Welcome to the 2012 MIssteps archive !


Back to Learning From Others' Missteps

  • December 20, 2012 - Just in time for Christmas, Dr. Mehmoud Patel began serving a ten year sentence for performing unnecessary cardiac procedures on patients and billing both the federal government and private insurance companies for those procedures. Dr. Patel's jail time itself is unusual but the lesson here is how difficult to was for the government to prosecute the case - a three month trial with expert witnesses from all over the country that resulted in a conviction on 51 counts of healthcare fraud and then a four year appeal, during which the doctor remained free on bond.

  • December 3, 2012 - Too much therapy? The US unsealed a False Claims complaint against the for profit nursing chain Life Care Centers of America, alleging that the chain intentionally provided medically unnecessary, unskilled and sometimes even harmful levels of therapy services to residents in order to qualify for the highest levels of reimbursement from Medicare and Tricare. The 196 paragraph Complaint contains quotes from corporate presentations, training materials and emails showing an organization-wide strategy of focusing on those highest reimbursement categories. It also details the care provided to particular patients. The company, which according to the Judge who unsealed the Complaint has known about the allegations since 2010, issued an "Open Letter to Life Care Associates and Medical Professionals" denying the government's allegations and accusing it of "relying upon procedural shortcuts and escalating policy disagreements to allegations of fraud." Here's the brochure for the company's Compliance Program.

  • November 6, 2012 - The price of refutation. It started with a patient talking to a reporter about how her care at Shasta Regional Medical Center was billed to Medicare. Responding to the resulting article, hospital officials - including the CEO, CMO and General "Council" - not only reviewed the patient's medical record but released information from it and even showed portions to a reporter. The CEO also wrote a detailed memo about the "actual facts" and distributed it to 785 employees and members of the hospital's medical staff - including the Privacy Officer. After the memo made its way to yet another news agency and the Internet, the California Department of Public Health dropped by for a visit. (The resulting report makes interesting reading.) CDPH has subsequently assessed a $95,000 fine for five violations of the state's Confidentiality of Medical Information Act, which the hospital is appealing.

  • October 26, 2012 - $7M worth of poor documentation - The US Attorney in the Southern Disctrict of New York announced a settlement with Westchester County Hospital for charges that the Hospital delivered and billed Medicaid for outpatient mental health services but did not maintain the "core documentation" required by the program. Why the large number? There may be a clue in the following statements from the press release :"WMC management knew for years that the outpatient mental health clinics were missing documentation. Until at least June 2010, WMC failed to take any but the most insignificant steps to address the problem.." It's one thing to have or discover a problem - another to ignore it once you know.

  • October 12, 2012 - Another HIPAA criminal - Kenneth Elliott McDowell , age 47, had worked as a medical records technician for more than 20 years at two different Maryland hospitals. But in 2009 he began to have trouble completing his share of the work - and started taking records home to hide that nonperformance. Mr. McDowell's nephew and the nephew's girlfriend viewed the records, realized the possibilities of using patient information for identity theft and committed that additional crime. Despite learning of his nephew's activities, Mr. McDowell continued to bring records home , compromising nearly 50 patients and their guarantors. He has spent time in jail, will spend more on home detention and probation and was ordered to pay restitution. His career in hospitals is, of course, over.

  • October 2, 2012 - Abbott Pharmaceutical was sentenced to five years probation, forfeiture $198.5M and pay fines of $500M and $1.5M. (That's in addition to an $800M civil settlement.) As part of its probation the Abbott CEO and Board will personally have to execute annual certifications that the company is in compliance with the law.

  • May 7, 2012 - $1.5 Billion -- That's what Abbott Pharmaceutical will pay to settle criminal and civil liability associated with years of "Off label" promotion of Depakote to nursing homes for use on elderly dementia patients as an alternative sedative. The complex deal includes a criminal plea, court supervised probation, a civil penalty, and a 5 year Corporate Integrity Agreement (CIA) relating to Abbott's promotion and marketing practices. For details click here. The 88 page CIA includes the "usual" provisions plus 19 different categories of procedures that must be produced within the next 120 days, a four paragraph (text included) letter that will be going out to actual and potential customers, and annual certifications by a the Board and a long list of Vice Presidents as well as the CECO.

