Thursday, April 27, 2017

When Is Physician Billing for In Office Prescriptions, Compounded Medications and Urine Toxicology Screening for Workers’ Compensation Patients Illegal? Orange County DA Charges Doctors, Pharmacists and Business Owners Alleging Insurance Fraud and Illegal Referral Fees

For years, there have been companies who approach physicians and offer ways they can add to their revenue stream.  This has been more common with physicians who treat workers’ compensation patients.  

Some of the common revenue enhancements are:  
(1) dispensing oral prescription medications in-office to patients;
(2) dispensing a 3-day supply of compound medications in-office to patients; and
(3) performing point of care urine toxicology testing on patients in-office.

Under California workers’ compensation law, there are ways for these medically necessary services and goods to be legally provided and billed. However, if the laws and regulations are not followed, the claims can be denied or the basis for insurance fraud charges.

A recent criminal prosecution in Orange County Superior Court shows what happens when workers' compensation insurance fraud and illegal referral fees are alleged in providing these types of goods and services (prescription medications, compounded medications and toxicology laboratory testing) to patients.

The Orange County District Attorney’s (OCDA) Office filed 26 felony criminal complaints in April 2017 against 25 physicians, a physician assistant, two pharmacists and the two owners of the billing and medical management companies King Medical King Medical Management, Inc., Monarch Medical Group, Inc. and/or One Source Laboratories, Inc. for services and goods provided and/or billed from 2011 to 2015.

Links to the Orange County DA criminal complaints are on the Department of Insurance press release issued on this investigation.  All physician defendants are presumed innocent and a felony complaint is not evidence.

It appears the OCDA decided to file a criminal case against each provider separately in order to not have a single multi-defendant case that would progress slowly and for other tactical reasons. However, there is a conspiracy count in each criminal complaint filed against the physicians or pharmacists in which the owner(s) of the medical management and billing companies are named as uncharged co-conspirators. The OCDA views the management billing companies as the hub in these cases.

Tuesday, April 18, 2017

Unnecessary Genetic Testing on Medicare Skilled Nursing Facility Patients Alleged in Federal Qui Tam Case Involving California Based Laboratory

Genetic testing is currently the subject of numerous qui tam cases and investigations by the Office of Inspector General. This is in addition to any investigations by private insurance carriers. A recent federal qui tam case shows that the government is going after those involved in the ordering of such tests as well as the laboratories.

One issue that arises is where genetic tests are ordered by physicians who are not the regularly treating physicians of the Medicare patients. In order to be considered medically necessary and thus reimbursable under Medicare, the general rule is that the laboratory test must be ordered by the physician treating the resident. 

What happens when a laboratory test is ordered by a physician who is not the regular treating physician of the patient? For example, what if the physician is an outside physician whose only role is ordering a genetic test? In a recent case, a federal qui tam (false claims) lawsuit was filed as a result against skilled nursing facilities who gave a laboratory access to its patients. This lawsuit and settlement can serve as a teaching moment for those who order genetic testing. 

On April 10, 2017, a multi-state nursing home company Prestige Administrative Services, LLC d/b/a Prestige Healthcare (Prestige) based in Kentucky agreed to pay the United States $995,500 to resolve allegations that it violated the False Claims Act with regard to its role in an alleged scheme to falsely bill Medicare for unnecessary genetic testing on skilled nursing home patients in four facilities located in Wisconsin.

The United States alleged that in 2014, Prestige was approached by an entity known as Genomix, LLC, which claimed that it could perform genetic testing on Prestige’s Medicare residents in order to ascertain whether Prestige’s patients were properly metabolizing their medications. 

The United States alleged that in 2014 and 2015, Prestige provided Genomix with insurance and personal medical information, as well as access to Prestige patients in nursing homes in several states, including Wisconsin, for purposes of conducting the testing. Genomix conducted the testing by taking cheek swabs of each Prestige patient and then sending the cheek swab to a laboratory for analysis.

The United States alleged that Prestige failed to ensure that physician orders were obtained for the genetic testing prior to its being conducted, and that Prestige's physicians were not aware of and did not agree with the medical necessity of the testing. 

United States also alleged that Prestige failed to ensure that its patients (or, in some cases, their family members responsible for their medical decisions) were appropriately informed of the testing prior to its being conducted and provided with the opportunity to decline the testing. Finally, the United States alleged that the lack of physician orders and patient consent was discovered during a survey conducted by state regulators in late 2015.

