Behavioral health fraud perpetrators plead guilty to $1M Medicaid scheme

Two men, who created and managed a company that provided mental health care to Medicaid patients and collected over $1 million in Medicaid payments, pleaded guilty to conspiracy to commit health care fraud. The president of Coastal Bay Behavioral Health, Inc. (Coastal Bay) acknowledged in the plea agreements that the other participant was an “excluded provider,” who was prohibited from billing federal health care programs due to a 2011 conviction for health care fraud. Each man faces a maximum penalty of five years in prison and a fine of up to $250,000.

Although the president was aware that he was employing an excluded provider, he did not disclose this fact to the state Medicaid program. Using an alias, the provider performed a variety of functions, including hiring and firing individuals, seeing patients, and performing other managerial tasks. Coastal Bay received $1.2 million in reimbursements from Medicaid because of the provider’s alleged fraud, according to court papers.

The provider and his family received significant financial benefits due to his involvement in Coastal Bay. Specifically, the provider had access to a Coastal Bay credit card, which he used to make routine purchases at restaurants, furniture stores, gas stations, and other places in North Carolina, even though Coastal Bay had no operations in North Carolina. In addition, the provider and his immediate family received more than $10,000 in direct payment withdrawals from the Coastal Bay business account.

$55M fraud scheme earns 84 months in prison

Involvement in a $55 million health fraud scheme earned a medical clinic owner 84 months in prison. She pleaded guilty in October 2015 to using her two Brooklyn, New York-based clinics, Prime Care on the Bay LLC and Bensonhurst Mega Medical Care PC to submit false and fraudulent claims to Medicare and Medicaid.

Scheme

According to the guilty plea, the owner and various co-conspirators paid kickbacks to induce patients to come to the clinics. She then submitted false claims for services induced by these kickbacks or provided by unlicensed staff. She also wrote checks from the clinics’ accounts to third-party companies that were ostensibly vendors, but were actually not providing services. These payments were used to generate cash for the kickbacks. The owner was ordered to forfeit over $29 million.

Several other co-conspirators have pleaded guilty to their part in the scheme. These include the former medical directors of both clinics, six therapists, three drivers, a former patient who received kickbacks, and the owner of several of the vendor companies used to launder funds.

Timing key for internal audits, self-disclosure

There is an art to conducting internal compliance audits and determining when to begin a self-disclosure protocol—the ideal compliance program should promote prevention, detection, and resolution of any conduct that fails to comply with the requirements of state and federal health care programs. Knowing when to perform an internal investigation or audit to encourage a healthy program is key, according to Leia C. Olsen, shareholder, Hall Render, who was presenting at a Health Care Compliance Association (HCCA) webinar.

Olsen noted that many qui tam actions arise when employees do not feel as though their concerns are being heard and taken seriously. She stressed the importance of having a mechanism for reporting incidents, and timely monitoring identified issues and implementing remedial measures. However, she noted that qui tam suits can potentially be prevented not only by conducting an internal investigation, but also by self-disclosing, which can trigger the public disclosure bar. Self-disclosure of identified wrongdoing is encouraged by the Department of Justice and HHS, but, per the Yates memorandum, all relevant facts must be provided by a company before it can receive credit for cooperating and voluntary self-disclosure. Therefore, it is important to conduct a thorough investigation, collecting all available information and documentation, before self-disclosing.

The 60-day refund rule, promulgated under Sec. 6402 of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148), together with the Fraud Enforcement and Recovery Act of 2009 (FERA) (P.L. 111-21), creates False Claims Act (FCA) liability for providers who fail to report and return identified overpayments within 60 days of identifying the overpayment. Therefore, Olsen said, the time to meet the reasonable diligence standard after learning of a potential overpayment is limited. Having a protocol in place to quickly decide whether to self-disclose is critical in securing the greatest amount of cooperation credit.

Sessions creates opioid fraud detection unit, focuses on 12 districts

Twelve federal districts have been selected to participate in an Opioid Fraud and Abuse Detection Unit, created by the Department of Justice (DOJ). The DOJ will fund twelve Assistant United States Attorneys for three year terms to focus solely on investigating and prosecuting fraud related to prescription opioids. Attorney General Jeff Sessions announced the program’s formation at the Columbus Police Academy in Ohio.

Data analytics program

The unit will consist of a data analytics program, which will allow targeted investigation and prosecution. Sessions stated that the team would use such information as physicians who prescribe opioids at a higher rate than peers, the average age of patients receiving the prescriptions, and pharmacies dispensing large amounts of opioids to focus its investigation.

The federal prosecutors, located in districts across the country, will work with various agencies to investigate and prosecute opioid fraud, including pill mills and unlawful diversion of opioids. Most of the districts are located in the east and Midwest, such as Florida, Michigan, Alabama, Kentucky, Ohio, and West Virginia.