Compliance Policy

The Fortune Society

POLICY PURSUANT TO THE FEDERAL DEFICIT
REDUCTION ACT OF 2005
:
Detection and Prevention of Fraud, Waste and
Abuse and Applicable Federal and State Laws

Policy

The Fortune Society prohibits the knowing submission of a false or fraudulent claim for payment to a federal or New York State funded health care program. Such a submission is a violation of federal and New York State law and can result in significant administrative and civil penalties under the federal False Claims Act, a federal statute that allows private citizens to help reduce fraud against the United States government. In addition, in New York State, the submission of a false claim can result in civil and criminal penalties under portions of the New York State Finance Law, Social Services Law, and Penal Law, among other New York State statutes.

The Fortune Society is committed to complying with the requirements of Section 6032 of the federal Deficit Reduction Act of 2005 (Employee Education About False Claims Recovery) and to preventing and detecting any fraud, waste, or abuse in its organization. To this end, The Fortune Society maintains a Compliance Program, which includes a detailed Compliance Plan and associated compliance policies and standards. Statements regarding legal and ethical conduct, training, detection, communication, and prevention can be found in the Compliance Plan and associated compliance policies and standards.

As part of its Compliance Program, The Fortune Society has adopted this Policy, which among other things, includes detailed information on the federal False Claims provisions, New York State False Claims provisions, their remedies, and their whistleblower provisions and protections. The Compliance Officer is responsible for the distribution of this Policy to all The Fortune Society employees and Contractors (as such term is defined in paragraph 4, below), and maintaining a record of signed acknowledgements of the receipt of this Policy from all The Fortune Society employees and Contractors. This Policy is also a part of the Corporate Compliance Handbook.

The Fortune Society contractors and agents subject to this Policy (referred to in this Policy as “Contractors”) are those that perform billing and coding functions on behalf of The Fortune Society, and those which or who, on behalf of The Fortune Society, furnish or otherwise authorize the furnishing of health care items or services or are involved in monitoring health care provided by The Fortune Society.

Each The Fortune Society employee must abide by this Policy. Each Contractor must abide by the Policy as to the work the Contractor performs for The Fortune Society, in addition to making the Policy available to the Contractor’s employees involved in performing that work.

All The Fortune Society employees and Contractors that reasonably suspect or are aware of the preparation or submission of a false claim or report or any other potential fraud, waste, or abuse related to a federal or New York State funded health care program are required to report such information to the appropriate The Fortune Society supervisor or to The Fortune Society’s Compliance Officer. The Compliance Officer may be reached by e-mail at sgoldstein@fortunesociety.org.  Any employee or Contractor who reports such information will have the right and opportunity to do so anonymously, and will be protected against retaliation for coming forward with such information both under The Fortune Society’s internal compliance policies and procedures and under applicable federal and New York State laws. (See below for summary descriptions of the federal and state laws that protect whistleblowers against retaliation.) Reportable issues might include, for example, cases where The Fortune Society is billing for services that(a) were not actually provided (services that did not occur or are improperly coded);(b) were medically unnecessary; or (c) were provided in a significantly substandard manner. Failure to report and disclose or assist in an investigation of fraud and abuse is a breach of the obligation of the employee or Contractor to The Fortune Society and may result in disciplinary action.

The Compliance Officer is responsible for The Fortune Society employees and Contractors receiving training on federal and New York State false claims laws, and other training as necessary and appropriate to educate The Fortune Society community so that they may detect, prevent and report suspected incidents of fraud, waste and abuse.

As an organization, The Fortune Society commits itself to investigate any suspicions of fraud, waste, or abuse swiftly and thoroughly and requires all employees and Contractors to assist in such investigations. If an employee or Contractor believes that The Fortune Society is not responding to his or her report within a reasonable period of time, the employee or Contractor shall bring these concerns about The Fortune Society’s perceived inaction to The Fortune Society’s Compliance Officer.

Please contact the Compliance Officer with any questions regarding the Compliance Program or this Policy.

A Description of the Federal False Claims Act and Federal and State Laws Pertaining to Civil or Criminal Penalties for False Claims and Statements

The Federal False Claims Act

The federal False Claims Act establishes liability for any person who engages in certain acts, including:

knowingly presenting or causing to be presented a false or fraudulent claim to the federal government for payment;

knowingly making, using, or causing to be made or used, a false record or statement to get a false or fraudulent claim paid by the federal government;

conspiring to defraud the federal government by getting a false or fraudulent claim allowed or paid; or

knowingly making, using or causing to be made or used, a false record or statement to conceal, avoid, or decrease an obligation to pay or transmit money or property to the federal government.

