Abstract

Louisiana's Medical Assistance Programs Integrity Law is expressly made applicable to not only Medicaid, but also to all other health care programs funded by the state. It is what must be described as a major anti-fraud law, and is the most sweeping health care fraud measure ever enacted to date in Louisiana. A detailed outline of the statute appears as an addendum to this article. Cf., the old civil health care fraud law, at La. R.S. 46:442, which this law repealed.

This law creates: a new definition for "health care provider"; a more expansive list of provider misconduct; authority for the Secretary of the Department of Health and Hospitals (D.H.H.) to impose Administrative Sanctions against providers who engage in misconduct; new and more onerous fines and civil money penalties; authority for the state to file civil suit/civil actions for recovery from providers who violate its provisions; and, it creates Qui Tam actions for the first time in Louisiana, as well as informant rewards of up to $2,000.

D.H.H., after publishing two "Notices of Intent," will soon publish in the Louisiana Register final regulations/rules for its administration of this anti-fraud measure.

During the 1997 legislative session, the Louisiana legislature enacted a major health care anti-fraud law. The law was given an effective date of August 15, 1997, and repealed the one section on civil health care fraud that had been Louisiana's only law on the subject since 1984, replacing it with an entire chapter of new law containing a total of twenty-seven sections. The new anti-fraud measure is called the "Medical Assistance Programs Integrity Law" (its acronym becomes "MAPIL"), and is the most sweeping health care fraud civil statute ever enacted in this state.

MAPIL and the implementing regulations contain new definitions for the phrase "health care provider," vastly enlarging and broadening the category of persons now exposed to health care civil fraud prohibitions and penalties. At the same time, and borrowing heavily from Federal statutes and regulations, the law expands greatly the list of acts deemed to be provider fraud, misrepresentation or other misconduct. It does too, however, contain three express "safe harbors" for one of the new specified acts of provider misconduct, and, though he has not yet done so, the Secretary of the Department of Health and Hospitals (D.H.H.) is authorized to provide for more safe harbors by published regulations.

This anti-fraud statute creates four specific administrative sanctions or punishments for provider misconduct which are to be used and imposed by D.H.H. at the agency level (which is prior to the judicial or court level), one of which even being the imposition of a monetary penalty. It authorizes D.H.H. to establish other and additional administrative sanctions, and the new regulation by D.H.H. does in fact create twelve more administrative sanctions. The regulation will also provide that as to all of the administrative sanctions except mandatory exclusion from Medicaid, the effect of the sanctions will not be suspended during any appeal to DHH's Bureau of Appeal.

MAPIL substantially increases the amounts of the penalties that had been in the older repealed statute, and at the same time creates new and additional sanctions such as fines, civil money penalties and other punishments, and provides for tripling of fines in some instances. It also authorizes the state, through either the Attorney General or the Secretary of D.H.H., to file civil collection suits for recovery from practitioners who violate its provisions, to place a lien (called a "Notice of Lis pendens") on property of a practitioner while civil collection suits are pending, and even authorizes D.H.H. to seek forfeiture of property purchased with the proceeds of fraudulent misconduct.

Another major feature of MAPIL, and which is a completely new device in Louisiana law, is the creation and authorization of Qui Tam actions. This is the name given to a suit filed by a private citizen, on behalf of both the state and the citizen, against a provider and seeking recovery from the provider for the fraud or misconduct described in this new statute. In a Qui Tam suit, the private citizen is not required to have been a patient of the practitioner, and he is allowed to keep a part of the recovery (like a "bounty") for himself if the suit is won. Such a person faces severe sanctions, however, if a judge finds he filed the suit merely for harassment or other frivolous purpose. MAPIL also authorizes an informant reward of up to $2,000 for information (a "tip") that enables the state to obtain a judgment against a provider, and establishes protections for whistleblowers,too.

Providers now include something called "providers-in-fact," agents of providers, billing agents, employees and independent contractors of providers, and those whose only involvement may be a percentage ownership interest as an investor. While there had been only one civil penalty under the repealed 1984 law, and it was only $2,000 per fraudulent claim, there are several fines now, two of which are $10,000 for each fraudulent claim — and all of the fines may be cumulative.

Exercising immediately the authority given it in this law by the legislature to promulgate regulations, as soon as the bill was signed the Secretary of D.H.H. published its first rule making Notice of Intent in the June 20, 1997, issue of the Louisiana Register. That initial draft proposal has undergone several revisions and the final regulation is expected to be published no later than the early fall. It has given the health care community even more definitions, such as for words like "affiliate," "ownership interest," and "random statistical sampling." The new regulation requires that DHH must first determine that a "pattern of incorrect [claims] submissions [is] material ... prior to imposing a fine or other monetary sanction which is greater than the amount of the identified overpayment that results from the pattern of incorrect submissions," and it also quantifies a minimum threshold for "materiality."

