Monday, August 31, 2009

DUI Arrests Without Convictions Are Held Sufficient Cause For California Medical Board To Discipline Doctor

On August 25, 2009, the California Third District Court of Appeal issued an opinion that held that a Northern California doctor’s repeated arrests for driving while intoxicated could serve as a proper basis for professional discipline, even though those arrests did not result in any criminal convictions.

In an opinion by Justice Harry Hull, the panel upheld the Medical Board of California’s decision revoking Dr. Louis H. Watson’s medical license but staying the revocation, and placing the doctor on probation for five years, with 30 days of actual suspension.

Dr. Watson was arrested on four occasions between July 2000 and August 2005 for driving under the influence of alcohol. According to the 2004 accusation filed against him by the board, two of these arrests occurred after police officers observed Dr. Watson driving erratically and two were subsequent to minor traffic collisions. On each occasion, Dr. Watson performed poorly on field sobriety tests but later breath or blood tests indicated his blood alcohol level was below the legal limit.

A misdemeanor complaint filed against Dr. Watson regarding the first incident was dismissed in November 2000 but a criminal matter was pending against Dr. Watson in connection with his last arrest in August 2005 at the time of his administrative hearing. No charges were filed based on his other two arrests.

The accusation also detailed Dr. Watson’s 2003 negotiated plea of no contest to battery, arising from an incident in which he hit another man in the back of the head in the parking lot of a home improvement store. Dr. Watson served one year on probation as a result of his conviction.

Watson further allegedly failed to disclose this conviction, as well as the medical board’s investigation and the drunken driving charges, in response to questions asking about such matters on two applications for reappointment to hospital medical staffs and two applications for professional liability insurance.

Following an administrative hearing, the medical board found each of the alleged incidents had been established and provided cause for discipline. Dr. Watson then petitioned for a writ of mandamus in the Sacramento Superior Court.

Sacramento Superior Court Judge Patrick Marlette granted the petition in part, finding that the board erred in relying on the battery incident to support discipline because that incident has no bearing on Watson’s qualifications to practice medicine.

Additionally, one of the alleged misstatements in an application for professional liability insurance could not serve as a basis for discipline because it was filed after Watson’s battery conviction had been expunged, Judge Marlette said.

Judge Marlette also struck the board’s finding that Watson suffered from a substance abuse disorder, along with two conditions of probation prohibiting the use of alcohol and requiring testing of bodily fluids. In all other respects, Marlette denied the petition.

On appeal, Dr. Watson argued that his use of alcohol could only be the basis for professional discipline if there were a proven nexus between his drinking and his ability to practice medicine safely. Justice Hull agreed that a logical connection between the two was required, as set forth in Business and Professions Code Sec. 2239which provides that a licensed physician’s use of alcohol “to the extent, or in such a manner as to be dangerous or injurious to the licensee, or to any other person or to the public, or to the extent that such use impairs the ability of the licensee to practice medicine safely” may subject him to discipline.

Noting the statute’s use of the disjunctive “or” between its clauses, Justice Hull reasoned that Sec. 2239 defines two distinct ways in which a licensee’s use of alcohol could merit disciplinary measures. Based on Griffiths v. Superior Court (2002) 96 Cal.App.4th 757—which involved a doctor with multiple misdemeanor convictions involving alcohol—and Weissbuch v. Board of Medical Examiners (1974) 41 Cal.App.3d 924—which concerned a physician’s use of narcotics—Justice Hull concluded that an express finding of an actual adverse impact on a doctor’s day-to-day practice of medicine is not required for discipline to be imposed and that a finding of unprofessional conduct could be based on a potential for future harm.

As driving under the influence of alcohol not only “reflects poorly” on a physician’s common sense and professional judgment, but also “demonstrates an inability or unwillingness to obey legal prohibitions against such conduct and constitutes a serious breach of a duty owed to society,” Justice Hull opined that Dr. Watson “posed a danger to himself and others” by repeatedly engaging in such conduct.

Justice Hull added that a criminal conviction for driving under the influence was not required for professional discipline to comport with due process since Sec. 2239 provides licensees with “fair warning” of the conduct it prohibits, even if it is not a bright-line standard. Justices Coleman Blease and Ronald B. Robie joined Hull in his decision.

The case is Watson v. Superior Court (Medical Board of California). A copy of the opinion is located at:

Attorney Commentary: There are a couple of things for licensed professionals to learn from this published decision:

(1) Even if you win your criminal case, the Medical Board can pursue the underlying allegations since it has a different burden of proof.

(2) Be very careful in completing hospital privilege and malpractice applications. It appears that the Medical Board investigation may have resulted from the doctor's failure to complete the application accurately. Hospitals have a duty to report the alleged misrepresentations or failures to disclose to the Medical Board.

(3) In our practice we have seen two driving under the influence convictions lead to probation even if there was no effect on the practice of medicine. Especially now that the diversion program has been abandoned, alcohol related arrests and/or convictions will be disciplined more aggressively by the Medical Board. The diversion program was eliminated in part due to lobbying by claims that consumers were not being protected by it.

(4) The Medical Board often seeks probation in these types of cases since they want to have a means by which to monitor the doctor and have some control over his or her behavior. The problem is that probation is hard on a career -- posting on a website, loss of insurance contracts, difficulty in getting employed, etc.

Any questions or comments should be directed to:  or call 213-233-2260 to arrange for an appointment. Tracy Green is a principal at Green and Associates. They focus their practice on the representation of professionals, including individual physicians, before licensing and regulatory agencies such as the Medical Board.

The firm website is:

Saturday, August 29, 2009

Intro To HIPAA For Health Care Providers: Frequently Asked Questions

The first time that health care providers encounter the Health Insurance Portability and Accountability Act of 1996 ("HIPAA"), the incredibly vast framework of privacy and security regulations may very well appear completely overwhelming. This is especially true when the question at issue – whether it is from a litigation or compliance perspective – is particularly narrow in scope. For the initiated and uninitiated alike, it is fairly easy to get lost in the morass of cross-referenced sub-parts that any given legal question implicates.

Through its privacy and security requirements, HIPAA impacts not only the medical community, but all individuals and industries that come into contact with the medical community. The implementation of HIPAA requires the development of new policies and procedures addressing the use and disclosure of medical information, as well as the appropriate utilization of available technology. Equally as important, as HIPAA has become more and more pervasive, compliance with the privacy and security regulations have necessarily involved attitudinal changes by everyone associated with the health care industry. HIPAA directly impacts the manner in which patients, providers, and payors interact with each other.

What Information is Protected by HIPAA?

