Bob Wade Interview
Bob Wade is an attorney and partner in the Healthcare Department of Barnes & Thornburg LLP. This interview took place on October 2, 2018.
To start off, could you describe your background as well as your current role?
My current role is that I am the healthcare attorney in the law firm of Barnes & Thornburg LLP. I am one hundred percent healthcare and I do basically fraud, abuse and compliance related stuff. In my history, I have been in private practice but was also in-house for seven years as the Integrity Officer for the General Counsel. A lot of my comments, with respect to this issue, come from my in-house experience. I represent hospitals primarily around the country on things like the Stark Act and the Kickback Statute and compliance related issues.
In the course of your legal experience in your different roles, what was the most memorable experience that you had? Was it something that you observed or something that you heard someone say? What stuck with you?
Well I guess my most memorable experience would be an experience that I am currently still experiencing. Four years ago I was selected as the Compliance Expert to the Board of Commissioners at Halifax Health. I am down at Halifax a lot and assisting them on compliance related issues but like I said, I will put that in one bucket. The second bucket is that I became the integrity officer and general counsel back in the late 90’s for hospital systems. It was when compliance was really in its infancy. I had the general counsel/health system approach me and indicate and ask me of whether or not I wanted to become a compliance officer. I never went to law school to become a compliance officer but I went in as a compliance officer, and I gained so much experience that I am obviously using now in private practice. So having the opportunity to be a compliance officer, in-house, gave me a lot of experience that I am using now with a lot of my clients.
So you have worked with the False Claims Act (FCA) as well as other related acts. Could you tell us more about the False Claims Act, what exactly it prohibits and your experience with it?
The False Claims Act (FCA) prohibits the knowing/billing of claims that you are not entitled to receive compensation for. There is also a reverse false claim, which is after you have received compensation from the government, have done a review and have identified that you are not entitled to retain that money (since it is inconsistent with the billing). If you decide to retain that compensation, then that is also considered to also be a false claim. The problem with the False Claims Act, from a provider perspective, is that for the government it is a huge weapon. The reason why it is a huge weapon is that the potential financial liability is huge. Under the False Claims Act, if I file something inappropriately and the government believes that it was done intentionally, the government gets trouble the images for whatever you bill times three. Plus, for every claim submitted, they can fine you up to 11,500 dollars. Let me drive this home because I know that when dealing with opioids, you are also dealing with a lot of laboratories. The laboratory builds a lab test, two dollars per lab test, and then would take that and multiply two times three--that is six dollars. Let’s assume that they build 3,000 tests. You take 3,000 and multiply that with 11,500 dollars and that is where the fines come in. You see a lot of these large settlements that the government is obtaining and that is based upon the multiplier effect under the False Claims Act. A lot of times you will hear that a lot of people from the government say, for example, that the “potential liability was 250 million, but we settled for 85 million--doesn’t that make us look good?” Well, the reason why there is the 250 million is due to the multiplier effect, and a lot of times the hospitals cannot afford it. Typically under the False Claims Act, hospitals are settling. The only real case that was fought until the bitter end was Toume, down in South Carolina. The original judgement that came out was more than what the hospital made in gross revenue in one year. They ended up settling for, I believe, 74 million dollars, but were forced to join another larger health system. They lost a local control, all dealing with compensation issues, but also the False Claims Act was on top of the Stark Law issue.
What does the Stark Law say or cover?
