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Corporate Compliance Program

Deficit Reduction Act of 2005 Compliance Policy

Education Concerning False Claims Liability, Anti-Retaliation Protections, and
Detecting and Responding to Fraud, Waste, and Abuse

Purpose: Sea Breeze Health Care Center is committed to its role in preventing health care fraud, waste, and abuse and complying with applicable federal and state laws related to health care fraud, waste, and abuse. The federal Deficit Reduction Act of 2005 (“DRA”) requires any entity that receives more than five million dollars per year in Medicaid payments to provide information to its employees about the federal False Claim Act (“FCA”) and other laws, including state laws, dealing with health care fraud, waste, and abuse, the rights of employees to be protected as whistleblowers, and the employer’s policies and procedures for detecting and preventing health care fraud and abuse. To ensure the nursing homes’ compliance with such laws, Sea Breeze Health Care Center has established a Corporate Compliance Program with policies and procedures to detect and prevent health care fraud, waste, and abuse.

Scope: This Deficit Reduction Act of 2005 Compliance Policy (“DRA Policy”) and the information contained in it apply and shall be distributed to all current and new employees (including management), all current and future contractors, and agents of Sea Breeze Health Care Center and its affiliated nursing homes. This policy shall also be included in the employee handbook. This DRA Policy contains information concerning the tools of the federal and state agencies regarding fraud, waste, and abuse in the administration of federal and state health care programs.

Policy: Sea Breeze Health Care Center and its affiliated nursing homes shall provide health care services in a manner that complies with applicable federal and state laws and that meets the high standards of business and professional ethics. To further our efforts to eliminate fraud, waste, and abuse with respect to payments from government programs that reimburse the provision of health care services, it is also our policy to provide information to all employees, contractors, and agents regarding the steps that we have implemented to detect health care fraud, waste, and abuse. This DRA Policy contains an overview of the FCA and other applicable state laws and outlines the measures our organization has implemented in an effort to prevent fraud, waste, and abuse and to maintain the integrity of the Medicare and Medicaid systems.

The Corporate Compliance Program implemented by Sea Breeze Health Care Center includes the following guidance: Code of Conduct; Quality of Care Policy; Resident Rights and Quality of Care Policy; Employment Screening Policy; Gifts Policy; Kickbacks and Resident Inducements Policy; Vendor Agreements Policy; Resident Referrals Policy; Building and Equipment Leases Policy; Physician Agreements Policy; Therapy Services Policy; Licensing and Certification Policy; Billing and Cost Reporting Policy; and Recordkeeping and Documentation Policy. The Corporate Compliance Program also provides for compliance training and educational opportunities for all Personnel and periodic auditing and monitoring of the Corporate Compliance Program in order to facilitate adjustments to address any areas of concern. Personnel are encouraged to report compliance concerns to the Compliance Officer. Sea Breeze Health Care Center has established a toll-free Compliance Hotline for reporting compliance concerns, anonymously, if desired. Personnel are also encouraged to contact the Compliance Officer directly by phone, e-mail, or regular mail.

Federal and State False Claims Laws and the Role of Such Laws in Preventing and Detecting Fraud, Waste, and Abuse:

The Center for Medicare and Medicaid Services (“CMS”) defines “fraud” as the intentional deception or misrepresentation that an individual makes, knowing it to be false and knowing that the deception could result in an unauthorized benefit to himself or another person. CMS defines “abuse” as incidents or practices of providers that are inconsistent with sound medical practice and may result in unnecessary costs, improper payment, or the payment for services that either fail to meet professionally recognized standards of care or are medically unnecessary.

The federal government and various states have enacted criminal and civil laws pertaining to the submission of false or fraudulent claims for payment or approval to the federal and state governments and to private payors. These laws, which provide for criminal, civil, and administrative penalties, provide governmental authorities with broad authority to investigate and prosecute potentially fraudulent activities, and also provide anti-retaliation provisions for individuals who make good faith reports of fraud and abuse.

Federal Civil False Claims Act (31 U.S.C. §§ 3729 et seq.)

Summary: The FCA is a federal statute that imposes civil liability on any person who: knowingly presents (or causes to be presented) a false or fraudulent claim, record, or statement for payment or approval; conspires to defraud the government by getting a false or fraudulent claim allowed or paid; uses a false record or statement to avoid or decrease an obligation to pay the government; and commits other fraudulent acts listed in the FCA. The term “knowingly,” as defined in the FCA, includes a person who has actual knowledge of the information, acts in deliberate ignorance of the truth or falsity of the information, or acts in reckless disregard of the truth or falsity of the information. No proof of specific intent to defraud is required. The term “claim” includes any request or demand for money or property if the United States government provides any portion of the money requested or demanded.