The HIPAA Privacy Rule covers all uses or disclosures of "Protected Health Information" ("PHI") whether in paper, electronic, or oral form. PHI has many characteristics that make it somewhat easy to spot. Whether a malpractice attorney is attempting to acquire the medical records of a plaintiff, or a transactional attorney is assisting with due diligence in connection to the sale of a clinic, it is imperative that PHI is treated appropriately. Being able to recognize PHI is the first step. PHI has the following characteristics:

•It is created or received by a Covered Entity (as defined below);
•It relates to an individual's past, present, or future physical or mental health, or condition, or payment for health care. This includes "payment" information; and
•It identifies or can be used to identify a specific individual.
The following are illustrative examples of information that are considered "patient identifiers":

•Name, name of employer, names of relatives;
•Social security number, plan beneficiary number;
•Fax number, telephone number;
•Address, email address;
•Birth date, fingerprint, picture;
•Internet Protocol (IP) address, web site URL; and
•Vehicle license number.

Generally speaking, PHI may be used or disclosed without first acquiring the patient's consent in very limited circumstances. Other than allowing disclosure to the individual about whom the PHI describes, the Privacy Rule generally allows disclosure of PHI without the patient's consent for the purposes of treatment, payment, or health care operations. Additionally, there are certain situations, such as in response to an order of court, or subpoenas (so long as certain additional requirements are met), where PHI may be disclosed without the patient's consent. In most other situations, a patient must provide consent before his PHI can be used or disclosed.

To that end, each individual maintains six basic privacy rights. An individual has the right to:

•Receive a Covered Entity's Notice of Privacy Practices;
•Request restrictions of certain uses of PHI (although Covered Entities are not required to grant such restrictions);
•Be given access to the individual's own PHI;
•Request that an amendment or correction be made to his PHI;
•Request an accounting of PHI disclosures; and
•File complaints regarding PHI use or disclosure.

Additionally, a Covered Entity's use or disclosure (not including "treatment, payment, or operations," or with consent) of PHI must be only to the "minimum necessary" extent. This minimum necessary standard essentially requires a provider to consider what minimum amount of PHI will meet the purpose of the disclosure. Furthermore, once a Covered Entity agrees to a restriction regarding the use or disclosure of an individual's PHI, this restriction must be honored.

Likewise, use and disclosure of PHI must be consistent with a Covered Entity's Notice of Privacy Practices. When the exchange of health information is deemed necessary, but the value of the information is not the personally identifiable aspect of the information, PHI is often "de-identified." PHI can be freely used to create de-identified data, and no restrictions are placed on its use and disclosure.

To Whom does HIPAA Apply?

Although HIPAA appears to be extremely pervasive, it maintains authority over only certain types of entities. HIPAA specifically applies only to "Covered Entities." Generally, a Covered Entity is one of the following:

•Health care provider. This includes any person or entity that (a) furnishes, bills, or is paid for health care; (b) uses electronic means to transmit any of the following: health claims, remittance or payment advice, or any of the other electronic transactions included in HIPAA.

•Health plan. This includes any organization or entity that provides or pays the cost of medical care, including Medicare and Medicaid, HMOs, or PPOs.

•Health care clearinghouse. These are organizations that process data elements or transactions.

Most of the time, HIPAA questions will involve the activities of or information held by either a provider or plan. Because providers and plans must utilize the services of many different entities, it was necessary to find a way to extend the protections afforded by HIPAA when these essential non-Covered Entities are handling or creating PHI.

These non-Covered Entities that play such a critical role in the health care arena are termed "Business Associates." Examples of common Business Associates are billing firms, accreditation organizations, document destruction contractors, lawyers, and third-party administrators.

Importantly, a Business Associate relationship is formed contractually. When a Covered Entity engages another person or entity to perform a function on behalf of the Covered Entity that requires the disclosure of PHI or the creation of new PHI by that person or entity, it is imperative that the Covered Entity requires that person or entity to sign a contract called a "Business Associates Agreement" (often referred to as a BAA). The BAA extends the requirements of HIPAA to the Business Associate and requires the Business Associate to be aware of its responsibilities under HIPAA.. Furthermore, a Covered Entity that does not require Business Associates to sign a BAA is in violation of HIPAA itself.

Federal vs. State Law

Although the term "preemption" is typically thought of in terms of an ERISA analysis, many HIPAA issues require a preemption analysis. As a general rule, HIPAA should be thought of as a regulatory "floor" of provisions. In other words, HIPAA provides a baseline of privacy requirements that state law cannot abrogate. This is not to say, however, that state law will not provide the answer to a given privacy concern.

State privacy laws are preempted by HIPAA if the state law is contrary to HIPAA. In order to determine whether the state law is contrary, two questions should be asked:

1.Would a Covered Entity find it impossible to comply with both the state and federal requirements?

2.Does the state law stand as an obstacle to the accomplishment and execution of the full purposes and objectives of the Privacy Rule?

Generally, if the answer to either of these questions is "yes," then the state law requirement will be preempted by HIPAA. It is important to keep in mind, however, that stronger state laws that are not contrary to HIPAA will apply. Such laws typically further limit the use or disclosure of PHI, create greater rights of access to PHI to the individual, strengthen authorization protection, or impose greater record-keeping requirements.

For example, many states have more stringent state laws regarding the use and disclosure of HIV/AIDS records, drug and alcohol treatment records, DNA records, and sexual assault victim records. Additionally, some states (with California being a prime example) have extremely intricate and detailed bodies of law that provide more stringent requirements that parallel much of the Privacy Rule.

Privacy vs. Security

Although the HIPAA statute and regulations address much more than privacy and security (i.e. health care transaction standards fraud and abuse provisions, provisions regarding medical savings accounts), HIPAA has become synonymous with patient privacy. Furthermore, as electronic medical records have become more prevalent (i.e., the recently passed Stark law exception and Anti-kickback statute safe harbor dealing with e-prescribing), the security regulations will become implicated on a more regular basis.

To a large extent, the privacy and security requirements are distinct regulatory provisions. A quick review of the security regulations, however, reveals many provisions that appears to be equally related to privacy. Generally, the following distinction between HIPAA privacy and HIPAA security hold true: Privacy generally refers to the rights of an individual to limit the use and disclosure of PHI; Security generally refers to the obligations of Covered Entities to safeguard health information from improper use or disclosure. In other words, the Privacy Rule addresses the "what," and the Security Rule addresses the "how."

Importantly, and to further complicate matters, the Security Rule essentially provides Covered Entities with a list of security issues that must be addressed. At no point does the Security Rule instruct Covered Entities how to implement these security standards. Although what appears to be a lack of direction in the Security Rule may seem frustrating to a provider (or an attorney advising the provider), the various administrative, technical, and physical safeguards described in the Security Rule are specifically designed to be both flexible and scalable. Security "solutions" should be proportionate to an organization's risks, and be based on organizational circumstances such as size, complexity, and capabilities


Violating HIPAA can be very costly. Civil penalties range from $100 per incident to $25,000 per person per year per standard violated. On the criminal side of enforcement, illegally obtaining or disclosing PHI can result in a fine of up to $50,000 and one year in prison. Obtaining PHI under "false pretenses" can be punished with fines up to $100,000 and five years in prison. Obtaining or disclosing PHI with the intent to sell, transfer, or use the PHI for commercial gain, personal gain, or malicious harm can result in even stiffer penalties - up to $250,000 and ten years in prison.

