Health Care Matters

A Complimentary Newsletter From:

Law Offices Of David S. Barmak, LLC

Partners to Skilled Nursing Facilities

Volume 10, Issue 3                               ADVERTISEMENT                                JUNE 2009

In This Issue
New Jersey Paid Family Leave Act: An Overview
An Overview of the Federal and New Jersey Fraud and Abuse Laws
Expansion of False Claims Act Liability Signed into Law by the President
Compliance Officer Q&A
David S. Barmak, Esq. 
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Licensed to practice law in the States of New Jersey, New York, Connecticut and Pennsylvania 
New Jersey Paid Family Leave Act:
An Overview
New Jersey has become only the second sate in the nation to mandate a paid family leave program for employees. The law was signed on May 2, 2008 and takes effect on July 1, 2009.
Paid family leave provides employees with up to six weeks of partial wage replacement to care for newborn, adopted or seriously ill family members every year. This program is similar to New Jersey's existing Temporary Disability Insurance program. The paid leave benefit provides two-thirds of the employee's wages capped at $546 per week for 2009. The maximum benefit rate is adjusted every year. The paid family leave program does not require any employer to hold the employee's position open, but employers should be mindful of other state and federal laws that may provide employees with the right to reinstatement. Eligible employees will also be able to take the leave on an intermittent basis.
All full and part-time employees are eligible for paid family leave based on the amount of wages paid over a period of "base weeks." An employee qualifies for the program who earns either:  $143 or more per week for 20 consecutive weeks, or $7,200 or more over the previous 52 calendar weeks. Businesses that have 50 or more employees are required to continue to comply with the unpaid leave provisions of the federal Family and Medical Leave Act and the New Jersey Family Leave Act. These laws require employees to work for the employer for a period of time before they become eligible for the unpaid leave. The Paid Family Leave Law will allow an eligible employee to take paid family leave almost immediately.
Important definitions:
Family Temporary Disability Leave provides up to six weeks of paid leave to: (1) bond with a newborn or adopted child, or (2) care for the serious health condition of a family member. An employer may require an employee to use up to two weeks of any paid sick, vacation or other paid time off in connection with a period of paid family leave. No employee may receive paid family leave benefits and simultaneously receive temporary disability income or unemployment compensation benefits.
Family members included in the program consist of the following: biological, adopted or foster children less than 19 years of age; a child over 19 years of age that is incapable of self care; a spouse; "domestic partners"; "civil union partners"; biological, foster, adopted parents or stepparents; or a legal guardian of the eligible employee when the employee was a child.
"Serious health condition" is defined as an illness, injury, impairment or physical or mental condition that requires:  inpatient care in a hospital, hospice, or residential medical care facility; or continuing medical treatment or continuing supervision by a healthcare provider.
"Healthcare provider" is defined as any person licensed under federal, state or local law, or the laws of a foreign nation to provide health care services; or any other person who has been authorized to provide health care by a licensed healthcare provider.
For more detailed information on rules and procedures of the New Jersey Paid Family Leave Act, please contact Law Offices Of David S. Barmak, LLC.
An Overview of the Federal and New Jersey Fraud and Abuse Laws
Federal and New Jersey Fraud and Abuse laws all but require that healthcare providers develop and implement Corporate Compliance Programs. The term "Corporate Compliance Program", originally brought to the attention of the healthcare industry by the federal Office of the Inspector General, has become a term of art. It does, however, represent a federal and state recognized program that has as its main goal to eliminate the element of "intent" if and when a federal or state body investigates and accuses a health care provider of fraud and abuse. But what do we mean when we refer to "fraud and abuse"?
Fraud and abuse ("F&A") is commonly used to refer to any activity by a healthcare provider or supplier or its agents (e.g.; billing agents, consultants, marketing representatives, etc.), that is intended to or does in fact result in the improper provision of goods or services or the inappropriate provision of benefits (i.e.;payment).
F&A includes, among other things: violations of various laws discussed below; claims for services not rendered; duplicate claims; claims in violation of specific Medicare or other third party reimbursement rules; claims for medically unnecessary services; claims for more complicated and expensive procedures than actually rendered (i.e. upcoding) and routine waiver of coinsurance and deductible services.
Fraud requires an intentional deception or misrepresentation made by a person with the knowledge that the deception could result in some unauthorized benefit to that person or another.
Abuse is anything less than fraud (i.e. the element of intent is absent) which results in the undeserved payment of benefits under Medicare or Medicaid. For example, repeated provision of medically unnecessary services. Conduct that starts out as abuse may become fraud if continued in the face of warnings or other notice that the conduct is improper.
F&A may be prosecuted either criminally or civilly. Criminal prosecutions involve the element of intent (knowingly and willfully).
F&A laws include but are not limited to:
  • The Federal Anti-Kickback Statute makes it a crime to knowingly and willfully offer, pay or receive remuneration (i.e., anything of value) in exchange for or in order to induce the referral of patients or other business which is reimbursable under Medicare, Medicaid or other federal health benefits programs. Violations of the anti-kickback statue may be prosecuted either criminally or civilly. The Government must prove the element of intent.