  • September 19, 2012 - No training, no agreement - Parkridge Medical Center, an HCA subsidiary, will pay $16.5M to settle a whistle blower lawsuit claiming that it gave paid above market rent to a referring physician group, Diagnostic Associates of Chattanooga. What's new here, aside from the fact that an organization like HCA with a compliance and ethics program that is often pointed to as a model for others can itself stumble, is a provision in the three year corporate integrity agreement that will require physician parties to future agreements with Parkridge to undergo "arrangements training" about the Stark and AntiKickback Acts in order to contact with the hospital. The parties to such agreements will also have to certify that they don't violate those laws.

  • May 12, 2012 - Do you know what your vendors are doing? Allegations from the Minnesota Attorney General of delays in Emergency Room care at the University of Minnesota's Fairview campus, because of the debt collection practices of its vendor, Accretive Health, have triggered an onsite EMTALA investigation. It's a good example of how vendor actions may bring unintended compliance consequences. July 31, 2012 - The saga ends, for the vendor at least, with Accretive agreeing to pay a $2.5 million settlement and stop doing business in Minnesota. September 13, 2012 - The federal investigation results are made public - Fairview is cited for several regulatory missteps, including "harassing" patients. See EMTALA for more details.

  • August 2012 - “I have been trained and understand…” The recent $9M settlement of the government’s false claims case against a Nashville home health agency includes an unusual provision in the Corporate Integrity Agreement. For each of the five years of the CIA the owner of the agency, James W. Carell, will have to execute a certification – spelled out in the CIA on page 4 – that the areas of the company under his authority “are in compliance with all applicable Federal health care program requirements…” What’s new is not the certification. Similar ones are now being routinely required from corporate board members in these types of settlements. What is unusual is the personal nature of the obligation to Mr. Carell, a named defendant in the lawsuit, regardless of what title he may hold within the agency in the years to come. That personal obligation probably reflects the Department of Justice’s contention that Mr. Carell played a “key role” in the underlying events. Mr. Carell’s company “vehemently” denies “any wrongdoing whatsoever” by him.

  • August 21, 2012 - Walmart Settles Reasonable Accommodation Charge - The company will pay $50,000 in back pay to a part-time sales clerk who attempted to return to work with a temporary accommodation of taking breaks off her feet. Her supervisor denied the request and the federal Equal Employment Opportunity Commission (EEOC) filed suit on the employee's behalf charging a violation of the Americans with Disabilities Act. The consent decree agreed to by the retailer and the Equal Employment Opportunity also requires "annual live ADA training" of managers at that store, posting a notice to employees about their rights under the ADA and referral of any future requests for accommodation and / or claims of discrimination to the EEOC. Perhaps most notable is that before the suit was filed the parties failed to reach agreement under the EEOC's conciliation process - perhaps undermining the statement of a Walmart representative to the local Carlsbad New Mexico paper that this was just a bad call by a "former local store manager".

  • August 17, 2012 - Sort of telling your public - For the second time in seven weeks the MD Anderson Cancer Hospital lost patient identifiable information and had to notify the public and its patients of the loss. The data of more than 2,200 patients was apparently involved, so the Hospital was required to tell the media and did so resulting in a story in the Houston Chronicle. It was also required to tell the federal government and probably did so, but that notice is not yet in the 500+ breach database on the website of the Office of Civil Rights. (The notice for the earlier incident is.) And then there is a notice on MD Anderson's website. Now under the Breach Notification Rule the covered entity (CE - the Hospital in this case) has an additional duty to provide individual notice by first class mail or email to the patients involved. If there are 10 or more patients the CE doesn't have sufficient information for it accomplish this it can do "substitute individual notice" by either (1) posting a notice on the CE's Home web page about the incident or (2) providing notice in the broadcast or print media in the area where the patients "likely reside". In either case this "substitute individual notice" must include some very specific information. Here's a link to the notice on the MD Anderson website. Does it meet all the requirements?