The Stark Law is a law that basically defines what type of financial arrangements that a reference physician can have with what they call a designated health services entity (DHS entity). There is a lot of DHS entities, but for now we will use the example of hospitals. Hospitals are the largest component of DHS entities. If I have a financial arrangement with that hospital and I refer Medicare business to that hospital, then the compensation arrangement has to fit within a Stark Law exception. This is so that that hospital is able to bill Medicare for the claims for the referrals that are coming from the physicians with whom they have a financial arrangement with. I give a lot of presentations regarding the Stark Law and literally in order to get a full understanding of the Stark Law, we would need about an hour to go through all the details. There are also some expectations, like the employment exception, personal services arrangement exception, rental of office space, rental of equipment-- there are lots of exceptions out there. Each of the exceptions have multiple components and you have to sit the financial arrangement within each component. One of the hardest components that hospitals face is outside of the employment exception. All the other exceptions require that the financial arrangement be in writing and fined by the parties--arguably like a contract. The more difficult thing that most of the exceptions require is that the compensation has to be determined to be commercially reasonable--reasonable to be entered into the financial arrangement. The compensation also needs to be representative of fair market value. Fair market value is this sort of fluid thing. I do a lot of fair market value work for my clients and try to use benchmark data in order to justify the compensation arrangement to make sure that we are clear of the Stark Law. Since I just talked about the False Claims Act, usually the government brings the Stark Law claim and the False Claims Act together. If they alleged that they did not have an appropriate arrangement that fit within the exception of the Stark Law, they will go after the hospitals with the Stark claim. They would then say that the hospitals knew that they weren’t entitled to bill the government because they violated Stark, and therefore billed inappropriately. Therefore, the government would hit them with the False Claims Act in addition to the Stark Law.
So these are federal laws that apply to public programs such as Medicare or Medicaid?
It is Medicare for the Stark Law and Medicaid for the Kickback Statute and also the False Claims Act.
So these laws do not apply to private insurance?
No, this is all dealing with public balance.
So if there is something that happens with the private insurance, is there any other law? Maybe a state law that may cover that? How does this work?
There are state laws that do apply. Most of the time the state laws apply towards the Medicaid balance and not the private insurance. Most states also have something with what they call insurance fraud. If an insurance company wanted to go after a provider because they believe that the provider inappropriately billed the insurance company, then there are state laws that would permit the insurance companies to bring such action.
In your experience representing clients who are being investigated by the federal government, did you generally find that it was something where they knew that they were possibly doing something contrary to what the law allowed? Or was it that they were not necessarily aware due to the complexity or possibly a misunderstanding?
Yes, it is definitely the latter, at least for the clients that I represent. The billing rules are so complex that once you get into a billing investigation, then you have to kind of figure out whether or not the documentation is appropriate in order to support the claim. Sometimes the doctors do not document everything appropriately and then the hospital then goes ahead and bills. However, when they go through with the investigation and pull up the medical records and try to see if what they billed for was appropriately documented on the medical records. The other thing that the government does, and I have been caught up in a few investigations with this, is that you get these requests for additional documentation from Medicare or third party payers. Sometimes what happens is that it goes into the medical records department and somebody from the medical records department basically pulls a medical record, copies them off and sends them on. Let’s say that they do not have a healthcare regulatory attorney, or somebody else that is an auditor, to review the completeness and accuracy of that medical record as it goes into the government for review. The government takes the position that once you submit the medical record, and if the medical records are not complete, they will say that it is a false claim. It is highly probable that the documentation does exist in the hospital, but it is just that the person that was pulling the medical record did not understand what was required to have a full complete medical record.
It was more of a matter of comprehensive record keeping rather than some nefarious scheme to put in fraudulent claims?
Yeah! The other two areas that I have been filing investigations for, and I have about four to five things going on right now, is under the Stark Law. The Stark Law has a lot of structural issues--whether or not you have appropriately structured the compensation arrangement to fit squarely within the exception. There have been a few cases where I have been in touch with there. The other area is fair market value and the allegation that the compensation arrangement with the refer is not fair market value. I guess what I also want to pile on here since we are talking about this area, is that under the False Claims Act is that there is an ability for a private citizen to bring a call of action against a healthcare entity if they think something is inappropriate--bringing up a case on behalf of the government. This is called a Qui Tam case. About 80% of the cases that are out there are initiated by a private citizen, and usually it is an employee. It’s not like you have a private citizen out there just bringing out Qui Tam cases, but it is actually people who are involved in the entity that believes fraud is going on. They then file this Qui Tam case against the entity, but ultimately it is the government who will receive any type of settlement or proceed. The person who actually brings up the Qui Tam case can obtain up to 25% of what the government collects.