Civil enforcement of HIPAA is handled by the Department of Health and Human Services' Office of Civil Rights ("OCR"), while criminal enforcement is overseen by the Department of Justice. The final Enforcement Rule was issued in February of 2006, and makes the HIPAA enforcement provisions applicable to all aspects of the Administrative Simplification Standards (not only the Privacy Rule). Importantly, the Enforcement Rule affirms that the OCR's enforcement philosophy is one of voluntary compliance.

That being said, and although enforcement measures have not been traditionally onerous, it seems that the tide is changing with regard to enforcement and the mindset of those investigating reported HIPAA violations.

Do Not be Fooled by the Myths

When discussing privacy and security issues with fellow health care providers, patients or friends, one of the first obstacles to overcome is their preconceived assumptions about what HIPAA does or does not permit. The following are a few of the many common myths regarding the Privacy Rule:

Myth - A hospital is prohibited from sharing information with the patient's family without the patient's express consent.
■ Fact - The Privacy Rule permits the disclosure to a patient's family members (not just immediate family) or close friends of medical information that is directly relevant to that person's involvement with the patient's care. If the patient is in the room when a provider is about to disclose such information and the patient does not object to such disclosure, the provider may freely disclose the information. On the other hand, if the patient is unable to provide consent (if, for example, the patient is unconscious or due to an emergency situation), the provider must determine whether such disclosure is in the best interest of the patient.

■ Myth -HIPAA does not permit providers to communicate with patients via email.
■ Fact - So long as the communication is made with reasonable and appropriate safeguards (such as encryption) to protect against any reasonably anticipated threats to the security of the information, email communication is permitted.

■ Myth - A patient's family member can no longer pick up prescriptions for the patient from a pharmacy.
■ Fact - This is simply not true. If a pharmacy does not allow this practice, the prohibition is one set forth in the pharmacy's policies and not one mandated by HIPAA.

In addition to addressing the many commonly circulated myths regarding the Privacy Rule, there are many provisions within the regulations to which health care providers and their attorneys should pay special attention.

The Privacy Rule specifically addresses the manner in which records should be released in response to a court order or subpoena. Additionally, there are provisions that address how Covered Entities should interact with a patient's personal representative. Although these provisions can appear somewhat intricate, a careful reading of the regulatory language, along with the published comments within the federal register, and diligent cross-referencing throughout the Privacy Rule will enable a thorough understanding of the concerns at issue.

Any questions or comments should be directed to: Tracy Green is a principal at Green and Associates. They focus their practice on the representation of professionals, particularly health care professionals including individual physicians, corporate providers and group practices.
Their website is:

Friday, August 28, 2009

Two Recent Auto Insurance Fraud Cases For Reporting Vehicles As Stolen From Ventura County

There are two recent auto insurance fraud cases prosecuted by the Ventura County District Attorney's Office. Both cases involve falsely reporting a stolen vehicle and illustrate how one bad decision can snowball out of control and lead to criminal prosecution. As the economy worsens, these type of cases increase.

In addition, Ventura County is known for being hard on crime and the first case where there's been a sentencing involved jail time of 218 days where the loss amount was less than $3,000. The second case involves potential jail time. Thus, venue (where the case is being prosecuted) matters.

Auto Insurance Fraud - 1st Case of Falsely Reporting Stolen Vehicle

On August 19, 2009, Paul Lafflito of Simi Valley was sentenced after previously pleading guilty to felony evading a peace officer and felony auto insurance fraud. Mr. Lafflitio was placed on formal probation for three years and ordered to serve 218 days in the Ventura County jail. He was ordered to pay restitution of $1,278 to Alliance United Insurance Company and an additional $1,592 to the property owners where he crashed his truck.

The allegations in the case were as follows. On March 25, 2009, at 9:00 p.m., two Simi Valley Police Department officers were working undercover in an unmarked patrol vehicle. They were stopped for a red light at the intersection of Sycamore and Royal when they saw a silver Dodge Ram pick-up truck approach the intersection. The Dodge failed to stop for the red light. As the Dodge drove through the intersection, one of the officers shined his spotlight into the cab of the Dodge and got a good look at the driver, Mr. Lafflitio.

The officers tried to pull over the Dodge but the truck sped away. Mr. Lafflitio drove at times between 90 and 100 mph while fleeing from the officers. Because he was driving so fast and recklessly, the officers decided to terminate the pursuit. Minutes later, however, the officers discovered Lafflitio's truck crashed and abandoned on private property off Wood Ranch Parkway. The officers discovered Mr. Lafflitio was the registered owner of the truck and called him. Mr. Lafflitio answered his cell phone and told the officers that he was “night-clubbing” in Hollywood. He added the vehicle must have been stolen from where he last parked it in Simi Valley. He said he would come to the police department the following day to report it stolen.

Unbeknownst to Mr. Lafflitio, both officers got a good look at him driving as the pursuit began. Additionally, cell phone tracking evidence placed Mr. Lafflitio in Simi Valley at the time of the pursuit, not in Hollywood as he told the officers. When Mr. Lafflitio arrived at the Simi Valley Police Department the next day, he was identified and arrested. The officers subsequently learned that prior to arriving at the police department, Mr. Lafflitio called Alliance United Insurance Company and falsely reported his vehicle was stolen.

Auto Insurance Fraud - 2nd Case Of Falsely Reporting Stolen Vehicle

On July 29, 2009, Rodolfo Donjuan of Camarillo pleaded guilty to one count of felony auto insurance fraud. This case was investigated by the California Department of Insurance Fraud Division.

Mr. Donjuan contacted the Ventura County Sheriff's Department on July 18, 2008, and reported his 2000 Chevrolet Silverado had been stolen from a friend's house in Camarillo . The Silverado was subsequently located abandoned and wrecked a short distance away. Mr. Donjuan also filed a claim with his insurance carrier, Infinity Insurance.

During the next two months, Mr. Donjuan gave Infinity Insurance conflicting statements about the theft of his vehicle. His insurance claim was transferred to Infinity's Special Investigations Unit.

On September 24, 2008, Mr. Donjuan was deposed under oath by an Infinity Insurance attorney. During the deposition, Mr. Donjuan was confronted with his inconsistent statements and admitted that he had lied. Mr. Donjuan stated he had been drinking beer and was driving when he crashed his vehicle. Mr. Donjuan said he ran away from the scene because he was afraid.