While it is not unusual for skilled nursing facility (SNF) operators, such as Prestige, to coordinate in placing orders with clinical laboratories for medically necessary diagnostic laboratory tests for their residents, the treating physician must order the test. This is a basic tenet that in order to be considered medically necessary and thus reimbursable under Medicare, the laboratory test must be ordered by the physician treating the resident. 

The settlement announced resolved only Prestige’s civil liability and did not resolve any liability of any other individuals or entities, including that of Genomix, which is a separate entity headquartered in Southern California. As part of the settlement, Prestige agreed to cooperate in the United States’ ongoing investigation. 

Based on what we hear in the healthcare legal community, we can expect to see more investigations, lawsuits and even potential criminal prosecutions involving genetic testing. There are allegations in other cases indicating that physicians are being paid as experts or researchers by laboratories to order genetic tests on their patients and that in some cases, these fees are disguised kickbacks. Any physician in such an arrangement with a laboratory should ensure that it is compliant with federal and state law.  

Posted by Tracy Green, Esq.
Green and Associates, Attorneys at Law
Work: 213-233-2261

Thursday, April 6, 2017

Billing for Prescriptions Not Dispensed to Patients Results in 4 Year Sentence for Los Angeles Medical Clinic Manager After Federal Trial

Federal prosecutors used to devote healthcare fraud resources to mainly government programs and allow private insurance carriers to handle the cases with special investigation units or with state prosecutions. A recent case shows how private insurance healthcare fraud is being pursued forcefully. This is in large part due to the overlap between private and public and the fact that the federal government pays subsidies for tens of millions of people who have private insurance.

The recent case was one of ghost billing. On March 28, 2017, Michael Huynh, the office manager and purported part-owner of a Los Angeles area medical clinic in Reseda was sentenced to 51 months in federal prison for his role in billing private insurance plans for prescription medication that was never dispensed to insured patients and failing to report such income on his federal income tax returns. Following a seven-day trial in September 2016, Mr. Huynh was found guilty of one count of conspiracy to commit healthcare fraud and 11 counts of filing false tax returns.

Mr. Huynh, age 67, was sentenced by United States District Judge Otis D. Wright II. In addition to the prison term, Judge Wright ordered Mr. Huynh to pay just over $1.9 million in restitution to the victim insurance companies and back taxes – estimated to be nearly $950,000 – to the Internal Revenue Service.
The evidence introduced at trial showed that between January 2004 and November 2009 Mr. Huynh and a pharmacist (Farhad N. Dany Sharim,  a co-owner of Century Discount Pharmacy in Reseda) participated in a healthcare fraud scheme that billed private insurance plans for prescription medication that was never dispensed to insured patients. Mr. Sharim, age 57, previously pleaded guilty to conspiracy to commit healthcare fraud and will be sentenced by Judge Wright on May 1.

The evidence at trial was that Mr. Huyhn provided Mr. Sharim with fabricated prescriptions purportedly for patients of the medial clinic who were insured by healthcare benefit programs. Mr. Sharim's pharmacy then submitted false and fraudulent bills for prescription drugs that had not been dispensed to the patients and received substantial payments from various health care benefit programs to which it was not entitled. Mr. Sharim allegedly paid Mr. Huyhn and/or the medical clinic more than $1.1 million.

In addition to the healthcare fraud scheme, Mr. Huynh was charged with filing false federal tax returns for tax years 2007 through 2011 that underreported the medical clinic’s gross receipts and sales by more than $1.6 million.

Posted by Tracy Green, Esq.
Office: 213-233-2260

Friday, March 24, 2017

Surrendering a Healthcare or Medical License While Disciplinary Charges Pending Will Get You a Medi-Cal Suspension

When a physician, nurse or any licensed healthcare provider has a state disciplinary proceeding pending, one of the issues that arises is whether they should surrender the license. In order to analyze this issue, one question is whether the person will be working in healthcare in any capacity in the future.

Imagine a case where a licensed physician or nurse decides to stop practicing medicine but still wants to work in healthcare businesses and wants to surrender his or her license while an Accusation is pending.  Another example is where the physician or nurse is not using their New York license and ends up on probation in New York due to being on probation in California and decides to surrender the New York license. What happens to their ability to work at a healthcare business that bills government programs?

Under California Welfare and Institutions Code Section 14043.6 if your healthcare license is suspended while an Accusation is pending (or revoked after a hearing), Medi-Cal will automatically put you on a "Suspended and Ineligible" List on the effective date of the suspension or revocation. If the individual is suspended from Medi-Cal, he or she cannot work, own or operate a business that receives Medi-Cal or Medicare funds in any capacity.