Civil Liability: The penalty for violating the FCA is a minimum of five thousand, five hundred dollars, up to a maximum of eleven thousand dollars for each false claim submitted. In addition to the penalty, a provider could be found liable for damages of up to three times the amount unlawfully claimed, and the costs of any civil action brought to recover such penalties or damages.

Private Qui Tam Actions: The FCA also provides for actions by a private person (a “whistleblower” or “qui tam relator”) who can bring a civil action (a “qui tam” lawsuit) in the name of the government for a violation of the FCA. Generally, such an action may not be brought more than six years after the violation, but in no event more than ten years after the violation. When the action is filed and served on the federal government, it remains under seal for at least sixty days. The federal government may choose to intervene in the lawsuit and assume primary responsibility for prosecuting, dismissing, or settling the action. If the government chooses not to intervene, the whistleblower who initiated the lawsuit has the right to conduct the action.

In the event the government proceeds with the lawsuit, the qui tam plaintiff may receive fifteen to twenty-five percent of the proceeds of the action or settlement. If the qui tam plaintiff proceeds with the action without the government, the plaintiff may receive twenty-five to thirty percent of the recovery. In either case, the plaintiff may also receive an amount for reasonable expenses plus reasonable attorneys’ fees and costs.

If the civil action is frivolous, clearly vexatious, or brought primarily for purposes of harassment, the plaintiff may be required to pay the defendant’s fees and costs. If the plaintiff planned or initiated the violation, the share of proceeds may be reduced and, if found guilty of a crime associated with the violation, the plaintiff will not share in any award.

Whistleblower Protection: The FCA also protects whistleblowers from retaliation. An employee, contractor or agent who is discharged, demoted, suspended, threatened, harassed, or discriminated against in the terms and conditions of his employment or engagement because of lawful acts conducted in furtherance of an action under the FCA may bring an action in federal district court seeking reinstatement, two times the amount of back pay plus interest, and other enumerated costs, damages, and fees.

Federal Program Fraud Civil Remedies Act of 1986 (38 U.S.C. §§ 3801 et seq.)

The Program Fraud Civil Remedies Act of 1986 (PFCRA) is a federal law that establishes an administrative remedy against any person who presents or causes to be presented a claim or written statement that the person knows or has reason to know is false, fictitious, or fraudulent due to an assertion or omission to certain federal agencies (including the Department of Health and Human Services).

The term “knows or has reason to know” means a person who has actual knowledge of the information, acts in deliberate ignorance of the truth or falsity of the information, or acts in reckless disregard of the truth or falsity of the information.

The term “claim” includes any request or demand for property or money, e.g., grants, loans, insurance or benefits, when the United States government provides or will reimburse any portion of the money.

The authority (i.e., federal department) may investigate and, with the U.S. Attorney General’s approval, commence proceedings if the claim is less than one hundred and fifty thousand dollars. A hearing must begin within six years from the submission of the claim. The PFCRA allows for civil monetary sanctions to be imposed in administrative hearings, including penalties of five thousand five hundred dollars per claim and an assessment, in lieu of damages, of not more than twice the amount of the original claim.

State Laws Pertaining to Health Care Fraud and Abuse

State False Claim Acts: The DRA requires providers to educate their employees and contractors on specific state laws pertaining to civil or criminal penalties for false claims and statements, and whistleblower protections under such laws, with respect to the role of such laws in preventing and detecting fraud and abuse in federal health care programs. An overview of the applicable state law is attached in the DRA Compliance State Addendum.

DRA Compliance Policy State Addendum
Alabama Law Pertaining to Health Care Fraud

Medicaid False Claims – Ala. Code Ann. § 22-1-11

The State False Medicaid Claims Act (“SFMCA”), enacted in 2007, sets forth the procedures whereby the state, and private citizens acting on behalf of the state, may bring civil actions against entities or individuals who have submitted false or fraudulent claims to the Medicaid program.

The SFMCA authorizes a civil penalty for any person who does any of the following: knowingly presents or causes to be presented to the Medicaid program a false or fraudulent claim; knowingly makes, uses, or causes to be made or used, a false record or statement to get a false or fraudulent claim paid or approved; conspires to defraud the Medicaid program by getting a false or fraudulent claim allowed or paid; has possession, custody, or control of property or money for use of the Medicaid program and who delivers or causes to be delivered less property than that for which the person receives a receipt; is authorized to make or deliver a receipt of property for use by the Medicaid program and who makes or delivers the receipt without completely knowing that the information on the receipt is true; knowingly buys or receives as a pledge of obligation or debt, public property from an officer or employee of the Medicaid program who may not lawfully sell or pledge the property; or knowingly makes, uses, or causes to be made or used, a false record or statement to conceal, avoid, or decrease an obligation to pay, repay, or transmit money or property to the state.