Mr. Donjuan will be sentenced on August 25, 2009. The maximum penalty for this charge is five years in state prison and a fine of up to $50,000. His sentence will depend on a number of factors and could range from probation to state prison depending upon his prior record and whether he has paid restitution to the insurance company.

Any questions or comments should be directed to: or 213-233-2260. Tracy Green is a principal at Green and Associates in Los Angeles, California. Ms. Green focuses her practice on the representation of licensed professionals, individuals and businesses in civil, business, administrative and criminal proceedings. She has significant experience in defending individuals, licensed professionals and businesses in insurance fraud investigations. The firm website is:

Thursday, August 27, 2009

New York Chiropractor Pleaded Guilty To Defrauding Private Insurance Companies

On August 21, 2009, chiropractor Michael Horowitz, a chiropractor, pleaded guilty in Manhattan Federal court to a scheme to defraud insurance companies of more than $750,000 by billing for medical services that were not performed. The plea was to one count of conspiracy to commit health care and mail fraud (Count Three of the Indictment) before United States Magistrate Judge James C. Francis IV.

According to the Complaint, the Indictment to which Dr. Horowitz, D.C., pleaded guilty, and statements made in court: Dr. Horowitz, D.C., practiced chiropractics at "Horowitz Family Chiropractic" in downtown Manhattan. In February 2002, Christopher Green joined Dr. Horowitz and opened "Wall Street Chiropractic" on Wall Street in New York City.

From at least 2003 to December 2006, it was alleged that Horowitz and Green defrauded insurance companies including, Empire Blue Cross Blue Shield, AETNA, and CIGNA. Specifically, it was alleged that the two billed insurance companies for providing chiropractic treatments that were not in fact provided. We see many cases where Medicare and Medicaid (Medi-Cal) fraud is prosecuted, but medical fraud cases where private insurers are the alleged victims are also on the rise.

In his plea, Dr. Horowitz admitted to false billings totaling $773,099.18. Christopher Green had plead guilty in August 2007 to participating in the same health care fraud conspiracy. Thus, it appeared that Green had plead out early was cooperating against Horowitz. Sentencing is set for December 3, 2009 by United States District Judge Richard M. Berman.

Posted by Tracy Green. Any questions or comments should be directed to: or 213-233-2260. The firm website is:

Tuesday, August 25, 2009

DEA Serves Search Warrant On Beverly Hills Pharmacy In Jackson Case. What Should You Do If Your Business Or Home Is Served With A Search Warrant?

According to an article in the Los Angeles Times, on August 22, 2009, the Drug Enforcement Agency (DEA) served a search warrant on Mickey Fine Pharmacy in Beverly Hills relating to an investigation into Michael Jackson's death. During the search, the DEA agents seized prescription drug records and spent five hours sifting through records at for "evidence of improper dispensing of controlled substances."

Special Agent Jose Martinez was quoted in the L.A. Times as saying that Jackson was known to have prescriptions filled at the Roxbury Drive store, running up a $101,000 drug bill in 2005, which the pharmacy collected after filing a lawsuit. The DEA search, part of a multi-agency investigation into Jackson's June 25 death, suggested that detectives are looking beyond Jackson's personal physician and the role of the anesthetic propofol.

A copy of the Los Angeles Times article can be found at:,0,4035804.story

Attorney Commentary: If your business or home is the subject of a search warrant, and the police are at the door with a search warrant, what do you do?

1. Do not lose your cool. Act calm (even if you are very nervous and scared). Act professional and respectful with the police or investigators even if you are angry and they are not acting in a professional manner. However, do not speak or volunteer information (see #3 below). If you have a lawyer, call him or her. If there are confidential records (medical or legal), there are certain measures that need to be taken within 72 hours in California state cases.

2. Ask for a copy of the warrant and cards from investigators. A search warrant gives the police the legal authority to search the premises named in the warrant. Ask for a copy of the warrant. Obtain a card from the lead investigator or officer conducting the search. This can help your lawyer determine which agencies are involved in the investigation.

3. You have the right to remain silent. Use it. Do not engage in conversation with the investigators or officers executing the warrant since everything you say is evidence. There is no guarantee that your statements will be accurately reflected in any report. What you say will not help you. Politely decline to answer any questions.

4. Do not consent to a search.  Before you consent to any further searches or any other locations, seek advice of counsel.

5. If you don't have an experienced lawyer, hire one after the search. If a search warrant has been issued, a judge may have determined that there is probable cause to believe you or your business has committed a crime. Or you or your business may be a witness in the case. Regardless of your status as suspect or witness, there is an ongoing criminal investigation. You need to prepare in advance.

There are things that a competent attorney can do to improve your chances of not being charged or things that can later help you win any case that may be filed. The attorney can also evaluate the case early, engage in damage control and, if appropriate, make a presentation to the prosecuting agencies in order to avoid prosecution.

Any questions or comments should be directed to: or 213-233-2260.
Tracy Green is a principal at Green and Associates in Los Angeles, California. Ms. Green focuses her practice on the representation of licensed professionals, individuals and businesses in civil, business, administrative and criminal proceedings. She has significant experience in defending individuals, licensed professionals and businesses in search warrants and investigations.
The firm website is:

Sunday, August 23, 2009

Washington Man Charged With Federal Crimes in San Jose, California For Unauthorized Access Of Private Email Account

A recent case regarding unauthorized access of a Yahoo email account shows how accessing someone's email account can be a federal crime. Think of someone you know in a troubled relationship who finds out their partner's password and authorizes their email without authorization. Even if not done for financial gain, it is a crime. In professional and personal relationships, email is a tempting means of accessing private information about someone.

On July 15, 2009, a federal grand jury in San Jose, California indicted Gregory Alexander, of Everett, Washington, for unauthorized access of the private email account of a member of a not-for-profit organization’s board of directors. Mr. Alexander was charged with computer fraud and aggravated identity theft. He is currently out of custody on a $100,000 personal recognizance bond. The case is being prosecuted in San Jose since that is where Yahoo is located.

According to the indictment, Mr. Alexander used a username and password belonging to Randall Hough, a member of the United States Chess Federation’s (UCSF) Board of Directors, to access Hough’s private email account on 34 separate occasions spanning from November 2007 to June 2008. Mr. Alexander was the webmaster for a chess site known as Additionally, the indictment notes that Mr. Alexander obtained information from Hough’s account on an unspecified number of those occasions.

The maximum statutory penalty for each count of computer fraud in violation of 18 U.S.C. § 1030(a)(2) is 10 years and a fine of $250,000. The maximum statutory penalty for the count of aggravated identity theft in violation of 18 U.S.C. § 1028A(a)(1) is two years. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553. Please note, an indictment contains only allegations against an individual and, as with all defendants, Mr. Alexander must be presumed innocent unless and until proven guilty.

