Provider Self-Disclosure Decisions – Voluntary Disclosure Process

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November 7, 2016

The decision whether or not to voluntarily disclose non-compliance to the government can be very difficult.  Not every case is clear.

Clearly not every situation where there has been a billing error amounts to fraud or wrongdoing requiring use of the self-disclosure protocol.  Many overpayments that are identified through audit can be dealt with at the intermediary level.  Where investigation raises questions about whether incorrect bills are “knowingly” submitted, the self-disclosure process may provide some mitigation of potential loss.  Situations where the provider perhaps “should have known” raise more difficult issues of analysis.

The Office of Inspector General’s self-disclosure process is available when there is a potential violation of Federal law that could result in the imposition of Civil Monetary Penalties (CMP).  A simple determination that a billing error may have led to an overpayment is generally not covered by the protocol.  It is only when the error presents potential CMP’s that the protocol can be used to self-disclose the violation to the Federal government.  For example, self-disclosure might be considered where an overpayment is not repaid within 60 days after discovery by the provider or where there is a violation of the anti-kickback statute discovered.

The situation is also complicated because a potential whistleblower may view a situation much differently than a provider who finds what it believes to be an innocent mistake through the audit process.  A provider may sincerely believe that there was no “wrongdoing” and that a simple mistake has been identified.  Finding such a mistake may actually be evidence the provider’s compliance efforts are working.  On the other hand, there is a whole legal profession out there now that is advertising for people to come forward as whistleblowers.  With potential recovery under the False Claims Act of three times the overpayment plus up to $22,000 per claim, whistleblower lawyers have strong incentive to attempt to turn what the provider believes to be an innocent mistake into a false claim.  The damage calculation creates a big payday for whistleblower plaintiffs and their lawyer, who take these cases on a contingency fee basis.

Generally speaking when errors are discovered the provider’s best bet is to be forthright and deal with the matter “head on.”  A complete internal investigation should be conducted to determine the precise nature of the issues and to identify the extent of wrongdoing.  Based on the outcome of the investigation, the provider can determine whether a simple repayment can be used or whether there may be reason to go through the formal self-disclosure process.

Anyone who has worked with reimbursement rules will realize that payment policies, rules and regulations are not always clear.  It is often difficult to determine whether there is even a violation of applicable rules or whether an overpayment actually exists.  Legal ambiguities further complicate the self-disclosure decision.  The precise nature of any legal ambiguities involved in the specific case need to be completely documented.  If a decision is made that there has been no wrongdoing, the legal analysis should be laid out in writing and in detail and a reasonable judgment should be made regarding the interpretation of applicable legal standards.  If self-disclosure is made in situations involving legal ambiguities, those ambiguities should be explained in detail as part of the self-disclosure.

In the end, a provider facing potential self-disclosure must follow a reasonable process to make a reasoned decision in the face of significant risk and uncertainty. Perhaps most importantly, it is never a good alternative to pretend the situation will never be discovered or brought to light.  These cases can arise in strange and unexpected ways.  It is best to assume a discovered compliance violation will eventually be brought to light.  In most cases it is advantageous for the provider to affirmatively bring the matter forward rather than waiting for the government or a whistleblower to bring a claim.  When that happens, it is much more difficult to resolve the issue.

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