Why Does Medicare Fraud Occur More Frequently In Clinics Run By Managers? Los Angeles Clinic Manager Sentenced To 60 Months For Using Physician Identities To Write Unnecessary Prescriptions And To Bill Medicare

One of the frequent fact patterns we see in California is the presence of "managers" or "management companies" in health care fraud cases. Why is that? It has to do with California's prohibition that prohibits non-physicians from owning medical practices. It also has to do with some of the people that open health care businesses without realizing the level of regulation and the potential consequence of not following the rules and regulations. When business people want to open a medical practice in California, they need to open the clinic in a doctor's name and sometimes the doctor is a nominal owner and he has little or no control over the practice and relies on the managers to run it properly. 


A recent case illustrates the ugly side of health care fraud involving unscrupulous managers. On January 9, 2011, Carolyn Ann Vasquez, 47, from Los Angeles medical clinic manager, was sentenced to 60 months in federal prison after having pleaded guilty to using fraudulent medical clinics and the stolen identities of physicians to defraud Medicare of more than $6.2 million.  U.S. District Judge Consuelo B. Marshall of the Central District of California sentenced Ms. Vasquez and also ordered her to pay $6.2 million in restitution. 

Originally, Ms. Vasquez was charged with two other persons: (1) physician assistant David Garrison and (2) co-manager Eduard Aslanyan.  Mr. Aslanyan pleaded guilty in April 2011 to conspiracy charges related to this case and is scheduled for sentencing on February 6, 2012. David Garrison, a physician assistant who worked at the fraudulent medical clinics with Vasquez and Aslanyan, is scheduled for trial on January 24, 2012. Mr. Garrison has a prior state health care fraud case that may be complicating his sentence that also arises from working at a clinic run by a manager.


In March 2011, Mr. Vasquez pleaded guilty to conspiracy to commit health care fraud. In her plea agreement, Ms. Vasquez admitted that from 2007 to 2008, she conspired with others to use a series of fraudulent Los Angeles-area medical clinics to defraud Medicare. Ms. Vasquez admitted that her co-conspirators used the identities and Medicare provider numbers of physicians who both worked and did not work at the clinics to submit false claims to Medicare for reimbursement for services the physicians did not perform and for power wheelchairs, medical equipment and diagnostic tests that the physicians did not order or prescribe. So the physician is not at the clinic but his name is on the prescription pads that are signed by the PAs or the manager using a stamp signature or even forging the name, and he may have no idea that power wheelchairs are being prescribed to patients and only look at the medical chart that shows a routine medical visit with no improper billing at the medical clinic.  


According to court documents, Ms. Vasquez physician assistants recruited to work at the clinics by Vasquez, and working at her direction and the direction of others, performed services that were medically unnecessary and prescribed and ordered the wheelchairs, medical equipment and diagnostic tests that were medically unnecessary.

According to court documents, Ms. Vasquez obtained access to physicians’ personal and Medicare information, which she stole to further the fraud scheme at the medical clinics. For example, Ms. Vasquez admitted that in approximately 2007, a physician contacted her about a job at one of the medical clinics, but the physician decided not to accept the job. Nevertheless, Ms. Vasquez’s clinic printed prescription pads with the physician’s name and Medicare provider number on them. Ms. Vasquez admitted that she instructed a physician assistant working at one of the medical clinics to use the prescription pads to write fraudulent prescriptions and medical documentation for diagnostic tests, power wheelchairs and other medical equipment in the physician’s name even though Ms. Vasquez knew that the physician did not work at the clinic.


Attorney Commentary: For those managers that are unethical or are seeking a doctor's license to use for their own purpose, they will target doctors who are desperate for money, older or have some other issues (alcoholism, depression, etc.) and use that doctor's license and NPI number to run their business without regard for how it will ruin the doctor's provider numbers, expose them to great financial liability and jeopardize their license. In some cases, there is actual identity theft of the physician's license and NPI number. 


In many cases, the clinics offer to employ the physician, pay them several thousand dollars per month and tell the physician that they do not have to come to the clinic except once or twice a month since a Physician Assistant (PA) is seeing the patients and all that the physician needs to do is to supervise the PA. The manager will reassure the physician that the clinic is well run and has been in business for years without any issues. For physicians who are looking for extra easy money, they often fall prey to these offers without seeking legal counsel about the legality and fail to do any due diligence about the managers running the clinic. 


What the physician or physician assistant often do not know is that the manager also has ownership interest in other businesses related to the clinic: pharmacy, durable medical equipment, diagnostic company, etc. Even if the manager does not make much money on the medical clinic, the prescriptions for these ancillary services can be very profitable. So everything can look pretty good at the clinic but if someone is not paying attention to the prescriptions for potentially unnecessary ultrasounds, DME (expensive wheelchairs or beds) or drugs, the fraud may not be apparent to the physician. 