For a copy of the indictment, go to:

Posted by Tracy Green. Any questions or comments should be directed to: or 213-233-2260. The firm website is:

Saturday, August 22, 2009

Former Owner of Atenas Medical Equipment, Inc. Arrested on Health Care Fraud Charges In Miami

As discussed before here, the number of health care fraud indictments and prosecutions continue to increase for all types of health care providers. In addition, in this particular medical supply case it took the government two years from the time the business ceased billing Medicare to obtain an indictment.

On August 21, 2009, Maria A. Aloise, the former owner of Atenas Medical Equipment, Inc. was arrested and had her initial appearance in Miami federal court. A detention hearing has been set for August 24, 2009.

On August 20, 2009, a federal grand jury in Miami returned an eleven-count Indictment charging Ms. Aloise with health care fraud, in violation of Title 18, United States Code, Section 1347. According to the Indictment, Ms. Aloise was the owner of Atenas Medical Equipment, Inc., a Hialeah-based company that purportedly provided durable medical equipment (“DME”) to Medicare beneficiaries. From June 8, 2005, through April 4, 2007, Atenas Medical Equipment is alleged to have submitted approximately $1,421,346 in fraudulent claims to Medicare seeking reimbursement for DME items, such as oxygen concentrators and hospital beds, that had not been prescribed by physicians nor provided to Medicare beneficiaries.

An indictment is only an accusation is not evidence of guilt. A defendant is presumed innocent and is entitled to a fair trial at which the government must prove guilt beyond a reasonable doubt. If convicted, Aloise faces a maximum sentence of ten years’ imprisonment on each of the health care fraud counts.

Related court documents and information may be found on the website of the District Court for the Southern District of Florida at or on

Attorney Commentary: Some businesses and individuals fail to understand that the government prosecutors work on old history and the fact that a business is closed, changed its practices or stopped billing Medicare will not prevent an investigation or prosecution from going forward. One of the goals of the government recently has been to lower the loss thresholds for prosecution and ensure that providers have a felony conviction and will be unable to participate in any government funded health programs in the future.

Posted by Tracy Green, Esq. Please email Ms. Green at or call her at 213-233-2260 to schedule a complimentary 30-minute consultation.  Ms. Green's office at Green and Associates is located in Los Angeles, California. Tracy Green, is a very experienced California health care fraud attorney, California Durable Medical Equipment attorney, and California DME attorney.

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:

Friday, August 21, 2009

Increase In Prosecution Of Employees And Employers For Workers' Compensation And Disability Fraud

With the economic issues facing the economy, there has been an increase in the number of workers' compensation and disability fraud cases filed against employers, workers and others.

Here are three examples of individuals who were recently charged with workers' compensation or disability fraud. A criminal complaint contains only allegations against an individual and individuals must be presumed innocent unless and until proven guilty.

There have also been a number of recent cases against employers for workers' compensation premium fraud which we will discuss in a separate future post.

Why the increase in the prosecution of these cases? First, the District Attorney's Offices have separately funded units to prosecute these cases. The funding is from workers' compensation premiums and not from county budgets. Second, the insurance companies are aggressively putting these cases together along with the Department of Insurance and present them as a package for filing at the DA's Offices so that most of the work is done.
Third, when the economy has problems, workers' compensation claims increase. From the workers' standpoint, we have seen an increase in claims (including some false or exaggerated ones) since many workers do not have health care insurance and this allows workers to obtain medical treatment post-employment. Further, since unemployment can run out after a number of months, a disability (partial or full) claim will allow the employee to obtain financial benefits apart from unemployment.
Fourth, the high cost of workers' compensation in California has caused many employers to leave the state and reducing fraud by prosecuting individuals and employers is politically popular.
1. San Bernardino Man Arrested for Workers’ Compensation Fraud
On July 29, 2009, Jose Haro-Arriaga, a 43 year-old San Bernardino man, was charged with workers' compensation fraud in San Bernardino County. The allegations in the nine-count criminal complaint are as follows. In December 2005, Mr. Haro-Arriaga filed a workers' compensation claim alleging an injury after two subjects stole a backpack leaf-blower he was wearing and operating during his employment as a landscape worker. Mr. Haro-Arriaga is alleged to have misrepresented the facts of his industrial injury, presented false or fraudulent statements in support of his claim for compensation, in order to obtain benefits in excess of $39,000. In addition, Mr. Haro-Arriaga allegedly gave false statements during a deposition, and allegedly concealed and failed to disclose his prior industrial injuries. His bail was set at $25,000.
2. San Bernardino Man Charged With Insurance Fraud And Grand Theft For Allegedly Operating His Own Business While Receiving Disability Benefits
On June 5, 2009, the San Bernardino District Attorney's Office charged Arno Offerman of Rancho Cucamonga with insurance fraud and theft related charges that stemmed from a workers compensation claim that Mr. Offerman had filed. The District Attorney's Office alleged that Mr. Offerman suffered a work related injury in July 1999, while working as a termite and pest control inspector. As a result of his alleged injury, Mr. Offerman was determined to be incapable of working and was subsequently placed on temporary total disability (TTD). Insurance documents showed that Mr. Offerman received TTD payments from late 2002 through June of 2005, and that he received over $64,000 dollars in TTD payments during that time.
During the same time period that Mr. Offerman was receiving TTD payments from the California Insurance Guarantee Association (CIGA), he was also earning income by operating his own termite and pest control business in Rancho Cucamonga, which Mr. Offerman allegedly failed to disclose to the insurance company (CIGA).
The investigation grew and allegedly revealed that while Mr. Offerman was operating his termite and pest control business he employed numerous employees that he failed to report to the California Employment Development Division (EDD). In addition to failing to report his employees to EDD, Mr. Offerman also failed to deposit with EDD the statutorily required taxes for his employees. Thus, this case was both an individual disability fraud and an employer's failure to pay the employment taxes to EDD.
3. Rialto Woman Plead Guilty To Insurance Fraud And Sentenced To Probation
In another worker's compensation fraud case prosecuted by the San Bernardino District Attorney's Office, Sherilee Peace was charged with insurance fraud relating to her workers' compensation claim. Ms. Peace claimed she injured her lower back and hip in March 2004, while employed by The Press Enterprise as an advertising representative. She delayed reporting the injury for two months.
In filing the claim, Ms. Peace made several alleged misrepresentations regarding her prior claim and medical history, her prior employment and her physical activities and abilities. The insurance company did a sub rosa (undercover) investigation and were able to contradict information she gave regarding her physical capabilities by surreptitiously obtained surveillance video.
Ms. Peace subsequently pleaded guilty to two counts of insurance fraud and under the terms of the plea agreement, was to be sentenced to three years of felony probation, ninety days in jail and payment of over $22,000 in restitution.