That provides a strong incentive for an individual who may notice something questionable happening to report it?
So have you been involved in cases, where it was a Qui Tam case where the plaintiff was that an employee who had been working for that company had noticed something happening?
Yes, most of the cases that I am involved with are brought by employees or medical staff members. There are also physicians who are not associated with the hospital but have negotiated with the hospital, and then either did not get an offer or did receive an offer from the hospital. A healthcare attorney then told them that they cannot accept because it violates the Stark Law. So those are where they typically come from.
So you are based in Indiana?
Yes, I am based in South Bend, Indiana.
I know that there were a number of states related to the opioid crisis where there were doctors who operated, pill mills, or situations with entrepreneurs who actively sought out people on Medicare or Medicaid. They then got [the individuals] to get prescriptions for opioids but they then ended up buying the opioids off them and then diverting them towards shadow pharmacies. Or, by ordering a number of unnecessary laboratory tests in order to get a better reimbursement. Was any of that seen in Indiana or was that something that took place in other states instead?
It did not happen to the same extent when compared to other states. It probably has occurred--I have not seen any large case here in Indiana. There was a 60 minute segment on Sunday where they had a whole episode on that with respect to the state of Florida covering the crisis and all the clinics opening up. There is something that happened in South Bend, and I am trying to remember the name. Anyways, there was a medical complex south of town and there were two buildings: a medical office building and a rehab hospital. The wife showed up in the morning asking for opioids and the doctor would not prescribe the opioids to her. In the afternoon, he walked from the medical office building to the rehab hospital. While he was walking, the husband showed up and killed him. So I think that there something that is going through Congress with his name attached to it. The thing is that people get so addicted. Maybe the husband was trying to defend his wife, or she was getting the pills for him--I am not sure.This is just a tragic result of this epidemic. I actually fell and hurt myself and it was extremely painful. I went into an urgent care center and I told them that I would like to have something to kill the pain. THe person was looking at me and as I told them that my pain was at a eight to a ten at times. I told them that I was a healthcare regulatory lawyer, so I knew about all of this. However, physicians are starting to take a very conservative approach with respect to their prescribing of pain medicine. It was kind of funny because they did give me pain pills, but they only gave me five--a limited prescription.
So there definitely has been a change with prescribing medicine/practice?
Yes, in that 60 minute episode that was on during Sunday, there was at least one doctor prescribing up to 2,000 pills a day for some of the patients. And that really started a lot of the epidemic as many of those pills ended up being sold and then went up to other states.
Looking at how prescribing practices change in response to the opioid crisis, the pendulum could also swing too far the other way and adversely affect patients who genuinely suffer from debilitating pain. I notice that you have been a speaker for conferences by the American Health Lawyers Association and the Healthcare Compliance Association. With those professional organizations, does it give you an opportunity to find out what else is happening with healthcare compliance in other states or other parts of the country?
Yes, definitely. Typically in the conferences that I speak out or the national conferences, we sometimes just talk about nationally what is happening. Sometimes there’s a state drill down but most of the time it is just talking about the things that are occurring nationally.
What advice would you give to a lawyer who wants to get into healthcare compliance--in terms of what kind of experience they should try to get or what kind of projects they should get involved in?