All who are involved in the health care industry — practitioners as well owners and those who are employees only, even those who are only passive investors or absentee owners — should be aware of this new statute and must be watchful for the way this new group of laws and implementing regulations are applied and enforced by D.H.H. The sanctions in this new statute are far too serious to be inattentive to it.

A d d e n d u m

Outline of Louisiana's 1997 Medical Assistance Programs Integrity Law

1. Providers and Misconduct

   1. The law and its sanctions, fines and other punishments applies to the following as "providers":

      1. Health Care Provider — Any person furnishing or claiming to furnish a good, service or supply under the medical assistance programs, any other person defined as a health care provider by federal or state law, or by rule, and a provider-in-fact.

      2. Provider-In-Fact — An agent who directly or indirectly participates in management decisions, has an ownership interest in the health care provider, or other persons so defined by federal or state law, or by rule.

      3. Agent — A person: (1) who is employed by a health care provider; or (2) who has a contractual relationship with a provider; or (3) who acts on behalf of a provider.

      4. Ownership interest — The possession, directly or indirectly, of equity in the capital stock, or the right to share in the profits, of a health care provider.

   2. The acts deemed "misconduct" by MAPIL:

      1. Illegal remuneration, which is ". . . the soliciting, receiving, offering, or paying of any remuneration, such as kickbacks, bribes, rebates, or bed hold payments, directly or indirectly, overtly or covertly, in cash or in kind . . . ":

         1. For referring an individual to a health care provider
         2. In return for purchasing, leasing or ordering goods paid for by the programs
         3. To obtain a recipient list, number, name or other identifying information
         4. To a/the recipient of medical services, goods or supplies paid for by the programs

      Note: The law describes, but only in broad, general terms, three (and creates the possibility of more) "safe harbors" for otherwise "illegal remuneration," with directions to D.H.H. to define-explain the details in Regulations the Secretary is directed to publish.

      2. Submission of a "false or fraudulent claim," which phrase is given an express definition or meaning for the specific purpose of this law.

      3. Misrepresentation (which word is also given an express definition or meaning for the specific purpose of this law) made to obtain or attempt to obtain payment of a claim.

      4. Conspiracy to defraud, or attempt to defraud, through submission of false or fraudulent claims or through misrepresentation, to obtain payment of a claim.

      5. The knowing submission of a claim for goods, services or supplies which were medically unnecessary or which were of "substandard quality" or quantity, and "substandard quality" is given an express definition or meaning.

      6. False, fictitious, or misleading statements knowingly made on any form for the purpose of qualifying a person to receive services or goods who is not eligible to receive same.

      7. Unauthorized obtaining, using, etc., of a recipient list, number, name, etc.

2. Administrative Actions/Sanctions

   Pursuant to Rules and Regulations published in accordance with the Administrative Procedure Act, the Secretary of D.H.H.:

   1. Shall establish a Claims Review process to determine if a provider's claim should be, or should have been, paid; the Claims Review may occur prior to, or after, making payment to a provider; and, payment to a provider may be withheld during a Claims Review, if necessary;

   2. May establish various Administrative Sanctions (sanctions imposed at the Department level, not the judicial or court level) to be imposed on providers; these Sanctions shall include:

      1. Recoupment of erroneous payments via reduction in payment to a provider
      2. Posting of bond, other security, or a combination of both
      3. Exclusion from participation in the programs

      4. A monetary penalty; and,

   3. Shall conduct a hearing at the request of a provider who wishes to contest an Administrative Sanction imposed on him (and an aggrieved provider may appeal any decision to the 19th Judicial District Court in East Baton Rouge Parish).

3. Civil Suits/Action

   1. The "recovery" (of over payments, fines, etc.) that the state may seek in a civil action includes:

      1. Actual damages sustained by the program, which "can be recovered only once by the . . . program [e.g., if recovered administratively via recoupment, cannot be sought again later in a civil suit] . . . and cannot be waived by the court."

      2. Civil fines of —

         1. up to $10,000 per violation for an illegal remuneration, or three times the value of the illegal remuneration, whichever is greater; and,

         2. up to three times the amount of actual damages for submission of a false/fraudulent claim or for a misrepresentation.

      3. Civil money penalties (CMP) — one, or all, of those listed below, and in addition to actual damages and civil fines listed above, as follows:

         1. Up to $10,000 for each false/fraudulent claim, each misrepresentation, or each illegal remuneration; and/or

         2. Payment of interest on the amount of the civil fine at the maximum rate of legal interest.
            
            The civil money penalty may be sought from a provider who has:

            1. been Sanctioned by Administrative Order,
            2. violated any part of this new law,
            3. violated a settlement agreement,
            4. been charged with a violation of state criminal statutes relative to medical assistance programs,
            5. been found liable in a federal civil action,
            6. plead guilty or nolo contendere to, or been convicted of, criminal conduct in federal court arising out of federal "health care 'fraud and abuse' ."
            
