What is Upcoding?

Whistleblowers with inside knowledge of fraud involving government funded healthcare programs have the ability to use the False Claims Act to bring the fraud to the government’s attention and possibly earn a reward. Individuals can file lawsuits on behalf of the United States using the qui tam provisions of the False Claims Act when they are aware of healthcare providers (such as doctors, hospitals, assisted living facilities, and others) fraudulently receiving reimbursements from taxpayer funded programs such as Medicaid and Medicare. One of the most prevalent methods of fraud perpetrated to receive such reimbursements is known as “upcoding.”

Upcoding is a method of fraud where health care providers seek more reimbursement from the government than they are entitled to. Government funded health care programs, like Medicaid and Medicare, have adopted specific billing codes, known as Current Procedural Terminology or CPT codes. Specific CPT codes exist for all the different medical services, devices, and other items provided by health care providers which are reimbursable by the government programs. Each billing code corresponds to a set rate schedule which determines the exact amount of reimbursement the government then pays the health care provider. Treatment of more severe conditions often provide higher reimbursement rates. As the government relies on the truthfulness of the CPT codes submitted by health care provides (who must certify that truthfulness when submitting the codes), it is imperative that the codes accurately reflect the actual services rendered.

Upcoding occurs when a health care provider seeks reimbursement using a fraudulent CPT code that provides a higher reimbursement than the CPT code which corresponds to the services actually rendered to a Medicaid or Medicare patient.

An example of upcoding would be if a doctor saw a patient for a routine check-up (which has a CPT code with a reimbursement of say $60), but when billing Medicare the doctor provides the CPT code for an extended check-up, which provides a reimbursement of $100. By upcoding, the doctor just fraudulently received $40 from taxpayer funded Medicare. The submission of the higher CPT code to the government to fraudulently receive the $40 extra is a violation of the False Claims Act.

Upcoding can also occur when healthcare providers submit CPT codes that accurately correspond to the services provided if the services provided were medically unnecessary. Using the example above, if a doctor knows that a Medicare patient only needs a routine check-up, but intentionally gives the patient an extensive check-up for the purpose of receiving a higher reimbursement for the government, submitting the CPT code for the extensive check-up is still fraudulent and in violation of the False Claims Act.

Another variation of upcoding involves so-called “unbundling” when submitting CPT codes. Unbundling occurs when a health care provider submits individuals CPT codes for each service provided when an applicable bundled CPT code could have been used which covered the entire procedure.

For example, medical procedures often are bundled together when they are related or usually performed together, such as incisions and closures incidental to surgeries. The bundled CPT codes for such services are often reimbursed at a lower rate by Medicare or Medicaid than if each service was submitted under its own separate CPT code.

Unbundling, like upcoding, can serve as the basis for False Claims Act liability.

Whistleblowers who have inside knowledge of a healthcare provider engaging in upcoding or unbundling have several options to report the fraudulent activity.

A whistleblower can report fraud internally to a hotline (which we highly recommend against), bring their concerns to the Health and Human Services Office of the Inspector General, as well as to members of Congress. However, there is only one avenue of reporting that provides for a potential reward for the whistleblower, using the qui tam provision of the False Claims Act.

Additionally, many states have their own versions of the False Claims Act which allow for recovery of state funds fraudulently paid out due to upcoding. The federal government is extremely concerned about Medicare and Medicaid fraud and has consistently made going after those defrauding taxpayer funded health care programs a top priority.

Whistleblowers who bring Medicare and Medicaid fraud to the attention of the government under the False Claims Act’s qui tam provisions have consistently recovered some of the most substantial whistleblower rewards paid out by the government.

Due to the highly discretionary way in which the Act is enforced, it is hard to say what constitutes a strong claim. That said, there are some necessary steps one must take and some common pitfalls to avoid.

The Act has a 30-day statute of limitations. This statute of limitations means one must file their claim within 30 days from the incident, or else the Department of Labor will not consider it. Regardless of how egregious the employer’s actions were, if the claim is not filed within the 30-day limit, the claim will be thrown out, with no exceptions.

Yes, but exercising that right has the same drawbacks as other OSHA anti-retaliation laws. It is up to the Department of Labor to enforce that right. The primary law governing a limited right to refuse hazardous work is outlined in the OSHA regulation concerning retaliation claims. Now codified as 29 C.F.R. § 1977.12(b)(2), the DOL rule permits employees, in certain conditions, to refuse to perform work that could result in “serious injury or death.”

OSHA published a Memorandum entitled “Clarification of the Work Refusal Standard” on January 11, 2016, which provides background as to how OSHA will review work refusal cases.

If you are considering refusing to work due to unsafe conditions, there are a few steps one must take to have a potential claim. You may file a complaint with the Agency at any point. Additionally, you are expected to bring the potentially hazardous condition to your employer’s attention, if possible. Typically you are only allowed to leave the worksite if merely being present exposes you to the potentially hazardous condition.

According to OSHA, the “right to refuse to do a task is protected if all [emphasis in the OSHA publication] of the following conditions are met:”

“Where possible, you have asked the employer to eliminate the danger, and the employer failed to do so; and

“You refused to work in ‘good faith.’ This means that you must genuinely believe that an imminent danger exists; and

“A reasonable person would agree that there is a real danger of death or serious injury; and

“There isn’t enough time, due to the urgency of the hazard, to get it corrected through regular enforcement channels, such as requesting an OSHA inspection.”

OSHA also recommends that employees take the following steps before refusing to perform a work assignment: (a) “Ask your employer to correct the hazard, or to assign other work;” (b) “Tell your employer that you won’t perform the work unless and until the hazard is corrected;” and (c) Remain at the worksite until ordered to leave by your employer.

