Baucus Health Care Reform Proposal Calls For Significant Tightening In Tax-Exemption Rules

September 22, 2009

Senate Finance Set To Begin Markup Sessions Today – Repeal of Rebuttable Presumption Rule In Reasonable Compensation Rules, Other Tightening of Requirements Threatened

With Senate Finance Committee meetings to mark up Chairman Max Baucus’ health care reform proposal as outlined in his 220-page “Chairman’s Mark of America’s Healthy Future Act of 2009” (the “Baucus Proposal”) scheduled to begin today (September 22, 2009), tax-exempt health care and other non-profit organizations should evaluate carefully proposed amendments that could impact their tax-exempt status or related obligations.  The proposed amendments have serious implications for non-profits within and beyond the health care industry.

Markup Scheduled To Begin Tuesday

The Senate Committee on Finance began meeting today (September 22, 2009) to negotiate how to convert into proposed legislation the Baucus Proposal introduced by Committee Chairman Max Baucus on September 16, 2009, the text of which may be reviewed here.

Since no text of the proposed legislation itself has been released yet, it is impossible to fully evaluate the specific nature and implications of the Baucus Proposal.  While this week’s planned Senate Finance Committee mark up will further clarify these matters, a review of the description of changes proposed by Chairman Baucus in the Baucus Proposals nevertheless provides significant insight of what health care organizations can expect to be discussed and, in all likelihood incorporated into the draft legislation ultimately proposed in some form.  Accordingly, tax-exempt health care organizations should carefully evaluate and act promptly to share their input with members of the Senate Finance Committee and other members of Congress about a series of proposed amendments that would impact their tax-treatment and other responsibilities.

All Tax-Exempts Should Monitor Proposals To Shift Burden Of Proof On Compensation Reasonability & Expanded IRS Powers

Among a multitude of proposed tax amendments, tax-exempt organizations inside and outside the health care industry will want to keep a a close eye on discussions and proposals to amend the Baucus Proposal to further modify the tax-exemption requirements for tax-exempt hospitals and other tax-exempt organizations.  Late last week, Ranking Member Senator Chuck Grassley submitted a proposal to amend the Baucus Proposal to further tighten tax-exemption requirements in two material respects likely to generally concern tax-exempt organizations:

  • For the stated purpose of avoiding wasteful legal challenges to the management and governance questions on the revised Form 990, to specifically grant statutory authority to the Internal Revenue Service to ask management and governance questions on the Form 990; and
  • To make it easier for the Internal Revenue Service to challenge as unreasonable compensation payments made by tax-exempt entities by shifting the burden to the taxpayer of proving the reasonability of compensation and removing the burden currently borne by the Internal Revenue Service of going forward with the evidence on comparability.  This would be accomplished by overruling the rebuttable presumption of reasonableness currently set forth in Treasury Regulation § 53.4958-6 of the intermediate sanctions rules and replacing it with a requirement that public charities due diligence demonstrate that their compensation payments meet the 3 current elements of the presumption:
    • Review by an authorized body made of members without a conflict of interest
    • Use of appropriate data as to comparability and
    • Adequate and contemporaneous documentation. This amendment is expected to raise revenue, according to the summary.

Given the potential implications of these proposed amendments, tax-exempt health care and other organizations should keep a close eye on proposed tax provisions of the Baucus Proposal and other related proposals.

Proposal To Tighten Other Tax-Exemption & Reporting Requirements For Tax-Exempt Hospitals

While the Senate Finance Committee as of yet has not released text of the proposed legislation itself, a review of the description of changes proposed by Chairman Baucus in the Baucus Proposals and other subsequently proposed amendments to the Baucus Proposal reveal other plans to materially change the tax-exemption qualification, governance and reporting requirements for tax-exempt hospitals beyond the proposal to create CO-OPs.  Among other things, the Baucus Proposal calls for the Internal Revenue Code § 501(c)(3) and its related provisions to be amended to require tax-exempt hospitals:

