§ Thanks to Michael Josephson, Esq. and
Josephson Institute of Ethics for use of
several of these slides
§ Thanks to David Hoffman,JD, FCPP for
assistance in creating ourCompliance and
Ethics Program and this training program
3. THE COMPLIANCE MANDATE
In our current highly regulated and scrutinized business
environment, corporations devote substantial resources
to prevent resource-draining and reputation-damaging
conduct that could result in criminal penalties or civil
Because such conduct cuts profits, principles of
prudence and self-interest impose a duty on
management to take whatever steps are needed to
assure that employees comply with laws and
4. Compliance Mandate
§ The link between compliance to service
delivery (“quality care”) makes our focus on
compliance even more compelling
§ Behavioral health is a highly regulated
industry with compliance risks
5. OBJECTIVE OF A COMPLIANCE
The objective of a compliance program is to detect and
prevent unlawful conduct within the corporation.
To achieve this a company must develop mechanisms to
assure that employees know the law and increase the
likelihood that they will obey it by establishing detection and
reporting processes that create a credible likelihood that
lawbreakers will be caught and disciplined.
7. .g. Lost
Difficulties in Talent
Pride and Morale
Loss of Trust &Credibility
Potential Impact of
Illegal, Unethical or
8. MOVEMENT FROM COMPLIANCE
In 1991 Federal Sentencing Guidelines for Organizations
(FSGO) defined the elements of an effective compliance
and ethics program and created a major incentive (i.e.,
sharply reduced penalties for violations) for companies to
implement an effective compliance program.
The accounting scandals in the early 2000s demonstrated
that too many companies had employed “window-
dressing” compliance programs that met the letter of the
law, but were essentially ineffective.
9. FSGO – CARROT AND STICK
The FSGO dramatically increased penalties for corporate
violations (average fine imposed increased from under
$200,000 to more than $3 million in 3 years) - a big stick to
encourage companies to prevent misconduct.
The FSGO also offered a very large carrot by reducing
penalties by as much as 90% if the company can
demonstrate that at the time of the violation they had in
place an effective compliance and ethics program.
10. “Compliance is more than looking to the letter
of the law. Indeed,…many organizations that
have compliance programs already describe
them as ethics and compliance programs and
also employ ‘ethics officers’…. [In fact] it is
questionable whether a compliance program
can be truly effective if it does not have an
- Judge Diana E. Murphy,
Chair of the U.S. Sentencing Commission (2002)
11. “Experience suggests that good ethics programs and
good compliance programs are interdependent; each is
incomplete without the other.
“A good compliance program must emphasize values and
moral responsibility, because this increases the program’s
effectiveness among employees.”
- Dawn-Marie Driscoll (cited by Judge Diana E. Murphy,
Chair of the U.S. Sentencing Commission in 2002)
12. MOVEMENT FROM COMPLIANCE
In 2004 the Guidelines were amended with the explicit
warning that “check the box” compliance programs would
be insufficient to justify a sentencing reduction.
Under the revised guideline the judge must find that the
program “promote[s] an organizational culture that
encourages ethical conduct and a commitment to
compliance with the law.”
13. 2004 AMENDMENTSTO FSGO REQUIRED
Identify areas of risk where criminal violations may occur
Train high level execs as well as employees in relevant
Give compliance /ethics officers sufficient authority and
resources to carry out their responsibilities.
Demonstrate program is more than “check the box” re:
each component - program could be reasonably expected
to make real impact on organization’s culture and
1. A Compliance Officer with authority and operational responsibility for the
2. Establishing standards and procedures.
3. Communicating standards, procedures and other aspects of the program.
4. Board ofTrustee oversight of program implementation and effectiveness.
5. Periodic reporting to high level personnel and the Board by the Compliance
6. Monitoring, auditing, and periodic evaluation of program effectiveness.
7. A confidential mechanism for reporting legal violations or seeking guidance
without fear of retaliation.
8. Responding appropriately to criminal conduct with corrective action.
15. Evaluating a Program :Overall Design
• Criminal prosecution and penalties
• Government regulatory actions and penalties
• Civil suits and liability
• Reputation damaging publicity
• Resource draining defensive action
• Bad outcomes from a care perspective (usually not
mentioned in same breath as above)
Detect, deter and/or prevent conduct that subjects
Meet federal standards under Federal Sentencing
• DOJ ISSUED GUIDANCE ON HOWTO EVALUATE A COMPLIANCE
Create a sustainable ethical culture that generates
trust, credibility, and employee morale.
