Crowell & Moring Helps St. Francis Hospital Achieve OIG "Self-Disclosure" Settlement

Crowell & Moring's John T. Brennan, Jr. represented St. Francis Hospital of Greenville, South Carolina in its nationally-reported settlement utilizing the HHS OIG Provider Self-Disclosure Protocol, announced by HHS on February 11, 2004. Utilizing that Protocol, the Hospital and its new owner Bon Secours Health System, were able to influence the process of negotiation and settlement and resolve the matter for much less than could have been imposed under the False Claims Act or Civil Monetary Penalty Law.

Upon its acquisition of the Hospital in 1999, Bon Secours Health System discovered potential improper claims submitted by the previous owner involving the Hospital's home health, hospice and DME services. Bon Secours elected to notify the OIG of these possible false claims through the Provider Self-Disclosure Protocol.

Bon Secours utilized the process to demonstrate to the Inspector General that it had fully audited and identified the scope of the potentially improper filings. While Bon Secours remained obligated for liabilities of the predecessor owner, Crowell & Moring and Bon Secours were able to convince the Inspector General that the deficiencies giving rise to the billing improprieties had been corrected, and that under Bon Secours' ownership, a strong new compliance program was now in place. Crowell & Moring worked with Bon Secours in performing the internal audit and in developing its compliance and corrective action plans.

As a result, St. Francis' payment in settlement ($9.5 million) was far less than what the Hospital's liability could have been under the False Claims Act or Civil Monetary Penalty Law. Importantly - and most unusually - the Hospital was not obligated to establish a Corporate Integrity Agreement, nor was any other administrative sanction deemed necessary.

The OIG's announcement of the settlement reports OIG Acting Principal Deputy Inspector Dana Corrigan's statement that the settlement is a good example of how the Self-Disclosure Protocol benefits both the integrity of Government health care programs and providers who discover and report evidence of potential fraud and overbilling in their organization. Corrigan said, "Taxpayers can be satisfied with this settlement because St. Francis will pay monetary damages to resolve compliance problems that might not have been revealed without the hospital's self-disclosure. And for its part, St. Francis is now able to continue its work and concentrate on future compliance without concern about lingering liabilities related to this conduct."

The OIG Provider Self-Disclosure Protocol worked well for Bon Secours and St. Francis Hospital in this case. However, the Protocol is not always the preferred approach to resolving potential overpayment and/or false billing issues. An alternative approach to consider, for example, might be to communicate directly with the provider's fiscal intermediary or carrier. Federal law mandates that federal health care program overpayments be disclosed to the government. It is important that each particular situation be carefully evaluated as to its potential legal risks, reporting obligations and strategic options.