted in 2011 by Bloink revealed the problem persisted and overpayments were still being received. Even faced with that, Carondelet did not make any more repayments.
Knowing and Willful
The overpayments occurred because Carondelet provided IRF services for patients that did not warrant inpatient services and hence were not properly reimbursable as inpatients. According to the court record, “Carondelet knowingly and willfully failed to notify Medicare of the results of its audits, and further knowingly and willfully failed to reimburse Medicare for services that did not meet Medicare’s requirements.”
The court documents seem to describe a health system that had a compliance program in place and was following its audit protocols. It was examining itself on a regular basis and was reporting the results to upper management. The compliance program was developing and implementing, or so it thought, corrective actions that should have resolved the issue but never seemed to have worked. In fact, it appears that the only part of the compliance program that was not working was the part where Carondelet refunded acknowledged and documented overpayments.
From the prosecutor’s perspective, as surmised from the announcement regarding the disclosure and refund that occurred just prior to Carondelet becoming aware of the lawsuit, there was concern that Carondelet’s disclosure and repayment was not timely, complete, or adequate. In spite of this, the government gave some consideration to Carondelet regarding its compliance efforts when deciding on the settlement amount. It could have been a lot worse, especially with the current requirements that repayments be made within 60 days.
Takeaway: There is a lesson here for all compliance officers and executive-level administrators. The most important part of a compliance program is taking effective action to fully and properly resolve discovered problems and promptly repay any overpayments identified.
