Medical Technology Use Spurs New C-Suite Titles, Which Bring Opportunity and Risk

This article is co-written by David Scher, principal of The Employment Law Group, P.C. Scher works closely with clients who suffer discrimination or retaliation under civil rights and whistleblower laws.

The C-suite of the healthcare industry has grown dramatically over the last several years. With titles like chief innovation officer and chief transformation officer now common, the opportunity for professional growth for doctors, nurses, and other healthcare providers has never been greater. However, most do not realize that these new titles come with additional risk.

The C-suite growth has been spurred largely by the American Recovery and Reinvestment Act of 2009 (ARRA), Pub. L. No. 111-5, which ties reimbursement rates under Medicare and Medicaid to the use of technology in medicine, such as the implementation of electronic medical record (EMR) systems and the “meaningful use” use of electronic health records (EHRs). Under the EHR Incentive Programs, at least 50% of patients must have access to their records online and more than 5% of those patients must actually use the online systems made available by their providers.

Healthcare companies, seeking to maximize their reimbursement, have created an array of positions, such as chief incentive officer, chief transformation officer, chief data analytics officer, and chief experience officer, to help with the implementation of new technologies. These positions directly reflect the requirements that must be met to maximize reimbursement under federal healthcare programs.

The opportunity to take on new leadership roles and for professional growth is immensely exciting, but it comes with risk. On September 9, 2015 the Department of Justice (DOJ) issued a memo with the subject, “Individual Accountability for Corporate Wrongdoing.” The memo discussed a new emphasis on prosecuting individual employees both criminally and civilly. The DOJ also suggested that companies who cooperate with the government during investigations may no longer receive full credit for their cooperation unless they reveal information about the individual employees at fault. Why should new C-suite members be aware of this memo? Because liability can attach itself to seemingly innocent acts or inaction, creating a minefield for new executives who come from a healthcare background with little regulatory experience.

For example, under Section 6402 of the Affordable Care Act, any overpayments by Medicare or Medicaid must be returned within 60 days from the date that the overpayment was “identified.” Retention of an overpayment past the 60-day deadline can trigger liability under the False Claims Act, which provides treble damages and fines of up to $11,000 per occurrence.

As a result of these recent changes in DOJ policy, when a new C-suite manager working to implement an EMR finds out that the company accidentally retained payments, or that the new system employs a questionable coding scheme, he or she must speak up to avoid potential personal liability. This may come as a daunting decision point, as the employee’s livelihood may be put in jeopardy.

These new C-suite employees should know that federal and state law provide robust protections for employees who speak up about reasonable concerns. For example, under the False Claims Act, employees are protected from retaliation if they engage in lawful efforts to stop a violation of the False Claims Act. These protections apply to both internal and external reports of wrongdoing. Another law, the Sarbanes-Oxley Act, protects employees of publicly traded companies, their subsidiaries, and contractors from retaliation. If a company does not address the problems raised internally, the False Claims Act also permits insiders with knowledge of fraud to bring a lawsuit, called a qui tam action, against the company to recover the government’s money. Successful whistleblowers are entitled to a reward of up to thirty percent of the money recovered for the government.

Take Aways for New C-Suite Managers

• Seek out training opportunities. Many employers are happy to help pay for education and training for their staff, especially when it enables them to promote from within. Look for opportunities to stay abreast of the newest requirements for Medicare, Medicaid, and Tricare.
• Understand your company’s reporting structure. Know who to contact with problems. If you find a problem, communicate your concern clearly in writing and give your employer an appropriate opportunity to investigate.
• Identify internal resources and other subject matter experts. Find out whom you can go to with questions. Many compliance offices, though intimidating, have an open door policy.
• If you feel that you are experiencing retaliation, or if your employer refuses to fix the problem, talk to a lawyer. Many laws exist to protect employees who report or oppose wrongdoing, even if they are mistaken.