Last week, the Department of Justice (DOJ) announced that Baptist Health System, a Florida-based hospital system, agreed to pay $1.5 million to resolve allegations that it violated the False Claims Act (FCA) by offering improper discounts to federal health care program beneficiaries in order to induce them to use the hospital’s services.

Of particular note, the matter was the result of a voluntary self-disclosure by Baptist Health.  According to the press release:

In connection with the settlement, the United States acknowledged that Baptist Health took significant steps entitling it to credit for cooperating with the government’s investigation . . .

Baptist Health voluntarily self-disclosed this conduct to the United States. In addition, Baptist Health cooperated with the government’s investigation and took remedial measures, including discontinuing its discount policy, conducting an internal compliance review and providing the United States with a detailed disclosure statement and other supplemental information to assist the United States in its investigation.

According to the DOJ’s press release, Baptist violated the Anti-Kickback Statute (AKS) and the FCA by offering discounts of up to 50% or more on patient cost sharing obligation balance for certain Medicare beneficiaries.  The DOJ alleges that these discounts were given “in exchange for” the beneficiaries’ purchase or referral of services from Baptist Health.

This settlement offers two very important take-aways.  First, it is improper for a healthcare provider to engage in the routine waiver of copays or coinsurance.  That doesn’t mean that a provider cannot waive a copay or coinsurance, but may do so only after it has taken reasonable steps to ensure that such waiver is based on an individualized assessment of the patient’s financial need.

Second, providers who uncover regulatory or legal issues should work with counsel to determine whether voluntary self-disclosure might be appropriate.  As this matter demonstrates, while the provider may still be required to enter into a monetary settlement, if done properly, such voluntary self-disclosure could result in a substantially lower damages multiplier and penalty calculation.

If you are a healthcare provider needing assistance with a voluntary self-disclosure, a False Claims Act investigation, or some other regulatory or legal issue, please contact us today.