Avoid Stop-Work Orders: Do NOT Treat Employees as Independent Contractors

By Christopher E. Brown, J.D. and George F. Indest III, J.D., M.P.A., LL.M., Board Certified by The Florida Bar in Health Law

Often a business obtains faulty legal advice that it can treat its employees as "independent contractors" and avoid a number of mandatory costs associated with hiring an actual employee.  These may include paying social security, Medicare and other mandatory assessments.  Additionally, the employer may believe that it can avoid expenses, such as workers' compensation insurance coverage, that are required by law.

Stop-Work Order Ceases Business Activities Until Compliance is Established.

The Stop-Work Order is one tool that is used by the Florida Department of Financial Services (DFS) to halt an employer's business activities until it comes into compliance with the required insurance coverage mandated by Section 440.10, Florida Statutes.  The issuance of such an Order can be a death sentence to a small business due to the limitations and penalties that it places on a business owner.  To avoid this situation it is critical to understand the requirements of Chapter 440, Florida Statutes, and the penalties an employer can face when it fails to be compliant with Florida's workers' compensation laws.

Most Employees that Work in Medical Practices Do Not Qualify as Independent Contractors.

The Florida Legislature has outlined very specific requirements in Section 440.02(15)(d)(1), Florida Statutes, that must be met in order for a worker to be classified as an independent contractor.  Most regular employees that work in an office setting or medical practice setting do not qualify as "independent contractors."  Typically, everyday employees such as medical assistants, receptionists, billing clerks, nurses, and clerical staff will not meet these requirements.

Complaint May Initiate a Department of Financial Services Investigation.

Generally, the DFS will receive a complaint or a tip, often from a former employee, but sometimes from a competitor.  An investigator from the DFS will then begin an investigation, often visiting the business suspected of the infraction.  A detailed records request or subpoena, requesting all financial documents (including bank statements, tax returns, cancelled checks, payrolls, ledgers, books, and other sensitive financial documents), will be served on the business, with only a short time to produce the requested information.

Stop-Work Order Can Have Devastating Impact on Business.

The DFS may issue a Stop-Work Order if egregious violations are found.  The Stop-Work Order closes down the business down immediately. The Order applies not only to the location where the Order was served, but to all other locations where the employer may be out of compliance.  The employer's failure to abide by this Order can result in a penalty of $1,000 per day for each day that the employer continues to conduct business operations. The issuance of a Stop-Work Order can lead to tens of thousands of dollars in lost income and can force both large and small businesses to close their doors forever.

Stop-Work Order Will Not Be Lifted Until Compliance is Demonstrated and All Penalties Are Paid.

The Stop-Work Order will not be lifted until your business is in compliance and all penalties are paid.  The DFS will assess a penalty equal to 1.5 times the amount the employer would have paid in premium when applying approved manual rates to the employer's payroll during the periods for which it failed to secure payment of workers' compensation.  These penalties can be extensive and costly.

Tips to Avoid Stop-Work Orders, Fines and Penalties Assessed by the DFS.

Physicians and other health professionals, especially those just starting a new business, should avoid taking shortcuts and attempting to avoid paying taxes and assessments that the law requires.

1. Do not attempt to scrimp on taxes and expenses by treating regular employees, even part-time or hourly employees, as "independent contractors."

2. Officers and shareholders (owners) of a business may be entitled to an exemption so that they do not count as an employee of the business for the purposes of reaching the statutory minimum number (four employees);  however, they must apply for this in advance of any investigation or complaint. Do so now!

3. Use a reliable commercial payroll service to make all mandatory deductions, withholdings, tax payments and assessments.

4. If you have employees, purchase workers compensation insurance, regardless of the number of employees.  This will help protect you from liability for employee injuries on the job.

5. Consult with an experienced attorney when setting up your business or medical practice.

6. If you receive a notice that you are being investigated, a documents request, or a Stop-Work Order, consult an attorney experienced in such matters immediately.

Contact Health Law Attorneys Experienced with Stop-Work Orders.

If you are confronted with a Stop-Work Order it is imperative to immediately contact an attorney experienced in these matters.  The Health Law Firm represents physicians, medical practices, and other health providers who have been issued a Stop-Work Order. The Health Law Firm's attorneys can assist you in producing the necessary documents and mitigating the penalties that may be assessed.
To contact The Health Law Firm, please call (407) 331-6620 or (850) 439-1001 and visit our website at http://www.thehealthlawfirm.com/.

