A recent U.S. Supreme Court ruling re-affirms liability under the federal False Claims Act (FCA) regardless of whether the person causing the submission of false claims to the government financially benefitted from their actions. The ruling denied a petition requesting the review of an appeal’s court decision to allow a Qui Tam suit against state officials involved in federal-state programs such as Medicaid under the federal False Claims Act (FCA) (Wilcox v. United States ex rel. Stoner, U.S., No. 07-1336, review denied 10/6/08).

The U.S. Court of Appeals argued three officials for the Santa Clara County Office of Education and the East Side Union High School District in California may be subject to liability for submitting a false claim to the United States. The appeals court determined that whistleblower John David Stoner did not have to allege that the state officials personally profited from the conduct after finding nothing in 31 U.S.C. §3729(a)(1) requiring a person knowingly making a false submission to obtain a personal benefit from the wrongful act.

Michael D. Miscoe JD, CPC, CHCC, an adamant compliance advocate, said, “This case demonstrates that a person need not benefit personally from an alleged misrepresentation to be liable under the FCA. Since coders are in many cases responsible for code selection as a means of representing the services performed, where the coder makes choices that are incorrect and designed to ‘get paid,’ liability can arise if the representations made resulting in payment are knowingly inaccurate. As certified coders, the standard of knowledge is not that they actually knew the code was wrong, but should have known by virtue of their training and credential. Because of a certified coder’s training and credential, the standard for what such a person “should know” could potentially be higher.”

While the FCA only applies to federal claims, it often provides persuasive guidance in cases where conduct is evaluated under state statutes or common law fraud standards. “There have been a number of cases where state false claims statutes or common law (judge made law) fraud causes of action have been interpreted using case law pertaining to the federal FCA,” said Miscoe.

Many coders submit claims according to what gets their physician paid and this can create liability. This case shows that the doctor (who is the primary financial beneficiary) is not the only target for false claim allegations. The standard for who is liable under the FCA are persons who actually submit a false claim or cause a false claim to be submitted—regardless of whether there was any financial benefit in doing so.

According to Miscoe, “To safeguard against FCA liability, a coder’s best defense is to research the coding rules applicable to the carrier being billed; don’t continue to bill a service just because that is what has always been done or that is what has traditionally gotten you paid.”

11 Responses to “FCA Ruling Reiterates the Importance of Compliance”

1. Angela Says:
   November 5th, 2008 at 2:07 pm

   What about the coder who does strict “charge entry” and does not have immediate access to the medical record at the time of entering, and subsequently billing, the services? While I agree that certified coders should be held to a much higher standard than a non-certified coder, I fear that physician’s who have been counseled/trained on proper documentation and code selection will now have even greater reason to be “lazy” or even downright negligent when it comes to ensuring compliance.
   I have been in the position where I was reasonably certain that my doctor was manipulating the diagnosis in order to get services covered by the insurance carrier but I did not have access to the medical documentation prior to or at the time of entering the charges. All I could go off of was the super bill. I had, on several occasions, questioned the doctor’s diagnosis selection and was told “don’t worry about it”. Or for instance, the phsyician brings a hospital demographic slip into the office and says he wants you to bill a level 5 outpt consult. There is no documentation because the dictation is not yet complete or hasn’t been done yet and you are risking the loss of your job if claims are not billed w/in a certain time frame? What do you do?
   I am afraid that this happens all too often and as coders, we need to have some entity that we can look to without the risk of bringing on an audit and losing out jobs.

