South Florida Hospital News
Wednesday August 5, 2020
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November 2010 - Volume 7 - Issue 5
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Individual Liability for Health Care Fraud: Enforcement Agencies Raise the Stakes

The legacy of health care fraud enforcement has primarily targeted organizations for criminal, civil and administrative liability for fraudulent and abusive practices. These enforcement efforts continue in all sectors of the health care industry, however, a trend in actions against individuals has surfaced in a number of recent cases. An increasing number of management, operational and even legal personnel of organizations have been held individually accountable in direct enforcement actions or through assumed obligations under Corporate Integrity Agreements (“CIA”) with the Office of Inspector General of Health and Human Services (“OIG-HHS”).

Individual Accountability and Recent Corporate Integrity Agreements (CIA)
A CIA is the alternative to excluding a health care provider or supplier organization from participating in Federal health programs. It requires the CCO to be a member of senior management and report to the Chief Executive Officer and specifically prohibits the CCO from being subordinate the General Counsel or Chief Financial Officer. Furthermore, the CIA requires that an Audit Committee of the Board of Directors be established to meet quarterly and review the effectiveness of the CIA. Additionally, the CCO is required to be the chairman of the Compliance Committee which must support the CCO in fulfilling duties under the CIA. The CCO must also have authority to report compliance matters directly to the Audit Committee of the Board of Directors at any time deemed appropriate. The CIA also explicitly requires the CCO to enforce practices, policies and procedures to ensure compliance with Federal health programs and Food and Drug Administration requirements and the obligations under the CIA. The CCO is also to monitor daily activities of the organization and to make quarterly reports to the Audit Committee and the Board of Directors.
 
The terms of the CIA also designate individual business unit managers and certain employees to monitor and oversee the compliance activities under the CIA and to certify compliance.
 
Individual Liability for Aiding in Health Care Fraud
In September of 2007 the government charged Christi Sulzbach, a Tenet Hospital System (“Tenet”) Compliance Officer and General Counsel, under the False Claims Act in a case in the Southern District of Florida. The allegations against Sulzbach were related to a CIA she signed on behalf of Tenet Healthcare in 1994 which remained in effect until 1999. The Complaint alleged that Sulzbach made a sworn declaration in a compliance report that was prepared under her direction and authority that Tenet was in conformity with its CIA when in fact, Sulzbach had personal knowledge this was not the case. Sulzbach allegedly had reviewed several contracts between Tenet and physicians in which physicians’ salaries were based on the number of referrals they garnered for the facility in violation of the Stark Law. Because Sulzbach signed off on the compliance report, and it was her responsibility to oversee compliance, and allegedly acted in dereliction of her duties, the government filed a Complaint against her for causing the submission of false claims. However, the government brought suit against Sulzbach 10 years after her purported misdeeds. The Court ultimately found that the government had enough knowledge earlier during its investigation of the matter to trigger the three year post-knowledge statute of limitations period. Thus, the court dismissed all claims against Sulzbach. Nevertheless, the case underscores the extent to which the Department of Justice will go to hold individuals accountable for health care fraud.
 
Conclusion
The government’s willingness to prosecute individuals who aid in the commission of health care fraud is clear. No longer will those engaging in fraud be shielded from liability by the government’s tendency to focus accountability on health care organizations. As the government continues to step up its efforts to prevent health care fraud, individuals involved in compliance and supervision need to tread carefully. When an individual responsible for compliance signs his or her name on a document or becomes personally involved in illegal transactions, he can face civil and criminal liability whether or not he was actively engaged in fraud.
Gabriel L. Imperato, Managing Partner of the Fort Lauderdale office of Broad and Cassel, can be reached at (954) 745-5223 or gimperato@broadandcassel.com. Elizabeth Hertz, a summer associate in the Fort Lauderdale office of Broad and Cassel, contributed to this article.
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