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.

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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: Huge fraud schemes involving telemedicine and DME

– Charges against two dozen people involving over $1.2 billion

 – Administrative Action against 130 DMEs submitting $1.7 Billion in claims

The DOJ announced charges against 24 defendants—including the CEOs, COOs, and others associated with five telemedicine companies, the owners of dozens of durable medical equipment (DME) companies, and three licensed medical professionals—associated with health care fraud schemes involving more than $1.2 billion. CMS and the Center for Program Integrity (CPI) have taken adverse administrative action against 130 DME companies that had submitted over $1.7 billion in claims and were paid over $900 million. The scheme involved payment of illegal kickbacks and bribes by DME companies in exchange for the referral of Medicare beneficiaries by medical professionals working with fraudulent telemedicine companies for back, shoulder, wrist, and knee braces that were medically unnecessary.

The DOJ alleges those charged with paying doctors to prescribe DME either without any patient interaction or with only a brief telephonic conversation with patients they had never met or seen. The proceeds of the fraudulent scheme were allegedly laundered through international shell corporations and used to purchase exotic automobiles, yachts, and luxury real estate in the United States and abroad. Some of the defendants obtained patients for the scheme by using an international call center that advertised to Medicare beneficiaries and “up-sold” the beneficiaries to get them to accept numerous “free or low-cost” DME braces, regardless of medical necessity. The international call center allegedly paid illegal kickbacks and bribes to telemedicine companies to obtain DME orders for these Medicare beneficiaries. The telemedicine companies then allegedly paid physicians to write medically unnecessary DME orders. Finally, the international call center sold the DME orders that it obtained from the telemedicine companies to DME companies, which fraudulently billed Medicare. Collectively, the CEOs, COOs, executives, business owners and medical professionals involved in the conspiracy are accused of causing over $1 billion in loss.

 

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 Google+ or LinkedIn.

Subscribe to the Kusserow on Compliance Newsletter

Copyright © 2019 Strategic Management Services, LLC. Published with permission.