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Compliance Matters: Steps to Protect Yourself with Medicare and Medicaid Self-Audits

November 23, 2020
Compliance By Deborah Alexander, Director

Recently, Healthcare Providers Service Organization (HPSO) and CNA released a case study involving a physical therapist and the owner of the physical therapy practice at which the therapist worked. The two were sued for medical malpractice, with one of the allegations being inadequate patient assessment.

This case study will benefit new graduates as well as those rehabilitation professionals who have been practicing for several years. There are important lessons for therapists and practice owners as HPSO and CNA both outline failures not only on the part of the treating physical therapist but also the private practice owner.




This case highlights the importance of therapists conducting thorough evaluations, documenting evaluation findings with every patient contact, conducting and documenting thorough patient assessments, and communicating a change in condition to the referring healthcare provider. Therapy practices must have policies and procedures in place that cover patient care protocols, infection control, HIPPA (Health Insurance Portability and Accountability Act), Occupational Safety and Health Administration (OSHA) guidelines, documentation, ethics, and other areas. Practice owners must schedule periodic training to ensure patient safety and the review of policies and procedures. There must be documentation of the training

Outline of the Case Study

The Mechanism of Injury and Initial Orthopedic Treatment

  • A forty-five-year-old female falls at work and sustains an ankle injury with an emergency department resultant diagnosis of Right Grade III lateral ankle sprain.
  • The Orthopedic Treatment focused on pain management, stabilization with issuing a Controlled Ankle Movement (CAM) boot, Non-Weight Bearing (NWB) for three (3) weeks, and a referral for therapy services.

Physical Therapy Initial Assessment and Course of Treatment

  • Initial Physical Therapy Assessment two days s/p orthopedic appointment
    • The therapist documented the patient was wearing a CAM walker boot.
    • Pertinent patient medical history reported by the patient included:
      • Relatively healthy without chronic or acute illness.
      • One-pack a day smoker for the past 30 years.
      • Recently started oral contraceptive medication to treat abnormal premenopausal menstrual bleeding.
      • Complaint of right calf pain with patient describing the sensation as a pulled muscle. The patient indicated the pain could be from the walking boot.
    • The therapist documents the patient plans to go on a cruise in the near future with the patient’s goal to ambulate without the CAM boot.
    • The therapist performed a Pratt Test to the right calf which was negative but failed to document the findings in the patient record.
    • The therapist failed to document the patient’s calf pain.
  • Day One Physical Therapy Treatment
    • Patient continued to experience complaints of right calf pain with the patient utilizing the right ankle during therapy.
    • The therapist continued to believe the CAM boot was the probable cause of the patient’s calf pain.
    • The therapist reported conducting an examination of the patient’s calf with no clinical signs of a deep vein thrombosis and a negative Pratt Test, relating the calf pain to the CAM boot.
    • The therapist failed to document in the medical record the calf examination and assessment of the calf.
  • Day Two Physical Therapy Treatment
    • The patient reported removing the CAM boot at work to walk around without support to speed up the recovery.
    • The therapist expressed concern about the patient’s presentation and comments while addressing the patient in the waiting room. During the brief walk to the exercise room the patient became short of breath and had to stop to rest, stating “I don’t know what‘s wrong with me today, I feel so tired.”
    • The therapist’s assessment of the right calf revealed the calf was softer than it had been the two prior examinations with the Pratt Test remaining negative with no signs of pain.
    • On Day two, due to the negative clinical evaluation, the therapist continued with the patient’s therapy consisting of active range of motion and toe exercises. The patient was unable to ambulate upstairs.
    • At the conclusion of the therapy, as the patient walked back to the waiting room the patient became short of breath. The therapist instructed the patient to contact her physician regarding the shortness of breath, fatigue, and calf pain prior to the cruise with the patient reporting there was no reason to go to the physician.
    • The therapist did not document in the medical record the recommendation for the patient to seek medical attention from the physician nor the patient’s response of not intending to seek medical attention. The therapist did document in the medical record, “The patient stated she will be on cruise for 14 days and would return to therapy after her vacation.”

