Kusserow on Compliance: DOJ moves on first criminal cases of COVID-19 fraud

The Department of Justice (DOJ) brought fraud charges against the president of a medical technology company in connection with a scheme to commit health care fraud with the submission of over $69 million in false and fraudulent claims for allergy and COVID-19 testing. The allegation is that he defrauded Medicare through illegal kickbacks and bribes and then turned to exploiting the pandemic by fraudulently promoting an unproven COVID-19 test to the market. The hoax leveraged off the fear of the pandemic with the company touting that his laboratory was the only one in the world that offered revolutionary “microarray technology,” which tested allergies and COVID-19 based on a drop of blood that was 250,000 times smaller than the amount required by technology touted by others.

The press announcement stated that beginning in or around 2018 and continuing to in or around February 2020, the company president and others paid kickbacks and bribes to recruiters and doctors to run an allergy screening test, using his Arrayit product, on every patient regardless of medical necessity, and then made numerous misrepresentations about the results. As the COVID-19 crisis began to escalate in March 2020, he and others made false claims concerning Arrayit’s ability to provide accurate, fast, reliable and cheap COVID-19 tests in compliance with state and federal regulations, and made numerous misrepresentations to potential investors about the COVID-19 tests and Arrayit’s future prospects for COVID-19 testing. The company president stated that it was simple to develop a test for COVID-19 because the switch from testing for allergies to testing for COVID-19 was a simple and easy step, but he and others never disclosed that there were questions about the validity of its data and the accuracy of its COVID-19 test. The press announcement reaffirmed that investigating COVID-19 fraud scams billed to federal health programs continues to be a top priority, noting that ongoing public health crisis has spawned a rash of fraudulent schemes.

 

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 © 2020 Strategic Management Services, LLC. Published with permission.

Kusserow on Compliance: Ninth Circuit reinstates unnecessary admissions whistleblower case

Federal Court established grounds for “medical necessity” fraud cases

A compliance high-risk area worthy of attention

On March 23, 2020, the Ninth Circuit reinstated a False Claims Act (ACA) “whistleblower” suit alleging a hospital and various physicians orchestrated medically unnecessary inpatient admissions resulting in the submission of more than $1.2 million in false claims to Medicare. This reversed the District Court ruling that FCA allegations failed because “subjective medical opinions…cannot be proved objectively false.”

The Circuit Court decision follows others that established the lack of “medical necessity” claims can proceed under the FCA. The qui tam relator in the case alleged that certain admissions to the hospital were not medically necessary and were in fact contraindicated by the patients’ medical records and the hospital’s admission criteria. As a result, the hospital allegedly submitted, or caused to be submitted, Medicare claims that falsely certified that patients’ hospitalizations were medically necessary. The relator was a nurse who reported 65 admissions that “failed to satisfy the hospital’s own admissions criteria” and noted that the admission rate from related nursing homes with was over 80 percent during the relevant time period. The nursing home operator had acquired fifty percent ownership in the hospital that resulted in a spike in admissions from those facilities. After repeatedly attempts to bring the issue to the attention of management, she was fired.

The Court held that a physician’s clinical opinion must be judged by the same standard as any other representation, including whether the physician: (1) knows the clinical opinion to be false; or (2) renders the opinion in reckless disregard of its truth or falsity. This means that a physician’s certification that inpatient hospitalization was “medically necessary” can be false or fraudulent as any opinion that is not honestly held. In short, a false certification of medical necessity can therefore give rise to FCA liability.

Compliance officers at any hospital should make this message known to the executive leadership and medical staff.

 

 

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.

Connect with Richard Kusserow on LinkedIn.

Subscribe to the Kusserow on Compliance Newsletter

Copyright © 2020 Strategic Management Services, LLC. Published with permission.

Kusserow on Compliance: DOJ moves against spine device manufacturer for paying kickbacks

The Department of Justice (DOJ) has intervened in a qui tam whistleblower case filed against SpineFrontier, Inc. and related entities and executives for alleging paying kickbacks to spine surgeons to induce use of their surgical devices. According to the complaint, spine surgeons were given over $8 million in sham “consulting” payments ostensibly for product evaluations, when in fact the payments were for use of SpineFrontier devices.

The defendants allegedly created Impartial Medical Experts LLC IME—a purported consulting company—as an entity intermediary to funnel kickbacks to spine surgeons. IME was designed to shield the defendants and spine surgeons from government scrutiny by creating a false impression that surgeons were consulting through an independent third-party entity. The Defendants generally paid “consulting” spine surgeons $500 for a cervical procedure, and $1,000 for a lumbar procedure—but only if the surgeon used SpineFrontier devices. The United States alleges that consulting spine surgeons often performed little or no work beyond implanting the devices—for which they were separately paid by insurers—and that the Defendants did not systematically collect or use feedback from consultants and paid them even when they had provided no feedback at all.

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.

Connect with Richard Kusserow on LinkedIn.

Subscribe to the Kusserow on Compliance Newsletter

Copyright © 2020 Strategic Management Services, LLC. Published with permission.

Kusserow on Compliance: DOJ reports 2019 False Claims Act Recoveries of over $3B

The DOJ obtained more than $3 billion in settlements and judgments from civil cases involving fraud and false claims against the government in fiscal year 2019. Recoveries since 1986, when Congress substantially strengthened the civil False Claims Act, now total more than $62 billion. Of the more than $3 billion in settlements and judgments recovered, $2.6 billion related to the health care industry.

This was the tenth consecutive year that health care fraud settlements and judgments have exceeded $2 billion. Whistleblower, or qui tam, actions comprise a significant percentage of the False Claims Act cases that are filed. Of the $3 billion in settlements and judgments reported by the government in fiscal year 2019, over $2.1 billion arose from lawsuits filed under the qui tam provisions of the False Claims Act.

During the same period, the government paid out $265 million to the individuals who exposed fraud and false claims by filing these actions. The number of lawsuits filed under the qui tam provisions of the Act has grown significantly since 1986, with 633 qui tam suits filed this past year—an average of more than 12 new cases every week. In its news release, the DOJ noted that it had increased holding individuals accountable and cited examples of actions taken against responsible executives.

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.

Connect with Richard Kusserow on LinkedIn.

Subscribe to the Kusserow on Compliance Newsletter

Copyright © 2020 Strategic Management Services, LLC. Published with permission.