August 15, 2013

The Office of the Inspector General has historically investigated fraud and abuse in the Medicare system.  However, in the past few years, the OIG has been ramping up its activity and expanding its scope.  Yesterday, the OIG reported on 7 oncologists being charged with violating the Food, Drug and Cosmetic Act by importing unapproved drugs for patient use, including Zometa, Kytril, Taxotere, Gemzar, Eloxatin and others, from outside the United States, where the drugs were not approved by the FDA.  The actual charges - shipment of misbranded drugs, a misdemeanor violation.

The press release (available here) issued by the Ohio US Attorney's Office relayed the charges resulted from an investigation initiated by the Office of Criminal Investigations and the Department of Health and Human Services – Office of Inspector General, and prosecuted by the Ohio US Attorney. 

Why report on this for today's newsletter?  Not for scare tactics or for gossip purposes, but to highlight the increased scrutiny across the board.  The facts relayed above are simple enough - doctors located in different locations across Ohio, each importing drugs not approved by the FDA.  Certain (or all) of those doctors presumably imported for the benefit of their patients.  Regardless of the intentions or uses, the fact that the imported drugs were not approved by the FDA led to the charges.  Here, fines are available if the doctors are convicted.  It is under those statutes that include fines we are seeing a rise of scrutiny, investigations and charges.  The best way to avoid exposure is through education, and understanding your areas of exposure.  The OIG website is an excellent resource, worth checking out to see what types of activity is on the government's radar.  Click here for OIG Compliance -

Of course, on the listserv we will continue to highlight relevant developments.


Provided by Judge Ruth Kraft, manager of K&K's Employment Law Group

In Tuesday's newsletter (available here) Jen highlighted one of the most common employment issues in medical practices: the missing copay.  As an employment lawyer, I can tell you from years of experience that, if copays are missing and the issue is not addressed, you will soon find your practice at considerably higher risk of more serious defalcations, including staff members’ endorsing insurance checks made payable to the physician and depositing them in their own accounts.  One practice with which I consulted lost over $200,000 this way before they figured out that revenues were down for reasons other than the economy.

Adding to Jen’s thoughts, I want to emphasize that internal operational compliance is essential.  Beginning with background checks (and I recommend that these be outsourced for a variety of legal reasons), to cash flow controls, to having proper disciplinary protocols in place---all are essential for the health of your organization.

If you decide to interview staff members, interview ALL of them to avoid subsequent allegations of disparate impact or discrimination.  Follow Jen’s rule and always have a second person, whether your partner or, if necessary, legal counsel, in the room during these meetings. 

Your practice should have a specific anti-harassment, anti-retaliation and whistleblowing policy in place.  This does not guarantee absolute confidentiality but individually signed forms which include at least two points of contact to whom workers can share concerns about a thief or predator in their midst are extremely important. 

Have you reviewed your employment manual? Your handbook should state that acts of gross misconduct may result in immediate discharge.  Stealing, whether $5 or $5000, rises to that level.  If the worker also falsifies the records to report that the patient did not make a co-payment, then this would constitute a violation of an additional rule. 

The manner in which you conduct interviews is also extremely important.  You must appear to be seeking information rather than cross-examining.  Offering employees the opportunity to write their own statements, in their own hands, may be useful as inconsistencies may be more evident in writing.

Documentation is essential.  If you elect to suspend an employee for an alleged theft, a written disciplinary form should be completed and signed by the employer, containing the ground for the suspension and its duration.  The worker should be given the opportunity to sign an acknowledgment of receipt, which does not mean that he or she agrees with the basis.  Should a decision to discharge be made, this should also be reduced to a writing.  Upon separation from employment, based upon your policies, barring gross misconduct as defined by the federal government, the employee must be offered the opportunity to continue health benefits under COBRA.  Additionally, your manual must be consulted to determine whether unused, accrued sick or vacation leave must be paid.  You MAY NOT deduct the amount of the theft from the final paycheck; this would constitute wage theft under New York’s stringent, pro-employee law.  

I agree with Jen that the authorities must be notified as soon as you have completed your investigation for reasons including:  establishing a record, deterring others from similar behavior and preventing your liability carrier from denying coverage for future losses pursuant to the terms of the insurance contract.

Employee theft is one of the most sensitive and difficult areas about which employers consult me.  I strongly recommend that you do not try to navigate this field on your own, without reaching out to counsel.   These scenarios, while never pleasant, are inevitable.  The best course of action is to anticipate them, have an action protocol in place and then follow through with it. 

Does your employee handbook reflect how you’d like to handle these matters? Do you have a separate, signed whistleblowing/anti-retaliation policy in place?  If not, the healthcare and employment groups at K & K are here to guide you.

Judge Kraft is available to discuss employment issues at (516) 747-6700 x. 326 or at