Jeannine LeCompte, Publishing and Research Coordinator
The Office of Inspector General (OIG) of the US Department of Health and Human Services (HHS) requires long-term care (LTC) facilities using Medicaid or Medicare funding to have a compliance committee, and to conduct periodic (at least annually) reviews. This obligation to report on an annual basis is to ensure that the LTC continues to operate at maximum efficiency and in full compliance with the law.
There are three major aspects of this requirement: fiduciary responsibilities; duty of care to the residents of LTCs; and, of course, avoiding fraud, waste, and abuse. Each of these reporting requirements will be discussed in detail in this series of articles, but before that, it is important for the company leadership to have a clear grasp of the organizational foundation which makes the entire process possible—and of their duties in this regard.
According to the OIG, company directors are obligated to ensure that oversight of the facility’s compliance function encompasses overseeing the day-to-day business operations and the “exercise of reasonable care to assure that corporate executives carry out their management responsibilities and comply with the law.”
This means that directors have a duty to ensure that an adequate corporate information and reporting system exist. Also, directors must ensure that this reporting system will guarantee that all information regarding compliance or noncompliance is brought to management’s attention in the timeliest manner possible.
In other words, any failure on the part of company directors to “reasonably oversee the implementation of a compliance program” can expose the company to legal jeopardy, and, in certain circumstances, even lead to directors being held personally liable for losses incurred due to the lack of such oversight.
Company directors often delegate responsibilities. There is a measure of legal protection provided by the “good faith” principle—that is, that the director was led to believe in all good faith that a suitable compliance and enforcement program was in place. However, if an investigation should reveal that there were any indicators to the contrary of which the director was aware, then such legal protection vanishes.
In summary, it is the ultimate duty of the company director to ensure that a compliance program is in place, and that it is functioning as specified by the law. A failure to do so can, and will, lead to penalties.
(See: Corporate Responsibility and Corporate Compliance: A Resource For Health Care Boards Of Directors, The Office of Inspector General of the U.S. Department of Health and Human Services and The American Health Lawyers Association, https://oig.hhs.gov/fraud/docs/complianceguidance/040203CorpRespRsceGuide.pdf)
