Kusserow’s Corner: Recent Fraud Sentences and Settlements

Patient Broker for a Psychiatric Hospital Sentenced in $67 Million Fraud Scheme

On November 6, 2013, Gloria Himmons was sentenced to serve 24 months in prison followed by three years of supervised release for her participation in a $67 million Medicare fraud scheme. She also was ordered to pay $14 million in restitution, joint and severally with her co-defendants. She pleaded guilty to conspiracy to receive health care kickbacks and one count of receiving a health care kickback. She had been a patient broker at Hollywood Pavilion LLC (HP), a state-licensed psychiatric hospital in South Florida that purported to offer both inpatient and outpatient mental health services. She provided Medicare beneficiaries to HP in exchange for bribes and kickbacks, knowing the patients she provided were not appropriate for inpatient psychiatric hospitalization or for outpatient mental health treatment. The patients included those who were not severely mentally ill, as well as substance abusers looking for rehabilitation programs. The patients did not have legitimate referrals from hospitals or doctors who had been treating acute-phase, severe mental illness. As a result of Himmons’s participation in this scheme, HP was improperly paid more than $7 million by Medicare. From at least 2003 through at least August 2012, HP billed Medicare approximately $67 million for services that were not properly rendered, for patients that did not qualify for the services being billed, and for claims for patients who were procured through bribes and kickbacks. Medicare reimbursed HP on approximately $40 million of those claims.

Co-defendants Karen Kallen-Zury, Daisy Miller and Christian Coloma were previously sentenced in September after their jury convictions. Kallen-Zury, the chief executive officer of HP, and Miller and Coloma were convicted on all counts at trial and sentenced to 300 months, 180 months and 144 months, respectively. Kallen-Zury and Miller were ordered to pay, jointly and severally with their co-defendants, nearly $40 million in restitution. Coloma was ordered to pay, jointly and severally, more than $20 million in restitution.

 

Baptist Health System Civil Settlement

Baptist Health Systems, in San Antonio, Texas paid $3,675,000 to settle allegations that it violated the federal False Claims Act by filing false claims for reimbursement under the Medicare program. This civil case was initiated by a whistleblower lawsuit that alleged improperly filed claims were mad to the Medicare program by failing to disclose on the claim that the patient receiving treatment had another insurance policy that covered the care at Baptist. It was also alleged Medicare program overpaid on claims from 2003 through 2007. Under the law, a health care provider is required to disclose the fact that a patient has other insurance when it files its claim with Medicare. The claim is processed under the other insurance policy and, in most cases, Medicare pays whatever the patient was out of pocket (such as a deductible or copayment). If the health care provider receives a double payment because the insurance company is slow to pay, then the health care provider must reimburse Medicare. The final basis of the settlement amount was an audit conducted by Baptist Health of claims going back ten years.

Nursing Home Operator $48 Million Settlement for Unnecessary Therapy Claims

The Ensign Group Inc., a skilled nursing provider that operates nursing homes across the western U.S. has agreed to pay $48 million to resolve allegations that it knowingly submitted to Medicare false claims for medically unnecessary rehabilitation therapy services. Six of their facilities submitted claims for physical, occupational and speech therapy services provided to Medicare beneficiaries whose conditions and diagnoses did not warrant it, solely to increase its reimbursement from Medicare. Ensign created improper incentivizes to therapists and others to increase the amount of therapy provided to patients to meet planned targets for Medicare revenue. These targets were set without regard to patients’ individual therapy needs and could only be achieved by billing at the highest reimbursement levels. Also alleged is that Ensign billed for inflated amounts of therapy it had not provided and that certain patients were kept in these facilities for periods of time exceeding what was medically necessary for treatment of their conditions. In addition to paying the settlement amount, Ensign agreed that each of its skilled nursing facilities across the nation would be bound by the terms of a Corporate Integrity Agreement with the HHS Office of Inspector General (OIG).

The allegations settled today arose from lawsuits filed by two former Ensign therapists under the qui tam, or whistleblower, provisions of the False Claims Act, which allow private citizens to bring suit on behalf of the government and to share in any recovery. The dollar amount that the whistleblowers in this case, Gloria Patterson and Carol Sanchez, will receive has not been determined. The lawsuits are captioned as United States of America ex rel. Gloria Patterson v. Ensign Group Inc., Case No. SACV 06-6956 CJC (ANx) (C.D. Calif.) and United States of America ex rel. Carol Sanchez v. Ensign Group Inc., Case No. SACV 06-0643 CJC (ANx) (C.D. Calif.).

Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

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Copyright © 2013 Strategic Management Services, LLC. Published with permission.