  • The Federal False Claims Act prohibits a person from knowingly submitting claims or making a false record or statement in order to secure payment by the Federal Government of a false or fraudulent claim. "Knowingly" is defined as actual knowledge; deliberate ignorance of the truth or falsity of the claim; or reckless disregard of the truth or falsity of the claim. There is a "Qui Tam" ("whistleblower") provision. Penalties include treble damages and $5,000 - $11,000 per false claim.

  • The New Jersey Insurance Fraud Prevention Act is a civil statute which provides for civil penalties if any person or practitioner knowingly presents or causes to be presented a claim for payment which includes false or misleading information or conceals or knowingly fails to disclose any information which affects any person's (including a corporation) initial or continued right to any insurance benefit or payment. Penalties for violating the Act include $5,000 for the first violation, $10,000 for the second and $15,000 for each additional violation. Insurance companies may also bring suit under the Act and if a pattern of violations is established the insurance company may be entitled to treble damages. The Commissioner may also refer the matter to the Attorney General for criminal prosecution.

  • The New Jersey False Claims Act parallels the Federal False Claims Act. This law covers "claims" submitted to the State of New Jersey (e.g., Medicaid). Civil penalties are the same as under the Federal False Claims Act (i.e., $5,500 - $11,000 per false claim) as well as treble damages.

  • The New Jersey HealthCare Claims Fraud Act is part of the criminal code that includes a specific offense for "health care claims fraud" - a second degree offense if the false claims were "knowingly submitted". Penalties may include prison and a fine of up to 5 times the financial benefit obtained through the false claim.
Expansion of False Claims Act Liability Signed into Law by the President
On May 20, 2009, President Barack Obama signed the Fraud Enforcement and Recovery Act of 2009 (FERA) into law. Among other provisions, FERA revises the civil liability provisions of the False Claims Act (FCA). The FCA grants a cause of action to the United States and qui tam relators for civil damages and penalties against any entity that makes a fraudulent claim for payment to the federal government. The FERA amendments will make it easier to recover against FCA defendants.
  • Allegedly false claims no longer need to be presented to a government employee.
  • Specific intent to defraud is no longer a requirement. Liability is imposed for knowingly making or using a false record or statement material to a false or fraudulent claim. "Material" is defined as "having a natural tendency to influence, or be capable of influencing, the payment or receipt of money or property."
  • The definition of "claim" has been expanded to include any situation where the defendant submits the request or demand for money not only directly to the government but also to a contractor or any other recipient of government funds used to advance a government program. For example:  if a therapy company that provides physical and occupational therapy for a skilled nursing facility submits a false claim to the skilled nursing facility which in turn forms the basis of a false claim submitted to the government, the therapy company can become the defendant in a FCA action  by the United States and qui tam relators.

The federal government is very focused on alleged fraud and abuse, particularly in the health care industry. It is reasonable to expect a high level of FCA enforcement. It is very important to have an effective corporate compliance program.

Compliance Officer Q & A
Question:  My facility has a Corporate Compliance Program. I originally thought it would just deal with fraud and abuse but our Compliance Attorney has presented a very broad, all inclusive program. Is this the norm?
Answer:  Yes. A Corporate Compliance Program for healthcare providers has as its core an effort to comply with laws and regulations - ALL laws and regulations. The Office of Inspector General has long touted having a Corporate Compliance Program to address fraud and abuse laws and regulations; however, the value of an effective Corporate Compliance Program - to negate the "intent" to commit wrongdoing and thereby avoid criminal penalties - applies to every area involving laws and regulations. For example, employment, privacy, emergency preparedness, documentation, etc. A truly effective Corporate Compliance Program is broad based with its main focus being to assist a healthcare provider in complying with various laws and regulations and to persuade the federal and state governments that if there is any wrongdoing on the part of the healthcare provider that there was no intent to do so. Mistakes happen and if there are civil penalties then so be it. What we don't want is for there to be a finding that there was intent to commit wrongdoing. Such a finding only leads to criminal penalties and debarment from federal and state programs.
Law Offices Of David S. Barmak, LLC
David Barmak established his health care law firm in 1984 to deliver legal services, both in transactions and litigation, to organizations and professional practitioners in the health care field.  We call this approach "Enterprise-Wide Risk Management" because it includes three important facets:
  1. Counsel and advisement on all aspects of legal risk, from setting up the entity to corporate governance;
  2. Protection of your practice or business through litigation prosecution or defense in the Courts; as well as regulatory compliance and licensure issues before government agencies; and
  3. Operations improvement through the implementation of enterprise-wise onsite audits, programs and training seminars in the areas of, but not limited to, Fraud and Abuse, HIPAA Privacy and Data Security, Employment, A/R Management, Emergency Preparedness, and Workplace Violence.

David S. Barmak, Esq. received his JD from Cornell University and BA from Duke University.  He is licensed to practice and serves clients in the States of New Jersey, New York, Connecticut and Pennsylvania.  Before making your choice of attorney, you should give this matter careful thought.  The selection of an attorney is an important decision.  The recipient may, if the newsletter is inaccurate or misleading, report the same to the Committee on Attorney Advertising. 

For more information, please contact us:
Telephone (609) 688-0055
Fax (609) 688-1199
Disclaimer:  The contents of this newsletter are presented as general information.  Legal advice and opinion can only be provided upon individual consultation.
         2009.  All Rights Reserved.