I am seeing more frequently people who surrendered their license and and did not understand that this is one of the harsh penalties of surrendering that is not set forth in the surrender agreement. It also seems some attorneys do not tell their clients that this will happen and the person finds out a year or more later of this consequence after they have been working in healthcare.

We have handled a number of cases in getting people reinstated to Medi-Cal in these situations and it is an unpredictable and long process. In one case, the healthcare provider surrendered one license and had another active one that was not surrendered but the suspension went into effect and jeopardized the ability to work in healthcare. In another case, a nurse surrendered a license while an Accusation was pending and then was not able to work at the healthcare business in which he was a part-owner in any capacity.  We have also handled audits for overpayment where a healthcare provider did business with an entity or person suspended under Medi-Cal.

In sum, in analyzing whether it makes sense to surrender any healthcare license in California, the licensee should understand that a surrender will prevent the person from working in any healthcare facility that takes government funds (Medicare and Medi-Cal) even if the person is not working as a licensed health care provider. Make sure you look at all the angles in making these decisions.

Posted by Tracy Green, Esq.
Green and Associates
Office: 213-233-2260

Thursday, March 16, 2017

Two Florida Owners of Sober Homes and Alcohol and Drug Treatment Centers Plead Guilty for Filing Fraudulent Insurance Claims and Paying Kickbacks for Referrals

Audits of alcohol and drug addiction treatment centers have been on the rise. We have also seen an increase in criminal filings relating to billing for medically unnecessary services and payment of kickbacks for the referral of rehab patients. However, the facts when cases go criminal tend to be ones where there is outrageous conduct.  A recent Florida case fits that profile. 

Although the facts in this case are on one end of the spectrum, alcohol and drug treatment centers need to be very careful about paying marketing fees for the referral of patients, offering patients free or reduced rent at sober homes, paying for patients' insurance, ordering excessive lab tests for patients and any financial arrangements with laboratories.  

On March 15, 2017, Kenneth Chatman and Laura Chatman, owners of sober homes and alcohol and drug addiction treatment centers, pled guilty to one count of conspiracy to commit health care fraud in violation of 18 USC Section 1349 for the filing of fraudulent insurance claim forms and defrauding health care benefit programs. Their plea also included money laundering and sex trafficking conspiracy (the outrageous facts) counts.  
According to the plea agreements, Mr. Chatman established a series of sober homes, including Stay’n Alive, Inc., Total Recovery Sober Living LLC, and several other multi-bed residences operating as sober homes in Palm Beach and Broward Counties under his wife's name. These sober home facilities were in the business of providing safe and drug-free residences for individuals suffering from drug and alcohol addiction. 

Mr. Chatman admitted he paid kickbacks and bribes to sober home owners for referring their residents to Reflections Treatment Center LLC in Margate, Florida and Journey to Recovery LLC in Lake Worth, Florida for treatment. Mr. Chatman called these referral payments “case management fees,” “consulting fees,” “marketing fees” and “commissions” but the government viewed them as kickbacks. The referring sober home owners met with Kenneth Chatman on a weekly basis to collect the referral payments, which were based on the number of insured patients that received treatment each week.

Sunday, March 12, 2017

Federal Jury Finds Mental Health Facility Administrator Guilty of Kickbacks for Referrals

Payment for recruiting and referral of patients. When is it marketing and when is it an illegal kickback? In a recent case, such payments were viewed as illegal kickbacks. 

On February 14, 2017, a federal jury deliberated after four days of trial and found a former Shreveport mental health facility administrator guilty Thursday of taking part in a kickback scheme. Tom McCardell of Louisiana was found guilty of 14 counts of paying illegal kickbacks. The jury only deliberated approximately four hours before delivering the guilty verdict. 

According to the evidence presented, from July of 2011 to November 2012, Mr. McCardell was the administrator of Physicians Behavior Hospital (PBH) in Shreveport, Louisiana a 24 bed behavioral health hospital. He made payments (viewed as kickbacks) to an Alabama resident, who had no medical training or background, to recruit and refer patients to PBH for psychiatric and substance abuse treatment. 

The hospital would then purchase bus tickets for the patients to travel to PBH in Shreveport. Many of the patients traveled unattended without escort. Mr. McCardell allegedly arranged for the payments to be issued in the name of the patient recruiter’s son which was used as evidence that there was knowledge it was illegal and was done to avoid detection. 

Evidence was also introduced that Mr. McCardell ordered PBH personnel to create an “employee file” in the name of the recruiter’s son in order to provide cover for the  payment (kickback) arrangement. 


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