Typically you would need to have a college degree, and under the Healthcare Compliance Association there is a job board posting. You can look to see what jobs are available. Most of the time you will start off as an assistant or associate compliance officer. If you can find an organization or an entity that you can learn from and then work your way from either with that organization or outside the organization, that is one way. The other way, the way that I did it, is being a lawyer and understanding healthcare regulatory stuff. It is not a far stretch from that to become a compliance officer. It is a fun, challenging and sort of thankless job since you are doing investigations. When I tell people about compliance programs or the development of compliance programs, and the evaluation of the effectiveness of compliance programs, the compliance officers are usually not the department that people are really happy to see come in. This is because they then know that there is an investigation going on and people really do want to do the right thing, but due to the complexity of the healthcare regulatory environment, mistakes happen. I remember when I was in house and we did a hotline call about this one department. I opened up an investigation on this department and the department manager came to my office and she said “I feel like I have a bullseye on my back.” I did not understand what she meant and she said that she felt like they were trying to investigate and find something wrong and then fire her. And then I said to her that first of all, she needed to take the bullseye off of her back. Secondly, when you are doing a compliance investigation, the deficiency is a lack of education or a lack of resources. And so we get through the compliance investigation and maybe there was something inappropriate. That doesn’t mean, unless it is egregious, that you are going to lose your job over it. We are going to get you the right resources as well as the right training for your employees so that you can do what you want to do--getting it right the first time.
Do you find that the regulatory regime, that is in place right now, to sometimes go a little too far and becomes too stringent? Or do you find that it doesn’t go far enough or does it depend on different areas?
I think that it is too stringent. In my world, I believe that both the False Claims Act and then Stark Law probably have gone too far. With the False Claims Act having the trouble damages and the 11,500 dollar penalty, I think is, as another has put it, “ draconian” for a civil case. The fear that people have, is that when you get caught up in a false claims case, is that it is better to settle than to fight the issue. If you can settle and not get into the triple damages and the fine, you have be able to get out of the investigation a lot quicker. But yes, I think the False Claims Act is too much and the Stark Law probably has too much rigidity to it as well. I understand the purpose of when it was originally formed. The intention of the Stark Law came from when they did a study where the physicians who owned laboratories tended to refer more laboratory tests than physicians who did not own a laboratory. What they were trying to do was to take away the financial incentive to refer--if they had the structural relationship with the outside entity to which they were referring. It makes some economic sense, but there is a lot of regulation with the Stark Law too. If you go into the Federal Register, it is 900 pages long to interpret a statute that is probably about 20 pages. There is a lot of complexity and you would have to hire someone like me in order to interpret it. I have been involved with the Stark Law analysis since the earlier 2000’s. I probably cover Stark at least five to six times a day with various clients. It is a huge issue and a huge expense, but this is the environment that we are in.
If someone were to give you a magic wand that would allow you to change any law or any regulation in order to make the healthcare compliance regulatory regime better, which specific law or regulation would you zero in on?
Definitely the False Claims Act. Now there are two things in the False Claims Act that I would change if I had my magic wand. First, the knowledge qualifier is not just actual knowledge but it can be reckless disregard or can be intentional disregard for the law. Like I said earlier, I think the fines and the penalties are egregious, so that is where I would focus.
Those are all the questions that I had, is there anything else that you would like to comment on?
I did want to comment on when I was in house. Regarding the medicine crisis, there are a couple things that, in my capacity as a compliance officer, that I have investigated. This has to do with healthcare professionals and diversion. Most hospitals have the narcotics in the system called the Pyxis System. In the order of the physician, the nurse will go into the Pyxis System, type in some things and the narcotics/opioids will be dispensed to that nurse. I have been in some investigations where the nurse has actually documented in the medical record, a lot of times this is done in nursing homes, that they gave the opioids/pain medicine to the patient, when there was allegations that the patient never received it. So they were fraudulently documenting in the medical record but obtained the pain medicine, and was taking the pain medicine themselves. That is one area, from a compliance perspective, that hospitals and nursing homes are having to deal with. The other one that I was recently involved with, was dealing with how a lot of pain medicines come through injections into the IV. I had one investigation where a physician left the vial not completely empty. When you give the injectable pain medication, you are supposed to appropriately dispose of the vial. What he was doing is he was taking the quarter full vial and was taking it himself. So those are the two areas, from a compliance perspective. Regarding the first one is sort of hard to conduct an investigation on since the medical records show that the patient received the pain medication. You would have to do some pretty good compliance investigation in order to try to catch the diversion that was going on. In the healthcare study, those are the two areas that I have touched with respect to diversion. You can go back into the whole issue with the False Claims Act, and now maybe you have a patient who was in a nursing home bed and not receiving the pain medications that he/she was entitled to receive. You have to question of whether or not you have provided appropriate services to those patients in order to bill for that encounter. This raises a whole bunch of compliance and billing concerns with respect to diversion of pain medicine. I just wanted to mention that because i think that it is something for the people who are listening, that represent or are involved in those healthcare entities. Those are the two areas that I have been involved in, with a compliance function and it is something that should be on people’s radars. I just wanted to add those two things.