In the Vasquez case and other cases, all that the manager needs to do is to post an advertisement in the Los Angeles Times or other publication and unsuspecting physicians will fax in resumes that list all their identifying information. Physicians should be very careful in sending identifying information in response to job ads and should not list license or DEA or NPI numbers unless and until they have done due diligence on the medical clinic. 


In addition, in any situation where there is a mangement agreement, physicians should have their own legal representation to ensure that the arrangement is legal and that there is little or minimal chance for any fraudulent conduct to occur. Physicians and those in the health care field often tend to be trusting but trying to clean up fraudulent billing and identity theft -- including the loss of a provider number or addressing a large overpayment incurred -- can take years and can be very expensive.  Practice preventative measures BEFORE you enter into any such arrangements.

Posted by Tracy Green, Esq. Please email Ms. Green at tgreen@greenassoc.com or call her at 213-233-2260 to schedule a complimentary 30-minute consultation.  Ms. Green's office at Green and Associates is located at 801 South Figueroa Street #1200, Los Angeles, CA 90017.

Any questions or comments  should be directed to Tracy Green, a very experienced California health care fraud attorney  and California Medicare fraud attorney at tgreen@greenassoc.com.

The firm focuses its practice on the representation of licensed professionals, individuals and businesses in civil, business, administrative and criminal proceedings. They have a specialty in representing licensed health care providers and in health care fraud related matters in California and throughout the country. Their website is: http://www.greenassoc.com/

Recent OIG Investigation Into Hospices Reveals Compliance, Marketing And Kickback Issues

A recent Bloomberg article (Dec. 6, 2011) on hospices and in particular Harden Healthcare LLC  entitled "Aunt Midge Not Dying In Hospice Reveals $14B Market" reveals issues with some hospices and the focus of government investigations. Hospices are meant for the terminally ill and given that Medicare's reimbursement rates are higher for hospice care, this has been a growth industry.

The article relays a story that caught the interest of the Department of Justice. Janet Stubbs' aunt, Doris Midge Appling, was admitted to Hospice Care of Kansas (HCK) during the company’s “Summer Sizzle” promotion drive, which paid employees as much as $100 a head for referrals. Ms. Stubbs said she had no clue that the nursing home doctor who referred her aunt for hospice moonlighted as medical director for the hospice company. The aunt was discharged after 20 months in HCK, and lived four more years before her death in April at age 106. Medicare paid nearly $80,000 for her hospice care. The aunt is now known as Patient 11 in a civil lawsuit filed by the Justice Department against HCK and its owners.

Hospice care, once chiefly a charitable cause, has become a growth industry, with $14 billion in revenues, 1,800 for-profit providers and a base of Medicare-covered patients that doubled to 1.1 million from 2000 to 2009.

The article discusses the investigations pending in the hospice business - and these are often publicly traded companies and national hospice chains. This means that independent owned hospices will also be under scrutiny and will often have less funds to devote to compliance and responding to government investigations. It is therefore critical for hospices to engage in compliance immediately since there is increased scrutiny on the industry.


The compliance issues noted in the article include:
(1) paying salespeople bonuses for increasing the number of patients enrolled and/or length of stay;
(2) admitting ineligible patients;
(3) giving salespeople a budget of $500 a month to buy lunches and gifts for doctors and nursing-facility managers and staff;
(4) paying enrollment bonuses to doctors, admissions directors and branch managers;
(5) giving pizza parties, gift cards and other extras to its registered nurses and social workers for meeting admission targets;
(6) pay to nursing home doctors who double as hospice medical directors; and
(7) paying incentives to medical directors of hospices.


The inspector general of the U.S. Health and Human Services Department is probing hospice marketing practices and financial relationships with nursing facilities. The inquiry was spawned by a 2009 report by the Medpac commission, a congressional advisory body, that found hospices “aggressively marketed” to nursing-home patients, and paid incentives to medical directors for “inappropriate” referrals and enrollments.

Complicated Laws

Under various federal statutes, paying for patient referrals or compensating employees based on the number of Medicare patients recruited may be illegal. But the laws are painfully complicated and loaded with exceptions.  A conservative view of health care laws bars all employees and contractors from earning bonuses based on Medicare enrollment goals, including salesmen and managers. In structuring bonuses, it is critical to seek legal advice from an established and experienced health care lawyer before establishing the parameters.


Posted by Tracy Green, Esq. Please email Ms. Green at tgreen@greenassoc.com or call her at 213-233-2260 to schedule a complimentary 30-minute consultation.  Ms. Green's office at Green and Associates is located at 801 South Figueroa Street #1200, Los Angeles, CA 90017.