Legal Implications

  • The patient was found deceased in her home two days after the last therapy treatment session. According to the autopsy the cause of death was, “acute pulmonary thromboembolism” with deep vein thrombosis (DVT) of the right leg and a history of right ankle sprain.
  • Six months post-mortem, the treating therapist and physical therapy business owner (co-defendant) receive a notice of intent to sue from the patient’s son.
  • Upon notification of the patient’s death, the therapist documented more details of the interactions that occurred during the patient’s last therapy session. The additional documentation of the last therapy treatment session lacked a date and signature.
  • Defense Experts’ Conclusions
    • The therapist failed to document concurrently the patient’s need to be seen urgently by a medical practitioner.
    • Given the complaints of increased calf pain, shortness of breath, and increased fatigue with walking; all physical therapy treatment should have been discontinued until the patient could be examined by the medical physician.
    • Continued physical therapy put the patient at risk of dislodging the blood clot.
    • The patient had an elevated risk for a DVT due to the smoking history, taking birth control, and use of the CAM walker boot.
    • Although the Pratt Test was appropriate to assess the patient for a DVT; the Pratt Test has a high false positive rate resulting in poor reliability.
  • Physical Therapy Practice Owner Resultant Liability
      • The business owner was implicated in the allegation due to the action of the employee, which is considered vicarious liability. Vicarious liability notes “employers are directly liable for the job-related conduct of employees when the wrongdoer is acting within the scope of employment at the time the negligence occurred.”
      • The vicarious liability was supported by the Defense’s Expert as the therapy practice possessed few policies and procedures governing the private practice and continuing education for employees had not been provided.

HPSO Risk Management Recommendations

  • Treating Physical Therapist
    • Recognize and document medical conditions and co-morbidities that may affect therapy.
    • Immediately notify the appropriate practitioner(s) of a change in the patient’s condition.
    • Document patient assessments, observations, communications, and actions objectively, timely, accurately, completely and appropriately.
    • Do not alter a medical record unless it is necessary for the patient’s care and if appropriate, the alteration/addendum requires the label as a late entry.
    • Once notified of a claim, do not alter or add to the medical record.
  • For the Physical Therapy Practice Owner
    • Perform at least annual employee reviews.
    • Provide physical therapy staff mentoring and training to ensure patient safety requirements are met.
    • Ensure clinical practices meet regulatory compliance and professional association standards.
    • Provide appropriate clinical support to be in compliance with supervisory requirements or employment agreements. Encourage adherence to legal, ethical, and professional standards of clinical practice.

Is Your Risk Management Program Comprehensive?

CNA’s Physical Therapy Liability Exposure: 2016 Claims Report Update states failure to properly test or treat the patient has the highest average paid indemnity in 2011 and again in the 2016 report. The highest percentage of claims closed during the 2016 reporting period was for improper management over the course of treatment.

In older reports, CNA and HPSO stated that other severe (costly) claims included failure to report the patient’s condition to a physician or other licensed independent practitioner, failure to complete a proper patient assessment, failure to refer the patient/and or seek consultation, and failure to follow established policy.

Does your risk management program include routine documentation audits, staff training, and compliance and HIPPA policies and procedures? These risk management processes support your compliance program requirements and assist in mitigating and minimizing risk whether the risk is negligence liability or documentation to support medical necessity and billing, which is payment driven.

It is important to implement a comprehensive risk management program including routine documentation audits, staff training to promote patient safety, and oversight to ensure staff comply with all regulatory policies and procedures, state practice guidelines, and professional guidelines.


LW Consulting, Inc. can assist you with your compliance program and/or conduct a documentation and coding audit. Contact Deborah Alexander at 717-213-3122 or email

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