The OSHA law has very straightforward rules concerning filing a complaint. The DOL Occupational Safety and Health Administration has well organized and user-friendly information online regarding its worker safety and anti-retaliation programs, including a dedicated webpage with detailed information on the laws and operating procedures regarding worker safety complaints. There is also another webpage that explains how employees can file complaints, including access to an online complaint form. There are online FAQs that describe the process for filing a hazardous working condition report or a retaliation complaint, and the general laws and procedures governing these processes.

Worker complaints can be filed by contacting OSHA at 1-800-321-OSHA (6742) and asking to be connected to your closest area office. No form is required to file a discrimination complaint, but you must contact OSHA within the 30-day statute of limitations for filing a retaliation case. OSHA complaints should be filed in writing and delivered to OSHA (with proof) before the expiration of the 30-day time limit to ensure they are timely.

Yes. Many states have versions of OSHA that offer the same or a greater level of protection. Even if your state’s version has the same issues as the Federal law, your state’s Department of Labor might have a higher rate of enforcement than the Federal government. In a detailed analysis of the federal OSHA claims, workplace safety expert and Professor at Northeastern University School of Law, Emily A. Spieler, found that only 10% of potentially meritorious claims resulted in reinstatement.

Today, almost every state provides protections for whistleblowers, either under its common law or under a state whistleblower protection statute. Additionally, 22 states have enacted their own OSHA laws that either have the same or greater protections, as does the federal OSHA law. Numerous workers who have faced retaliation for raising workplace safety concerns or for refusing to perform life-threatening jobs have relied upon strong state laws for protection. A growing number of state courts are permitting employees to sue their employers in state court for significant damages in cases that would also be covered under the federal OSHA law.

Many state courts recognize that the federal Occupational Safety and Health Act is completely “inadequate,” as a matter of law, to displace state rights over employee safety. A Missouri Court of Appeals decision summarized the weaknesses in the federal law, clearly explaining why employees could use the Missouri laws to obtain protection:

OSHA only allows an employee to file a complaint with the Secretary of Labor who then decides whether to bring an action . . . the employee’s right to relief is further restricted in that the complaint must be filed within thirty days. . . . The decision to assert a cause of action is in the sole discretion of the Secretary of Labor and the statute affords the employee no appeal if the Secretary declines to file suit.

Consistent with the Missouri court’s ruling, other states have permitted OSHA whistleblowers to file lawsuits under the “public policy exception.” Under this doctrine, whistleblowers are usually permitted file lawsuits based on state tort (i.e., personal injury) law, and obtain back pay, other economic damages, compensatory damages, and punitive damages. These states include Alaska, California, Illinois, Iowa, Kansas, Minnesota, New Mexico, New Jersey, Nevada, Ohio, and Oklahoma.

You should also review the Coronavirus Whistleblowers FAQ.

Yes. There are other extremely effective whistleblower laws, including the False Claims Act and the Dodd-Frank Act. Where applicable, these laws provide employees with an opportunity to obtain financial rewards. These laws also have strong anti-retaliation provisions.

Due to the weak nature of the OSHA protections and other labor laws, it is advisable to talk to a qui tam lawyer. Unlike the OSHA provisions, qui tam whistleblower laws have a private right of action. Whistleblower reward or qui tam laws can be very effective at providing compensation to whistleblowers and protecting workers that report underlying violations.

For example, the FCA could cover an employee at a medical facility that is not meeting the safety standards required to receive government Medicare reimbursements. Failure to meet these standards can amount to Medicare fraud. The Justice Department has already filed federal fraud cases related directly to the coronavirus pandemic.

Under the Dodd-Frank Act, the U.S. Securities and Exchange Commission can take action against regulated companies for violations related to the coronavirus pandemic. The SEC has published a COVID-19 “response” page and a web page dedicated to the securities violations and requirements concerning COVID-19. The Commission has also initiated numerous enforcement actions against corporations based on COVID-19 related frauds. As of April 22, 2020, the SEC has suspended trading on 23 companies suspected of engaging in coronavirus related scams.

These different whistleblower laws create a patchwork of protection. Unfortunately, many gaps still exist. Additionally, like OSHA, these laws each have specific perimeters. A qui tam lawyer can help ensure you do not make a costly mistake. But, if properly navigated, the employee may be eligible for additional relief beyond what is provided by OSHA. The FCA and other qui tam whistleblower laws have whistleblower reward programs. These programs reward the relator with a portion of any fines resulting from the complaint. Even if the claim does not result in any fines, these laws may provide additional retaliation protections.

Yes. OSHA also provides guidance as to rules that may be applicable to ensure worker safety. To assist employees and employers in understanding the job-related safety risks posed by COVID-19, the U.S. Department of Labor (DOL) Occupational Safety and Health Administration and the Department of Health and Human Services prepared a manual Guidance on Preparing Workplaces for COVID-19 (OSHA No. 3990-03-2020). The DOL Occupational Safety and Health Administration also has a COVID-19 resource page. These documents and online resources provide clear guidance as to the type of protection employees need to ensure they do not become sick or die from COVID-19. They are highly useful for employers who need to know the steps they must take to protect employees from unnecessary risks, and for employees who need to understand their rights and understand the types of violations that may exist in a workplace and that need to be corrected or reported.

It is always essential to contact a whistleblower lawyer or a qui tam attorney before you blow the whistle. You may have rights to confidentiality or the ability to obtain stronger protections directly tied to how you raise your disclosures. The single best resource on your rights as a whistleblower is Rules for Whistleblowers: A Handbook for Doing What’s Right (Lyons Press, 2023). There is also a free online law library with resources for whistleblowers. Several articles have been published that are specifically addressed to issues related to employee rights and the coronavirus pandemic. These articles include an article discussing the problems protecting public health whistleblowers and the problems with OSHA.