  • To conduct or participate in and share with the public a community-needs analysis with input from a broad cross section of the community at least once every 3 years and thereafter to report on its implementation, including explaining where applicable why identified needs were unaddressed.  These additional requirements would supplement rather than replace existing community benefit standards already generally applicable to charitable entities
  • To provide non-discriminatory emergency care
  • To have, implement and widely disseminate a written financial assistance policy  defining among other things:
    • The rules for determining who qualifies for financial assistance
    • How the hospital determines amounts to be billed to patients in manner that provides for patient discounts to be based on Medicare rates, “best” commercial rates or other approved statutory measures rather than “chargemaster rates”
    • Require hospital to notify patients of the financial assistance policy on admission, on bills and in telephone calls of its financial assistance policy before initiating various collection actions or reporting the account to a credit rating agency
  • To make its audited financial statements (and where applicable, the consolidated financial report of any entity of which it is a part) available widely
  • The Internal Revenue Service (IRS) to conduct a SEC-type review of each 501(c)(3) hospital’s community benefit activities at least once every three years based on data reported on Schedule H of the Form 990
  • The IRS and the Department of Health and Human Services (HHS)  to report annually to Congress on community benefit activities of non-governmental tax-exempt hospitals, charity care, bad debt, and unreimbursed costs of government programs (means-tested and non-means-tested) incurred by tax-exempt, taxable, and governmental hospitals.

CO-Ops As Health Coverage Alternative

Much more widely discussed is the Chairman’s CO-OP proposal.  The Baucus Proposal calls for the creation of a new vehicle to provide an alternative source of health care coverage called “CO-Ops.”  As contemplated by the Baucus Proposal, CO-Ops would be associations controlled by a beneficiary board unrelated to existing organizations providing health insurance as of July 16, 2009.  Subject to their meeting non-inurement and other common existing requirements for charitable status as well as other conditions, CO-Ops would be able to apply for tax-exempt status as well as federal funding.

New Taxes and Fees On Insurers & Others

The Baucus Proposal proposes to finance its health care reforms through a variety of mechanisms including, excise taxes and penalties on employers and individuals that fail to purchase the government specified health care package, taxes on premiums paid for health insurance coverage in excess of certain specified annual limits, the imposition of certain premium taxes and “sector fees” on healthcare insurers (with some exceptions possible under certain circumstances for certain 501(c)(3) and (c)(4) HMOs not providing commercial-type insurance within the meaning of Section 501(m)).

Other Baucus Proposal Highlights

In its current summary form, the 220-page Baucus Proposal includes a host of other sweeping reforms, which are certain to be further expanded and refined during this week’s scheduled Senate Finance Committee markup session.  Many of these other proposed reforms were highlighted in an overview of the Baucus Proposal published hereYou can join the discussion of these and other proposed health care forms and exchange updates and other resources about health care reform and related concerns by registering to participate in the Coalition For Responsible Health Care Policy Group on Linkedin.

Other Recent Developments

If you found this information of interest, you also may be interested in reviewing some of the following recent Solution Law Press Health Care Updates available online by clicking on the article title below:

 

For More Information

We hope that this information is useful to you.  If you need assistance with health care compliance, risk management, reimbursement, staffing, credentialing, transactional, operational or public policy concerns, please contact the author of this update, Curran Tomko Tarski LLP Health Practice Group Chair, Cynthia Marcotte Stamer, at (214) 270‑2402, cstamer@cttlegal.com or your other favorite Curran Tomko Tarski LLP Partner.  Ms. Stamer has extensive experience advising clients and writes and speaks extensively on these and other health industry and related matters. 

You can review other recent health care and internal controls resources and additional information about the health industry and other experience of Ms. Stamer here.  If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information – including your preferred e-mail – by creating or updating your profile at here, by e-mailing this information to support@cttlegal.com or by participating in the SLP Health Care Risk Management & Operations Group on LinkedIn.

©2009 Curran Tomko Tarski LLP.  All rights reserved.


Baucus’ America’s Healthy Future Act of 2009 Calls For Significant Tightening of Tax Exemption Rules

September 21, 2009

Senate Finance Set To Begin Markup Session Proposal September 22 – Repeal of Rebuttable Presumption Rule In Reasonable Compensation Rules, Other Tightening of Requirements Threatened

With Senate Finance Committee meetings to mark up Chairman Max Baucus’ health care reform proposal as outlined in his 220-page “Chairman’s Mark of America’s Healthy Future Act of 2009” (the “Baucus Proposal”) scheduled to begin tomorrow (September 22, 2009), tax-exempt health care and other non-profit organizations should evaluate carefully proposed amendments that could impact their tax-exempt status or related obligations in addition to the widely-discussed proposal to create “Consumer Operated and Oriented Plans (CO-OPs).