Any questions or comments  should be directed to Tracy Green, a very experienced Medicare fraud attorney, Medi-Cal fraud attorney, California health care attorney, and California compliance attorney at tgreen@greenassoc.com.

Jackson's Doctor Gets Four Years, Will Serve Two With Good Behavior Credits. Judge Blasts Dr. Murray at Sentencing And Rejects Probation Request.

Los Angeles County Superior Court Judge Michael Pastor sentenced Dr. Conrad Murray, Michael Jackson's personal physician, to the maximum possible in this case: four years in a county jail for Dr. Murray's role in Jackson's 2009 death. Judge Pastor rejected the defense's request for probation.

The sentencing follows a jury verdict earlier this month that found Dr. Murray guilty of involuntary manslaughter after treating Mr. Jackson's insomnia with a powerful surgical sedative. The jury verdict indicated that Dr. Murray used the drug, propofol, in violation of accepted medical practice.

Judge Pastor's comments at sentencing were harsh and explained why he gave the maximum time allowed. For example, he called Dr. Murray  "a disgrace to the medical profession," and said that his $150,000-a-month employment with the singer constituted "money-for-medicine madness."

With good time credit, a 4 year sentence means that Dr. Murray will only serve 2 years if he has good behavior while he serves his sentence. Judge Pastor said he was barred from sending Dr. Murray, now 58 years old, to state prison, under a recent California law designed to reduce overcrowding by keeping "non-serious" felons in county jails. In fact, county jail in Los Angeles is often a worse place to serve a sentence than state prison so this does not necessarily benefit Dr. Murray.  For example, exercise, meals, visitation and other rules are much stricter in the county jails.

Dr. Murray didn't speak during the 90-minute hearing. His lawyers submitted a 45-page memorandum, along with 35 character-reference letters, as part of a request for probation instead of incarceration. Dr. Murray's lead lawyer, Ed Chernoff, urged Judge Pastor to consider "the entirety of a man's book of life, as opposed to one chapter." He added: "In 56 years, he never committed a crime, never ran afoul of the law."

Separately, a lawyer representing Mr. Jackson's family read a statement that requested, in part, "a sentence that reminds physicians that they cannot sell their services to the highest bidder."

The prosecutors have asked for an absurd amount of restitution that is not presently supported by evidence submitted to the Court.  Judge Pastor deferred until January 23 a request by prosecutors for more than $100 million restitution, saying that he needed more documentation to support such a large request.

The prosecution submitted a letter from a lawyer representing the Jackson estate, listing funeral expenses of more than $1.8 million. The same email estimated that Mr. Jackson personally would have earned $100 million from the concert series for which he was preparing at the time of his death. Neither estimate was supported by a balance sheet or other detailed breakdown."   It's not often courts are requested to make restitution of $101,821,871.65 based on a three-line email," Judge Pastor said.

Dr. Murray's television interview hurt him at sentencing. In handing down the sentence, Judge Pastor referred to remarks included in a television documentary about Dr. Murray that aired on MSNBC days after his conviction. At one point in the program, the doctor tells an interviewer he feels no guilt because he did nothing wrong, going on to blame Mr. Jackson himself for his own death.

"Yipes!" Judge Pastor said in reference to the doctor's televised remark. "Talk about blaming the victim. There's not only no remorse, there's umbrage and outrage, on the part of Dr. Murray, against the decedent."


Attorney Comments: It is not an easy task to come before the court and ask for probation after a high profile trial. The defense lawyers had their work cut out for them and they were not assisted by their client going on national television and not showing any remorse for his conduct and claiming innocence. Even if Dr. Murray was right, television before sentencing is not the place for it. Controlling an intelligent physician who is in the unusual place of being a criminal defendant is a high-wire balancing act. 


On the one hand, it is Dr. Murray's case and life and he may care more about going on television and proclaiming his innocence than how it will affect the sentencing. A lawyer can only control their client to a certain extent and then it is the client's decision and life. Some attorneys would quit if their client indicated they were going on television. Others would allow the client to make the decision even if it were a mistake. The problem is that after the mistake, some lawyers believe they will be blamed for not controlling their client.  


Posted by Tracy Green, Esq. Please email Ms. Green at tgreen@greenassoc.com or call her at 213-233-2260 to schedule a complimentary 30-minute consultation.  Ms. Green's office at Green and Associates is located at 801 South Figueroa Street #1200, Los Angeles, CA 90017.

Any questions or comments  should be directed to Tracy Green, a very experienced California health care attorney, physician attorney, and white collar crime attorney at tgreen@greenassoc.com.

The firm focuses its practice on the representation of licensed professionals, individuals and businesses in civil, business, administrative and criminal proceedings. They have a specialty in representing licensed health care providers in California and throughout the country. Their website is: http://www.greenassoc.com/

Ex-Beverly Hills School Employee Convicted By Jury In Felony Conflict Of Interest Case: What Can We Learn From This Case?

