Houston physician found guilty for role in $1.5M fraud scheme

Following a four-day trial, a Houston-area physician was convicted of conspiracy to commit health care fraud and conspiracy to pay and receive illegal kickbacks in a scheme involving home health services involving Allied Covenant Home Health, Inc. (Allied). Sentencing is scheduled for September 25, 2017.

Scheme

According to the Department of Justice (DOJ), the physician was involved in a scheme to defraud Medicare by submitting $1.5 million in fraudulent claims from 2006 to 2013. Evidence showed that the physician admitted patients for home health services through Allied without regard for qualification for such services. The physician falsified medical records and signed false documentation to show that patients met Medicare criteria for home health service reimbursement when they did not.

The evidence also showed that the physician paid illegal kickbacks to the owner of Harris Health Care Group (Harris). These kickbacks were paid in order to facilitate Medicare billing for facet injections. These injections were not medically necessary or not provided.

Fraud perpetrators receive lengthy prison sentences for false claims, kickbacks

Two health care fraud scheme perpetrators in separate cases successfully prosecuted by the Department of Justice (DOJ) have been sentenced for their crimes. A physician who accepted kickbacks and committed tax fraud received a sentence of seven years in prison. A Detroit medical biller received a sentence of 50 months in prison for her role in billing $7.3 million in fraudulent claims to Medicare and Medicaid.

Physician

A Pennsylvania physician was sentenced to 84 months in prison with three years’ supervised release, 60 months of which run concurrently with a sentence imposed by a Florida district court. The DOJ presented information to the court showing that the physician, who practiced anesthesiology and pain management, owned and operated pain management clinics. The physician conspired to receive kickbacks from a drug testing lab in exchange for referring patients to the lab, totaling over $2.3 million. Medicare and Medicaid paid the lab over $4.5 million based on the physician’s referrals. The physician also failed to remit employment taxes for a corporation of which he was a 100-percent shareholder.

Medical biller

At trial, the DOJ showed that the medical biller submitted fraudulent bills on behalf of a physician for services that she knew could not have been rendered or were not rendered as billed as part of a $7.3 million fraud scheme. She received 6 percent of the total billings received from Medicare. She was sentenced to 50 months in prison with one year of supervised release and ordered to pay restitution of $3.2 million jointly and severally with co-defendants.

DOJ focus is on ‘egregious’ and ‘despicable’ health care fraud

In a speech on May 18, 2017, at the American Bar Association’s 27th Annual Institute on Health Care Fraud, Acting Assistant Attorney General Kenneth A. Blanco stressed that the Department of Justice (DOJ) would continue with keeping health care fraud a priority. The amount of loss to the American tax payer per year due to healthcare fraud is in the billions, with some estimates putting the number close to $100 billion per year.

Blanco stressed the importance of cooperation between the Medicare Strike Force, the U.S. Attorney’s Offices, and federal and state investigative agencies. He noted that the DOJ was employing an in-house data analytics team to review CMS billing data in order to focus on the most aggravated cases quickly. In turn this data is pushed to other federal and state investigative agencies.

Detailing examples of recent work by the Health Care Fraud Unit, Blanco highlighted that October 2016, Tenet Healthcare Corporation, a publicly-traded company and the third largest hospital chain in the United States, entered into a global resolution with the government, agreeing to resolve an investigation of a corporate bribery and fraud scheme at four Tenet-owned hospitals in Georgia and South Carolina. As part of that scheme, the hospitals paid over $12 million in bribes to a chain of prenatal care clinics in exchange for the referral of Medicaid patients.

Under the global resolution: (1) two Tenet subsidiaries pleaded guilty to conspiracy to defraud the United States and pay kickbacks and bribes in violation of the Anti-Kickback Statute, and forfeited over $146 million in Medicare and Medicaid funds; (2) Tenet entered into a non-prosecution agreement requiring, among other things, an independent compliance monitor for a period of three years over all entities owned, in whole or in part by Tenet; and (3) Tenet and its subsidiaries entered into a civil settlement agreement and paid $368 million to the United States, the State of Georgia and the State of South Carolina (see Corporations, beware: Tenet Healthcare to pay $513M to settle kickback charges, Health Law Daily, October 4, 2016). Subsequently two individuals have pleaded guilty and a former senior executive of Tenet was indicted for the scheme (see DOJ comes for executive in Tenet fraud case, Health Law Daily, February 2, 2017).

CMS has estimated that the total health care spending in the United States in 2015 reached $3.2 trillion, or 17.8 percent of the gross domestic product. As such, the DOJ considered health care fraud as “egregious,” and from Blanco’s viewpoint, “despicable,” because it resulted in depriving medical care for those in actual need. Blanco noted that health care fraud impacts the public’s access to medical care, even the most basic forms, because fraud increases the costs for all.

Former Tuomey CEO faces the ‘Stark’ reality of referral scheme

The former CEO of Tuomey Healthcare System agreed to a four-year period of exclusion and a $1 million settlement as a result of his involvement in a physician-referral scheme. The former executive’s exclusion and settlement follow a jury finding that Tuomey defrauded Medicare by filing false claims based upon illegally referred services.

Fraud

The government alleged that, due to fears that Tuomey would lose outpatient procedure referrals to a new surgery center, the former CEO entered into contracts with 19 specialist physicians, requiring the physicians to refer patients to Tuomey in exchange for compensation greatly in excess of fair market value. During the trail against Tuomey, the government asserted that the former CEO ignored warnings from the hospital’s attorneys that the physician contracts were “risky.”

Tuomey judgment

 After a month long trial, a South Carolina jury determined that the referral arrangement violated the Stark Law (42 U.S.C. § 1395nn). The illegal arrangement resulted in a $237.4 million judgment against Tuomey. Subsequently, the U.S. resolved its judgment against the health care system for $72.4 million and Tuomey was sold to Palmetto Health, a multi-hospital health care system. Prior to the CEO’s termination, the jury concluded that Tuomey filed more than 21,000 false claims with Medicare (see Tuorney saga punctuated with DOJ settlement, Health Law Daily, October 19, 2015). 

Settlement

The settlement with the former CEO is based upon allegations that, as a key decision maker, he led or participated in the scheme to defraud Medicare. Under the terms of the agreement, in addition to the $1 million payment, the former CEO will be excluded from federal health care program participation for a period of four years. His exclusion prohibits him from providing management or administrative services paid for by federal health care programs.