Markup Scheduled To Begin Tuesday

The Senate Committee on Finance plans on Tuesday, September 22, 2009 to hash out how to convert into proposed legislation the health care reform proposal outlined in the “Chairman’s Mark America’s Healthy Future Act of 2009” introduced by Committee Chairman Max Baucus on September 16, 2009, the text of which may be reviewed here.

Since no text of the proposed legislation itself has been released yet, it is impossible to fully evaluate the specific nature and implications of the Baucus Proposal.  While this week’s planned Senate Finance Committee mark up will further clarify these matters, a review of the description of changes proposed by Chairman Baucus in the Baucus Proposals nevertheless provides significant insight of what health care organizations can expect to be discussed and, in all likelihood incorporated into the draft legislation ultimately proposed.  Accordingly, tax-exempt health care organizations should carefully evaluate and act promptly to share their input with members of the Senate Finance Committee and other members of Congress about a series of proposed amendments that would impact their tax-treatment and other responsibilities.

Proposal To Tighten Tax-Exemption & Reporting

Requirements For Tax-Exempt Hospitals

While the Senate Finance Committee as of yet has not released text of the proposed legislation itself, a review of the description of changes proposed by Chairman Baucus in the Baucus Proposals and other subsequently proposed amendments to the Baucus Proposal reveal plans to materially change the tax-exemption qualification, governance and reporting requirements for tax-exempt hospitals beyond the proposal to create CO-OPs.  Among other things, the Baucus Proposal calls for the Internal Revenue Code § 50!(c)(3) and its related provisions to be amended to require:

  • The hospital to conduct or participate in and share with the public a community-needs analysis with input from a broad cross section of the community at least once every 3 years and thereafter to report on its implementation, including explaining where applicable why identified needs were unaddressed.  These additional requirements would supplement rather than replace existing community benefit standards already generally applicable to charitable entities
  • The hospital to provide non-discriminatory emergency care
  • The hospital to have, implement and widely disseminate a written financial assistance policy  defining among other things:
    • The rules for determining who qualifies for financial assistance
    • How the hospital determines amounts to be billed to patients in manner that provides for patient discounts to be based on Medicare rates, “best” commercial rates or other approved statutory measures rather than “chargemaster rates”
    • Require hospital to notify patients of the financial assistance policy on admission, on bills and in telephone calls of its financial assistance policy before initiating various collection actions or reporting the account to a credit rating agency
  • The hospital make its audited financial statements (and where applicable, the consolidated financial report of any entity of which it is a part) available widely
  • The Internal Revenue Service (IRS) to conduct a SEC-type review of each 501(c)(3) hospital’s community benefit activities at least once every three years based on data reported on Schedule H of the Form 990
  • The IRS and the Department of Health and Human Services (HHS)  to report annually to Congress on community benefit activities of non-governmental tax-exempt hospitals, charity care, bad debt, and unreimbursed costs of government programs (means-tested and non-means-tested) incurred by tax-exempt, taxable, and governmental hospitals.

In addition to the proposed amendments included in the Baucus Proposal as originally introduced, health care organizations also will need a close eye on discussions and proposals to amend the Baucus Proposal to further modify the tax-exemption requirements for tax-exempt hospitals and other health care organizations.  For instance, late last week, Ranking Member Senator Chuck Grassley submitted a proposal to amend the Baucus Proposal to further tighten requirements for tax-exempt health care organizations:

  • For the stated purpose of avoiding wasteful legal challenges to the management and governance questions on the revised Form 990, to specifically grant statutory authority to the Internal Revenue Service to ask management and governance questions on the Form 990; and
  • To make it easier for the Internal Revenue Service to challenge as unreasonable compensation payments made by tax-exempt entities by shifting the burden to the taxpayer of proving the reasonability of compensation and removing the burden currently borne by the Internal Revenue Service of going forward with the evidence on comparability.  This would be accomplished by overruling the rebuttable presumption of reasonableness currently set forth in Treasury Regulation § 53.4958-6 of the intermediate sanctions rules and replacing it with a requirement that public charities due diligence demonstrate that their compensation payments meet the 3 current elements of the presumption:
    • Review by an authorized body made of members without a conflict of interest
    • Use of appropriate data as to comparability and
    • Adequate and contemporaneous documentation. This amendment is expected to raise revenue, according to the summary.

