On April 15, 2008, the Office of Inspector General (OIG) of the Department of Health & Human Services issued an open letter to health care providers concerning the Provider Self-Disclosure Protocol (SDP). The open letter sought to clarify the SDP, which was established in 1998 and followed the lead of other federal programs encouraging self-disclosure for potential fraud.

The SDP has caused great misunderstanding and apprehension in the health care field. Hinshaw & Culbertson LLP has always counseled the firm’s clients to be incredibly cautious in this area. Health care providers need to be responsible. But that responsibility does not always mandate self-disclosure to the government.

The OIG indicated that their improved disclosure process for admission to SDP must include the following information:

• a complete description of the conduct being disclosed;
• a description of the provider’s internal investigation or a commitment regarding when it will be completed;
• an estimate of the damages to the federal health care programs and the methodology used to calculate that figure or a commitment regarding when the provider will complete such estimate; and
• a statement of the laws potentially violated by the conduct.

The health care provider must be in a position to complete the investigation and the damages assessment within three months after acceptance under the SDP.

Significantly, the OIG expressly allows for taking action other than through the SDP. Its open letter states that:

The SDP is intended to facilitate resolution of matters that potentially violate federal criminal law, civil law, or administrative laws for which exclusion or civil monetary penalties are authorized. Disclosures that are characterized as mere billing errors or overpayments are not appropriately addressed by the SDP and should be submitted directly by the provider to the appropriate claims-processing entity, such as the Medicare contractor. (Emphasis added)

Although the open letter clarifies certain areas and makes changes which appear to streamline the SDP, we caution hospitals to contact their health care attorneys to assess whether self-disclosure is appropriate or necessary. In many instances, self-disclosure might seem warranted upon first glance. But it has been the experience of Hinshaw’s Health Care and White Collar Crime groups that after an investigation into the matter has been conducted, action short of utilizing the SDP is found to be all that is necessary.

This alert was written for the benefit of Hinshaw’s health care clients by the firm’s White Collar Crime group. That group has extensive experience defending clients in white collar criminal matters, including health care fraud, complex financial fraud, tax fraud, insurance fraud, office and police corruption, RICO, organized crime, bank embezzlement and bank fraud.  For further information about this alert or Hinshaw’s white collar criminal defense capabilities, please contact Dan Purdom or your regular Hinshaw attorney.

This alert has been prepared by Hinshaw & Culbertson LLP to provide information on recent legal developments of interest to our readers. It is not intended to provide legal advice for a specific situation or to create an attorney-client relationship.