2. Amy Says:
   November 5th, 2008 at 4:57 pm

   Where is the onus on the insurance companies? If coders and physicians “manipulate” the system to get payment, it’s more than likely out of necessity because time and again you receive pended or denied claims, reduced payment, bundled codes, etc. that only skirt the edge of compliance on the insurances’ end. With the medical system working the way it does now, and especially in this climate, more and more patients end up with inadequate care because they simply can’t afford their medical expenses, so now on top of that physicians are having to skirt their end of compliance in order to merely stay afloat and break even! I had a patient just today ask me my advice on which insurance he should elect from his employer and the cheapest option he had was with a $2000 deductible and 30% co-insurance. Who can afford that? So without doing all we can to ensure payment from the insurance, our employers will be going out of business and we ill be added to the unemployment rolls in record numbers. I’m certainly not advocating illegal or inappropriate coding, and I personally have never performed any such coding errors to my knowledge, but there are “tricks of the trade” we all learn to try to work the system in our favor now and then. So now we are liable for that?

   And to Angela, I’d advise you to insist upon access to medical records as truly you cannot insure accuracy without looking at the progress notes. And if your employer refuses to allow you this, then I’d look for a new one if you can. Good luck!

3. Michael Miscoe JD, CPC, CHCC Says:
   November 5th, 2008 at 6:55 pm

   Angela:

   The function you describe is more of a billing entry function. Only if you had reason to know that the codes you were entering were not only wrong, but wrong in a manner designed to obtain higher reimbursement (or reimbursement that would not otherwise be forthcoming) would you potentially be liable.

   There are a number of elements to prove liability under the false claims act. You are focused on only one – the knowledge element. For this element, the key to FCA liability is whether you knew or should have known of the falsity. While I cannot adequately detail the various standards by which what you “knew or should have known” is evaluated, it would appear that without access to the documentation, it would be difficult for the government to prove that you “knew” the claim was false. I am assuming that you are precluded access to the medical record documentation such that you could not conduct a reasonable investigation. If this is true, then you are probably clear. I would, nonetheless, recommend that you raise your concerns with the doctor so that he/she can either provide assurance that the diagnosis is proper or can understand the potential liability that he/she is creating for him/herself. If the latter, use the opportunity to demonstrate how you, as a certified coder, can help the doctor code correctly and compliantly.

   In the referenced case, the court simply resolved the issue regarding whether the lack of a financial motive was a defense. It is not. Hence, the Qui Tam case can proceed against the state officials. As that case proceeds, if it is shown that the claim was false, was false in a material way, that state officials “knew” that false information was submitted, and that the government relied on the false information in making a payment determination, then they will be liable. There are a number of interesting “knowledge” false claims cases that are instructive as to how courts evaluate this element of the FCA. Nonetheless, the relevance of Wilcox to coders is obvious. In most cases, coders do not have a personal stake in the result of what they code.

   If coding something you know is wrong, or adding to or omitting information to gain a benefit payment (for the doctor/clinic/facility) that you would not get if the carrier knew the full facts, then you have a cause for concern. What Wilcox demonstrates is this: the fact that you do not personally benefit is no defense.

4. Michael Miscoe JD, CPC, CHCC Says:
   November 5th, 2008 at 7:52 pm

   Angela:

   Regarding your concern that FCA liability will motivate doctors to become lazy or “downright negligent.” This would be the wrong reaction. While mistakes and negligence do not create false claims act liability, in most cases, certainly in Medicare, being wrong means the doctor must pay back the money. Just having to pay back the money is often devastating. FCA liability involves a different level of wrongness and involves substantially higher civil penalties and damages.

   Doctors are ultimately responsible for claim content. Whether trained in coding or not, they are expected to know. I recently testified in a federal criminal case where the doctor was misled into billing what was not technically the wrong code, but certainly perceived to be the wrong code from a practical perspective. His failure to get training is what allowed him to be misled into the use of these codes by consultants. The resultant coding landed him on the wrong side of a criminal indictment, facing a jury, and the potential loss of his liberty. The case will go to the jury tomorrow and I can only hope that the jury does not find ignorance as a basis for criminal liability.

   For these reasons, I really disagree that physicians can get lazy or negligent with respect to coding. They do so to their peril. The point of the article is this – as a coder, you should not knowingly code improperly – or it could be to your peril as well.

