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$1.68 million. That’s what company controlling millions in taxpayer dollars wants back from fired CEO

Article in the Winston Salem Journal today:

Cardinal Innovations filed a lawsuit Monday in Mecklenburg Superior Court against fired chief executive Richard Topping.

The state’s largest managed care organization – which controls hundreds of millions in taxpayer dollars – is suing to recoup $1.68 million in severance from Topping, as well as prevent him from collecting any further payments approved by the former board that was disbanded Nov. 27.

The lawsuit says Topping’s severance represents “excessive and unlawful payments.”

Cardinal oversees providers of services for mental health, developmental disabilities and substance abuse for more than 850,000 Medicaid enrollees in 20 counties, including Forsyth and five others in the Triad. It handles more than $675 million in annual federal and state Medicaid money.

shhhhtoppings

An investigation by McGuireWoods LLP was requested by a reconstituted board, formed in January and approved by state health Secretary Mandy Cohen, along with interim chief executive Trey Sutten. It was conducted by McGuireWoods partner Kurt Meyers, a former federal prosecutor.

The lawsuit represents a new action by Cardinal, and is not in response to the previous board’s lawsuit against the state to allow for executive salaries, including for Topping, that exceeded those permitted by state law.

However, it does represent a follow-up on the temporary restraining order and then preliminary injunction won against Topping and the former board filed in the same court.

The injunction prevents Topping and the former board from interfering with N.C. Department of Health and Human Services’ regulatory actions versus Cardinal that began when Cohen ordered the takeover of the organization on Nov. 27.

The former board took action against Topping’s employment at its Nov. 17 meeting by terminating his contract without cause. The board, at Topping’s request, would have been allowed to stay on through Dec. 1.

Cardinal said in the lawsuit that “Topping’s motive in asking the board to allow him to remain CEO was so that he could use his position as CEO to ensure that Cardinal Innovations paid him the lump-sum severance before his departure.”

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Now to my opinion:

Disclosure: I have not read the Complaint and would love someone to send it to me. But, on the face of this article, my experience in the legal world, and my limited knowledge about the whole Topping debacle:

While we can all agree that Topping’s salary, plus bonuses and perks, was absolutely repugnant and offensive to taxpayers (like me), Topping did not get there all by himself. The Board of Directors met, discussed Topping’s salary, and voted to give him that salary. The Board of Directors, essentially, is the heart and the brain of Cardinal Innovations.

Is Cardinal Innovations going to sue itself for bestowing such an outrageous salary, plus benefits, to Topping?

Because if I am Topping and I get sued for having a high salary, I am going to point at the Board of Directors and say, “I couldn’t have gotten paid without your votes, Board. So have fun and sue yourself.”

BTW: Isn’t this lawsuit a conflict of interest?? It was only last year that Cardinal filed a lawsuit asking the court to ALLOW TOPPING TO CONTINUE TO RECEIVE SUCH OUTRAGEOUS SALARY THAT NOW – SAME COMPANY – IS SUING BECAUSE IT GAVE THIS SALARY TO IT CEO…which is it, Cardinal? Or is it just a matter of following the wind of public opinion? 

Not to mention – HOW IS CARDINAL FUNDING THE LAWSUIT (ATTORNEYS’ FEES) – WITH OUR TAX DOLLARS!!!!!!! I mean, good for Womble Carlyle, the law firm hired with our tax dollars to spend more money on a losing case (my opinion) because Cardinal mismanaged our tax dollars! Winner, winner, chicken dinner! Last year it got paid to file a lawsuit to keep Topping’s salary and perks. Five months later it’s hired to sue for giving Topping’s salary and perks. See blog.

Does anyone else not see how screwed up this is?????

Medicaid/care Fraud: You Are Guilty Until Proven Innocent!

Don’t we have due process in America? Isn’t due process something that our founding fathers thought important, essential even? Due process is in our Constitution.

The Fourteenth (governing state governments) and the Fifth Amendment (governing federal government) state that no person shall be “deprived of life, liberty, or property without due process of law.”

Yet, apparently, if you accept Medicaid or Medicare, due process is thrown out the window. Bye, Felicia!

How is it possible that criminals (burglars, murderers, rapists) are afforded due process but a health care provider who accepts Medicaid/care does not?

Surely, that is not true! Let’s look at some examples.

In Tulsa, a 61-year-old man was arrested for killing his Lebanese neighbor. He pled not guilty. In news articles, the word “allegedly” is rampant. He allegedly killed his neighbor. Authorities believe that he may have killed his neighbor.