A recent conflict of interest criminal case serves as a reminder to employees and consultants (public and private) of the need to seek legal advice before entering into contracts and taking actions that could benefit oneself privately.  In the public sector, there could be conflict of interest charges and in the private sector it could lead to embezzlement charges. Compliance is the key and seeking legal advice upfront is important. 


On November 21, 2011, Karen Anne Christiansen, a former Beverly Hills Unified School District official was convicted by a jury of four counts of felony conflict of interest and taking more than $1.3 million through a building management contract she allegedly steered to herself. The criminal case was prosecuted by the Los Angeles County District Attorney, Public Integrity Division. A very experienced prosecutor, Deputy District Attorney Max Huntsman, was assigned to the case.


The jury took two days to reach a guilty verdict. Once the verdict was returned, the trial judge, Los Angeles Superior Court Judge Stephen Marcus, immediately ordered Christiansen remanded into custody and increased her bail to $400,000.


What happened here? The facts are interesting in that some of the actions Ms. Christiansen and her lawyers took might have forced the government's hand in filing charges against her. Or perhaps her lawyers knew a criminal case was coming and attempted to use civil litigation as a defense. Either way, it was a gamble.


In 2004, Ms. Christiansen was hired by the Beverly Hills School District at a salary of $113,000 per year to be the project manager for the $334 million Measure E Bond.  The allegation was that the secretly negotiated a deal to be an independent contractor through her company Strategic Concepts while performing her employee duties for the school district. Strategic Concepts received the contract and was paid $5.2 million for consulting services between 2006 and 2009. The Beverly Hills School District terminated Strategic Concepts in 2009. 


This case began with civil litigation commenced by Strategic Concepts suing the District for $16 million in damages. The District countersued for $4 million in damages. After the District spent over $1 million on the civil case, the District Attorney's Office became interested, investigated and ultimately filed criminal charges and stayed the civil lawsuit. The conviction in the criminal case will probably be a ground for the District to file a motion for summary judgment. Query as to whether Ms. Christiansen's attorney had fully evaluated her criminal exposure prior to filing a lawsuit and negotiated a comprehensive settlement with the District or decided not to file a civil lawsuit, would the result in this case have been different? 

Sentencing for Ms. Christiansen is scheduled for January 5, 2012 in Department 102 of the Los Angeles County Superior Court in downtown Los Angeles, and she faces a maximum state prison term of eight years. Given that the jury reached a finding that there was an "excessive taking" of $1.3 million, probation may not be an option for Judge Marcus and may be grounds for the higher end of the sentencing range. 


There is a co-defendant in the case as well, Jeffrey Hubbard, 54, the former superintendent of the Beverly Hills Unified School District. He faces three counts of misappropriation of public funds in connection with the case and his case goes to trial next.

Mr. Hubbard – now superintendent of the Newport Mesa Unified School District – was charged in December 2010 with two counts of misappropriation of public funds for allegedly giving Ms. Christiansen more than $20,000 in unauthorized gifts and giving her increases in her car allowance that were unauthorized by the  school board. On Oct. 11, Hubbard was arraigned on a Grand Jury indictment charging him with a new count of misappropriation of public funds. The new charge stems from his alleged direction of a subordinate to give a raise to a female employee without school board authorization. His next court date is December 12 for a pretrial hearing.


We have represented both both private and public employees in criminal investigations or civil lawsuits for "self-dealing" or conflict of interest. Business practices are under greater scrutiny and the laws for public employees are very detailed and complicated. For example, the California Attorney General's Office published a lengthy 136-page Guide to financial conflicts of interest by local and state executive and legislative officials. This is just one small part of conflict of interest laws - and compliance with conflict of interest rules is the best way of avoiding a civil lawsuit, fines or criminal prosecution. 


This case is unusual in that it is a high profile school district and it seems doubtful that Ms. Christiansen did not fully comprehend her criminal exposure prior to filing the civil lawsuit. What seemed like a contract case turned into a criminal case. We have handled many "civil" lawsuits that have criminal implications and therefore become "sensitive" cases that cannot be handled like traditional civil cases. Full evaluation of cases before filing is key to a successful global result.


Posted by Tracy Green, Esq. Please email Ms. Green at tgreen@greenassoc.com or call her at 213-233-2260 to schedule a complimentary 30-minute consultation.  Ms. Green's office at Green and Associates is located at 801 South Figueroa Street #1200, Los Angeles, CA 90017.


Any questions or comments  should be directed to Tracy Green, a very experienced California conflict of interest attorney, California self-dealing attorney, California white collar attorney, and California compliance attorney at tgreen@greenassoc.com.