Compliance Kickback

Ghost of Eliot Ness Busts 345 Defendants in Nation’s Largest Opioid-Fueled Healthcare Fraud Extravaganza – $6 Billion In Alleged False Claims

October 12, 2020

In a move reminiscent of prohibition-era crime fighter Eliot Ness, the U.S. Department of Justice recently announced a coordinated enforcement action against 345 alleged healthcare criminals, including over 100 physicians and other licensed (for now) healthcare professionals, in 51 judicial districts.

The defendants were charged with submitting more than $6 billion in false and fraudulent claims to federal health care programs and private insurers. Of that sum, over $4.5 billion relates to telemedicine, more than $845 million is connected to substance abuse treatment facilities, or “sober homes,” and over $806 million relates to other health care fraud and illegal opioid distribution schemes. 

Telemedicine Scheme

Unfortunately, the structure of the telemedicine scheme is one that
I’ve seen play out multiple times, sometimes with enough time to avert a client’s participation:

Step 1: Certain defendant telemedicine executives allegedly used
marketing networks to lure unsuspecting “patients” into the scheme via telemarketing, direct mail, TV ads, and internet ads. Call centers confirm Medicare or Medicaid eligibility and transfer the individuals to the telemedicine company.

Step 2. The telemedicine companies controlled by the defendants then allegedly pay defendant doctors and nurse practitioners to order unnecessary durable medical equipment, genetic and other diagnostic testing, and pain medications, either without any patient interaction or with only a brief telephonic conversation with patients they had never met or seen.

Step 3: The telemedicine defendants then allegedly sell (as in illegal kickbacks and bribes) the physician’s or nurse practitioner’s orders to defendant DME companies, genetic testing laboratories, and pharmacies, which, pursuant to the Government’s allegations, subsequently submitted false and fraudulent claims to Medicare and other government insurers.  

Sober Homes Scheme

In connection with the substance abuse treatment facilities (also known
as “sober homes” ) scheme, the Government alleged an $845 million scheme of false and fraudulent claims for tests and treatments for drug and/or alcohol addiction.  

The defendants include physicians, owners and operators of substance abuse treatment facilities, as well as patient recruiters (AKA “body brokers”) all alleged to have participated in schemes involving the payment of illegal kickbacks and bribes for the referral of scores of patients to substance abuse treatment facilities. According to the charges, those patients were subjected to medically unnecessary drug testing – often billing thousands of dollars for a single test – and therapy sessions that were frequently not provided, and which resulted in millions of dollars of false and fraudulent claims being submitted to private insurers.  

It’s also alleged that medical professionals prescribed medically unnecessary controlled substances and other medications to these patients, sometimes to entice them to stay at the facility.  The patients were then often discharged and admitted to other treatment facilities, or referred to other laboratories and clinics, in exchange for more kickbacks.

Opioids Scheme

The DOJ’s announcement included charges filed, and guilty pleas obtained, involving more than 240 defendants who allegedly participated in schemes to submit more than $800 million in false and fraudulent claims to Medicare, Medicaid, TRICARE, and private insurance companies for medically unnecessary, and often never provided, treatments involving more than 30 million doses of opioids and other prescription narcotics.

Takeaways for You

1. The first takeaway is one that that I often urge: Just because some other party to a proposed venture tells you that the deal’s been vetted by their lawyers and is “legal,” don’t bet on it. Vet it through your own counsel and assess your own risk. As in carpentry, measure (assess) twice, cut (do the deal) once. Or not do the deal – you get the idea.

2. Government funds spent pursuing healthcare fraud result in a return on investment that Warren Buffett could only dream of. As a result, the federal and state governments will continue to pursue and pursue and pursue potential defendants. Since 2007, the DOJ’s Health Care Fraud Strike Force program had charged more than 4,200 defendants who have collectively billed the Medicare program for approximately $19 billion. And now, according the DOJ’s announcement, they’ve kicked those efforts up a notch or three through the creation of a National Rapid Response Strike Force within that existing program. It’s mission? To investigate and prosecute fraud cases involving major health care providers that operate in multiple jurisdictions.

3. Don’t get swept up (and away, as in put away) by either of those enforcement programs. 

Comment or contact me if you’d like to discuss this post.

Mark F. Weiss

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