16. What do you think?
If we create a positive ethical culture
that nurtures and demands a high
level of integrity, respect, fairness
and kindness, the likelihood of major
incidents damaging your
institution’s reputation and draining
its resources is sharply reduced.
17. What do you think?
We can identify culturally
accepted attitudes and
behaviors that subject the
institution to financial
and reputational risks.
18. What do you think?
No matter how culturally
entrenched, we can sharply reduce
dangerous and damaging conduct
almost immediately and eventually
convert it to a minor concern if we
devise and implement an effective
detection and enforcement system.
19. What do you think?
norms change, the
culture will follow.
20. Which is the bigger problem:
Compliance or Ethics
21. If we solved all
would we also
solve all or most
of our ethical
If we solved all
would we also
solve all or most
23. What is
Ethics – philosophical
principles (e.g., truth,
defining what is
morally worthy and
provide the basis for
standards and rules
and guide the choices
and conduct of good
organizations (e.g., be
honest, fair, caring,
and responsible; treat
people with respect)
24. • core principles about moral
right and wrong; what it is to
be a good and worthy
• laws and rules (compliance
ethics); gifts, conflicts of
Professional Code of Conduct
25. • Ethics requires us to give up the idea that
an act is proper simply because it is
permissible or that an act is ethical so long
as it is legal.
• An ethical person often chooses to do more
than the law requires and less than the law
27. But what does this have to do
with the ethics in your organization?
What does management want from
What do employees want from their
What does the public want and
expect from your organization?
28. “Trustworthy Organizations”
§ Six types of signals people consider when
deciding to trust a person, group or
ú Common values: Does the organizationshare our
values and beliefs?
ú Aligned interests: Do the organization’sinterest
coincide rather than conflict with ours?
ú Benevolence: Does the organizationcare about
29. Trustworthiness (cont’d)
ú Competence: Is the organizationcapableofdelivering
ú Predictabilityandintegrity: Does the organization
abide by commonlyacceptedethicalstandards(such
as honesty and fairness),and is it predictable?
ú Communication: Does the organizationlistenand
engage in open and mutual dialogue?
“DesigningTrustworthyOrganizations”, Robert F. Hurley,
NicoleGillespie,DonaldL. Ferrin and GrahamDietz, MIT
Sloan ManagementReview,Vol. 54, No. 4, Summer
30. What can be done to increase ethics?
Ethics training – online and classes
Establishing an ethical culture
• HR policies – hire for character, train for skills
• TEAM – teach, enforce, advocate, model
• Best possible result decision-making
31. Who are the Major Players in
the Enforcement World?
§ TheOffice of InspectorGeneral (OIG) for the
Department of Health and Human Services
§ Department ofJustice/US Attorney’sOffices
§ Centers for Medicare & Medicaid Services (CMS)
§ Office of theStateAttorneyGeneral
-MedicaidFraud ControlUnit (MFCU)
33. Federal Criminal
Statutes-Health Care Fraud
§ 18 U.S.C. Section 1347.
Whoever knowingly and willfully executes, or attempts to execute,
a scheme or artifice -
(1) to defraud any health care benefit program; or
(2) to obtain, by means of false or fraudulent pretenses,
representations, or promises, any of the money or property owned
by, or under the custody or control of, any health care benefit
program, inconnection with the delivery of or payment for health care
benefits, items, or services, shall be fined under this title or
imprisoned not more than 10 years, or both. If the violation
results in serious bodily injury (as defined in section 1365 of
this title), such person shall be fined under this title or
imprisoned not more than 20 years, or both; and if the violation
results in death, such person shall be fined under this title, or
imprisoned for any term of years or for life, or both.