(31 U.S.C. § 3729). Under the federal False Claims Act, a person acts “knowingly” if he or she:

has actual knowledge of the information;

acts in deliberate ignorance of the truth or falsity of the information; or

acts in reckless disregard of the truth or falsity of the information.

There is no requirement that the person specifically intend to defraud the government through his or her actions, or had actual knowledge that the claim was false. (31 U.S.C. § 3729(b)).

Under the federal False Claims Act, a “claim” is any request or demand for money or property if the federal government provides any portion of the money or property in question. This includes requests or demands submitted to a contractor of the government, and includes Medicaid claims. (31 U.S.C. § 3729(c)).

In summary, the federal False Claims Act imposes liability on any person who submits a claim to the federal government that he or she knows (or should know) is false. An example may be a physician who submits a bill to Medicaid for medical services she knows she has not provided. The federal False Claims Act also imposes liability on an individual who may knowingly submit a false record in order to obtain payment from the government. An example of this may include a government contractor who submits records that he knows (or should know) are false and that indicate compliance with certain contractual or regulatory requirements. The third area of liability includes those instances in which someone may obtain money from the federal government to which he may not be entitled, and then uses false statements or records in order to retain the money. An example of this so-called “reverse false claim” may include a hospital that obtains interim payments from Medicare throughout the year, and then knowingly files a false cost report at the end of the year in order to avoid making a refund to the Medicare program.

A violation of the federal False Claims Act results in a civil penalty between $5,500 and $11,000 for each false claim submitted, plus up to three times the amount of the damages sustained by the government because of the violation. (31 U.S.C. § 3729). In addition to being liable for damages and civil penalties, violating the federal False Claims Act can subject a person or entity to exclusion from participation in federal health care programs, such as Medicare and Medicaid. (42 U.S.C. § 1320a-7a(a)).

The federal False Claims Act allows a private person to bring an enforcement action on behalf of the United States. (31 U.S.C. 3730 (b)). These private persons, known as “qui tam relators” or “whistleblowers,” may share in a percentage of the proceeds from a federal False Claim Act action or settlement. (31 U.S.C. § 3730(d)(1)). The federal False Claims Act provides, with some exceptions, that a whistleblower, when the Government has intervened in the lawsuit, shall receive at least 15% but not more than 25 % of the proceeds of the federal False Claims Act action, depending upon the extent to which the whistleblower substantially contributed to the prosecution of the action. When the Government does not intervene, the federal False Claims Act provides that the whistleblower shall receive an amount that the court decides is reasonable and shall be not less than 25% and not more than 30%. (31 U.S.C. § 3730(d)(2)). Whistleblower recoveries can be very high; however, if a whistleblower brings a case that is clearly frivolous or brought primarily for purposes of harassment, the whistleblower may be required to pay the defendant’s reasonable attorneys’ fees and expenses. (31 U.S.C. § 3730(d)(4)).

The False Claims Act provides protection to whistleblowers who are discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of their employment as a result of their furtherance of an action under the federal False Claims Act. (31 U.S.C. 3730(h)). Remedies include reinstatement with comparable seniority as the whistleblower would have had but for the discrimination, two times the amount of any back pay, interest on any back pay, and compensation for any special damages sustained as a result of the discrimination, including litigation costs and reasonable attorneys’ fees.

A Description of the Federal Program Fraud Civil Remedies Act

The Program Fraud Civil Remedies Act (31 U.S.C. §§ 3801-3812) (the “PFCRA”) resembles the federal False Claims Act in that it targets persons who make or present (or cause to be made or presented) claims or statements for payment from the federal government that such persons know or have reason to know are false, fictitious, or fraudulent. The PFCRA focuses on certain federal agencies, including, among others, the Department of Health and Human Services (“HHS”), the federal agency that oversees Medicaid claims. The PFCRA establishes an administrative hearing and remedy that is in the first instance administered by the applicable federal agency, subject to limited court review. In contrast, cases involving the federal False Claims Act are heard and determined by the courts.
Similar to the federal False Claims Act, the PCFRA provides that a person “knows or has reason to know” if the person:

has actual knowledge of the information;

acts in deliberate ignorance of the truth or falsity of the information; or

acts in reckless disregard of the truth or falsity of the information.

