Medicare Fraud

Healthcare Whistleblower Claims Based on Self-Referral Arrangements

July 17, 2014 | Little Health Law

Two federal laws regulate referrals and financial arrangements between healthcare providers and facilities – Stark Law and the Anti-Kickback Statute.¹ These laws have recently been at the center of important healthcare whistleblower fraud cases. While both serve the same essential purpose – to eliminate improper financial incentives that interfere with independent medical judgment and good patient care – they do so in slightly different ways and contexts.

Stark Law (also known as the “Ethics in Patient Referrals Act”) prohibits physician referrals of specified or “designated health services” for Medicare and Medicaid patients, where the physician or her immediate family member has a financial relationship with the referred entity.² A financial relationship can include ownership, investment interest, and direct or indirect compensation arrangements.³ A “referral” is broadly defined to include “the request by a physician for the item or service” (Medicare Part B services) and “the request or establishment of a plan of care by a physician which includes the provision of the designated health service” (all other services).⁴ Designated health services (DHS) include laboratory services, physical therapy and occupational services, radiology (including MRI, ultrasound, and computer tomography scan) services, radiation therapy services and supplies, durable medical equipment and supplies, prosthetics, orthotics, and prosthetic devices, home health services and supplies, outpatient prescription drugs, and inpatient and outpatient hospital services.⁵
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The Affordable Care Act & Qui TamWhistleblower Claims

May 20, 2014 | Little Health Law

Controlling healthcare costs is essential to the economic security of the United States. Total healthcare spending in the U.S., already an astronomical $3 trillion dollars in 2013, is expected to grow almost 6% annually through 2022.¹ Spiraling healthcare costs is an obvious problem on many levels, including the fact that, through Medicare, the federal government is the single largest purchaser of healthcare in our third party payer system. Total Medicare spending is expected to increase from $523 billion in 2010 to $932 billion by 2020.²

The Patient Protection and Affordable Care Act, commonly known as the Affordable Care Act (ACA) or “Obamacare,” has frequently been in the spotlight for website issues and intense political debate over the law. However, a less publicized – but critical – aspect of the ACA is its intended role of curbing the rise in our nation’s healthcare costs.³
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Primer on Whistleblowing in Healthcare

May 5, 2014 | Little Health Law

What are whistleblower lawsuits?

Whistleblower lawsuits and settlements are on the rise and in the news. From January 2009 through September 2013, the federal government recovered $17 billion in false claims alone. Of course, most healthcare providers are honest and work diligently to improve the health of their patients and contribute to the lawful operation of a healthcare business. It is in the best financial interests of physicians and other healthcare providers who comply with the law that fraudulent schemes to unlawfully obtain government funds be deterred and remedied. The federal and many state governments have determined that a crucial means of combatting healthcare fraud is by incentivizing those who are aware of fraud to report it as a “whistleblower.”¹ In light of spiraling healthcare costs and with state and federal governments’ roles as third party payors, healthcare whistleblowing protects law-abiding taxpayers, healthcare professionals and consumers.

As this article explains, many federal and state whistleblower laws provide legal causes of actions for employees, officials and others who suspect or discover violations of law, waste or abuse within government or fraudulent practices by companies doing business with government. A person with knowledge of a violation or fraud, known as a whistleblower or “relator,” may bring a lawsuit to expose the fraud or abuse and recover damages on the government’s behalf. In many cases, whistleblowers are entitled to a percentage of the recovery for their efforts in uncovering fraud and assisting in the recovery.
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STARK Whistleblowing Case Leads To Record $85 Million False Claims Act Settlement Between Florida Hospital System And The Government

April 22, 2014 | Little Health Law

Halifax Hospital Medical Center and Halifax Staffing, Inc. (Halifax), on the day of jury selection, agreed to pay $85 million and made other concessions as part of a settlement with the federal government to resolve allegations that Halifax violated STARK prohibitions and the False Claims Act (FCA). The settlement amount is the largest STARK sanction to date against a hospital system for STARK law violations.