            And thus, this state civil liability (fines, etc.) is deemed to spring into existence if a bad actor violates federal civil or criminal statutes, or state criminal statutes (!?!!!).

      4. Costs, expenses, fees, and attorney fees — all of such related to the investigation and legal proceedings associated with a violation are recoverable by the state, the amount of which is subject to review by the court for reasonableness.

   2. "Collection" of the recovery/fines is not left to chance, and as to same, MAPIL provides:

      1. Privilege, and ranking of privilege — a "lien" or security interest over all property owned by the defendant provider; the lien ranks ahead of any lien the provider himself may have over the same property; and, ranks ahead of liens of third parties if notice of lis pendens has been filed in the public records by the state.

      2. Nondischargeability under bankruptcy laws — recovery by the state for illegal remuneration's, false or fraudulent claims, or misrepresentations, "shall be considered a nondischargable liability" under the federal bankruptcy statutes.

      3. Continuing liability — a person against whom judgment is rendered in these civil suits continues to be liable for payment even though a (presumably corporate or other type juridical person) defendant may have been sold to another person or entity.

      4. Liability of purchaser — a person who buys an ownership interest in a (presumably corporate or other entity) liable defendant "shall assume" (does it mean "automatically acquires" - ?) liability for, and responsibility to pay, any "outstanding recovery" provided the state has taken certain specified steps.

   3. Additional civil suit "rights and remedies" of the state are:

      1. TRO's — Concurrent with the filing of a civil suit, withholding of payments, etc., the state may seek temporary restraining orders and/or injunctions to prevent the provider from whom recovery may be sought from disposing of property or assets.

      2. Lis Pendens — The state may file a "notice of pendency of litigation" at the time it files suit against a provider, which establishes ranking for the state's lien and "warns" the public of an impending lien and its rank.

      3. Forfeiture of Property — The state may seek a court judgment ordering a provider from whom recovery is due to forfeit to the state ownership of property which constitutes, or was derived directly or indirectly from, gross proceeds traceable to the violation or misconduct that is the basis for the recovery.

4. Qui Tam Actions

   1. Qui Tam statutes, which have existed in the Federal law since the mid-1800's, authorize a private citizen to file a civil suit on behalf of the government. If the Qui Tam plaintiff (called the "relator") wins and obtains a recovery for the government, he is allowed to keep a part of the recovery in return for his efforts ("bounty"). MAPIL authorizes Qui Tam actions against a provider who has committed the misconduct described in the statute. The relator must have, however, voluntarily provided the information/evidence about the misconduct to D.H.H. before he may file the suit. There are a number of other restrictions, including a requirement that the relator be someone who is an "original source" of the information concerning the misconduct, and he cannot have learned of the misconduct through the news media and cannot have been a government employee who learned of the misconduct through his job.

   2. The state (through the Attorney General or D.H.H.) may join in with the relator in the Qui Tam suit, and if that occurs and the suit is won, the relator will receive at least 10%, but not more than 20%, exclusive of the civil money penalty, recovered against the provider.

   3. If the state does not intervene in the Qui Tam suit, and the suit is won, the relator will receive a part, not more than 30%, of the recovery against the provider that the court decides is reasonable for the relator's efforts.

   4. If the provider wins the suit and the court finds that the allegations by the relator were without merit or filed primarily to harass the provider, the court may grant a judgment in favor of the provider and against the relator for costs, expenses, fees and attorney fees.

5. Rewards and Whistleblowers

   1. Rewards — Provided the informant himself is not subject to suit under MAPIL, the state may reward an informant up to $2,000 for information (a tip) which results in a recovery against a provider for misconduct.

   2. Whistleblowers — Those who are employees of a target provider under this law cannot be discharged, discriminated against or harassed "for any lawful act engaged in by the employee . . . in furtherance of any action taken pursuant to" MAPIL; and, if such occurs, the employee has a cause of action against the employer for actual, and exemplary, damages. But, this right does not extend to a relator in a Qui Tam action whose suit was found to have been frivolous or harassing. The same protections, and rights, are extended to whistleblowers who are not employees of the target provider.

E n d n o t e s:

1. Louisiana's Medical Assistance Programs Integrity Law is in Title 46 of Louisiana Revised Statutes, and is cited as La. 46:437.1, et seq.

2. The new regulations by Louisiana's Department of Health and Hospitals will be published in Title 50 of the Louisiana Administrative Code, as Chapter 41 of Subpart 1 of Part II of that Title of the Code.