That was very helpful! If there is a case where a nurse is putting into the record that they did [administer the pain medicine], but the patient is actually not receiving the pain medicine, in terms of liability, would it just be on the nurse or would it be also on the institution?
Well that would be a two-pronged process. Number one, the liability on the nurse is primarily the nurse’s license. You would have to report them to the nursing board and they would most likely lose their license, as they are inappropriately documenting a patient’s medical records. On the provider’s side, like a hospital or nursing home, they would have to take a look at it from a False Claims perspective. They would then need to decide whether or not the claim needs to be repaid, if they have received the payment. Most of the time, they would not have to since the provider has no knowledge that this was going on. In order to be liable in the False Claims Act, you would have to have knowledge. This is unless someone in administration turned a blind eye, which I do not think would happen but it may. Otherwise, it is something that the entities should consider and review. The likelihood that this would cause a False Claim is pretty low. It is more about quality of care though. If you have a patient in pain, in the nursing home bed, and you are not providing the appropriate pain medication, that is not good quality of care for that patient.
In addition to hospitals or nursing homes, are there any other places where you’ve heard about questionable activities taking place?
Yes I have. Hospice and also home health. Less with home health but definitely hospice. Obviously with hospice, most of the services are palliative care--making sure that the patient is comfortable. If they are in pain, then you provide them with the pain medications. There are probably a majority of in-patient hospice patients who are probably receiving some form of pain medication.
From my understanding, a hospice is a specialized type of care for people who are facing a life limiting illness?
In general, like you were saying, they are going to be on some kind of pain reliever?
Yes, highly probable.
So you said hospice but home care as well?
Home health. So if we have someone who is home bound and has been prescribed to receive pain medicine, then there could be diversion but that would be to a lesser extent. I would say the majority would be hospice and hospitals and nursing homes.
I can see it with hospice, given the fact that they would be on painkillers and probably a significant amount since it is near end of life care.
Yes, that is correct.
I remember reading an article about rehab centers where some of them (in-patient) were ordering a lot of tests--urine tests and other tests. They were ordering more than was necessary to monitor patients. Regarding the issues going on with that, have you heard anything about it?
I have heard, with rehab into the hospital category. Usually they are a rehabilitation hospital. You get the same risk as a rehabilitation centers or hospitals as you do with just general two care hospitals.
It seems like under the False Claims Act that it could cover a variety of things, and not just necessarily opioid prescriptions but other procedures as well. Such as terms of procedures where they are ordering more than what they need or something else happening.
Medical necessity is a huge issue. Medical necessity in terms of a performance of a procedure or the ordering of a test. There are a lot of categories that can fit within the False Claims Act. Medical necessity, I know, is a really large category/class of claims that are brought on behalf of the False Claims Act.
Those are all the questions that I had. Are there any other additional thoughts or ideas that you would like to share?
No, I think that we covered it all.
Great! Thank you so much for this super informative interview. I learned a lot from it, and I think that a lot of people can benefit from it.