Compliance | Kickback

Record Bust: 601 Defendants, Including 165 Doctors, Nurses and Other Licensees Charged With Over $2 Billion in Fraud

On Thursday, June 28th, the DOJ and HHS announced the largest ever health care fraud enforcement action. It resulted in charges against 601 defendants across 58 federal districts, including 165 doctors, nurses and other licensed medical professionals,  for their alleged participation in health care fraud schemes involving more than $2 billion in false billings.

The cases were coordinated by the Medicare Fraud Strike Force, a partnership between the DOJ’s Criminal Division, U.S. Attorney’s Offices, the FBI and HHS-OIG. Other federal and state agencies participated.

The prosecutions have a heavy opioid/dangerous narcotics focus: Of those charged, 162 defendants, including 76 doctors, were charged for their roles in prescribing and distributing those drugs.

Importantly, in addition to targeting schemes billing Medicare, Medicaid, and TRICARE, the feds also went after defendants who focused on billing private insurance companies for medically unnecessary prescription drugs and compounded medications that often were never even purchased and/or distributed to beneficiaries.

The defendants allegedly participated in schemes to submit claims for treatments that were medically unnecessary and often never provided. Patient recruiters, beneficiaries and other co-conspirators were allegedly paid cash kickbacks in return for supplying beneficiary information to providers, so that the providers could then submit fraudulent bills to Medicare.

The federal investigation was coordinated with a number of states’ Medicaid Fraud Control Units. As a result, in the states of Arizona, Arkansas, California, Connecticut, Delaware, Florida, Hawaii, Illinois, Indiana, Kansas, Louisiana, Maine, Michigan, Missouri, Mississippi, Nevada, New York, Oklahoma, Pennsylvania, Texas, Vermont, and Washington, 97 defendants were charged with defrauding the Medicaid program out of over $27 million.

From the many examples of alleged facts in the DOJ announcement:

  • An indictment in a compounding pharmacy fraud case alleges an attorney/marketer paid kickbacks and offered incentives such as prostitutes and expensive meals to two podiatrists in exchange for prescriptions written on pre-printed prescription pads, regardless of the medical need for the prescriptions. Once the prescriptions were filled, members of the conspiracy submitted approximately $250 million in fraudulent claims to federal, state, and private insurers for the compounded drugs.
  • In another case, defendants are a pharmacy chain owner, managing partner, and lead pharmacist charged with a drug and money laundering conspiracy. According to the indictment, the coconspirators used fraudulent prescriptions to fill bulk orders for over one million pills of hydrocodone and oxycodone, which the pharmacy, in turn, sold to drug couriers for millions of dollars.
  • A prosecution alleges a home health fraud and kickback conspiracy which resulted in more than $6.2 million paid by Medicare based on fraudulent billings.
  • A physician/owner of a pain management clinic was charged with unlawfully prescribing more than two million dosage units of Oxycodone.
  • Twelve defendants, including five medical professionals, were charged in various schemes involving health care fraud, unlawful distribution of controlled substances, aggravated identity theft, and money laundering. One of the schemes involved the operation of two false-front medical clinics.

The feds also announced that since this time last year, they excluded 2,700 individuals from participation in Medicare, Medicaid, and all other Federal health care programs, of whom 587 were excluded for opioid diversion and abuse. Over the past fiscal year, the DOJ has won or negotiated over $2 billion in judgments and settlements related to matters alleging health care fraud.

For those interested in the full press release, it can be found here. Additionally, documents (photos, links to indictments, and more) relating to the cases can be found here.

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

Mark F. Weiss

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“But Everyone Is Doing It!” Is Not A Great Defense To A Compliance Violation

I’m on my way to work. The speed limit on this road is 40. I’m not going to tell you how fast I’m going, but I will say that I’m going with the flow of traffic.

For argument’s sake, let’s assume what you already think: we’re all going a lot faster than 40 mph. Let’s also assume a policeman pulls over the guy in the silver Honda in front of me.

Do you think that Mr. Honda Driver will be successful arguing his way out of a ticket by exclaiming, “but, officer, everyone is speeding!”

Nope, that’s not going to work.

Even if that sort of argument were to work later in front of a judge, Mr. Honda Driver is still going to spend his day in court, and, depending on how far he’s willing to fight until he settles or gives up, hire a “speeding ticket defense lawyer.” And, then there’s the cost of increased car insurance when the ticket hits his driving record.

So, even if he wins, there’s a transaction cost to speeding, potentially a heavy one.

Most people understand that.

But yet, so many people – physicians and business people – engaging in arrangements involving sophisticated federal and state anti-kickback issues and self-referral issues, often simply point to someone else who’s doing what they claim is the same thing, as if that makes it acceptable.

“Everyone is giving up something for referrals.” “My friend from residency says that his group makes a fortune by doing it.” “No one is going to find out because people do it all the time.” “The hospital says we can do it, and they have a department full of lawyers.”

In other words, they point at all the other speeders.

Let’s, for the moment, give the others the benefit of the doubt: Even if it’s true that they are doing the same thing, it’s essential to remember this all-so-true adage in terms of healthcare compliance: “If you’ve seen one deal you’ve seen one deal.”

You don’t know if that deal was properly structured. And, if it were, you don’t know if the pivotal reason why the deal does work applies to your situation.

These days, unfortunately, physicians and other healthcare providers and their ventures have targets painted on their backs in terms of prosecution. There are federal, state, and even local law enforcement task forces aimed at healthcare fraud. Prosecutors are using new tricks to turn state crimes into federal ones. And, the transaction cost of defending against charges related to a questionable deal can easily exceed $500,000 or even $1 million, plus the attendant months or years of limbo, and the damage to your practice, reputation, and business while the wheels of justice turn slowly.

At the same time, changes in healthcare, especially in terms of new ventures that take advantage of the The Impending Death of Hospitals, bring tremendous opportunity to those willing to pursue it.

In pursuing those opportunities, you must think twice, no, thrice, about how those new ventures and other relationships are structured. If not, you’re inviting whistleblowers – enemies, jilted potential partners, former employees and observers – to simply drop the dime on you or even to file a claim against you under the False Claims Act.

Don’t skimp and save, trying to avoid an expense, when it might just be that the only place you have to spend it is in the federal prison commissary.

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

Mark F. Weiss

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