The case is styled United States ex rel v. Halifax Hospital Medical Center, et al., No. 09-cv-1002 (M.D. Fla). The government’s allegations stemmed from Halifax’s financial relationships with a group of oncologists. The case was initiated by a compliance officer of the hospital, and the Justice Department agreed to take the case pursuant to the FCA.
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Health Services Company Owners Plead Guilty to Healthcare Fraud

September 21, 2013 | Little Health Law

On September 5, 2013, owners of Trust Care Health Services, Inc. (Trust Care) pled guilty in a Florida federal court to federal healthcare fraud charges. Roberto Marrero, Sandra Fernandez and Enrique Rodriguez, owned and operated Trust Care. Trust Care was a Florida corporation, incorporated in 2005 that did business as a home healthcare services business in the Miami and South Florida area. Trust Care provided home health and physical therapy services to Medicare beneficiaries.

Trust Care was an authorized Medicare provider, approved to submit claims to Medicare. The Government’s allegations of Medicare fraud were based on the Government’s contention that physical therapy and home health services were billed to Medicare but not medically necessary, or not provided, or both.

According to the indictment, the defendants and co-conspirators paid patient recruiters to provide Trust Care with patients to whom defendants sold healthcare services that were not medically necessary and/or not provided. Kickbacks and bribes were also paid to obtain for Trust Care prescriptions, medical certifications and other documents needed to facilitate the scheme. Specifically, the government alleged:

It was the purpose of the conspiracy for the defendants and their conspirators to unlawfully enrich themselves by: (1) paying and accepting kickbacks and bribes for referring Medicare beneficiaries to Trust Care so that their Medicare beneficiary numbers would serve as the bases of claims filed for home health care; and (2) submitting and causing the submission of claims to Medicare for home health services that the defendants and their conspirators purported to provide to those beneficiaries.

Indictment, para. 3.
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Medicare Fraud Strike Force Uncovers $2.6 Million Medicare Fraud Scheme by DME Owner

August 29, 2013 | Little Health Law

The Medicare Strike Force of the FBI and HHS-OIG continues efforts to eliminate fraudulent healthcare providers from the healthcare arena. The Strike Force recently obtained a guilty plea by the former owner of a California durable medical equipment supply company (DME) business based on an alleged scheme to defraud Medicare of millions. Akinola Afolabi, 54, of Long Beach, California, pled guilty to one count of healthcare fraud and now faces up to 10 years in prison and a $250,000 fine. Afolabi’s sentencing by the U.S. District Court in the Central District of California will take place on November 25, 2013.

According to the government’s allegations in that case, Afolabi owned Emanuel Medical Supply Company. Emanuel was a DME supply company that sold, among other things, power wheelchairs and related supplies. The federal government alleged that Afolabi used Emanuel to provide medically unnecessary power wheelchairs and other DME to Medicare beneficiaries in California, during a three year period. Afolabi is alleged to have used “marketers,” among other means, to obtain Medicare beneficiaries’ contact information, which Afolabi submitted to the government to make false Medicare claims. Afolabi paid the marketers to refer Medicare beneficiaries to Emanuel. Afolabi then falsely certified to Medicare that each claim submitted was for medically necessary DME that was actually provided to the beneficiary, according to the government. During the subject time frame, Afolabi submitted to Medicare approximately $2.6 million in alleged fraudulent claims for the wheelchairs and related services, and Medicare paid out almost $1.5 million.

The Medicare Strike Force continues to combat healthcare fraud. Eliminating healthcare fraud and obtaining recoveries from bad actors remain a major push for the federal government as a means of reducing the cost of healthcare for our Country. Since 2007, the Strike Force has charged over 1,500 defendants who have together submitted more than $5 billion in Medicare claims.
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Combatting a National Trend of Physicians Dispensing Unapproved Foreign Drugs

February 1, 2013 | Little Health Law

On January 15, 2013, Dr. Joel I. Bertstein, a La Jolla, California oncologist, pled guilty to a charge that he introduced an unapproved drug into interstate commerce and administering it to patients. The drug is a cancer fighting drug known as “Mabthera.” Mabthera has not been approved by the U.S. Food and Drug Administration (FDA) for use in the United States and is intended for marketing in Turkey. Rituxa is the approved U.S. drug that contains the same active ingredient and is used to fight lymphomas and leukemias.

