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

www.weisspc.com

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Compliance

Healthcare Freedom of Choice: Doughnuts and Doing Time

In a Wall Street Journal piece published in last weekend’s Saturday/Sunday Nov. 11-12, 2017, edition, Ezekial Emanuel, M.D. of the University of Pennsylvania and other pursuits, wrote of the “hype of virtual medicine.”

In particular, he cited studies that show that virtual medicine and high-tech health gadgets such as Fitbits accomplish nothing in regard to increasing patient compliance with doctors’ orders or to actually live healthier lifestyles. The same compliance problems that exist with regard to traditional medical encounters exist with regard to technological encounters.

The bigger issue is why he’s surprised at all.

People are free to do with their health what they want to do, and the simple fact of the matter is that many people don’t feel like complying with physicians’ “orders” any more than many physicians feel like complying with “compliance” laws.

It’s simply a fact of free choice.

Just as I wasn’t surprised when, several years ago, a corpulent physician suggested that I eat a second lunch in the physician’s dining room at the hospital “because the food is free,” I’m not that surprised when a group of hospital administrators thinks that an obviously defective and illegal kickback scheme is a perfectly valid business model.

Free choice in structuring healthcare deals, just as free choice in having that fifth doughnut, falls on a risk-reward-punishment continuum.

What’s Sally’s (the wife and mother) health risk when faced with the question of second glazed or fourth jelly? What’s Sally’s (now at her desk as hospital CEO) risk when faced with the question of entering into an undocumented financial arrangement with a referring physician, thus implicating Stark and the Anti-Kickback Statute? What’s Sally’s sister Sarah’s risk when faced with the question of entering her medical group into a deal with pharmacy owners and investors to telephonically prescribe pain creams to patients on a one-off, transactional basis?

Pleasure/money now, with some risk of diabetes/debarrment/detainment far off in the future. Or, maybe not so far off.

The issue of risk isn’t just the cold calculation of the chance of getting caught. It’s that chance times the intensity of the punishment. A 5% chance of 10 years in prison is riskier than a 60% chance of a $50,000 civil monetary penalty and being forced into a Corporate Integrity Agreement.

Of course, the scale that we use to measure risk isn’t fixed either, and some put an extra finger or even two on the side of the scale marked “it won’t happen to me.” But, then again, we’re also free to fool ourselves.

How else can you explain deals gone awry such as these:

Sweet Dreams Nurse Anesthesia agreed to pay $1,034,416 to the U.S. government and $12,078.79 to the the State of Georgia to resolve allegations that it violated (due to underling AKS violations) the False Claims Act and the Georgia False Medicaid Claims Act.

Specifically, they were alleged to have entered into arrangements with ASCs to provide the facilities with free anesthesia drugs in exchange for exclusive anesthesia agreements. They were also alleged to have agreed, through an affiliate, to fund the construction of an ASC in exchange for contracts as the exclusive anesthesia provider at that and a number of other ASCs.

MediSys Health Network Inc., the owner of Jamaica Hospital Medical Center and Flushing Hospital and Medical Center, both in Queens, New York, agreed to pay $4 million to the U.S. government to settle allegations that it violated (due to underlying Stark Law violations) the False Claims Act by engaging in improper financial relationships with referring physicians.

Specifically they were alleged to have have submitted false claims to the Medicare program for services rendered to patients referred by physicians with whom the defendants had improper compensation and office lease arrangements.

So, strap on that Fitbit and have the glazed, or give free drugs to the ASC, or provide free office space to the cardiac surgery group.

Hey, it’s a free country. Just remember that you’re free to suffer the consequences, too.

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

Mark F. Weiss

www.weisspc.com

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Kickback

Drugs, Sentencing, and Lock (and Roll on to Another Kickback Prosecution)

Back in February of this year, I wrote in my post Pain Medicine Doctors Alleged to Have Received $115,000 in Kickbacks … Plus $40 Million in Illicit Profit, about the cautionary tale of Drs. John Couch and Xiulu Ruan, both then in the midst of their federal court trial for, as was then alleged, receiving $115,000 in kickbacks from Insys Therapeutics, Inc. in connection with its fentanyl drug, Subsys.

Among the allegations:

  • That Couch and Ruan prescribed, and also sold through their owned pharmacy, large quantities of Subsys, based on misleading diagnoses, defrauding payors.
  • That their profit of $40,000,000 from dispensing Subsys and other controlled substances was an illicit profit from a “pill mill.”
  • That they received “speaking fees” from Insys based on the number of Subsys prescriptions they wrote.

As I commented then, the federal Anti-Kickback statute makes it illegal to receive anything of value for the referral of federal health care program patients. Wire fraud statues, the federal Travel Act and other laws turn what are “simple” violations (a huge simplification!) of state laws into federal criminal offenses. The federal Controlled Substances Act permits prescribing and dispensing only for legitimate purposes, not in respect of “pill mill” activities. Federal healthcare fraud makes it a crime to defraud a healthcare benefits program, including a commercial insurer.

Update

Over the ensuing months, Couch and Ruan’s trial moved forward to guilty verdicts and then to sentencing:  Crouch was sentenced to prison for 240 months and Ruan received an even stiffer sentence, 252 months behind bars.

In addition, the duo was ordered to make restitution of $6,282,023.00 to Medicare, $3,649,092.97 to Blue Cross/Blue Shield of Alabama, $2,285,170.70 to Tricare, and $1,695,929.00 to United Heath Group.

And Another Subsys Prosecution

Just last week, the State of Arizona brought criminal charges in state court against three pain medicine physicians, Steve Fanto, M.D., Nikesh Seth, M.D., and Sheldon Gingerich, M.D., as well as against Insys and Insys executives.

The allegations: That the physicians collected sham educational “speaker fees” in exchange for writing prescriptions for Subsys.

The criminal complaint claims that from March 2012 to April 2017, more than $33 million, or 64 percent of Subsys sales in Arizona, came from prescriptions written by Fanto, Seth, and Gingerich.

In additional echoes of the Couch and Ruan prosecution, it’s alleged that Drs. Fanto, Nikesh, and Gingerich gave insurers false and misleading information, including that patients had cancer when they did not, to obtain prior authorization for Subsys prescriptions.

Once Again, the Takeaways for You:

1. Money: The are many legitimate ways for physicians to increase their practice income. They include, depending on state law, investments in pharmacies and the direct dispensing of pharmaceuticals.

2. Structure: But any deal must be structured in compliance with the federal Anti-Kickback Statute, the Controlled Substances Act, Stark, and numerous other federal laws, as well as with various state law counterparts and other restrictions. Your investment in structuring things correctly is an investment in yourself and your jail-free future.

3. Compliance Auditing: No matter how well structured, it’s essential that you engage in periodic compliance audits coordinated through legal counsel. Laws change and actual behavior impacts all of the structure and planning. Even the best planning can be made worthless if illegal conduct takes place within the context of what was planned to be a proper structure.

4. Investigations: If you learn that you (or any person or entity connected to the operation) are under investigation, immediately engage a team of experienced healthcare attorneys and criminal defense counsel. Many potential prosecutions are resolved at this stage.

5. Indictment and trial: Again, immediately engage a defense team of healthcare and criminal defense counsel.

We’ve established a strategic alliance with noted white collar defense attorney Lawrence Brown and his firm, Brown PC, in order to bring a wider set of skills and experience to select clients at the auditing, investigation and indictment/trial phase. Please contact me for additional information.

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

Mark F. Weiss

www.weisspc.com

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