By: Daniel G. Giaquinto, Esq.

In fiscal year 2006, expenditures for healthcare topped $2.6 trillion, representing 16.5% of out gross national product. As health care expenditures rise at over twice the rate of inflation, and as people continue to live longer, the Centers for Medicare and Medicaid (CMS) estimate that health care spending will exceed $3.3 trillion by fiscal year 2012.

Health care fraud in the most generic sense is submitting or attempting to submit a claim that contains false or misleading information for payment for health services. All programs of health insurance are vulnerable to fraud, and Medicare and Medicaid are the most visible. Fraud schemes are becoming more complex and sophisticated, and health care fraud perpetrators run the gamut from providers and patients, to corporate-driven schemes and even infiltration by organized crime.

It is estimated that over $100 billion are lost annually due to health care fraud. Due to corporate scandals and the legislative response such as Sarbanes-Oxley, surveys now reveal that the public considers white collar crime as great a threat to society as street crime. In addition, there is a distinct recognition that with the rising cost of health care, health care fraud is not a victimless crime. Coupled with the reality that the recovery of health care dollars lost to fraud is a source of revenue, there should be little wonder why there is such an unprecedented scrutiny of and demand for accountability from the healthcare industry. Audits, investigations, indictments, civil suits and administrative discipline of providers for fraud and abuse are reaching a level heretofore never experienced by the health care industry.

Corporate Integrity Agreements (CIAs) and Deferred Prosecution Agreements (DPAs) are tools of increasing use that can resolve investigations and charges of health care fraud.

The most commonly used federal criminal laws to combat health care fraud, such as the health care fraud statute, the anti-kickback statute, and even the civil false claims act statute, all require the government to prove an element of scientor. On a state level, New Jersey statutes that have been enacted to combat health care fraud, such as the healthcare claims fraud, the runners, and insurance fraud statutes, also involve this element. Simply put, scientor is the mental state of the defendant that must be proved by the prosection along with the other elements of a crime. Usually this requires proving that the defendant either purposely, knowingly, or willfully committed the conduct prohibited in the statute. In some healthcare fraud contexts "knowingly committing a violation" can mean acting with actual knowledge of the false information presented, with deliberate ignorance to the false information, or with reckless disregard for the truth of the information presented.

What better way to strive to eliminate fraud and abuse, and at the same time negate criminal intent or an allegation of "deliberate indifference" or "reckless disregard for the truth," than to establish, on a voluntary basis, a compliance program similar to the programs required by CIAs and DPAs? Put in the context of a drug offender, completion of voluntary rehabilitation prior to a plea agreement counts more than a promise of completing a rehab program as a condition of sentence. Since all practices are capable of making billing errors, and given the particular current climate, no practice is beyond the reach of an audit or subpoena. Demonstration of a pre-existing effort to eliminate the potential for fraud and abuse could, and should, make a positive difference in the ultimate outcome of any governmental or private insurer audit or investigation.

A compliance program can be tailored to the individual practice, appropriate for the size, nature and complexity of the practice. At a minimum a compliance program should contain written compliance guidelines; identify a chief compliance officer or assemble a compliance team; and identify the reasons for avoiding fraud and abuse violations. The program should also allow for employees and patients to file complaints with the practice, and should allow for anonymous complains. Internal audits can also be provided for as well as semiannual or annual assessments from an outside organization to determine whether the practice is adhering to its own compliance guidelines. Any program must also make sure that corporate policies, loyalty and culture do not inhibit true compliance. Once problems are identified, a mechanism must exist to remedy them.

As with any compliance program, training will play an integral part. Introductory training should be tailored to and made mandatory for new employees, and refresher training on a quarterly or semiannual basis should be developed for current employees. This training should also identify potential criminal, civil, and administrative exposures for fraud and abuse, as well as review healthcare industry issues specific to the practice and its billing. Employees must be made aware of the potential consequences to them for failing to embrace the goal, objectives and measures of the compliance program.

Any compliance program should be based on the objectives of quality care, ethics, and honest and accurate billing. The goal is to eliminate fraud and abuse and to minimize the potential for such accusations to be made against the practice. Practitioners would be well-advised to contact legal counsel to explore setting up and implementing a compliance program, or at the very least the educational component of a compliance program. Should federal or state authorities come knocking, the only "intent" the practitioner wants to demonstrate is the "intent to do things right." As always, the best defense is a good offense.