Articles on Compliance Strategies

Sheehan: Falsely Certifying Conditions of Participation May Lead to False Claims Suit

Reprinted from the April 25, 2005, issue of REPORT ON MEDICARE COMPLIANCE, the nation's leading source of news and strategic information on false claims, overpayments, compliance programs, billing errors and other Medicare compliance issues.

Hospitals could face a false claims lawsuit for violating the Medicare conditions of participation, says influential federal prosecutor Jim Sheehan. If a hospital administrator knows the hospital is breaching a condition of participation but he/she looks the other way — and then certifies in writing that the hospital is in compliance with all applicable Medicare laws and regulations — the false claims boom may be lowered, Sheehan tells RMC. One major example: abusive use of patient restraints, already an emerging target of law enforcement.

"We intend to bring cases where management has had an issue brought repeatedly to their attention and then done nothing or intentionally made false statements about what they have done [to fix it]," says Sheehan, associate U.S. attorney in Philadelphia. "The [False Claims Act] is not about mistakes. It's about what management does after a specific problem is brought to their attention." Sheehan cited the conditions of participation during a discussion of false claims trends April 19 at the Health Care Compliance Association's annual conference in New Orleans.

Hospitals must certify their compliance with all Medicare requirements, including conditions of participation, on Form 2552-96 and attach it to the cost report. Compliance with conditions of participation is required for Medicare certification. Sheehan's notion: When a hospital signs a document stating it is in compliance with various requirements, including conditions of participation, but knowing there is actually a violation, then the hospital is submitting false information to Medicare with reckless disregard, which is the standard of proof for the False Claims Act.

Pursuing hospitals for false certification of condition-of-participation compliance is one way to address reckless use of chemical or physical restraints, he says. The 1999 conditions of participation regulation barred the use of restraints to control patients or to convenience staff, and required hospitals to inform CMS of deaths stemming from restraints.

"What we are looking at is not some condition of participation they were out of compliance with. We are looking for records that show.failure to comply with the conditions of participation leading to patient harm and death and knowledge by senior management of the existence of these problems," Sheehan says.

The Department of Justice (DOJ) is already cracking down on restraint use in nursing homes. "One of the trends in fraud enforcement is to focus on restraints," says Sheehan. So far, it's been treated mostly as a civil rights violation. For example, on Feb. 22, DOJ announced a settlement agreement with Mercer County, N.J., over conditions at Mercer County Geriatric Center, a 240-bed nursing home, according to a press release. The case was handled by the department's Civil Rights Division. The settlement stems from DOJ allegations that the nursing home "exposed residents to unsafe living conditions and undue restraints, failed to provide adequate medical and mental health care, failed to provide residents with adequate nutrition and hydration, and failed to protect residents from unnecessary institutionalization." The county agreed in the settlement to overhaul its resident care.

"We have learned from our nursing home cases that restraints are a significant issue because people die from them," he says. Hospitals may not be as sensitive to the enforcement risk they face from abuse of restraints because the crackdown came in a regulation, and it's fairly recent. "With respect to hospitals, it's a regulation, not a law, and therefore I'm not sure it's gotten the same degree of attention in the hospital as in the nursing home context," he says.

Restraints Should Be Last Resort

The 1999 conditions of participation regulation's section on patient rights contains the new standard on the use of chemical or physical patient restraints. Restraints aren't barred, but CMS makes it clear they are only a last resort - and not to be used to control patients or for the sake of convenience. If a patient dies, the hospital must tell CMS.

The regulation states: "Standard: Restraint for acute medical and surgical care. (1) The patient has the right to be free from restraints of any form that are not medically necessary or are used as a means of coercion, discipline, convenience, or retaliation by staff. The term 'restraint' includes either a physical restraint or a drug that is being used as a restraint. A physical restraint is any manual method or physical or mechanical device, material, or equipment attached or adjacent to the patient's body that he or she cannot easily remove that restricts freedom of movement or normal access to one's body. A drug used as a restraint is a medication used to control behavior or to restrict the patient's freedom of movement and is not a standard treatment for the patient's medical or psychiatric condition."

The regulation also states, "The hospital must report to [CMS] any death that occurs while a patient is restrained or in seclusion, or where it is reasonable to assume that a patient's death is a result of restraint or seclusion."

Critics Question Premise of False Claims

But Florida attorney Ed Hopkins thinks there are no grounds to push conditions of participation violations into the false claims arena. "It's not correct to say that if you fail to meet a condition of participation, you file a false claim. It doesn't relate to payment," he says. "This is another attempt to cobble together a False Claims Act violation out of a non-payment issue for which Medicare already provides a perfectly adequate remedy through enforcement of the provider agreement."

He notes that there are a number of hospital conditions of participation, and each one contains several standards. A hospital could violate a standard and still not breach the conditions of participation, he says. Even when there is a violation of the conditions of participation, CMS does not deny Medicare payment. Instead, there are other enforcement options implicating the Medicare provider agreement. In particular, CMS may send the hospital a notice of termination, requiring it to initiate corrective action or lose Medicare certification. "An alleged violation relating to an improper use of restraints does not per se result in a false claim for payment," says Hopkins, who is with the law firm of Broad and Cassel.

View the Medicare conditions of participation at

http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=1999_register&docid=fr02jy99-8/.

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