And prior to getting his liberty usurped and getting thrown in jail, a trial ensues. Because before we take a person’s liberty away, we want a fair trial. Doesn’t the same go for life and property?

Example A: I recently received a phone call from a health care provider in New Jersey. She ran a pediatric medical daycare. In 2012, it closed its doors when the State of New Jersey accused it of an overpayment of over $12 million and suspended its funds. With its funds suspended, it could no longer pay staff or render services to its clients.

Now, in 2016, MORE THAN FOUR YEARS LATER, she calls to ask advice on a closing statement for an administrative hearing. This tells me (from my amazing Murdoch Mysteries (my daughter’s favorite show) sense of intuition): (1) she was not provided a trial for FOUR YEARS; (2) the state has withheld her money, kept it, and gained interest on it for over FOUR YEARS; (3) in the beginning, she did have an attorney to file an injunction and a declaratory judgment; and (4) in the end, she could not afford such representation (she was filing her closing argument pro se).

Examples B-P: 15 New Mexico behavioral health care agencies. On June 23, 2013, the State of New Mexico accuses 15 behavioral health care agencies of Medicaid fraud, which comprised 87.5% of the behavioral health care in New Mexico. The state immediately suspends all reimbursements and puts most of the companies out of business. Now, MORE THAN THREE YEARS LATER, 11 of the agencies still have not undergone a “Fair Hearing.” Could you imagine the outrage if an alleged criminal were held in jail for THREE YEARS before a trial?

Example Q: Child psychiatrist in rural area is accused of Medicaid fraud. In reality, he is not guilty. The person he hired as his biller is guilty. But the state immediately suspends all reimbursements. This Example has a happy ending. Child psychiatrist hired us and we obtained an injunction, which lifted the suspension. He did not go out of business.

Example R: A man runs a company that provides non-emergency medical transportation (NEMT). One day, the government comes and seizes all his property and freezes all his bank accounts with no notice. They even seize his fiance’s wedding ring. More than TWO YEARS LATER – He has not stood trial. He has not been able to defend himself. He still has no assets. He cannot pay for a legal defense, much less groceries.

Apparently the right to speedy trial and due process only applies to alleged burglars, rapists, and murderers, not physicians and health care providers who render medically necessary services to our most fragile and vulnerable population. Due process??? Bye, Felicia!

What can you, as a health care provider, do if you are accused of fraud and your reimbursements are immediately suspended?

  1. Prepare. If you accept Medicare/caid, open an account and contribute to it generously. This is your CYA account. It is for your legal defense. And do not be stupid. If you accept Medicaid/care, it is not a matter of if; it is a matter of when.
  2. Have your attorney on speed dial. And I am not talking about your brother’s best friend from college who practices general trial law and defends DUIs. I am talking about a Medicaid/care litigation expert.
  3. File an injunction. Suspension of your reimbursements is a death sentence. The two prongs for an injunction are (a) likelihood of success on the merits; and (b) irreparable harm. Losing your company is irreparable harm. Likelihood of success on the merits is on you. If your documents are good – you are good.

Accusations of Medicaid/care Fraud Run Rampant in SC: There Are Legal Remedies!

As if South Carolina didn’t have enough issues with the recent flooding, let’s throw in some allegations of Medicaid fraud against the health care providers. I’m imagining a provider under water, trying to defend themselves against fraud allegations, while treading water. It’s not a pretty picture.

Flash floods happen fast, as those in SC can attest.

So, too, do the consequences of allegations.

Shakespeare is no stranger to false accusations. In Othello, Othello is convinced that his wife is unfaithful, yet she was virtuous. In Much Ado About Nothing, Claudio believes Hero to be unfaithful and slanders her until her death. Interestingly, neither Othello and Claudio came to their respective opinions on their own. Both had a persuader. Both had a tempter. Both had someone else whisper the allegations of unfaithfulness in their ears and both chose to believe the accusation with no independent investigation. So too are accusations of Medicaid/care fraud so easily accepted without independent investigation.

With the inception of the Affordable Care Act (ACA), We have seen a sharp uptick on accusations of credible allegations of fraud.  See blog for the definition of credible allegation of fraud.

The threshold for credible allegation of fraud incredibly low. A mere accusation from a disgruntled employee, a mere indicia of credibility, and/or even a computer data mining program can incite an allegation of fraud. Hero was, most likely, committing Medicare/acid fraud too.

