Opinion ID: 2982785
Heading Depth: 4
Heading Rank: 1

Heading: Administrative Audit and Investigation

Text: In April 2006, an anonymous tip received on a fraud hotline reported that Erlanger was improperly billing observation patients as inpatients. The United States Department of Health and Human Services (“HHS”), Office of Inspector General (“OIG”), received the complaint and referred it for review by AdvanceMed Corporation, which is the Medicare Part A Program Safeguard Contractor for Tennessee hired to perform “benefit integrity activities aimed to reduce fraud, waste, and abuse in the Medicare program.” AdvanceMed, acting on behalf of the government, identified ninety claims for reimbursement from Medicare for inpatient admissions of two days or less from the period July 2005 through May 2006. In November 2006, after Whipple had left Erlanger, AdvanceMed sent Erlanger a request for additional records and information supporting those claims. AdvanceMed’s audit found evidence of upcoding based on a notably high error rate of 49%, identified four possible sources of errors and overpayments, and observed that upcoding would be a violation of Erlanger’s 2005 Corporate Integrity Agreement. Those findings were outlined and communicated directly to the OIG’s Office of Investigations in a Fraud Case Referral dated July 3, 2007.6 6 AdvanceMed’s audit of the records identified potential overpayments resulting from billing: “for services without a valid admission order,” “for inpatient services that should have been billed as observation services,” “for inpatient services when the physician ordered an observation status,” and “for services that do not support the [Diagnosis Related Group] code billed.” No. 13-6645 United States, et al. v. Whipple, et al. Page 8 In February 2008, the OIG’s Office of Investigations opened an administrative investigation into whether the errors and potential overpayments identified by AdvanceMed’s review violated criminal law. The Opening Investigative Memorandum also indicated that the investigation was being coordinated with the OIG’s Office of Counsel to the Inspector General (“OCIG”), which was responsible for monitoring Erlanger’s compliance with the Corporate Integrity Agreement. Erlanger was notified that it was under review by the OIG’s Office in March 2008. Specifically, on March 19, 2008, Erlanger was advised by OIG Special Agent Jennifer Trussell that several concerns about Erlanger’s inpatient billing practices had been identified from the sample of records reviewed by AdvanceMed. The record reflects that Agent Trussell communicated the issues to Erlanger’s Chief Compliance Officer Alana Sullivan and outside counsel for Erlanger, Attorney Sara Kay Wheeler.7 Erlanger undertook an internal investigation and retained Deloitte Financial Advisory Services, LLP, as a billing consultant to review the issues raised and conduct a broader independent audit of one-day hospital stays from October 2005 through December 2007. Erlanger, its attorneys, and the auditors presented the results of the internal investigation to OIG Special Agent Trussell on May 29, 2008. Erlanger included the results of Deloitte’s audit, which found that Erlanger had improperly billed for inpatient services (without a physician order, without a basis for a change in status, or without documentation to support the level of care) and for observation services after outpatient same-day surgeries. Erlanger offered explanations for the errors and estimated the amount of the overpayments it had received as a result. The OIG’s Office of Investigations consulted with the United States Attorney’s Office for the Eastern District of Tennessee, and both the Civil and Criminal Divisions declined to pursue the matter in June 2008. The OCIG’s Office received confidential communication from Erlanger’s counsel outlining the investigation and compliance efforts, and the OCIG’s portion of the investigation was closed in February 2009. At that point, the OIG referred the investigation to AdvanceMed for administrative resolution on behalf of the government. After further review, AdvanceMed estimated the amount of the overpayments resulting from the errors identified and 7 Erlanger also learned that the OIG’s Office of Investigation was reviewing issues with swing-bed billing at another Erlanger facility identified from a separate record review by AdvanceMed. Facts pertinent to that aspect of the investigation are omitted because they are not relevant to the issues in this appeal. No. 13-6645 United States, et al. v. Whipple, et al. Page 9 directed Erlanger to submit a voluntary refund check in the amount of $477,140.42. When Erlanger did so in September 2009, the investigation was administratively closed. There is no suggestion that further disclosure occurred before Whipple brought this action. The district court found that there was a public disclosure of the alleged fraud, apparently accepting Erlanger’s contention that the information was publicly disclosed “through the investigations, oversights and audits conducted by the government, consultants, attorneys and contractors.” The district court also seems to have concluded, at least implicitly, that the disclosure was public simply because it occurred in the course of an administrative audit or investigation. Whipple contends that the information was not “publicly disclosed” because the information was disclosed privately and was not disseminated beyond the participants in the administrative audit and investigation.