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By: David S. Barmak, Esq.
WHAT IF Jordan Belfort, the "Wolf of Wall Street", (subject of the recently released Martin Scorsese film based upon a memoir about Belfort's exploits as a crooked broker), had chosen to own skilled nursing facilities (SNFs), ostensibly providing care for residents instead of owning a brokerage company and selling penny stocks? Imagine if Belfort, instead of starting the brokerage firm Stratton Oakmont and defrauding investors with fraudulent penny stock sales during the 1990's had begun his career as an administrator in training, eventually becoming licensed and owning a hundred SNFs? His chances of having been caught, going to jail and making restitution for Medicare and Medicaid fraud would have been very slim prior to the passage of the Patient Protection and Affordable Care Act. Had he started with his first SNF in the 1980's, he might still be earning millions of dollars.
Healthcare fraud might easily be the most lucrative crime with the least likelihood of getting caught in the United States. The Patient Protection and Affordable Care Act has not changed criminal opportunities but has significantly increased the likelihood of being caught and prosecuted.
Healthcare and investment fraud have a primary commonality: both are white-collar crimes and as such, are viewed by regulatory agencies as interchangeable. It is critical to differentiate the sheep (the SNFs that make honest mistakes) from the wolves (the organized criminals - regardless of the industry - that intentionally commit crimes). An effective compliance program is essential for conveying this differentiation.
A Quick Primer On White-Collar Crime
White-collar crime has its origins in the social struggles stemming from the transition from an agrarian society to an industrial society. The conflict between the "haves" and the "have-nots" for wealth and control, and the laws created to regulate protection for the "have-nots" from the "haves" are the genesis for white-collar crime.
Legislation was created to try to protect consumers from the obscene finance industry frauds perpetrated by Jordan Belfort. Belfort, however, was a babe in the woods compared to Michael Milken (He was indicted for racketeering and securities fraud in 1989 for inside trading during which he earned $1 billion in a four-year period during a 17 year career . He served 2 years in jail and repaid $600 million dollars. He was reported to have an estimated net worth of around $2 billion in 2010) and Ivan Boesky (He collaborated with Milken. He inspired the famous fictional Wall Street movie character Gordon Gekko. Boesky spoke at the School of Business Administration at Berkeley commencement in May of 1986 and was quoted as saying: "Greed is all right, by the way. I want you to know that. I think greed is healthy. You can be greedy and still feel good about yourself." Sadly but telling people in the audience reportedly laughed and applauded following Boesky's speech.)
The Patient Protection and Affordable Care Act like its predecessors the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 and the Deficit Reduction Act of 2005, focuses on protecting consumers by targeting Medicare and Medicaid fraud.
Regulatory Enforcement's Perspective
Of White-Collar Criminals
If legislation concerning white-collar crime stems from the conflict between the "haves' and the "have- nots", enactment of such laws is just the beginning of societal reform. The conflict then extends to the enforcement process. Regulatory agencies are focusing on white-collar criminals not street criminals. Our judicial system double standard starts here. SNFs reasonably assume that regulatory agencies like the Office of Inspector General (OIG) view SNFs as attempting to provide their residents with quality care, employing hundreds of workers, while still turning a profit (proprietary) or a surplus (non-profit), therefore deserving the benefit of the doubt when ferreting out criminal intent from civil mistake. NOTHING COULD BE FURTHER FROM THE TRUTH!
All regulatory agencies have one responsibility - deal with corporate crimes - which leads to viewing those who commit corporate crimes as white-collar criminals. Forget that "our industry" claims to have an inherent value of caring for people. Belfort allegedly rationalized his "pump and dump" penny stock fraud as providing some investors with the potential to work their way out of financial debt (to date only 10% of the $110 million of court mandated restitution moneys have been paid to the 1,513 clients he defrauded).
Essential Value Of An Effective Compliance Program
So what does Belfort have in common with the majority of Skilled Nursing Facilities?
From the perspective of intent - ABSOLUTELY NOTHING!
From the perspective of appearances in highly regulated industries - Unfortunately, a lot.
Our government places an extremely high priority on protecting helpless citizens from victimization by unscrupulous business people. Belfort showed all too clearly how investment and banking fraud can destroy the lives of innocent people. The small list of SNFs accused of fraudulently receiving government monies (really our money) through the provision of substandard quality of care has, sadly and erroneously, given our legislatures and regulatory agencies the opportunity to superficially equate the Belforts of the brokerage industry with our entire healthcare industry, contrary facts notwithstanding.
An effective compliance program is THE BEST way to dispel this misguided perspective.
Our government clearly recognizes the importance of an effective compliance program. When the Office of Inspector General (OIG) comes to a SNF, its first 3 questions are: a) "Do you have a compliance program?" b) "Who is your Compliance Officer?"; and c) "Who is responsible for compliance?" (Answer: "We all are!") When a SNF acknowledges or is adjudged to have committed wrongdoing, the OIG imposes a very burdensome and expensive corporate integrity agreement.
From the first moment on-site at a SNF, the OIG attempts to gauge if there's a corporate culture of good faith adherence to laws and regulations.
An effective compliance program is the sine qua non of good faith.
An effective compliance program guides the OIG's white-collar criminal perspective towards civil mistake and away from criminal intent.
An effective compliance program helps ensure that a SNF's employees really are uniformly and consistently operating in a law-abiding manner. This is critical in steering regulators, faced with a significant behavioral error of any sort, towards a determination of civil mistake rather than criminal intent. A SNF's employees and overall operations must be portrayed to regulators as operating in a legally compliant manner, thereby supporting the correct perspective that errors are really just mistakes, and not instances of intentional fraud.
An effective compliance program significantly and dramatically helps to separate and portray the explicit differences between the SNFs (sheep) passionately dedicated to providing residents with wonderful quality care while making a good-faith effort to adhere to the law; from the Belfort's (wolves) of our healthcare industry who manipulatively maximize profits with the tragic consequences of substandard quality of care with flagrant disregard for our laws and regulations.
An effective compliance program is essential for separating the sheep from the wolves.
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