The consequences of being accused of fraud is catastrophic for a  health care provider regardless whether the accusation is accurate. You are guilty before proving your innocence! Your reimbursements are immediately suspended! Your entire livelihood is immediately crumbled! You are forced to terminate staff! Assets can be seized, preventing you even the ability to hire an attorney to defend yourself!

I have seen providers be accused of credible allegations of fraud and the devastation that follows. In New Mexico. In North Carolina. See documentary. Many NC providers serve SC’s population as well. The Medicaid reimbursement rates are higher in SC.

Obviously, The ACA is nationwide, federal law. Hence, the increase in allegations/accusations of health care fraud is nationwide.

Recently, South Carolina health care providers have been on the chopping block. Othello and Claudio are in the house of Gamecocks!

South Carolina’s single state agency, DHHS, required Medicaid recipients to get a 2nd prior approval before receiving health care services for “rehabilitative behavioral health” services, such as behavioral health care services for substance abuse and mental illness (could you imagine the burden if this were required here in NC?).

Then, last year, SC DHHS eliminated such 2nd prior approval requirement.

With fewer regulations and red tape in which to maneuver, SC saw a drastic uptick of behavioral health care services. Othello and Claudio said, “Fraud! More services with only one prior approval must be prima fracie fraud!”

Hence, behavioral health care providers in SC are getting investigated. But, mind you, during investigations reimbursements are suspended. You say, “Well, Knicole, how will these health care provider agencies afford to defend themselves without getting paid?” “Good question,” I say. “They cannot unless they have a stack of cash on hand for this exact reason.”

“What should these providers do?” You ask.

Hire an attorney and seek an injunction lifting the suspension of payments during the investigation.

Turn a Shakespearean tragedy into a comedy! Toss in a dingy!

Judges have lifted the suspensions. Read the case excerpt below:

order

As you can read in the above-referenced case, despite 42 455.23(a) mandating a suspension of payments upon credible allegations of fraud, this Judge found that the state failed to carefully weigh the evidence before suspending all payments.

There are legal remedies!!

Knicole Emanuel Interviewed by ABC: SOME MEDICAID PROVIDERS OWE DHHS BIG BUCKS

pic of my interview

Jon Camp, journalist for ABC11, interviewed me yesterday about a durable medical equipment client.  In case you missed it, here is the link:

http://abc11.com/video/embed/?pid=773639

NCTracks

Preliminary Injunctions: In NC Medicaid, Extraordinary Circumstances Call for Extraordinary Measures

Preliminary injunctions…Prior to law school, had you asked me what a preliminary injunction was I probably would have said, generally, that an injunction is a legal remedy to stop someone from doing something.

Now, post-law school and after approximately 13-years of legal experience, I know now that I would have been only partially right prior to law school.

First, I understand that preliminary injunctions are extraordinary measures.  But don’t extraordinary circumstances call for extraordinary measures?

There are 2 types of injunctions: preventive and mandatory.

How could an injunction help you, as a Medicaid provider? (And, believe me, it can!!)

I have used injunctions in many different ways to help Medicaid providers.  Here are some examples:

  • A provider’s Medicaid contract is terminated…a preventive injunction can be put in place to stay the termination until a determination of the termination’s validity (Secret: If any entity other than the Department of Health and Human Services (DHHS), Division of Medical Assistance (DMA) terminated the Medicaid contract, most likely, the termination is not valid).
  • A provider’s Medicaid reimbursements are suspended…a preventive injunction can be put into place to stay the suspension of payments until a determination of the suspension’s validity.
  • A provider, who has provided Medicaid services for years and has had a Medicaid contract with DHHS for years, is denied enrollment by a Managed Care Organization (MCO)…a mandatory injunction could force the MCO to contract with the provider.

The last example is an example of a mandatory injunction.  Mandatory injunctions, generally, are more difficult to convince a judge to order than a preventive injunction.  However, in the context of Medicaid, generally, the providers have compelling stories that will warrant any type of injunction…extraordinary circumstances.

But a preliminary injunctions is not the first step.

Normally when I draft a Motion for Preliminary Injunction, I use North Carolina Civil Procedure, Rule 65.

Rule 65. Injunctions.

(a)        Preliminary injunction; notice. – No preliminary injunction shall be issued without notice to the adverse party.