  • August 15, 2012 - With all deliberate speed - More than a year after the start of inquiries about phone hacking by journalists at its now closed "News of the World", News Corporation Chairman announced a restructuring of the company's compliance effort under the oversight of its General Counsel. Here is Rupert Murdoch's memo to employees about that restructuring.
  • August 14, 2012 - Physicians (and the Department of Justice) suing another Physician. The US Attorney for South Texas announced a $650,000 settlement with a "Prominent Houston Radiologist" of a qui tam lawsuit alleging violations of the Stark, AntiKickback, False Claims and Texas Medicaid Fraud Preventions statutes. The suit, filed by two practicing physicians (who will receive 20% of the settlement), alleged that the radiologist entered into sham "medical directorships" with referring doctors based on the value of their referrals as well as paying staff salaries in the referring physicians' offices. Besides paying the settlement amount the Defendant radiologist has agreed to a six year exclusion from the Medicare and Medicaid programs.

  • August 2, 2012 - The $1M settlement of a 2007 whistleblower suit by the Mayo Clinic shows the many routes by which such allegations can arise and the costs to the organization against which they are made. The whistleblower was a physician attorney who was investigating possible malpractice claims when he discovered pathology specimens that were billed for but never "made or examined". The US Justice Department joined the suit three years later - in 2010. The press release on Mayo's website stresses its previous refund of the actual amounts overbilled before it knew of the DOJ's entry into the suit. The government's press release says that earlier payment came after it issued a subpoena to Mayo about its billing practices. It also discloses that Mayo will pay the Plaintiffs' attorney fees and expenses.

  • August 1,2012 - Sometimes even the government gets it wrong - The US Department of Justice announced a settlement with the City of Woodland, California under which the City will stop requiring applicants for jobs to undergo pre-offer physicals. Such pre (vs. post) offer physical exams violate individual rights under the Americans with Disabilities Act (ADA), which recently reached its twenty-second anniversary.

  • July 23, 2012 - Those pesky personal, portable computers. One of the nation's premier teaching hospitals, Beth Israel Deaconess, began notifying more than 3,000 patients that a laptop containing information about them was stolen in May 2012. The laptop apparently had a tracking device, which the Hospital's statement emphasizes has not been triggered, suggesting that the data was not accessed by the thief or anyone else. But while a suspect is in custody, the laptop has not been recovered. According to the Boston Globe the laptop was the physician's personal device and not encrypted, hence the Hospital's duty to notify the patients whose data was stored on it. The Hospital is also now requiring mandatory encryption of all devices - personal or not - on which patient data is stored.

  • July 12, 2012 - The Penn State Report and the University's follow-up statement.

  • July 9, 2012 - 99% noncompliance - That's the finding of a study by the DHHS OIG on the documentation of "atypical" administrations of antipsychotic medications to nursing home patients. Those documentation requirements are designed to demonstrate that appropriate assessment of patients and decision-making about the use of the drugs (which carry increased risk of death) took place as part of the resident's plan of care. The report describes the requirements very well and should be read by anyone involved in compliance efforts for such a facility - and perhaps by those whose friend or family is a resident of one as well.

  • July 2, 2012 - "Largest Health Care Fraud Settlement in U.S. History" It's hardly the way that you want a press release about your company to start, but that's where drugmaker GlaxoSmithKline found itself. The settlement covers a range of civil and criminal liabilities for the company relating to the marketing of nine of its drugs, misreporting of price information as far back as 1994 and withholding safety and efficacy related information from the FDA. Of particular interest to compliance practitioners are novel features in the accompanying 5 year corporate integrity agreement, including changes in executive and sales force compensation, potential recoupment of bonuses from current and former employees, as well as changes in policies on research reporting and contracting with health care providers. The company's own press release focuses on changes it has already made - "We have fundamentally changed our procedures for compliance, marketing and selling…" along with the CEO's "regret" and belief that "we have learnt from the mistakes that were made. "

  • June 26, 2012 -$1.7 Million - that's the price paid by the Alaska Department of Health and Human Services after "a portable electronic storage device (USB hard drive) possibly containing ePHI was stolen from the vehicle of a DHSS employee". The Alaskan agency has the dubious honor of becoming the first state agency to resolve a security incident with the federal Office of Civil Rights not simply because of the lost drive (which it reported as a breach to OCR) but because subsequent investigations showed inadequate policies, training, risk analysis and mitigation, according to the press release accompanying the Resolution Agreement.