5. Martha Says:
   November 6th, 2008 at 8:08 am

   What about the certified coders who audit the charts and have made recommendations to the doctors regarding 1) the lack of documentation to support the level of coding and 2) the improper use of consult codes.
   We currently have no way to document that we have made these recommendations and the doctor has disagreed with us. Some of the doctors where I work refuse to make the necessary changes. They insist upon billing at the level they’ve coded because they stand by their codes. We’ve had in-services with outside consultants regarding coding issues & they still argue with us.

6. Alex Says:
   November 6th, 2008 at 11:36 am

   What happens when we as coders work for a large network of doctors and we are aware of what the proper coding guidelines but 1) it is difficult keeping track of the carriers that allow certain codes and the ones that don’t and then 2) the doctors feel that when we leave codes off their charges being billed out when we know what payors accept these codes. We have talked and educated the doctors on a constant basis but they still feel we are cheating them out of money. Our directive is to code everything on the op report and our billing dept will worry about the rest. Are we safe???

7. Julie E. Chicoine, Esq., RN, CPC Says:
   November 6th, 2008 at 11:55 am

   I think that Michael’s point is that the Federa False Claims Act prohibits a person (individual or organization) from “knowingly” submitting a false claim to the government for payment. “Knowingly” means that the individual has “actual knowledge” that the information in the claim was false or acted with “reckless disregard” or “deliberate ignorance” that the information on the claim was false. In CMS parlance, the person submitting the claim knew or should have known that their conduct departed from generally accepted business practices, ie. appropriate use of place of service codes or correct use of modifiers. That being said, the Civil monetary penalties and administrative provisions will be levied depending upon the gravity of the situation and what steps (i.e, compliance) that the provider took to stay on top of Federal health care program requirements. A basic compliance program where you demonstrate ongoing auditing and monitoring, correspondence with payros verifying payment rules, can make the difference between a repayment and civil monetary penalties.

8. Linda Says:
   November 7th, 2008 at 8:41 am

   Documentation, Documentation, Documentation….Every coding class I have ever attended has driven that fact home. If claims are auditted and the documentation is not there to support the service and/or level of service, it didnt happen. (Even though the services were performed). Included with that information is that ignorance is not an excuse. “Intent’ is assessed. There is liability insurance protection coverage available for the professional coder. The doctor whose name is reported on the claim, is in on the hook. I understand there is “liablity” insurance coverage available for the professional coder for protection to them. I have gleaned a lot of good information from the responses provided in this session. I will take anny corrections and further comments to heart.

9. Pawan Arya, MBA Says:
   November 16th, 2008 at 7:46 pm

   Angela,

   As a charge entry person, I don’t think you would have any wrong doing liability since you are only coding off the sheet provided by the physician. I hope he signs off on the sheet. If not you should insist on having him/her sign off and there by taking the ownership of the coding generated.

   I manage an Oncology Practice and the physicians work off the encounter forms like most other Practices. The physicians check off the codes on the encounter form and sign off at the bottom. The charge entry biller is therefore, in no way responsible for the code billed.

10. Donna Eagen, CPC Says:
    December 4th, 2008 at 9:04 am

    Martha,
    Keep a journal of all your recommendations regarding coding and compliance. Keep it at home, not in the office. If there is ever an audit, you have your own documentation to protect yourself if necessary.

11. LaShann Long, CPC Says:
    December 11th, 2008 at 9:43 am

    I am in the same boat as Angela and share some of the same concerns. I don’t have access to documentation in order to ensure proper coding. However, when I do find something that arises my suspicions I do seek the documentation to verify.
    My problem is that I work for and Outpatient Hospital Facility where the coding requirements are a little different. I don’t always get the updates from payors unless it is passed on from our billing department. Some times that can take months for that information to be received. How would that affect me on the “know/should have known” criteria?

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