According to the government’s allegations, Bernstein and his corporate medical practice, Dr. Joel I. Bernstein, M.D. Inc., imported Mabthera at a deep discount, dispensed the drug to unwitting patients, billed Medicare as if the drug was legitimate, and retained profits from the transactions. The government alleged that during the period from 2007 to 2011, Bernstein purchased $3.4 million of unapproved cancer drugs, for significantly less than market value in the U.S., and submitted claims to Medicare at the full reimbursement price using Medicare codes for approved cancer drugs. The government charged that Bernstein submitted reimbursement claims of $1.7 million to Medicare.

The financial recovery for the federal tax payer is not the sole objective for the government’s prosecution of this type of Medicare fraud. Additionally, the government seeks to combat a strong nationwide trend that exposes U.S. patients to risks associated with the use of drugs not vetted and approved by the FDA. Patient welfare is at stake. Indeed, the government considers the problem of counterfeit drugs to be of “epidemic” scale. Numerous federal agencies, including the Department of Justice, the Federal Bureau of Investigation, the FDA, and Homeland Security, are involved in the effort to combat a national crisis of importation counterfeit and unapproved drugs. The government has undertaken significant efforts to discovery fraudulent Medicare schemes that cost the federal taxpaper billions of dollars every year and compromise patient safety.

The FDA’s procedures for approving a drug apply not only to the drug itself but also to labeling and packaging, the facility where the drug was manufactured and shipping protocol. Some oncology medications must be transported at a particular temperature. When a patient consumes an unapproved drug, he is taking a serious chance that the proper conditions for the manufacture and shipment of the drug have not been met. In Dr. Berstein’s case, the government asserted that unapproved chemotherapy drugs “may be fake, ineffective, unsafe and dangerous.”
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Seven Arrested, Charged with $22 Million Detroit-area Home Health Care Fraud Scheme

January 25, 2013 | Little Health Law

Federal law enforcement agents arrested one Chicago-area resident and six Detroit-area residents based on allegations of home health care fraud. In an 18-count indictment unsealed on January 17, 2013, the federal government contends that the seven parties effectuated a scheme to defraud Medicare based on claims for in-home health services at Royal Home Health Care Inc., Prestige Home Health Care Services Inc., Platinum Home Health Services Inc. and Empirical Home Health Care Services Inc. According to the indictment, Medicare was defrauded of over $22 million based on false claims for services since August 2008.

The Medicare Program is a federal health care program that provides benefits to the disabled and persons over age 65. It is administered by the Centers for Medicare and Medicaid Services (“CMS”), a division of the United States Department of Health and Human Services Office of Inspector General (“HHS-OIG”). In order for a health care provider to participate in Medicare, the provider must agree to abide by Medicare polices and procedures, rules, and regulations published by the federal government. When a provider is certified as a participant in the program, the provider receives a provider identification number for billing purposes, known as a “PIN.” A provider uses the PIN to submit claims for reimbursement to the government for services rendered to a patient, or “beneficiary.” A Medicare beneficiary has a Medicare beneficiary number that is used for billing purposes.

Combating Medicare fraud has been a major priority and focus of the federal government for many years. Since March 2007, the federal government’s Medicare Fraud Strike Force, which involves HHS-OIG, the FBI and other federal law enforcement, have charged more than 1,480 defendants who have falsely billed Medicare for over $4.8 billion. This indictment is part of the effort of the government’s Medicare Fraud Strike Force to effectively combat Medicare Fraud in an effort to curb the spiraling costs of the Medicare Program and otherwise for the benefit of the federal taxpayer.

According to the indictment, the home health care companies purported to provide in-home physical therapy, occupational therapy, speech pathology and/or skilled nursing services to patients. Royal, Prestige, Platinum and Empirical were Medicare providers that submitted claims directly to Medicare using PINs and beneficiary numbers. The individuals named in the indictment were either owners and/or officers of the home health care companies, or were employed as therapists or patient recruiters. The indictment charges that the defendants offered and paid kickbacks and bribes in the forms of cash payments and/or prescription narcotics to Medicare beneficiaries for the purpose of such beneficiaries arranging for the use of their Medicare beneficiary numbers by the conspirators as the bases of claims for physical therapy and other services. The indictment further alleges that Medicare claims were submitted to the government for physical therapy services and other services that were not provided and/or were not medically necessary. The indictment states that the defendants used false medical documents to support the fraudulent claims.
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