With these provisions already targeting their tax-exempt status, tax-exempt hospitals and other non-profits and others likely to surface as the legislative discussion proceeds, tax-exempt health care and other organizations should keep a close eye on proposed tax provisions of the Baucus Proposal and other related proposals.

CO-Ops As Health Coverage Alternative

Much more widely discussed is the Chairman’s CO-OP proposal.  The Baucus Proposal calls for the creation of a new vehicle to provide an alternative source of health care coverage called  “CO-Ops.”  As contemplated by the Baucus Proposal, CO-Ops would be associations controlled by a beneficiary board unrelated to existing organizations providing health insurance as of July 16, 2009.  Subject to their meeting non-inurement and other common existing requirements for charitable status as well as other conditions, CO-Ops would be able to apply for tax-exempt status as well as federal funding.

New Taxes and Fees On Insurers & Others

The Baucus Proposal proposes to finance its health care reforms through a variety of mechanisms including, excise taxes and penalties on employers and individuals that fail to purchase the government specified health care package, taxes on premiums paid for health insurance coverage in excess of certain specified annual limits, the imposition of certain premium taxes and “sector fees” on healthcare insurers (with some exceptions possible under certain circumstances for certain 501(c)(3) and (c)(4) HMOs not providing commercial-type insurance within the meaning of Section 501(m)).

Other Baucus Proposal Highlights

In its current summary form, the 220-page Baucus Proposal includes a host of other sweeping reforms, which are certain to be further expanded and refined during this week’s scheduled Senate Finance Committee markup session.  Many of these other proposed reforms were highlighted in an overview of the Baucus Proposal published hereYou can join the discussion of these and other proposed health care forms and exchange updates and other resources about health care reform and related concerns by registering to participate in the Coalition For Responsible Health Care Policy Group on Linkedin.

 

Other Recent Developments

If you found this information of interest, you also may be interested in reviewing some of the following recent Solution Law Press Health Care Updates available online by clicking on the article title below:

For More Information

We hope that this information is useful to you.  If you need assistance with these or other health care public policy, regulatory, compliance, risk management, workforce and other staffing, transactional or operational concerns, please contact the author of this update, Curran Tomko Tarski LLP Health Practice Group Chair, Cynthia Marcotte Stamer, at (214) 270‑2402, cstamer@cttlegal.com, Ms. Stamer has extensive experience advising clients and writes and speaks extensively on these and other health industry and other reimbursement, operations, internal controls and risk management matters. 

Ms. Stamer has extensive experience in these and other health industry related representation.  You can review other recent health care and related resources and additional information about the health industry and other experience of Ms. Stamer here

If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information – including your preferred e-mail – by creating or updating your profile at here, or e-mailing this information to cstamer@cttlegal.com, and/or by participating in the SLP Health Care Risk Management & Operations Group on LinkedIn.

If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information – including your preferred e-mail – by creating or updating your profile at here or e-mailing this information here.  To unsubscribe, e-mail here.

©2009 Cynthia Marcotte Stamer.  All rights reserved.


House Democratic Leaders Work To Resolve Differences In Committee Versions of Health Care Reform Legislation and Build Public Support During August Recess

August 5, 2009

Democratic Leaders in the House of Representatives plan to hammer out differences three versions of the America’s Affordable Health Choices Act (H.R. 3200) as separately passed by three key House Committees in July before House members return from their August recess in hopes of bringing the agreed to version of H.R. 3200 to the full house in September.  Regardless of which version ultimately emerges, the enactment of H.R. 3200 would result in sweeping new regulation and federal control over health care providers, health care payers, employers, and individuals.

