Kernan Hospital

Information about Federal and State False Claims Legislation¹

The James Lawrence Kernan Hospital ("Kernan"), is required by federal law to provide information to all of its employees, contractors and, agents regarding the federal false claims act, administrative remedies for false claims and statements, the state false claims act and whistleblower protections under these laws. The federal and state false claims acts play an important role in detecting fraud, waste and abuse in federal health care programs.

Federal False Claims Act

What the law does:

It allows a civil action to be brought against a health care provider that:

Knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval to any federal employee;
Knowingly makes, uses or causes to be made or used a false record or statement to get a false or fraudulent claim paid; or
Conspires to defraud the government by getting a false or fraudulent claim allowed or paid

Examples of a false claim:

Billing for procedures not performed
Violating another law, for example submitting an appropriate claim, but the service was resulted from an inappropriate arrangement between a physician and a hospital (e.g., physician received a kickback for referring patients to Kernan)
Falsifying information in the medical record
Billing than once for the same service

Remedies:

A federal false claims action may be brought by the U.S Department of Justice
An individual may bring a "qui tam" action. This means the individual files an action on behalf of the government.
Violation of the federal False Claims Act is punishable by a civil penalty of between $5,500 and $11,000 per false claim, plus three times the amount of damages incurred by the government.
A statute of limitations indicates how much time may pass before an action may no longer be brought for violation of the law. Under the False Claims Act, the statute of limitations is six years after the date of violation or three years after the date when material facts are known or should have been known by the government, but no later than ten years after the date on which the violation was committed.

Federal Whistleblower Protections

Federal law prohibits an employer from retaliating against an employee in the terms or conditions of employment because the employee initiated or otherwise assisted in a false claims action. The employee is entitled to all relief necessary to make the employee whole.

Maryland False Claims Provisions

Maryland, like many other states, has enacted a statute similar to the federal False Claims Act that provides for criminal and civil remedies for the submission of false and fraudulent claims to the Medicaid program. Under Maryland's Medicaid fraud statute, it is a crime for a person to knowingly and willfully:

Defraud or attempt to defraud the Medicaid program in connection with the delivery of or payment for a health care service or
Obtain or attempt to obtain by means of a false representation anything of value in connection with the delivery of or payment for a health care service through the Medicaid program

Examples of false representations include:

Knowingly and willfully concealing, falsifying or omitting a material fact
Knowingly and willfully making a material false or fraudulent statement
Knowingly and willfully using a document that contains a statement of material fact that the user knows to be false or fraudulent

Maryland Whistleblower Protections

Maryland law prohibits retaliatory action by an employer against an employee who in good faith reports:

Any potential violation of state or federal law by an employer as a health care provider; or

Any situation where an employer provides care in a manner that violates state or federal standards or laws or recognized clinical or ethical standards.

Kernan's Policies & Procedures for Detecting and Preventing Fraud & Abuse

Kernan has processes in place that support the detection and prevention of fraud and abuse:

Kernan uses outside vendors to validate and confirm the accuracy of the APR-DRG assigned by the Health Information Management Department and the content of documentation to support those charges billed can be supported with documentation in the medical record. One vendor validates the accuracy of the APR-DRG assignment, and another vendor validates the supporting documentation, which can be found in the medical record
the University of Maryland Medical System's Internal Audit Group evaluates and validates, at the transaction level, the accuracy of charging, adjustments, write offs, cash posting, billing and supporting documentation for services rendered in the medical record
annually, an external auditor tests the accuracy of reporting by Kernan's patient financial services operations to make sure the appropriate checks and balances are adhered to in each phase of the department's operations and to make recommendations to protect Kernan's accounts receivable asset
the Patient Financial Services Department employs individuals with clinical backgrounds to perform charge retroactive audits
Kernan uses billing compliance software that checks to make sure that the appropriate procedural coding and services being billed are aligned with the patient diagnosis that has been assigned

What you should do if you think Kernan may have made a false claim?

If you, as an employee or a contractor/agent, have a concern about any of Kernan's billing practices, Kernan encourages you to:

Report the information to a supervisor for further investigation

If you are not comfortable reporting the information in this manner or do not see action in response to an earlier report, please contact Kernan's Compliance Office at 1-877-300-DUTY (3889) or logon to www.reportit.net to submit an electronic report to Kernan's Compliance Office

You are not required to report a possible false claims act violation to Kernan first. You may report directly to the federal Department of Justice.

If you have any questions about this information, please call Kernan's Compliance Department at 410 328-3848.

You can find additional information about the False Claims Act at:

This information is being provided in compliance with the federal Deficit Reduction Act of 2005.

This page was last updated on: April 17, 2008.