05-13-2020 Council Packet - Laserfiche WebLink

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34 the retention of overpayments by defining the term overpayment and the circumstances and timing under which an overpayment need be returned to the government before it becomes an “obligation” under the FCA. On February 12, 2016, CMS released a final rule imposing a new “reasonable diligence” standard for identifying overpayments that must be reported and returned within 60 days. CMS clarified that the 60-day timeframe for report and return begins when either reasonable diligence is completed (including determination of the overpayment amount) or on the day the person received credible information of a potential overpayment (if the person failed to conduct reasonable diligence and the person in fact received an overpayment). Failure to report and return overpayments as described herein may also result in potential FCA liability. Civil Monetary Penalties Law. The Civil Monetary Penalties Law (the “CMPL”) in part authorizes the government to impose money penalties against individuals and entities committing a variety of acts. For example, penalties may be imposed for the knowing presentation of claims that are (i) incorrectly coded for payment, (ii) for services that are known to be medically unnecessary, (iii) for services furnished by an excluded party, or (iv) otherwise false. An entity that offers remuneration to an individual that the entity knows is likely to induce the individual to receive care from a particular provider may also be fined. The ACA amended the CMPL to authorize civil money penalties for a number of additional activities, including (i) knowingly making or using a false record or statement material to a false or fraudulent claim for payment; (ii) failing to grant the Office of Inspector General timely access for audits, investigations or evaluations; and (iii) failing to report and return a known overpayment within statutory time limits. Violations of the CMPL can result in substantial civil money penalties plus three times the amount claimed. Management of Sole Member does not believe that it will be involved in activities that pose a significant risk of sanctions under these referral laws. However, there can be no assurance that such challenge or investigation will not occur in the future. Labor Issues. Sole Member and certain of their affiliates have suffered from an increasing scarcity of skilled nursing and health care personnel and aides to staff their communities. The trend in the scarcity of qualified personnel has forced owners of such communities, including Sole Member and certain of their affiliates, to pay increased salaries to such personnel as competition for such employees intensified. If a community cannot maintain adequate staffing levels, the community’s license may be at risk. A shortage of qualified professional personnel, including registered nurses, could significantly increase payroll costs of Sole Member and certain of their affiliates. Malpractice Claims and Losses. Sole Member maintain professional liability insurance with commercial insurance carriers. The operations of Sole Member and certain of their affiliates (including the Borrower) may be affected by increases in the incidence of malpractice lawsuits against elder care communities and care providers in general and by increases in the dollar amount of client damage recoveries. These may result in increased insurance premiums and an increased difficulty in obtaining malpractice insurance. It is not possible at this time to determine either the extent to which malpractice coverage will continue to be available to Sole Member and certain of their affiliates (including the Borrower) or the premiums at which such coverage can be obtained. Environmental Factors Affecting the Health Care Industry. Nursing and assisted living communities such as those operated by the Sole Member or its affiliates are subject to a wide variety of federal, state and local environmental and occupational and safety laws and regulations. Among the types of regulatory requirements faced by nursing and assisted living communities are: air and water quality control requirements; waste management requirements; specific regulatory requirements applicable to asbestos, polychlorinated biphenyls and radioactive substances; requirements for providing notice to employees and members of the public about hazardous materials handled by or located at nursing and