The health care industry is facing unprecedented scrutiny and exposure. Changes in legislation, enacted to aid against misconduct, have led to a dramatic increase in liability for health care organizations. From billions of dollars being returned to government coffers, to hospital mergers being blocked because of anticompetitive concerns, to expensive litigation involving medical staff and their former employers — recent increases in exposures require a detailed review of changing rules and regulations and a properly structured management liability insurance program to help combat these new threats.
False Claims Act: The False Claims Act (FCA) is the government's primary tool for combating waste, fraud and abuse by health care providers participating in federal health care programs and by other government contractors. The FCA imposes liability on anyone who knowingly submits or causes the submission of a false or fraudulent claim to the United States for payment. Damages and penalties under the FCA can be significant.
In recent years, there has been a significant upswing in the number of FCA cases filed and in the amount of recoveries in those cases. In 2012 alone the United States recovered close to $5 billion in civil actions alleging FCA violations.
The overwhelming majority of FCA actions are brought pursuant to the FCA's qui tam provisions, which permit private parties (referred to as relators) to file suits seeking recovery under the FCA on behalf of the United States. Relators are required to file qui tam actions under seal to allow the United States to investigate the allegations.
Health care providers should be mindful of the government's continued emphasis on FCA enforcement and proactively implement and review compliance measures designed to ensure accurate billing. Failure to do so could expose providers to the risk of significant FCA liability.
Antitrust Laws: Participants in the health care industry also face increased risk that their activities will run afoul of the federal antitrust laws. Over the past four years, federal and state enforcement agencies, along with the private bar, have significantly ramped up their efforts to police anticompetitive conduct. While price fixing, agreements to allocate markets, group boycotts, and monopolization remain staples of antitrust litigation, anything that unreasonably restrains competition can pose antitrust risk in most industries, including health care. Investigations, challenges and lawsuits have targeted numerous types of conduct. Health care providers have entered a new age of antitrust liability.
The growing edge for antitrust appears to relate to mergers and acquisitions. The imperative to consolidate — born of early health care reform and spurred by the Affordable Care Act — is being checked by a swelling tide of enforcement actions and private lawsuits. Hospital acquisitions of physician practices, mergers among physician practices, and providers consolidating with other types of providers all carry antitrust risk if they lead to the exercise of market power in the form of higher prices or reduced quality of care or access.
Health care market participants should not expect an abatement of vigorous antitrust enforcement. The market forces that are driving the tidal wave of consolidation and the struggle for shifting and shrinking reimbursement dollars will be present for the foreseeable future.
Peer Review and Credentialing: Disputes between hospitals and physicians over credentialing and peer review matters are typically hard-fought and involve high stakes. While hospitals take actions against medical staff members to fulfill their quality of care mandates, physicians often see such actions as unfairly targeted, biased attempts to deprive them of their livelihood. Even the best “by the numbers” administrative proceedings can end up in a lawsuit challenging the hospital's actions. These lawsuits can include many legal theories, such as breach of contract, violation of due process rights, conspiracy, tortious interference with contract, and even intentional infliction of emotional distress. Win, lose or draw, significant costs and legal fees can be incurred in addition to the risk of liability.
In today's changing regulatory environment, health care providers must be more vigilant in protecting their exposures. The challenges faced — from relators looking for the next million-dollar payday to high-stakes disputes between competing hospitals — can be met by a proactive risk management strategy that includes a properly structured management liability insurance program. Failure to do so could expose health care organizations to significant risk. â–