  • June 21, 2012 - Penn State has a new poster highlighting its Ethics and Compliance Hotline. It's also recruiting for a Director of University Compliance.

  • June 12, 2012 - The Economic Times reports that Walmart has now extended KPMG's work in India to reviewing its vendors there and characterizing the firms as "red, yellow or green" for corrupt practices. Sort poses the question of what due diligence existed in the past? Meanwhile, US Representatives Cummings and Waxman are pushing Walmart to be more transparent in its responses to Congressional requests for information, revealing in their correspondence that Walmart has been advised to expand it anti-corruption investigation to Brazil, China and South America as well as Mexico and India.

  • June 7, 2012 - The US Attorney for Massachusetts announced the settlement of criminal charges and a false claims qui tam action against medical device manufacturer Orthofix relating to the marketing of the company's bone stimulator device. As part of the "global resolution" Orthofix will plead guilty to obstruction of the investigation against it, pay a $7.65 M criminal fine and $34.23 M to settle the False Claims lawsuit (without admitting liability), and enter into an "extensive" corporate integrity agreement. Five Orthofix employees have also pled guilty to various charges in connection with the investigation. The company's trademarked "Integrity Advantage" compliance effort is not mentioned in the US Attorney's press release.

  • June 4, 2012 - Another guilty plea in the New Jersey Orange MRI "cash-for-patients" scheme (see January 6, 2012 below) A 69 year old doctor pled guilty to accepting envelopes of cash in exchange for referring patients to the facility. The approximately $4,000 received will carry a potential penalty of 5 years and a $25,000 fine. Exclusion from the federal health care programs will also be triggered by the plea.

  • May 30, 2012 - Headwear accommodations required. The US Department of Justice announced a settlement of a eight year old suit with the NYCity Transit Authority that will require the Authority to accommodate headgear worn by various employees for religious reasons. Post 9/11 the Authority had begun demanding that Sikh and Muslim employees attach official insignia to their headgear or move out of public contact positions, in violation of Title VII of the Civil Rights Act of 1964 which prohibits discrimination on the basis of race, sex, national origin and religion. Under the settlement the Authority will revise its policies, ensure training in the new standards and pay a settlement of $184,500 which will be split among 8 current and former employees.

  • [[#x2013---May 28, 2012 - It’s never too late to train – Walmart’s joint venture in India has announced a broad “awareness” program for managers about the Foreign Corrupt Practices Act (FCPA) to be conducted by KPMG and “a team of lawyers.” According to the India Times the program is “meant to familiarise [sic.] all levels of associates with the basics of FCPA and provide a forum for discussion and clearing any doubts or queries.”]]May 28, 2012 - It’s never too late to train – Walmart’s joint venture in India has announced a broad “awareness” program for managers about the Foreign Corrupt Practices Act (FCPA) to be conducted by KPMG and “a team of lawyers.” According to the India Times the program is “meant to familiarise [sic.] all levels of associates with the basics of FCPA and provide a forum for discussion and clearing any doubts or queries.”

  • May 11, 2012 - "We Don't Treat People Like You" Two medical clinics have settled investigations by the Department of Justice for refusing to treat patients with HIV. Both settlements resolve claims of discrimination under the Americans With Disabilities Act. Both require not only payments to the patients who were denied service but also development of an anti-discrimination policy and staff training.The settlement agreements are available on the Department's new webpage on the ADA and HIV.

  • May 10, 2012 - "Knowingly" obtaining Protected Health Information is enough - The 9th Circuit Court of appeals upheld the misdemeanor criminal conviction of Huping Zhou, a former UCLA researcher who used his computer access to snoop into the medical records of celebrities and coworkers. Specifically the Court rejected the argument that Zhou's claimed ignorance of the unlawfulness of his conduct was a defense to criminal liability, holding the statute's use of the term "knowingly" was limited to the accessing of PHI - not knowledge of the illegality in doing so.