As with the federal False Claims Act, there is no necessary proof of specific intent to defraud the government.

A violation of the PCFRA results in a civil monetary penalty of up to $5,500 per false claim and an assessment of twice the amount of the false claim.

Although private individuals may report suspected violations of the PFCRA to the government, unlike the federal False Claims Act the PCFRA does not provide that whistleblowers may share in amounts recovered from defendants.

New York False Claims Act

The New York False Claims Act (NY State Finance Law §§ 187-194) is substantially similar to the federal False Claims Act discussed above. Like the federal law, the New York law imposes liability for, among other things: knowingly submitting (or causing to be submitted) a false claim to the government for payment; knowingly making, using or causing to be made or used a false record or statement to get a false claim paid by the government; conspiring to defraud the government by getting a false claim allowed or paid; and knowingly making, using or causing to be made or used a false record or statement to conceal or avoid an obligation to pay government. (NY State Finance Law § 189(1)). The New York False Claims Act, however, imposes liability for claims submitted to New York State or to a local government and not for claims submitted to the federal government.

The term “knowingly” is defined in substantially the same way in the New York law as it is under federal law. (NY State Finance Law § 188(3)).

Both the Attorney General and local governments may bring actions to enforce the New York False Claims Act. (NY State Finance Law § 190(1)). The penalties for violating the statute range from $6,000 to $12,000 for each false claim (as opposed to $5,500 to $11,000 per claim under federal law) and up to three times the amount of actual damages sustained by New York State or local government as a result of the prohibited conduct. (NY State Finance Law § 189(1)).

Like the federal law, the New York False Claims Act authorizes private parties to file a lawsuit in the name of New York State or local government and allows for private parties bringing such actions to receive up to 30% of any monetary recovery, plus reasonable attorneys’ fees and costs. (NY State Finance Law § 190(2)&(6)). In addition, as under the federal False Claims Act, persons who file cases under the New York False Claims Act are provided certain protections against retaliation for bringing a good faith action including reinstatement with comparable seniority and fringe benefits, double back pay plus interest, and/or compensation for any special damages such as reasonable attorneys’ fees. (NY State Finance Law § 191).

Whistleblower Law

New York Labor Law Article 20-C, “Retaliatory Action by Employers,” affords protections to employees who may notice and report inappropriate activities. Under this Article, which contains New York Labor Law §§ 740-741, an employer may not take any retaliatory personnel action against an employee because the employee:

discloses, or threatens to disclose to a supervisor or to a public body an activity, policy or practice of the employer that is in violation of law, rule or regulation which violation creates and presents a substantial and specific danger to the public health or safety, or constitutes the crime of health care fraud, or that the employee reasonably believes, in good faith, constitutes improper quality of patient care;

provides information to, or testifies before, any public body conducting an investigation, hearing or inquiry into any such violation of a law, rule or regulation by such employer; or

objects to, or refuses to participate in any such activity, policy or practice in violation of a law, rule or regulation.

(NY Labor Law §§ 740(2) & 741(2)).

The law defines “improper quality of patient care” as a practice, action, or failure to act of an employer which violates law and which relates to matters which may present a substantial and specific danger to public health or safety or a significant threat to the health of a specific patient. (NY Labor Law § 741(1)(d)).

To bring an action under New York Labor Law § 740, the employee must first bring the alleged violation to the attention of the employer and give the employer a reasonable opportunity to correct the allegedly unlawful practice. (NY Labor Law §§ 740(3)) & 741(3)). However, there is no requirement to first notify the employer if the issue involves improper quality of patient care, as defined above, and presents an imminent threat to public health or safety or to the health of a specific patient, and the whistleblower reasonably believes in good faith that reporting to a supervisor would not result in corrective action. (NY Labor Law § 741(3)).

The law allows employees who are the subject of a retaliatory action to bring a civil action in court seeking relief such as an injunction prohibiting continued retaliation; reinstatement, back-pay and compensation of reasonable costs. (NY Labor Law § 740(4)& (5)). In addition, if an employer retaliates in bad faith against an employee whistleblower, and if the employee’s complaint concerned the improper quality of patient care, the employer may be subject to civil penalty of an amount not to exceed $10,000, which is paid to a New York State fund devoted to improving the quality of patient care. (NY Labor Law § 740(4)(d)). The law also provides that employees who bring an action without basis in law or fact may be held liable to the employer for its attorney’s fees and costs. (NY Labor Law § 740(6)).

 

 

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