explanation History reminds us that the compliance program needs to reach every corner

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The case US ex rel. Shindler v. Valley Tumor Medical Group, et al., CV 15-2249 is an archetype of a settlement that could have been prevented if  the defendant had maintained an effective compliance and ethics program that reached every corner of its organization – a program, which is two-fold: compliance and ethics. In the case of Valley Tumor Medical Group (VTMG), the issues underlying the settlement included compliance problems like sub-par standard of care and failure to meet conditions for payment, as well as ethical red flags like possible rogue employees, lack of transparency from senior management, and what could be perceived as retaliation.

Below is a short summary of the case:

In August 2017, a US Attorney in California’s Central District unsealed the qui tam case, US ex rel. Shindler v. Valley Tumor Medical Group, et al., CV 15-2249. Allegations stated that between 2006 and 2015, radiation technicians performed over 50,000 diagnostic procedures at VTMG’s Ridgecrest location without the required direct supervision of a physician, which resulted in a $7 million overpayment from government programs. VTMG settled for approximately $3 million; Mr. Shindler received approximately 20% of the settlement amount.

The following are key issues in the case that demonstrate the need for analysis of both compliance and ethical hazards that can create liability:

The requirement for direct physician supervision of radiation therapy and diagnostic services is well-published, well-established, and well-known.

“Direct supervision” is defined in the Code of Federal Regulations as a requirement that “the physician…be present in the office suite and immediately available to furnish assistance and direction throughout the performance of the procedure.” The concept of physician supervision also surfaces in a myriad of materials that VTMG and its oncologists would be expected to know, such as:

The very professional organization that represents Radiation Oncologists in the US asserts a best practice of naming a compliance officer and that the physicians be ethical and compliant. The requirement for direct supervision in the circumstances of the case should have been known to the physicians, midlevel providers, coders and billers, administrators, compliance officers, and anyone else that encounters radiation oncology and the submission of claims. The complicating ethical issue is that a poor training or business decision in 2006 began to appear as a serious compliance issue nearly 10 years later.

The fraud was extensive. The duration of the billing error and subsequent overpayment spanned nearly a decade and involved over 50,000 procedures.

The sheer duration of the overpayment suggests that a misunderstanding or failed internal control grew into a longstanding and sub-par standard of care. The duration suggests that VTMG Ridgecrest condoned the delivery of radiation services without physician direct supervision, and the staff, such as Shindler himself, deployed the services according to that standard.  The existence, length and duration of this problem may presuppose a lack of attention to requirements for payment with ethical underpinnings.

The extensive overpayment also calls into question the relationship between the practitioners at Ridgecrest and the billing staff responsible for coding and processing the claims. Ultimately, the responsibility for filing claims that were not compliant fell upon VTMG.

VTMG is affiliated with 11 hospitals, yet the investigated fraud was only present at the Ridgecrest location.

This issue probably best demonstrates the interdependence of compliance and ethics as corporate controls and safeguards.  In Shindler, on the one hand, the overpayment was contained to the Ridgecrest location, which would suggest the overpayments were not systemic throughout VTMG.  On the other hand, such a severe problem specific to one facility signals that there may have been rogue employees and a disparate culture at Ridgecrest, which the VTMG senior administration had not identified, did not manage, and which the compliance program did not address.   When an organization’s compliance program fails to detect, mitigate and correct non-compliance over such a long duration, compliance hazards foment below the surface and may prompt a whistleblower to turn to the US Government.

Epilogue

The overpayment lasted nearly a decade.  VTMG closed the location in early 2016.  In August 2017, the OIG reported the whistleblower case was settled for $3 million.  At Ridgecrest, it appears that VTMG lost more than $3 million from its longstanding pattern of noncompliance. The danger of a long pattern of noncompliance lies in the organization’s culture. VTMG’s organizational ethics and core values apparently did not prevent the problems at Ridgecrest.  Physician groups with multiple sites of care delivery would do well to audit their compliance program’s reach and effectiveness, re-train all teams regarding ethics, and monitor their billing for compliance issues.