After negotiating a last minute pre-August recess deal with certain Blue Dog Democrat Committee members, the House Energy and Commerce Committee on July 31, 2009 passed its version of H.R. 3200, the America’s Affordable Health Choices Act (H.R. 3200). The version of H.R. 3200 passed by the House Energy and Commerce Committee incorporates a series of amendments to the language of H.R. 3200 as originally introduced.  For instance, this version of H.R. 3200 provides incentives for states to adopt certain tort reforms, provides for a public plan option that would reimburse physicians based on negotiated rates rather Medicare rates, and would allow states to offer both state-based heath insurance exchanges and health insurance co-ops. To review H.R. 3200 as amended by the House Energy and Commerce Committee, see here.

The approval by the Energy and Commerce Committee of its version of H.R. 3200 follows the July 17, 2009 approval by the House Ways and Means Committee and Education and Labor Committee of their own versions of H.R. 3200.  For details on the version of H.R. 3200 approved by the House Ways and Means Committee, see here.  For details on the version of H.R. 3200 approved by the House Education and Labor Committee, see here

Leading House Democrats have announced their intention to work to resolve differences between these three versions of H.R. 3200 as passed by these Committees during August recess in hopes of  bringing the agreed to version of H.R. 3200 to a vote  of the full House of Representatives in September.

Meanwhile, House members from both parties also generally are using the August recess as an opportunity to reconnect with local constituents on health care reform and other core issues.

For More Information

The author of this article, Curran Tomko and Tarski LLP Health Care Practice Chair Cynthia Marcotte Stamer has extensive experience advising and assisting health industry clients and others about a diverse range of health care policy, regulatory, compliance, risk management and operational concerns.  You can get more information about her health industry experience here.  

We hope that this information is useful to you.  If you need assistance monitoring, evaluating or responding to these or other proposed health care or other regulatory reforms or with other health care compliance, risk management, transaction or operation concerns, please contact the author of this update, Curran Tomko Tarski LLP Health Practice Group Chair, Cynthia Marcotte Stamer, at (214) 270-2402, cstamer@cttlegal.com or your other favorite Curran Tomko Tarski LLP Partner.

We also encourage you and others to join the discussion about these and other health care reform proposals and concerns by joining the Coalition for Responsible Health Care Reform Group on Linkedin, registering to receive these updates here.

Other Helpful Resources & Other Information

We hope that this information is useful to you.   If you found these updates of interest, you also be interested in one or more of the following other recent articles published on our electronic Solutions Law Press Health Care Update publication available here. If you or someone else you know would like to receive future updates about developments on these and other concerns, please register to receive this Solutions Law Press Health Care Update here and be sure that we have your current contact information – including your preferred e-mail- by creating or updating your profile at here. You can access other recent updates and other informative publications and resources provided by Curran Tomko Tarski LLP attorneys and get information about its attorneys’ experience, briefings, speeches and other credentials here.

For important information concerning this communication click here.  If you do not wish to receive these updates in the future, send an e-mail with the word “Remove” in the Subject to support@SolutionsLawyer.net.

©2009 Cynthia Marcotte Stamer.  All rights reserved. 


Reassignment of HIPAA Security Rule Enforcement Signals Growing Seriousness About Enforcing HIPAA

August 4, 2009

The Department of Health & Human Services (HHS) today (August 3, 2009) transferred authority for the administration and enforcement of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) Security Rule to the Office for Civil Rights (OCR).  Prior to this announcement, responsibility for interpretation and enforcement of the Security Rule rested with the Centers for Medicare & Medicaid Services (CMS).  The change reflects the growing seriousness of HHS and others about enforcing federal privacy and data security mandates for health information.  HHS anticipates the transfer of authority will eliminate duplication and increase efficiencies in how the department ensures that Americans’ health information privacy is protected.

HHS has the authority for administration and enforcement of the federal standards for health information privacy called for in HIPAA. The Privacy Rule provides federal protections for personal health information held by covered entities and gives patients an array of rights with respect to that information. OCR has been responsible for enforcement of the Privacy Rule since 2003. The Security Rule specifies a series of administrative, technical, and physical security procedures for covered entities to use to assure the confidentiality of electronic protected health information. The Health Information Technology for Economic and Clinical Health (HITECH) Act, part of the American Recovery and Reinvestment Act of 2009 (ARRA), mandated improved enforcement of the Privacy Rule and the Security Rule.

Through a separate delegation, CMS continues to have authority for administration and enforcement of the HIPAA Administrative Simplification regulations, other than privacy and security of health information.