Posted by Tracy Green. Any questions or comments should be directed to: Tracy Green is a principal at Green & Associates in Los Angeles, California. They focus their practice on the representation of licensed professionals, individuals and businesses in civil, business, administrative and criminal proceedings. They have handled numerous workers' compensation fraud cases representing individuals, businesses, medical providers and attorneys. The firm website is

Thursday, August 20, 2009

Sentences For Medicare Fraud Cases Are Getting Longer - Miami Physican and Physician's Assistant Sentenced To 97 Months

The Medicare fraud prosecutions continue to mount up across the country. Further, the sentences in these cases are increasingly harsh. The tolerance for "white collar crime" by judges, prosecutors and the public has waned and apart from restitution, there is an increasing demand for jail time. If a person is convicted after a jury trial -- the sentences have been significantly longer than those entering into plea agreements -- putting greater pressure on those charged with offenses to enter into plea agreements and waive their constitutional right to a trial.

A recent case illustrates this trend. On August 7, 2009, in Miami federal court physician Keith Russell, 65, and physician’s assistant Jorge Luis Pacheco, 50, were each sentenced to 97 months in prison, and physician’s assistant Eda Marietta Milanes, 43, was sentenced to 63 months in prison, for their roles in fraud schemes that involved billing Medicare for $10,903,509 worth of alleged unnecessary HIV infusion treatments. Dr. Russell, Mr. Pacheco and Ms. Milanes were also ordered to pay more than $3.1 million in restitution to the Medicare program during their sentencing hearings before U.S. District Judge Ursula Ungaro. This sentence comes after all three were convicted by a jury of conspiracy to commit health care fraud and multiple counts of health care fraud on March 17, 2009, after a two-week trial in Miami.

In order to seek longer sentences, the government argues that those who commit health care fraud are bankrupting the health care system and threatening its fiscal integrity. The government made such arguments in this case. With the national political debate raging as to the broken health care system, these arguments add fuel to the fire.

The trial evidence in this case was that Dr. Russell, Mr. Pacheco and Ms. Milanes served as the medical staff for M&P Group of South Florida Inc. (M&P Group) and Tendercare Medical Center Inc. (Tendercare), which purported to specialize in the treatment of Human Immunodeficiency Virus (HIV). Dr. Russell was the medical director for both M&P Group and Tendercare during their operations. Mr. Pacheco (who was a licensed physician in Cuba before coming to the U.S.) and Ms. Milanes worked as medical assistants for Dr. Russell at both clinics.

One of the owners of the clinics, Tony Marrero, testified at trial that the clinics were established for the sole purpose of defrauding Medicare. Marrero testified that the scheme was to submit claims for medically unnecessary HIV infusion and injection treatments. Evidence at trial showed that Medicare was submitted billings of $10,903,509 and that the defendants' companies were paid in excess of $3.1 during approximately two years of operations.

Trial witnesses testified that the unnecessary medicines were not administered, and that the clinics were only operated to create the appearance of legitimacy. Mr. Marrero stated that he had an arrangement with a pharmaceutical wholesale company, Lifecare Medical, to buy invoices showing the purchase of large amounts of medications, when only minor amounts were actually bought. Mr. Marrero also testified that he paid Ms. Milanes and the M&P group extra money to manipulate patients’ blood samples so the lab results would appear to support the fraudulent claims. Another physician’s assistant, Luz Borrego, testified how those samples were manipulated, and Borrego also stated that she would not give the medications because she knew the medications could hurt HIV patients if actually provided.

Trial testimony established that every patient who went to the clinics was paid a cash kickback of up to $200 per visit. Four patients testified at trial that they took bribes and never received medication at the clinics. One patient testified that he used his payments from the clinics to support his cocaine addiction. Another patient testified that he did not even have HIV, notwithstanding clinic documents showing he was being infused with medication to treat HIV.
Trial evidence established that Dr. Russell, Mr. Pacheco and Ms. Milanes worked at Tendercare and M&P Group at the same time. Further, patients testified at trial that they would received cash and bogus treatments from both clinics.

At sentencing, Ms. Milanes acknowledged that she was paid extra by Marrero to manipulate blood samples to justify the false claims. Marrero testified that Pacheco worked directly for him to determine what drugs would be falsely billed to Medicare.

Posted by Tracy Green. Any questions or comments should be directed to: or by calling 213-233-2260. Tracy Green is a principal at Green and Associates in Los Angeles, California. They focus their 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. Their website is:

Sunday, August 16, 2009

At Los Angeles Free Mega-Clinic -- Scenes From The Third World As Thousands Of Uninsured Seek Dental, Medical And Vision Care

There is an article in the August 16, 2009 edition of the Los Angeles Times by columnist Steve Lopez entitled "At Free Clinic, Scenes From The Third World." The article is about what dentists and doctors faced when non-profit group Remote Area Medical organized a free mega clinic at the Forum in Los Angeles last week. In Los Angeles it is estimated that 1 out of 4 working age adults do not have health insurance in Los Angeles, a metropolitan area of 10 million people. This means 2.5 million people in Los Angeles area alone are without health insurance.

Remote Area Medical was founded to travel to the third world and -- and with amazing local support -- was asked to come to Los Angeles where they found third world health conditions. The eight-day event has been drawing overwhelming response for free dental, vision, and medical care. They treated about 750 people a day (many of who had camped out) and turned away many more. This highlights how our healthcare system is not working for a large percentage of our population and why the debate on how to fix it is so heated. There were are lot of human stories at the Forum -- people who couldn't see, had untreated diabetes, had missing or infected teeth.

The article can be found at:,0,3959652.column

Posted by Tracy Green at

Saturday, August 15, 2009

Los Angeles Federal Jury Convicts DME Suppliers Of Medicare Fraud For Medically Unnecessary Power Wheelchairs And Kickbacks To Clinics

On July 17, 2009, after a one-week trial in federal court in Los Angeles, the jury convicted the owners and operators of CHH Medical Supply a Los Angeles-area durable medical equipment. The jury found Gevork Kartashyan guilty of conspiracy to commit health care fraud and health care fraud; and found Eliza Shurabalyan guilty of health care fraud. U.S. District Judge Stephen V. Wilson scheduled sentencing for October 5, 2009.

At trial, the government alleged that Ms. Shubaralyan and Mr. Kartashyan owned and operated CHH Medical Supply, a durable medical equipment (DME) supply company. Ms. Shubaralyan was the listed owner. It was further alleged that between January 2005 and June 2008, Ms. Shubaralyan and Mr. Kartashyan, through CHH Medical Supply, billed Medicare $949,859, and were paid $597,750. Virtually all of these bills were for power wheelchairs and wheelchair accessories which the government contended were medically unnecessary.

The trial illustrated the interrelationships between beneficiaries, referring physicians and clinics and medical supply companies. At trial, elderly Medicare beneficiaries testified about how they were recruited and taken to Los Angeles-area medical clinics. At the clinics -- which were not operated by the defendants in this case -- the beneficiaries turned over their Medicare numbers and other personal identifying information. Some were promised vitamins, diabetic shoes, and other items that they never received.

