Kusserow’s Corner: Highlights of December Enforcement Actions, Part 2

Home Health Fraud

Twenty Detroit-area residents were charged in a $34 million Medicare fraud scheme related to physician home visit, home health care, chiropractic, and psychotherapy. Defendants included physicians, owners and operators of companies, office employees, and patient recruiters. They were charged with submitting fraudulent claims for services that were never rendered and with paying kickbacks to obtain patients to be billed. Nineteen of the defendants were arrested or surrendered to authorities with one remaining at large. In addition, search warrants were executed at nine locations and seizure warrants of 14 bank accounts related to the alleged fraud schemes.

Kickbacks for Patient Referrals for MRI

A physician practicing gastroenterology and internal medicine in West Orange, New Jersey, pleaded guilty to receiving cash kickbacks for diagnostic testing referrals, becoming the 13th doctor and 14th defendant to be convicted in connection with the government’s investigation of illegal payments made by an Orange, New Jersey, diagnostic testing facility. The physician took payments from Orange Community MRI LLC in exchange for MRIs and CAT scans he referred to the diagnostic testing facility over a period of three years on a per-patient basis.

Health Care Fraud Charges Against Russian Diplomats

Charges were made against 49 Russian diplomats for participating in a widespread fraud scheme to illegally obtain Medicaid benefits. The defendants charged are current or former Russian diplomats or the spouses of diplomats employed at either the Russian Mission to the United Nations, the Russian Federation Consulate General in New York, or the Trade Representation of the Russian Federation in the USA, New York Office. The defendants and their unnamed co-conspirators participated in a widespread scheme to illegally obtain Medicaid benefits for prenatal care and related costs by, among other things, falsely underreporting their income or falsely claiming that their child was a citizen of the United States. Moreover, before, during, and after the time that the defendants applied for and received hundreds of thousands of dollars in Medicaid benefits, they spent tens of thousands of dollars on luxury items, including cruise vacations and purchases such as watches, shoes, and jewelry at stores such as Tiffany & Co., Jimmy Choo, Prada, Bloomingdale’s, and Burberry.

Unlawful Distribution of Controlled Substances, Health Fraud, and Money Laundering

A Louisville obstetrician/gynecologist was charged by a federal grand jury with 14 counts of unlawful distribution of controlled substances, healthcare fraud, and money laundering. The charges state he knowingly and intentionally distributed and dispensed controlled substances, including oxycodone, alprazolam, clonazepam, hydrocodone, phentermine, and carisoprodol, not for a legitimate medical purpose and beyond the bounds of a professional medical practice. On average, he would see more than 35 patients per day, providing medically unnecessary services. A typical first-time patient would pay $75 for a gynecological exam, and each visit thereafter, the patient would typically pay $35 in cash and receive a Schedule II-V controlled substance prescription without a physical examination. He was also charged with one count of money laundering for purchasing a 2012 Honda Accord with $15,000 in cash and a $5,971.63 check from money derived from the unlawful dispensing and distribution of controlled substances and health care fraud.

Durable Medical Equipment Fraud

A man and his wife, owners of a DME business, along with another, were convicted by a federal jury in San Francisco of Conspiracy to Commit Health Care Fraud, Health Care Fraud, and paying and receiving Kickbacks involving referral of Medicare beneficiaries. They submitted over $3.2 million in fraudulent claims to Medicare for power wheelchairs and power wheelchair accessories based on bogus prescriptions for Medicare beneficiaries who had been identified by the defendants and other street-level recruiters. They also paid and received cash kickbacks in exchange for referral of the Medicare beneficiaries. They used a co-conspirator physician to obtain bogus prescriptions for power wheelchairs. Two other co-defendants previously pled guilty to charges.

Wound Care False Claims

In a qui tam case, owners of the Lymphedema & Wound Care Institute Inc. have paid the United States $4.3 million to settle claims they violated the federal False Claims Act by submitting claims to the Medicare Program for physical therapy treatments provided by unqualified therapists. They conducted business in four locations throughout the Houston area. They billed the Medicare program for providing manual lymphatic drainage therapy to Medicare beneficiaries using massage therapists as opposed to physical therapists as required under the rules and regulations governing the Medicare program.

Causing Widespread Hepatitis C Outbreak

A former employee of Exeter Hospital in New Hampshire was sentenced today to serve 39 years in prison for his conduct in causing a widespread Hepatitis C outbreak in numerous states. He was a “traveling” radiologic technician, using various placement agencies to find employment at medical facilities in New York, Pennsylvania, Maryland, Arizona, Kansas, Georgia, and New Hampshire. He stole syringes of fentanyl—a powerful anesthetic which he did not have authority to access—intended for patients undergoing certain medical procedures. He replaced the stolen syringes with syringes that he had stolen from previous procedures and refilled with saline, after having injected himself with the fentanyl intended for his patients, despite knowing he was infected with Hepatitis C. Consequently, instead of receiving their prescribed doses of fentanyl with the intended anesthetic effect, those patients actually received saline tainted with the defendant’s strain of the Hepatitis C virus.

CVS’ Caremark Fraud

In a qui tam case, Caremark LLC, a pharmacy benefit management company (PBM), will pay the government and five states a total of $4.25 million to settle allegations that it knowingly failed to reimburse Medicaid for prescription drug costs paid on behalf of Medicaid beneficiaries, who also were eligible for drug benefits under Caremark-administered private health plans. Caremark is operated by CVS Caremark Corp., one of the largest PBMs and retail pharmacies in the country that administers and manages the drug benefits for clients who offer drug benefits under a health insurance plan. Under the terms of the agreement, the government will receive approximately $2.31 million. In addition, five states—Arkansas, California, Delaware, Louisiana and Massachusetts—will share $1.94 million. Caremark used a computer claims processing platform called “Quantum Leap” to cancel claims for reimbursement submitted by Medicaid for dual eligibles. Caremark’s actions caused Medicaid to incur prescription drug costs that should have been paid for by the Caremark-administered private health plans rather than Medicaid.

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.