  • May 7, 2012 - $1.5 Billion -- That's what Abbott Pharmaceutical will pay to settle criminal and civil liability associated with years of "Off label" promotion of Depakote to nursing homes for use on elderly dementia patients as an alternative sedative. The complex deal includes a criminal plea, court supervised probation, a civil penalty, and a 5 year Corporate Integrity Agreement (CIA) relating to Abbott's promotion and marketing practices. For details click here. The 88 page CIA includes the "usual" provisions plus 19 different categories of procedures that must be produced within the next 120 days, a four paragraph (text included) letter that will be going out to actual and potential customers, and annual certifications by a the Board and a long list of Vice Presidents as well as the CECO.

  • May 1, 2012 - A cautionary tale (and a quick discussion of recent behavioral psychology research) - The Psychology of Fraud: Why Good People Do Bad Things (NPR 2012)

  • April 22, 2012 - How not to conduct an internal investigation, in Mexico or elsewhere. The New York Times published a lengthy article detailing allegations of systematic bribery and corruption in the growth of Walmart's Mexican subsidiary. At least as riveting as the tales of backhanded payments to government officials for permits are the details about how those about how leaders in the corporation's home office and Mexican headquarters responded to the findings of Walmart's own preliminary internal investigation in 2005-2006 - by questioning the motives of the principal witness and then turning over control of the investigation over to one of the named targets. Walmart's initial public response in 2012? "If these allegations are true, it is not a reflection of who we are or what we stand for." April 24, 2012 - Walmart's second formal response included the announcement of a new "Global FCPA Compliance Officer" position. April 25, 2012 - No job opening after all - Walmart later told news outlets that Tom Gean, a former US attorney who has worked for Walmart since 2004 as a "legal compliance officer" was appointed as its FCPA Compliance Officer "earlier this year".

  • April 20, 2012 - "Free gifts" cost Walgreens Pharmacy $7.9 million. The US Department of Justice announced a settlement of two whistleblower actions charging that the chain gave $25 gift cards to Medicare, Medicaid and other federal healthcare program beneficiaries who transferred prescriptions to Walgreens from other pharmacies. Apparently exemptions of these customers from the "gift" program were stated in the public advertisements but "frequently" ignored by employees on the front lines. An independent pharmacist and a former Walgreens pharmacy technician each brought suit as a relator under the False Claims Act and will share $1.2 million as their part of the settlement..

  • April 17, 2012 - A pretty good deal - but for who? The federal Office of Civil Rights has announced its first resolution agreement with a medical group for violations of the HIPAA privacy and security regulations. A Phoenix based five physician cardiac surgery practice will pay $100,000 and do what it was supposed to be doing since 2003 / 2005 to be in compliance with these requirements (policies, procedures, risk analysis, training.) Well, at least do them for the one year term of the resolution agreement. There is no requirement in the resolution agreement that the group's patients be told about the settlement or about the posting of their information on a publicly available website that triggered the investigation of the practice.

  • April 14, 2012 - A chance for one of the "world's most ethical companies" to set an example in transparency. This week saw the resignation Tuesday of the CEO at a Ethisphere 2011 "world's most ethical company" - Best Buy . Although not mentioned in the carefully worded press release from the company, by Thursday word was out that the resignation occurred in the midst of an investigation, by the Board's audit committee, of the CEO's "personal conduct" and the company was promising to make the results of that investigation public within a few weeks. The week's events were followed by a Saturday confirmation that the company will be closing 50 of its "big box" stores by the middle of May. May 11, 2012 - Rumors continue, but still no report from the Best Buy Board. May 14, 2012 - The Best Buy Audit Committee releases a detailed four page report describing its investigation and conclusion that its former CEO violated company policy when he engaged in an "inappropriate" relationship with a female employee, improperly solicited a vendor for a ticket used by the female employee, but did not misuse company resources to maintain the relationship. Suprisingly, the Committee also found that the Chairman of the Board and Company founder, Richard Schulze, inappropriately handled the matter when it was first brought to his attention in December 2011. The final result: the CEO will get his severence, the Chairman will step down from that role but stay on the Board until 2013. The statement on Best Buy's investor website provides further details of Mr. Dunn's financial payout and a proposal, still to be voted on by shareholders, that all Best Buy directors will stand for annual reelection.