It was alleged that the clinics were in the business of generating fraudulent power wheelchair prescriptions that could be sold to DME company owners who would bill Medicare for the wheelchairs. In other words, CHH Medical Supply was alleged to have paid kickbacks to the clinics for the wheelchair prescriptions. Many of the beneficiaries testified they did not know they were getting a wheelchair until it was delivered to them by CHH Medical Supply. All of the beneficiaries testified that they did not need or use the wheelchair.

Five physicians from the clinics testified that they never authorized or approved the power wheelchair prescriptions written under their names, often by physician's assistants. Three of these physicians testified that they never even worked at the clinics listed on phony prescription pads.

A government witness, who recently pleaded guilty to health care fraud in connection with one of the clinics at issue in this case, testified that Mr. Kartashyan would regularly come into the office where he and others worked in order to pick up power wheelchair prescriptions that he had purchased. Upon delivery, Mr. Kartashyan would then generate phony forms stating that the beneficiaries' homes were appropriate for the use of a power wheelchair, even though no home assessment was done.

Ms. Shubaralyan, who was the listed owner of CHH Medical Supply, prepared the billing and submitted all of the company's claims to Medicare. Power wheelchairs and accessories constituted over 98 percent of the company's billings to Medicare. In addition, Ms. Shubaralyan withdrew over $195,000 in cash from the company's bank account in order to pay for the kickbacks to purchase the power wheelchair prescriptions.

Any questions or comments should be directed to:  Tracy Green is a principal at Green and Associates. They focus their practice on the representation of professionals, particularly health care professionals including individual physicians, corporate providers and group practices. Their website is:

Friday, August 14, 2009

What Should I Do To Prepare For Or Help Avoid An Audit By Medi-Cal, Medicare Or Private Insurance Companies?

If you are a health care provider with a Medicare or Medi-Cal provider number -- especially in Southern California --chances are you WILL be audited or have an on-site visit at some point over the years. The audits and on-site visits (sometimes unannounced) have increased dramatically over the past years and will continue to increase as the state and federal governments face budget problems. In addition, the private insurers who administer Medicare are required by their contracts with the government to audit whether they suspect improprieties or not.

Your practice may also be subject to audits from insurance companies and health maintenance organizations (HMOs). The audit must be taken seriously since it can result in an overpayment being assessed and/or adverse administrative history. However, do not panic. Although it can seem like an intimidating event, you can increase your chances of prevailing and not having an unfair overpayment amount assessed if you prepare for any potential audit in advance and handle it properly once the request is made.

Here are some strategies and tips for helping you not only survive your audit but being prepared and prevailing to the greatest extent possible:

1. Prepare Your Staff In Advance For Understanding That Audits Are Part Of The Healthcare Business. Providers and the staff often erroneously assume that if they are being paid for claims that everything is correct and they are doing everything right. Not so. Medicare and Medi-Cal pay the provider on a "good faith" basis and reserve the right to audit. Private insurers, on the other hand, often require pre-approval before payment. Thus, it is critical that your entire staff understand that the best defense against audits is good charting, documentation, proper coding, and avoiding any upcoding, billing for services not provided or documented or anything else that may be characterized as fraud or abuse.

Once everyone understands that audits are part of the process it also helps them take control of the audit process and not let fear prevent them from handling it professionally. Most Medicare and Medi-Cal audits fall into one of three broad categories:
(1) an audit during the application or updating of application process where there is an on-site visit and review of business records and typically only a limited number of claims;
(2) prepayment audits (most common in Medicare), in which a review of claims is conducted before Medicare pays the physician, where carriers typically want to look at only one or two claims from each physician; and
(3) post-payment audits.

In a comprehensive post-payment audit or review, the carrier reviews a small statistical sample of claims and uses the results to calculate a projected overpayment for a period of months or years.

2. Identify In Advance Who Is Authorized To Speak To Auditors And Any Other Person Or Investigator Who Visits The Office In An Announced Or Unannounced Visit. First impressions count and this applies to audits and other visits by regulators or investigators. You will be better prepared if you determine in advance who is permitted to speak to government auditors or regulators. For example, you do not want the receptionist interviewed about your office's policies and procedures since anything he or she says may be used in your audit.

Establish a procedure that only an office manager, the provider or the health care lawyer are allowed to meet and discuss anything with the auditor or regulator. The other staff should be limited to contacts about establishing times and dates available for meeting unless and until they are instructed to do so by the designated persons in charge of the audit. There are many horror stories about staff meeting with auditors or regulators while the provider is out of the office and giving misinformation which was later used against the provider.

3. In Order To Anticipate An Audit Or Prevent An Adverse Audit, Understand Fully How The Medicare Or Medi-Cal Program Operates. Providers often assume that billers and office staff know how the Medicare and Medi-Cal programs operate when this is often not the case. Billers are used to working from superbills and entering codes without analyzing whether all the program rules are being followed. It should be understood by all that these programs will only reimburse "reasonable and necessary" services where there is the required documentation -- even if the services were provided. If the documentation is not present in the file -- it will be presumed that the service was not provided or that it was not medically reasonable and necessary.

We suggest that the providers have the billers and office managers create a thorough notebook regarding each of the procedure codes billed that contains the printed portions of any relevant manuals about what constitutes 'reasonable and necessary services' as defined by Medicare or Medi-Cal and what documentation is required for these services. It is then necessary to have the providers and anyone who sees patients or provides services read and understand these requirements. In addition, the provider needs to be aware of what your local carrier wants claims forms and patient records to contain because the requirements vary.

The provider may have worked in a hospital or private setting where the documentation requirements are different from private Medicare or Medi-Cal and not realize they are failing to properly document the file. For example, state law and private insurers may allow a physical therapist assistant or physical therapy aide to perform certain tasks in physical therapy while Medicare's billing and reimbursement policies and procedures may not pay for the same treatment by these assistants or aides for Medicare treated patients. Such information typically is contained in the Medicare manual and the local carrier's local medical review policy which are all available online.

Above all else, maintain complete documentation in patient records to substantiate the services billed. Record symptoms and diagnoses, details of the services and level of care provided, and complete progress notes. Medicare considers lack of corresponding documentation as evidence that billed services were not reasonable and necessary. The auditor will consider any related reimbursement as an overpayment and require the provider to refund the applicable amount.

There should be periodic internal reviews of files and education to ensure that the documentation is being done properly. Even if this billing and procedure code notebook and research was not done before the audit, prepare it at the beginning of the audit so everyone at the provider's office is prepared and knows the billing and reimbursement policies. Often during the audit, auditors will be mistaken about documentation or medical necessity requirements.