The transfer of Security Rule enforcement authority comes as guidance about new data breach rules for electronic protected health information is impending.  This impending guidance relates to  the implementation of new breach notification rules for covered entities and their business associates concerning their obligation to use of technologies and methodologies that render protected health information unusable, unreadable, or indecipherable to unauthorized individuals, as required by amendments to HIPAA enacted under the Health Information Technology for Economic and Clinical Health (HITECH) Act passed as part of the American Recovery and Reinvestment Act of 2009 (ARRA) last February.  OCR officials have stated that they are working to publish the next set of regulations regarding these new breach notifications before the end of August, 2009. 

In addition to adding the breach notification requirements, the HITECH Act also tightened the HIPAA mandates in several other respects.  Among other things, it amended HIPAA to:

  • Broaden the applicability of the HIPAA’s Privacy Rules and penalties to include business associates;
  • Clarify that HIPAA’s criminal sanctions apply to employees or other individuals that wrongfully use or access PHI held by a covered entity;
  • Increase criminal and civil penalties for HIPAA Privacy Rules violators;
  • Allow State Attorneys General to bring civil damages actions on behalf of certain state citizens who are victims of HIPAA Privacy and Security Rule violations;
  • Modify certain HIPAA use and disclosure and accounting requirements and risks;
  • Prohibits sales of PHI without prior consent;
  • Tighten certain other HIPAA restrictions on uses or disclosures;
  • Tighten certain HIPAA accounting for disclosure requirements;
  • Clarify the definition of health care operations to excludes certain promotional communications; and
  • Expand the Business Associates Agreement Requirements.

These and other developments make it imperative HIPAA covered entities and their business associates take prompt action to immediately review and update their data security and privacy practices to guard against growing liability exposures under HIPAA and other federal and state laws. Covered entities must update policies and practices to avoid these growing liabilities. Business associates that have not already done so also must appoint privacy officers and adopt and implement privacy and data security policies and procedures fully compliant with HIPAA and other applicable federal and state rules, including amendments enacted as part of the American Recovery and Reinvestment Act of 2009 signed into law on February 17, 2009.

 

For more information about today’s announcement, see here.  See here for the initial guidance and request for comments issued by HHS regarding these new security standards.

For More Information

We hope that this information is useful to you.  If you need assistance with health care privacy and data security, technology, or other health care compliance, risk management, transaction or operation concerns, please contact the author of this update, Curran Tomko Tarski LLP Health Practice Group Chair, Cynthia Marcotte Stamer, at (214) 270-2402, cstamer@cttlegal.com or your other favorite Curran Tomko Tarski LLP Partner.  Ms. Stamer has extensive experience advising clients and writes and speaks extensively on these and other health care privacy and data security and related matters. 

You can review other recent health care and internal controls resources and additional information about the health industry and other experience of Ms. Stamer here.  If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information – including your preferred e-mail – by creating or updating your profile at here or e-mailing this information to cstamer@cttlegal.com.

For important information concerning this communication click here.  If you do not wish to receive these updates in the future, send an e-mail with the word “Remove” in the Subject to support@SolutionsLawyer.net.

©2009 Cynthia Marcotte Stamer.  All rights reserved. 


Newly Enacted FERA Amendments To False Claims Act Signal New Risks For Health Industry Organizations & Others

May 26, 2009

Health care providers and other parties covered by the False Claims Act, 31 U.S.C. § 3729 (FCA), now face expanded whistleblower and other liability under amendments to the FCA enacted under the “Fraud Enforcement and Recovery Act of 2009”(FERA).  The amendments increase the likelihood both that whistleblowers will turn in health care providers and other individuals and organizations that file false claims in violation of the FCA and the liability that violators may incur for that misconduct.