(b)        Temporary restraining order; notice; hearing; duration. – A temporary restraining order may be granted without written or oral notice to the adverse party or that party’s attorney only if (i) it clearly appears from specific facts shown by affidavit or by verified complaint that immediate and irreparable injury, loss, or damage will result to the applicant before the adverse party or that party’s attorney can be heard in opposition, and (ii) the applicant’s attorney certifies to the court in writing the efforts, if any, that have been made to give the notice and the reasons supporting the claim that notice should not be required.

Temporary Restraining Order? I thought we were talking about injunctions!!! Now I am confused!!

Do not fret!

Notice that, according to Rule 65, a preliminary injunction may NOT be issued without notice to the adverse party.  However, a Temporary Restraining Order (TRO) CAN be granted withOUT notice to the adverse party.

How this plays out in real life is that, when I want an injunction, I file a “Motion to Stay, Temporary Restraining Order, and Preliminary Injunction.”  I file the Motion in the Office of Administrative Hearings (OAH), which is great, because, generally, the Administrative Law Judges (ALJs) have a deep understanding of Medicaid laws, rules and regulations.

According to Rule 65, the Judge, in his or her discretion may grant the TRO, then schedule the preliminary injunction within 7-10 days.

The fact that a Judge can grant a TRO quickly and without notice to the adverse party clearly shows how extraordinary a TRO is.

But extraordinary circumstances call for extraordinary measures.  Or, in Latin, “extremis malis extrema remedia.”

Example:

Alice is a health care provider who accepts Medicaid.  Alice has a small practice; she only has 3 employees and maybe 40 clients.  She provides mental health care to needy adults in Mecklenburg county.  MeckLINK is her MCO.  On August 1, 2013, MeckLINK sends correspondence to Alice stating that as of August 5, 2013, Alice’s Medicaid contract will be terminated.  Alice panics.  Not only is her small practice her only source of revenue…her livelihood…her career, but she would have to close her practice immediately if MeckLINK failed to pay her even one time.

What are Alice’s choices?

A:   Cry. Give up;

B:   Cuss out MeckLINK, only to have MeckLINK provide her additional legal bases for the termination;

C:   Appeal through MeckLINK’s informal appeal, only to have the termination become effective August 5th, despite the appeal, schedule the informal appeal within 30 days, and go bankrupt prior to the informal appeal; or

D:   Get a TRO/preliminary injunction

Personally, I go with ‘D.’

If you do file a Motion to Stay, TRO and Preliminary Injunction and the Judge follows the legal protocol, the TRO should be granted within a few days.  Then a preliminary injunction (PI) should be scheduled within 7-10 days.  At the PI hearing, you must show: (1) likelihood of success on the merits; and (2) irreparable harm.

How do you show likelihood of success on the merits? Well, in my example, MeckLINK was the acting entity taking the action to terminate Alice’s Medicaid contract.  But federal law dictates that a single state entity manage Medicaid.  It is my position that MeckLINK does not have the authority to unilaterally and without DHHS’ express authorization to terminate a Medicaid contract. Make the argument…show likelihood of success on the merits.

How do you show irreparable harm? Damages must be more than just monetary. Damages must be irreparable…as in, not fixable with mere money.  Obviously, monetary damages are at issue.  But also, goodwill/reputation in the community, staff morale, fear of bankruptcy, effect of bankruptcy on Alice, Alice’s family, staff, effect on Medicaid recipients (not receiving the medically necessary services), impact on the community, etc.  Show irreparable harm…get the PI.

Once you meet your burden of proof for preliminary injunction, then the injunction is upheld until a full hearing on the merits.  Usually, the full hearing on the merits will not be scheduled for many months.  So the PI enables you to continue to do business as usual…as if no termination had ever been threatened.  Status quo. (The existing state of affairs).

Had Alice’s TRO and PI NOT been granted?

Alice would have lost her business.  Her 3 staff members would have been unemployed.  Alice’s family would have been without income.  Her 3 staff would have been without income, perhaps they would have applied for unemployment.  Her landlord would not have been paid.  The 40-ish  Medicaid recipients would not have received medically necessary services.  The Medicaid recipients would have decomposed…perhaps becoming hospitalized or incarcerated…or on the street.  Alice’s reputation in the community would have been that “MeckLINK shut Alice down! She must have been doing something wrong.”  Alice would have become depressed…convinced that she were a failure.  Alice, due to zero income, would have lost her home; her husband would have left her.  (No one can really comprehend the harm of closing a business. The consequences could be more dire than my description).

These are extraordinary circumstances. And extraordinary circumstances call for extraordinary measures!