North Carolina’s Health Care Enforcement -- Adding to the Arsenal

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Shorts on Long Term Care Newsletter

05.01.2007

Christopher P. Brewer

The North Carolina Medicaid Fraud Control Unit and other state health care enforcement agencies currently have a variety of weapons in their arsenal for criminal and civil prosecution and recovery in health care cases. Senate Bill 179, introduced in the 2007 legislative session, seeks not only to provide the government with new weapons, but also to give more bang to the existing ones.

At the state level, most Medicaid fraud cases are prosecuted criminally under the Medical Assistance Provider Fraud statute (N.C.Gen.Stat. §108A-63). This statute is violated when a Medicaid provider willfully and knowingly makes, or causes to be made, a false statement or a false representation of a material fact:

in an application for payment (claim); or
in an application to determine Medicaid provider eligibility for payment or that allows a provider of services to qualify or remain eligible to provide Medicaid services.

The statute is also violated when a Medicaid provider knowingly and willfully conceals or fails to disclose any fact or event that affects either the provider’s initial or continued entitlement to Medicaid payments, or the amount of payment to such person is or may be entitled. A provider is defined as any person who provides goods or services under the Medicaid Program and any other person acting as an employee, representative, or agent of such person. Currently, violation of the Medical Assistance Provider Fraud statute is a Class I felony.

SB 179 would increase the punishment for engaging in a scheme to defraud the Medicaid Program to a Class H felony if the value of the health care services is less than $100,000, and a Class C felony if the value of services exceeds $100,000.

The legislative proposal would also add an anti-kickback provision that would be very similar to the present federal anti-kickback statute.

North Carolina also has the Medical Assistance Provider False Claims Act, which is similar to the federal False Claims Act (FCA), to assist in civil recoveries (N.C.Gen.Stat. §108A-70.12). This law became effective December 1, 1997, for any conduct occurring on or after that date. The act applies to any Medicaid provider who knowingly presents or causes to be presented to Medicaid a false or fraudulent claim for payment or approval. It also applies to any Medicaid provider who 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 by the Medicaid Program. Each claim presented is a separate violation. A civil penalty may be assessed of not less than $5,000 and not more than $10,000 plus three times the actual damages sustained by Medicaid for each claim. There is a double damage provision for self-reported violations if certain conditions are met. The statute provides assurances that double penalties will not be assessed from both the federal and state false claims statutes for the same claim. There are provisions for Civil Investigative Demands (civil subpoena) by the attorney general. Unlike the federal statute, the state statute does not currently include a qui tam (whistleblower) provision.

SB 179 would make several significant changes to the state FCA. The proposed legislation would add liability for engaging in a conspiracy to defraud the Medicaid Program. Civil penalties would be increased to not less than $5,500 and not more than $11,000 for each violation. Perhaps most significantly, SB 179 would add a qui tam provision to the existing statute.

Finally, SB 179 provides for an “authorized investigative demand,” adding a new subpoena to the government’s criminal enforcement arsenal that tracks very closely the subpoena authority given to the United States Department of Justice in 1998 for use in federal health care fraud investigations. The subpoena may be used only for production of documents and records, and for testimony concerning their production and authentication. Documents produced can also be used in parallel civil actions. It is important to note that SB 179 allows the new subpoena to be used in health care investigations relating to patient abuse and neglect, as well as theft of patient personal property.

Long term care providers who would potentially be impacted if SB 179 is enacted should pay close attention to this proposal during the current legislative session.

Physical Address: 301 Fayetteville Street, Suite 1900, Raleigh, NC 27601

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05.01.2007