Signed into law by President Obama last Wednesday (May 20, 2009), FERA immediately upon enactment:

  • Amends the whistleblower protections afforded to employees, contractors and agents who suffer retaliation for taking lawful efforts to stop violations of the FCA and to make it easier for those individuals to pursue retaliation claims;
  • Expands liability under for making false or fraudulent claims to the federal government under the FCA;
  • Applies liability under the FCA for presenting a false or fraudulent claim for payment or approval (currently limited to such a claim presented to an officer or employee of the federal government); and
  • Requires persons who violate such Act to reimburse the federal government for the costs of a civil action to recover penalties or damages 

Concurrent with President Obama’s signature of FERA into law, the U.S. Departments of Justice (DOJ) and Health & Human Services (HHS) jointly announced the expansion of federal health care fraud enforcement efforts.  On May 20, 2009, HHS and DOJ announced their activation of a new interagency team to combat health care fraud highlights the increasing need for health care providers and health plans to review and tighten their practices for dealing with Medicare and other federal programs to survive scrutiny under federal health care fraud initiatives.  Coupled with FERA and the already significant increase in federal health care fraud detection and enforcement activities in recent years and a proposed 50 percent increase in funding for these activities included in President Obama’s Fiscal Year 2010 budget, health care providers and payers must be prepared to defend their dealing with Medicare, Medicaid and other federal health care programs.

The expanded protections afforded under FERA to whistleblowers and others suffering retaliation for opposing or reporting illegal actions can be expected to serve as a key tool in these efforts. These new retaliation safeguards are designed further increase the likelihood that employees and other insiders will help government officials ferret out false claims and other fraud. Specifically with regard to retaliatory action claims Section 4(d) of FERA amends 31 U.S.C.§ 3730(h) to provide for the recovery of “all relief necessary to make that employee, contractor, or agent whole” where that individual is discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of employment because of lawful acts he does or takes on behalf of an individual in furtherance of other efforts to stop a violation of the FCA. 

FERA expressly provides that relief to victims of retaliation will include “reinstatement with the same seniority status that employee, contractor, or agent would have had but for the discrimination, 2 times the amount of back pay, interest on the back pay, and compensation for any special damages sustained as a result of the discrimination, including litigation costs and reasonable attorneys’ fees.” 

The FERA amendments to the FCA, the new TEAMS enforcement effort announced simultaneously with its signature into law mean that health care industry organizations and others covered by the FCA must implement appropriate fraud prevention, detection, redress and other procedures to help defend against possible FCA or other health care fraud claims and investigations.

The attorneys at Curran Tomko Tarski, LLC have extensive experience representing and advising health industry and other clients against FCA and other federal health care and fraud laws. 

For More Information

We hope that this information is useful to you. If you need assistance with auditing or defending health care fraud concerns or other health care compliance, risk management, transactions or operations concerns, please contact Curran Tomko Tarski LLP Partners Cynthia Marcotte Stamer at (214) 270-2402, CStamer@CTTLegal.com; Michael T. Tarski at (214) 270-1420 or MTarski@CTTLegal.com; Edwin J. Tomko at (214) 270-1405 or ETomko@CTTLegal.com.

You can review other recent health care and internal controls resources and additional information about the health industry and white collar experience of the Curran Tomko Tarski LLP attorneys at http://www.CTTLegal.com. If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information – including your preferred e-mail – by creating or updating your profile at CTTLegal.com or e-mailing this information to CStamer@CTTLegal.com.


HHS Announces Availability of $50 Million In Grants To Strengthen Nonprofit and Faith Based Organizations Aiding Families & Communities Struggling With Economic Downturn

May 11, 2009

 The Department of Health and Human Services (HHS) today (May 11, 2009) announced the availability of grants worth $50 million to strengthen nonprofit and faith-based organizations that aid families and communities who are struggling in the economic downturn.

The funds provided under the Strengthening Communities Fund (SCF) were authorized through the American Recovery and Reinvestment Act (ARRA).  The SCF funding will be distributed through two programs.

  •  The Nonprofit Capacity Building program will make one-time, two-year awards of up to $1 million to lead organizations that will use the funds to support other faith-based or secular nonprofit organizations.
  •  The State, Local and Tribal Government Capacity Building program will make one-time, two-year awards of up to $250,000 to state, city, county and Indian/Native American tribal governments. Governments will use these grants to strengthen nonprofit organizations and increase the nonprofits’ involvement in projects that help turn our economy around.

 Grantees for both programs must provide at least 20 percent of the total approved cost of the project from non-federal funds. This match may be met by cash or in-kind contributions.

 HHS’ Administration for Children and Families’ Office of Community Services will administer the SCF programs. Applicants interested in applying for funds should visit http://www.acf.hhs.gov/grants/recovery.html.


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