A person found in violation of the foregoing is liable of a civil penalty of not less than five thousand, five hundred dollars and not more than eleven thousand dollars for each false claim, plus three times the amount of damages sustained by the Medicaid program and the costs of bringing the action. The SFMCA provides for a potential reduction in the penalty where the alleged violator cooperates with the investigation.

The term “claim” means any request or demand for money, property or services made to directly or indirectly to the Medicaid program, where the Medicaid program is to provide any portion of the money or property or will reimburse any portion of the property or money requested or demanded. The terms “know” and “knowingly” mean that a person has knowledge of the information, acts in deliberate ignorance of the information, or acts in reckless disregard of the truth or falsity of the information.

Private Civil Actions: The SFMCA also provides for actions by a private person (a “whistleblower”) who can bring a civil action in the name of the government for a violation of the FCA. Generally, such an action may not be brought more than six years after the violation, but in no event more than ten years after the violation. When the action is filed and served on the attorney general, it remains under seal for at least sixty days. The attorney general may choose to intervene in the lawsuit and assume primary responsibility for prosecuting, dismissing, or settling the action. If the attorney general elects not to proceed with action, the whistleblower who initiated the lawsuit has the right to conduct the action.

In the event the government proceeds with the lawsuit, the whistleblower may receive fifteen to twenty-five percent of the proceeds of the action or settlement. If the whistleblower proceeds with the action without the government, the plaintiff may receive twenty-five to thirty percent of the recovery. In either case, the whistleblower may also receive an amount for reasonable expenses plus reasonable attorneys’ fees and costs.

If the civil action is frivolous, clearly vexatious, or brought primarily for purposes of harassment, the whistleblower may be required to pay the defendant’s fees and costs. If the whistleblower planned or initiated the violation, the share of proceeds may be reduced and, if found guilty of a crime associated with the violation, the plaintiff will not share in any award.

Whistleblower Protection: The SFMCA also protects whistleblowers from retaliation. An employee who is discharged, demoted, suspended, threatened, harassed, or discriminated against in the terms and conditions of employment because of lawful acts done by the employee in furtherance of an action under the SFMCA may bring an action in the appropriate court in Alabama seeking reinstatement at the same seniority status, two times the amount of back pay plus interest, and other enumerated costs, damages, and fees.

Medicaid Fraud – O.C.G.A. § 49-4-146.1

Subsection (b) of this statute provides that it shall be unlawful for any person or provider to obtain, attempt to obtain, or retain for himself, herself, or any other person any medical assistance or other benefits or payments under this article, or under a managed care program operated, funded, or reimbursed by the Alabama Medicaid program, to which the person or provider is not entitled, or in an amount greater than that to which the person or provider is entitled, when the assistance, benefit, or payment is obtained, attempted to be obtained, or retained, by: knowingly and willfully making a false statement or false representation; deliberate concealment of any material fact; or any fraudulent scheme or device. Furthermore, it is also unlawful for any person or provider knowingly and willfully to accept medical assistance payments to which he or she is not entitled or in an amount greater than that to which he or she is entitled, or knowingly and willfully to falsify any report or document required under the Medicaid program.

Any person violating these provisions is guilty of a felony and, upon conviction thereof, is subject to punishment for each offense by a fine of not more than ten thousand dollars, or by imprisonment for not less than one year and not more than ten years, or by both such fine and imprisonment. This statute is a criminal statute and the state has the burden of proving beyond a reasonable doubt that the defendant intentionally committed the acts for which he or she is charged. In addition to criminal penalties, any person committing abuse shall be liable for a civil monetary penalty equal to two times of any excess benefit or payment.

“Abuse” is defined in the statute as a provider knowingly obtaining or attempting to obtain medical assistance or other benefits or payments under this article to which the provider knows he or she is not entitled and the payments assistance, benefits, or payments directly or indirectly result in unnecessary costs to the Medicaid program. Miscoding does not constitute abuse if there is a good faith basis that the codes used were appropriate under the Department of Community Health, Division of Medical Assistance’s policies and procedures manual and there was no deceptive intent on the part of the provider.

In addition to any other penalties provided by law, each person violating this law is liable for a civil penalty equal to the greater of three times the amount of any such excess benefit or payment or one thousand dollars for each excessive claim. Interest on the penalty shall be paid at the rate of twelve percent per annum.