Unlike Franz Kafka’s Joseph K.[1], arrested and charged with a crime about which he is given no information and for which he is ultimately convicted and condemned to death, Alexander S., full name Alexander Shister, a Milwaukee, Wisconsin-area pharmacist and now felon, knows full well the crime for which he was charged, pleaded guilty, and was sentenced–violation of the federal Anti-Kickback Statute, the AKS, in connection with a pain cream scam.
Unlike Joseph K., there will be no state-administered knife through the heart, “only” 18-months imprisonment, a $40,000 fine, and the obligation to pay close to $1 million in restitution to Medicare and Medicaid.
Shister owned four Milwaukee-area pharmacies. Beginning in 2016, Shister engaged in a scheme to pay co-defendant David Guerrero kickbacks of $100 per Medicare and Medicaid patient referral, in total over $100,000, for expensive compound pain creams. Guerrero, not a medical provider but an employee of two medical clinics, used his position, often without the patients’ knowledge or consent, to order approximately $1 million of medically unnecessary pain creams, including creams not even received by patients.
Guerrero was previously sentenced to 32 months’ imprisonment for his role in the kickback scheme with Shister, as well as a second kickback scheme involving a local medical laboratory company.
The Shister/Guerrero tale is just the latest pain cream scam to be mentioned on this blog. For example, see Greasy Kickback Residue Is All That’s Left of Pain Cream Fraud, Compound King Breaks Bad, Gets Creamed, and No Matter How Hard They Tri[Care], Another Compounded Medicine Scam Creams Out.
Unfortunately, pain cream scams often spread to physicians, sometimes even to hospital-based physicians looking to pick up a little (well, actually, a lot) of cash on the side, generally by way of what appears to be telemedicine, but which is just a technologically polished scam.
The problem became so large that in 2022, the U.S. Department of Health and Human Services Office of Inspector General (“OIG”) issued a new Special Fraud Alert urging caution when entering into arrangements with telehealth companies.
Here, in encapsulated form, is what you need to know:
- These schemes, which abound, exploit the public’s acceptance of remote treatment tech, and purport to use telehealth, telemedicine, or telemarketing services.
- In some of these schemes, the companies intentionally pay physicians kickbacks to prescribe prescription medication. Other schemes involve unnecessary DME, genetic testing, and wound care. All result in fraudulent claims to Medicare, Medicaid, and other Federal health care programs.
- Although the breadth of scams is wide both in type, as mentioned above, and in operation, e.g., call centers, staffing companies, marketers, brokers, etc., the commonality is the use of kickbacks to recruit and reward the practitioners.
- Generally, the telemedicine companies solicit and recruit purported patients and shunt them to practitioners, with the aim of arranging for the order or prescription of medically unnecessary items and services for individuals with whom the practitioners have limited, if any, interaction, and without regard to medical necessity.
- Payments to practitioners are sometimes described as payment per review, audit, consult, or assessment of medical charts.
- The telemedicine companies often tell practitioners that they do not need to contact the purported patient or that they only need speak to the purported patient by telephone.
- Practitioners are not given an opportunity to review the purported patient’s real medical records.
- The telemedicine company may direct the practitioner to order or prescribe a preselected item or service, regardless of medical necessity or clinical appropriateness.
- In many cases, the telemedicine company sells the order or prescription generated by practitioners to other individuals or entities that then fraudulently bill for the unnecessary items and services.
The Special Fraud Alert includes a nonexclusive list of telehealth/telemedicine fraud scam characteristics for you to keep in mind:
- The purported patients for whom the practitioner orders or prescribes items or services were identified or recruited by the telemedicine company, telemarketing company, sales agent, recruiter, call center, health fair, and/or through internet, television, or social media advertising for free or low out-of-pocket cost items or services.
- The practitioner does not have sufficient contact with or information from the purported patient to meaningfully assess the medical necessity of the items or services ordered or prescribed.
- The telemedicine company compensates the practitioner based on the volume of items or services ordered or prescribed, which may be characterized to the practitioner as compensation based on the number of purported medical records that the practitioner reviewed.
- The telemedicine company only furnishes items and services to Federal health care program beneficiaries and does not accept insurance from any other payor.
- The telemedicine company claims to only furnish items and services to individuals who are not Federal health care program beneficiaries but may in fact bill Federal health care programs.
- The telemedicine company only furnishes one product or a single class of products (e.g., durable medical equipment, genetic testing, diabetic supplies, or various prescription creams), potentially restricting a practitioner’s treating options to a predetermined course of treatment.
- The telemedicine company does not expect practitioners (or another practitioner) to follow up with purported patients nor does it provide practitioners with the information required to follow up with purported patients (e.g., the telemedicine company does not require practitioners to discuss genetic testing results with each purported patient).
The danger to physicians and other practitioners considering participation in these arrangements is that they potentially implicate multiple Federal laws, including the Federal anti-kickback statute (the “AKS”), the Federal criminal law that prohibits knowingly and willfully soliciting or receiving (or offering or paying) any remuneration in return for (or to induce), among other things, referrals for, or orders of, items or services reimbursable by a Federal health care program. Other triggered laws include the Civil Monetary Penalty Law, the criminal health care fraud statute, and the Federal False Claims Act. Penalties range from multi-year prison terms to significant fines to very large civil penalties.
Often lost on physicians is the fact that even though they might not be the moving party involved in the scam, liability falls on both sides of a kickback scheme. In other words, you can be personally liable, criminally and civilly, in connection with these scams, including for submitting or causing the submission of claims.
With lots of money at play, it’s not hard to see why the government is motivated to investigate and prosecute in order to obtain huge fines and the benefit of the forfeiture (generally to the investigating agency) of scores of millions of dollars.
Some final takeaways for you:
Any deal must be structured in compliance with the federal Anti-Kickback Statute, Stark, and various state law counterparts and other restrictions.
Money, big money, is tempting. I know because I’ve counseled many clients in connection with telemedicine “ventures” paying what they must have thought was money from heaven.
Yes, telemedicine has many valid applications. Violation of the AKS and committing fraud are not among them.
And, the money’s not from heaven. It’s from hell.
Let’s talk before you consider any telehealth or telemedicine arrangement.
[1] The Trial by Franz Kafka written in 1914 and 1915 and published in 1925. Prescient then and as prescient now.