  • March 27, 2012 - Less may not be better. Leighton Holdings, an international construction firm, has admitted that it did not have a policy against bribery or anti-corruption of foreign officials. This admission comes in the midst of investigations by the Aurstralian federal police and the Iraqi oil ministry of payments allegedly made to officials in that agency. Leighton Offshore's website does claim that "codes" of ethics and business conduct exist, but the information isn't attached or linked.

  • March 13, 2012 - Less than $1.50 per individual. That's the price agreed to by Blue Cross Blue Shield of Tennessee (BCBST) and the federal Office of Civil Rights to "resolve" the health plans' 2009 loss of 57 computers containing audio and video records of customer service calls with more than a million of its members. In addition to paying the "resolution" amount BCBST also agreed to create or update its policies, train its employees about those policies and do specific monitoring to see if the policies are being followed and are effective.

  • February 23, 2012 - Albert "Jack" Stanley, former Chairman and CEO of Kellogg Brown & Root, was sentenced to 30 months in prison, followed by 3 years of supervised release and payment of $10.8 Million in restitution to his former company in connection with KBR's payment of kickbacks to Nigerian government officials in exchange for contracts to build liquified natural gas plants in that country. Mr. Stanley pled guilty in Sept. 2008 to charges under the Foreign Corrupt Practices Act - his sentencing has been delayed 16 times since then. His "substantial cooperation" with authorities was cited as a reason for the reduction of his sentence from 7 years to 30 months. Meanwhile, his former company pled guilty in February 2009 and has been working on its compliance program under an independent compliance monitor. The company's website has a Code of Business Conduct, information about a confidential Hotline and a letter from its current CEO that directs employees to contact an unnamed Director of Business Conduct "or another attorney within KBR's legal department" if they have questions about specific situations.

  • February 17, 2012 - Advanced Dialysis Centers of Randallstown, Maryland entered a settlement agreement with the federal Office of Civil Rights (OCR) to resolve complaints made on behalf of a deaf patient that the Centers failed to provide appropriate assistive devices as required by the Americans with Disabilities Act and Section 504 of the Rehabilitation Act. The Advanced settlement is only the latest in a series of these actions pursued by OCR in the last year.

  • February 8, 2012 - The Department of Health and Human Services OIG issued its own "lesson" for physicians enrolled in Medicare. In a two page "Alert:" the office described a series of settlements made with unnamed physicians who had agreed to reassign their Medicare billing number in exchange for "medical directorships" (presumably paid) with a company that provided substandard services by unqualified individuals as though the services had been ordered or supervised by the physician whose number was being used. It's a good document to share with any physician you may know.

  • February 7, 2012 - 14 hospitals have agreed to pay the US more than $12 Million to settle claims that they provided spine surgery (kyphoplasty) to patients on an inpatient rather than outpatient basis, according to a US Department of Justice press release. That brings the total of involved hospitals now to more than 40 - all of whom bought the associated device from the same manufacturer - Kyphon (previously Medtronic Spine LLC) which settled its own case in 2008 involving allegations that it encouraged hospitals to bill these procedures this way. Lesson: Maybe it's better to seek reimbursement advice from a source other than the company trying to sell you its product.

  • February 2, 2012 - The US Department of Justice announced another in a series of settlements with hospitals (see Recognizing Civil Rights) over their non-provision of assistive devices (like interpreters) to deaf patients as required by the Americans with Disabilities Act. The 92 paragraph agreement with Henry Ford Health System requires 24/7 availability of a "high level" administrator, training, patient and community outreach and appropriate technology. Lesson: Communicating effectively with all patients is a good idea for lots of reasons.

  • Jan. 6, 2012 - The Department of Justice announced the filing of claims for $150 Million in recovery under the federal False Claims Act related to the payment of kickbacks for the referral of radiology tests. What's unusual here is the government's recovery not just from those who paid the kick backs - but also from 14 physicians and physician organizations that received them. Lesson: Taking cash for referrals carries a pretty steep downstream price.

  • Two faculty at the University of Virginia School of Law have developed an online collection of prosecution agreements dating back to 1992 and covering a wide variety of agencies and industries. So far they have 230 examples of public missteps - with five added just in December 2012. Lesson: Sadly, there's no shortage of them out there.







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