In some cases, a company facing possible liability under the False Claims Act may opt to self-report and self-disclose the potential violations, which typically results in a lesser fine and may help offset some of the statutory penalties awaiting violators of the Act. In today’s case, we review a recent settlement out of Louisiana arising after Westwood Mental Health, LLC and its parent company followed the self-disclosure protocol implemented by the Department of Health and Human Services to allow companies the opportunity to voluntarily reveal information that may involve violations of the FCA and other statutes. Accordingly, today’s case does not involve a whistleblower. However, the conduct alleged against Westwood is not unlike that seen in other cases involving healthcare fraud.
Details of healthcare fraud allegations against Westwood Mental Health
Located in Shreveport, Louisiana, Westwood Mental Health (“Westwood”) is a medical facility specializing in inpatient mental health services, including intensive psychiatric case management, counseling, and treatment for chronic mental health conditions.
The Department of Justice became involved with Westwood following a voluntary self-disclosure of a number of potential violations, including:
- Falsifying patient records in order to qualify patients for covered treatments;
- Billing for psychiatric services that were not medically necessary;
- Billing for services not actually rendered to patients;
- Offering bribes to Medicare beneficiaries who did not independently qualify for inpatient services;
- Offering kickbacks to area psychiatric practitioners to recommend inpatient services that were not medically necessary; and
- Offering bribes to said practitioners to conceal the fraud.
As a result of self-reporting the misconduct, which allegedly took place between 2006 and 2009, the company was able to secure a $3.5 million settlement – a figure which likely would have been much higher had the case made it to a trial.
The U.S. Attorney’s Office said in a statement, “Reaching this settlement through the self-disclosure process demonstrates what the healthcare community and law enforcement can achieve by working together….When Westwood discovered the problems, it brought the matter to the attention of the HHS Office of Inspector General, and in doing so avoided the costs associated with a protracted investigation and the risk of potential fines under the False Claims Act.”
OIG’s Self-Disclosure Protocol
The OIG offers a number of benefits to healthcare practitioners seeking to self-disclose acts of misconduct. First, there is a presumption against requiring corporate integrity agreements in cases of self-disclosure. In other words, companies choosing to take this route may be able to avoid the restraints and oversight often implemented against False Claims Act offenders caught “red handed” engaging in intentional healthcare fraud.
Second, a self-reporter will likely pay a lower multiplier when it comes to calculating damages. Under the FCA, a False Claims Act defendant may face treble (triple) damages assessed against each violation. For the self-reporting defendant, this figure is reduced by half to 1.5.
Third, self-reporting defendants may minimize their exposure under the reverse false claims regulations, which require defendants to return all overpayments within 60 days or face additional fines and penalties. By self-reporting fraud, this regulation could be inapplicable, depending on the situation.
Lastly, the OIG encourages self-disclosure as it will generally take much less time to resolve than the typical FCA case, which can take years to reach a conclusion. More specifically, the OIG professes a dedication to ensuring self-disclosure cases are resolved in less than 12 months.