About the Author:  George F. Indest III, J.D., M.P.A., LL.M., is Board Certified by The Florida Bar in Health Law.  He is the President and Managing Partner of The Health Law Firm, which has a national practice.  Its main office is in the Orlando, Florida, area.  http://www.thehealthlawfirm.com/  The Health Law Firm, 1101 Douglas Ave., Altamonte Springs, FL 32714, Phone:  (407) 331-6620.

Connecticut Attorney General Alleges Medicaid Fraud Scheme

By George F. Indest III, J.D., M.P.A., LL.M., Board Certified by The Florida Bar in Health Law

Connecticut Attorney General George Jepsen alleges that 28 individuals, dental practices and corporations were involved in a $24 million Medicaid fraud scheme. Jepsen filed a civil action  on May 31, 2012. It is the first case the state has initiated under the Connecticut False Claims Act. The Connecticut False Claims Act gives the state the ability to seek compensation for taxpayers from those who submit false claims for reimbursements they are not eligible to receive. To view the Connecticut False Claims Act, click here.

The complaint seeks restitution, treble damages and civil penalties as well as a permanent injunction against the unlawful acts and practices alleged in the complaint. To view the complaint, click here.

Despite Being Excluded from Medicare and Medicaid, Accused Individual Allegedly Found Ways to Bill Medicaid for Services.

According to the complaint, one of the individuals involved in the alleged fraud scheme was previously convicted of a felony in another state for submitting false health care claims. He was then permanently excluded by the U.S. Department of Health and Human Services (DHHS) from participation in Medicare and Medicaid, as a result of his conviction. Any entity with which he serves as an employee, administrator, operator or in any other capacity, were also excluded from state healthcare programs. The state alleges that, despite the exclusion, he established a number of dental practices in Connecticut that were operated by practicing dentists who billed Medicaid for services.

Allegedly, the excluded individual was actively involved in managing the practices and received millions of dollars in Medicaid reimbursements. The dental providers allegedly knew of the exclusion and did not disclose it on enrollment and re-enrollment forms for the Connecticut Medical Assistance Program.

Florida Has Similar False Claims Act.

Florida has a Medicaid False Claims Act similar to the one that Connecticut has. Florida's Medicaid False Claims Act can be found here. However, in Florida, a separate provision of the state's Medicaid law provides an award to a whistle-blower of up to 25% of any recovery. This is in Section 409.9203, Florida Statutes. In addition, Florida has a law that allows civil recovery for criminal acts such as Medicaid fraud, which is sometimes used by the Florida Attorney General and private individuals to recover money lost as a result of certain criminal conduct. For the Florida Civil Remedies for Criminal Actions law, click here.

As a general rule state false claims acts are modeled after the federal False Claims Act used to pursue Medicare fraud. For the federal Medicare Fraud False Claims Act, 31 U.S.C. § 3729, click here.

Contact Health Law Attorneys Experienced in Handling Medicaid and Medicare Fraud Cases.
The Health Law Firm's attorneys routinely represent physicians, dentists, nurses, medical groups, clinics, pharmacies, durable medical equipment (DME) suppliers, home health agencies, nursing homes and other healthcare providers in Medicaid and Medicare investigations, audits, hearings and recovery actions. In addition The Health Law Firm represents health providers in Medicare exclusion actions and in being reinstated to the Medicare Program or being removed from the exclusion list.

To contact The Health Law Firm please call (407) 331-6620 or (850) 439-1001 and visit our website at http://www.thehealthlawfirm.com/.

Sources:
Rees, Nick. "Jepsen alleges $24M Medicaid fraud." Legal Newsline. (June 4, 2012). From:
http://www.legalnewsline.com/news/contentview.asp?c=236342

About the Author:  George F. Indest III, J.D., M.P.A., LL.M., is Board Certified by The Florida Bar in Health Law.  He is the President and Managing Partner of The Health Law Firm, which has a national practice.  Its main office is in the Orlando, Florida, area.  http://www.thehealthlawfirm.com/  The Health Law Firm, 1101 Douglas Ave., Altamonte Springs, FL 32714, Phone:  (407) 331-6620.