34. • 18 U.S.C. Section 1035
• In any matter involving a health care benefit program
• Knowingly and willfully
Ø Falsifies, conceals, or covers up by any trick, scheme, or
device a material fact; or
Ø Makes any materially false, fictitious, or fraudulent
statements or representations, or makes or uses any
materially false writing or document knowing the same
to contain any materially false, fictitious, or fraudulent
statement or entry, in connection with the delivery of or
payment for health care benefits, items, or services
Ø 5 years in prison
False Statements Relating to
Health Care Matters
35. Civil Federal
False Claims Act
ú 1. Knowingly presents, or causes to presented, a false or fraudulent
claim for payment or approval;(§3729(a)(1)(A));
ú 2. Knowingly makes, uses or causes to be made or used, a false record or
statement material to false or fraudulent claim (§3729(a)(1))(B);
ú 3. Conspires to commit a violation of paragraphs A, B, D, E, F, orG
ú 4. Knowingly makes, uses, or causes to be made or used, a false
record or statement material to an obligation to pay or transmit
money or property to the Government, or knowingly conceals or
knowingly and improperly avoids or decreases an obligation to
pay or transmit money or property to the Government
36. Intent under the FCA
§ Knowingand knowinglyaredefined to mean that a
person, with respect to information:
(1) “has actual knowledge of the information”;
(2) “acts in deliberate ignoranceof the truth or falsity
of the information”;or
(3) “acts in recklessdisregard of the truth or falsityof
§ NO Proof of specificintentto defraud is required.
§ Burden of proof is “preponderanceof the evidence”.
37. Federal False Claims Act
§ Claim means any request or demand, whether
under contract or otherwise, for money or
property and whether or not theUnited States
has title to the money or property, that—
ú is presented to an officeror agent ofU.S. or
ú is made to a contractor,grantee, or other recipient, if
the moneyor property is to be spent or used on the
Government’s behalf or to advance a Government
program or interest…
38. Federal False Claims Act
§ Obligation means an established duty, whether
or not fixed, arising from an express or implied
contractual, grantor-grantee,or licensor-licensee
relationship, from a fee-based or similar
relationship, from statute or regulation, or from
the retention of any overpayment.
§ Material means having a natural tendency to
influence, or be capable of influencing, the
payment or receipt of money or property.
39. Federal False Claims Act
§ Liability for overpayments—what impact on
provider’s retention of “overpayments”?
40. Liability for Violating the
§ Treble Damages, i.e., three times the dollar
amount that the government is defrauded.
§ Civil penalties of $10,000 to $21,000 (or so)
for each false claim.
§ Attorney fees and costs.
41. False Claims under the
§ Submitting claims for goods and services that
were never delivered or rendered.
§ Performing inappropriate or unnecessary
medical procedures in order to increase
§ Knowingly submit claims that violate
§ What about failing to provide care or
performing it so poorly that it is tantamount
to no care at all?
42. Compliance Risk Areas
§ Billing for services never rendered—Are we
certain that what was billed was delivered?
§ Lack of “medical necessity”
§ HIPAA—Privacy /Security and Confidentiality
ú “Minimum necessary” standard
§ Documentation issues
ú Back-dating signatures
ú Lack of authentication—dates,times, location,
ú “Cloned” documentation—treatmentplansand
43. Compliance Risk Areas(cont’d)
§ Start and stop times-exactly an hour or half
§ Length of sessions do not vary over time
§ Length of stay inappropriate (including
frequency, duration and intensity of service)
44. Compliance Risk Areas (cont’d)
§ All regulatory requirements met before claim
submission—is that happening?
§ Quality of services rendered is compliant
ú Evidences medical necessity
ú Links assessment-serviceplanning-services
ú Outcomes oriented service delivery
45. The MTS Health Compliance Program
§ Modify our organizational structure so that it
will continue to facilitate a “culture of
compliance”, ethics, quality care and clinical
and operational excellence
§ Develop and implement a robust and all-
inclusiveCorporate Compliance Plan
§ Establish and communicate clearly defined
written code of ethics
§ Establish and communicate clearly defined
written protocols, policies and procedures to
govern all clinical functions and business
46. The MTS Health Compliance Program
§ Communicate clearly defined expectations
for staff providing direct care services to
§ Communicate structure and process of
internal utilization management and review
§ Refine our clinical review and auditing
structure and process
47. The MTS Health Compliance Program
§ Hold staff accountable for their professional
standards and code of ethics, MTS Health
Code of Ethics and MTS Health requirements
§ Report any untoward staff behavior to state
licensing boards, FloridaAHCA, federal and
state regulators, payors and professional