Summary of the PATH Complaint
On October 29, 1997, the Association of American Medical Colleges (AAMC) and the American Medical Association (AMA) filed a legal complaint in the U.S. District Court for the Central District of California seeking relief from the unjust and coercive conduct by the Department of Health and Human Services (HHS) Office of the Inspector General (OIG) and the Department of Justice (DOJ) in investigations of teaching physician Medicare billing practices. The AAMC and the AMA are joined in the complaint against the government by other associations and academic organizations that represent medical schools, faculty physicians and teaching hospitals across the country. The reason the United States is the defendant rather than one or more of the agencies involved in the initiative is because the settlements that are secured by the OIG/DOJ teams are under the Federal False Claims Act, which can only be enforced by the United States. A suit against the United States for the misconduct of any of its agencies operates as a suit against the agencies involved.
In 1996, the HHS OIG announced a nationwide audit of teaching physician's known as the Physicians at Teaching Hospitals (PATH) initiative. The stated goal of the initiative was to review teaching physician billings submitted to Medicare to determine: (1) if they complied with Intermediary Letter 372, a document issued by the Health Care Financing Administration (HCFA)--the federal agency that administers the Medicare program--to elucidate the requirements for a teaching physician who wishes to bill Medicare when a resident also is involved in the care of a patient; and (2) if the correct billing codes were used. Since the inception of the PATH initiative, it has become clear that the federal government is using rules for the PATH audits that were not in effect at the time the teaching physicians provided care to the patients. The federal government also is presuming that if a PATH audit determines that money is owed to the government, the Federal False Claims Act (FCA) will apply, bringing with it an assessment of double or treble damages. The law requires that for the FCA to be used, the government must show intent to submit a false bill.
Challenge to the Audit Standards
The Plaintiffs have always recognized the right of the government to conduct audits, and the complaint does not challenge that right. The complaint also does not endorse clearly fraudulent behavior by physicians. Such behavior can never be tolerated. Rather, the complaint challenges the government's right to conduct an audit and impose damages or penalties under standards that the government itself has acknowledged are vague and inconsistent; standards that for nearly three decades have been poorly communicated to teaching physicians. The standards that the government uses as the basis of the PATH audits did not, in fact, go into effect until August 1995 (in the case of physician billing codes) and July 1, 1996 (in the case of rules that require a teaching physician to personally accompany the resident on every occasion of service and write a personal note documenting his/her presence in the patient's medical record when the resident has already documented the service). PATH audits examine services that were provided from 1990 through 1995.
Challenge to the Use of Different Rules in Different Areas by Medicare Carriers
The complaint also challenges the government's use of different rules in different parts of the country by Medicare contract carriers. In conducting the PATH audits, the government has decided that where HCFA's rules were vague, it can look to carriers to determine what requirements they set forth in their local areas. The carriers' purpose is to process Medicare bills, ensuring that they meet appropriate federal requirements. Contractors do not have the legal authority to set standards that differ from HCFA's. If each carrier can independently establish its own rules, then Medicare becomes a program where physicians in different parts of the country may be treated differently for exactly the same behavior and services.
Challenge to the Use of Sampling to Impose Damages and Penalties
A further challenge in the complaint concerns the imposition of damages and penalties based on the use of statistical sampling. Through this technique the government may review a very small number of claims that represent services provided by only a fraction of the faculty physicians. The results of that review are then applied to hundreds of thousands of claims submitted by all faculty physicians over six years to determine the money owed to the government and, by using the FCA, the damages and penalties that will be assessed on that amount. The complaint challenges this conduct on two bases: (1) it is improper to project damages or penalties that require some level of intentional wrongdoing when the rules that were supposedly violated were vague, inconsistent and unauthorized; and(2) even if it could be shown that the conduct was intentional, it is improper to project damages and penalties to faculty members whose services were never audited.
Challenge to Using Penalties and Damages to Coerce a Settlement
Finally, the complaint challenges the government's coercive use of the potentially ruinous penalties under the FCA--double or treble damages plus $5-$10,000 per claim--and the extraordinary costs for an institution to challenge the government in court, to obtain settlements in the millions of dollars. Medical schools, faculty physicians and teaching hospitals have a fiduciary duty to preserve their assets for research, medical education and patient care. Despite the fact that the government is using incorrect audit standards, and is improperly applying statistical sampling techniques, it may be a more prudent financial decision for an institution to reach a multi-million dollar settlement with the government than to challenge the government in court. The FCA was enacted to punish wrongdoers; it was not put in place to be used as a mechanism to force settlements.
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