4. Have A Health Care Attorney To Whom You Can Send Any Audit Letters Or Whom You Can Contact Anytime There Is A Visit And Request For An Interview. If you receive a letter or visit from your Medicare or Medi-Cal carrier requesting a number of charts or records, contact your attorney immediately and fax him or her the letter or business cards of the visitors. Even if the attorney only needs to be minimally involved in most of the audit and file preparation, you need an objective person to ensure that the audit is handled in the best manner possible.

It is often easier for the health care attorney to speak with the auditors and set up a timetable for any interviews or to ensure that there is sufficient time to respond to the request for documentation. In most cases, thirty or sixty minutes of a qualified health care attorney's time at the beginning of the audit is well worth it since it will reduce the risk of overpayment, help reduce the provider's time and help ensure that the audit goes smoothly and that a good impression is made.

Resist the temptation to think that if a health care attorney is involved that an auditor or regulator will think that something is "wrong." In fact, the opposite impression is given: the provider is sophisticated, professional and has an established method for responding to audits. This is especially important in "unannounced" visits where it is easier for a health care attorney to be objective and take control of the situation where an auditor simply shows up and demands records and interviews at that moment. The health care attorney can also address regulatory issues that may be beyond the provider's expertise.

5. Read Any Letters Or Lists Carefully And Make Sure You Understand What Is Requested And See If There Are Any Patterns. This is another reason to send an audit or similar letter to your health care attorney so you understand what is requested. For example, assume that records for specific dates of service are requested as to a certain number of patients. Make sure that you also send in any other documentation that would support the services rendered on that day. This could include laboratory results, X-ray reports, photographs, consultations from other physicians, etc.

When reviewing the audit letter, especially if the letter requests multiple charts, see if there seems to be some type of underlying pattern or theme in the chart notes. Were the requested patient charts all billed for one particular code, all referred by a certain physician, or is there some other pattern? This will assist you in better addressing the concerns of the audit -- which may not be told to you directly by the auditors.

6. Determine With Your Health Care Attorney Whether You Need An Expert Witness Or Coding Expert During The Audit Process. Your attorney and you should consider hiring a coding expert to review the charts, preferably before you submit them to the auditor or carrier. If the expert cannot complete the review before the deadline for producing the records, the attorney will ask for an extension or simply have the expert conduct his review at the same time that the carrier does. Your attorney should have the review done under the attorney work product privilege so that the results will be confidential. One excellent preventative measure is to have a coding expert review charts periodically so that you know that your practice is in compliance with billing and record requirements. This can also be part of a compliance plan.

7. Take Control Of The Audit. Make Sure Records Are Complete. Review Charts And Records Carefully Before Copying Them Or Providing Them To Auditors. The auditors or regulators do their best to put the burden on the provider to prove that the services were properly documented and coded. Remember that the auditors are often not medical personnel even if they have some medical training. The auditors will often ask for the charts right away in unannounced visits.

Take your time and ensure that all reports, notes and other information are in the chart before you produce or copy it. Look for other records such as sign in sheets that will also be relevant to the audit. One of the most important things to do in preparing to respond to an audit is to ensure that the records are complete. One of the best ways to do this is to meticulously compare each medical record with its corresponding billing record. Remember, the billings are where the government’s investigation began. You can ensure that there are records for each of the dates billed, identify coding issues and have a better idea how to proceed in the audit.

Another important step is to make sure you produce the complete records. It is not enough to have them but you need to produce them and have records of the production. If you fail to produce records requested, you can be penalized financially or with adverse action against your provider number. If the auditor or regulator agrees you do not need to produce certain records or documentation, you or your health care attorney should document this agreement. It is important to document what is produced since you will be creating an administrative record. All records and documentation produced should be accompanied by a memorandum or letter itemizing the records produced and either delivered in person or with a return receipt or overnight service as proof of delivery.

8. Do Not Alter The Records. If you need to supplement the records, make sure you do not back date or alter the records. Altering records can cause problems much worse than overpayments -- Medical Board complaints and discipline. Seek the advice of counsel when it comes to supplementing records or there is any issue about missing records.

9. Understand What Circumstances Might Can Trigger An Audit. Audits can provide an education. They can be stressful, especially if the outcome is unfavorable. However, they can offer tremendous amounts of information and educational opportunities for your office. Try to remain positive while you go through this process. What are some common triggers of audits?

■ High or excessive use of specific CPT codes. Sometimes excessive use of certain ICD-9 codes may also trigger audits. Generally, doctors who are outside the bell curve with regard to billing practices may get flagged on internal carrier audit screens.

If your practice tends to be more specialized (perhaps you specialize more in geriatric patients), you will, by the nature of your practice, be billing certain codes more frequently than the other doctors in the community who have a more broader-based practice pattern. You will want to explain these issues to the auditors. Do not be afraid to bill for specialized services or think that you will avoid an audit by underbilling or billing at the lower code. Just be extra careful in the documentation. Do not alter proper billing protocols just to try to stay under the radar. Bill for what you did and let the chart defend you.

Importantly, don't stress to the auditors how you provide services for "free" and underbill. That does not help your audit in most circumstances. Are you billing for codes where you are using new technology? Did you change your practice patterns to become more specialized so that your billing patterns changed? Did you add new diagnostic or therapeutic machines to the practice? Did you purchase a practice? If so, you may flag out on a statistical basis. Explain your billing and practice changes to the auditors and the best defense is a well-documented file. Use the research notebook described above to ensure you are complying with all the documentation and medical necessity requirements.

■ Do you have an unhappy patient or patient's family? If you have an unhappy patient, review the bill if the patient had a bad outcome or received an unexpectedly large bill. Sometimes collection practices or a bad outcome can prompt a patient to launch a complaint that generated the audit. To avoid such problems in the future, make sure the patient knows upfront about the costs. Speak with the biller or collection service to alter methods of collections. Consider formulating a payment plan with the patient or allow patients to pay with a credit card. If one of the patients was unhappy, raise this with the auditors.

■ Do you have disgruntled current or former employees? All it takes is a complaint from a current or former employee to trigger a fraud audit or other review. The employee may try to get revenge and the best way to prevent this from occurring is to do the following:
--have a compliance plan that requires the employee to report suspected fraud and abuse during employment;
--conduct exit interviews where employees are asked about any suspected fraud or abuse;
--have written employee policies and maintain personnel files;
--have regular office meetings to review policies;
--address small issues before they escalate to large ones;
--make everyone in the office feel like part of the team; and
--educate the employees regarding billing and documentation requirements so that they do not mistakenly think that something is being done improperly.

If you suspect that a current or former employee triggered the audit, bring the disgruntled employee up in the audit and explain why he or she is not credible if he or she is the source. The auditor may not identify the complainant but this may help defuse the employee's allegations.

■ Are You Overusing Pre-Printed Forms Or Template Shortcuts? Be careful with the use of templates especially in electronic records. Although templates are acceptable charting methods, they can look very repetitive, especially when it comes to routine care and services. Each chart note should clearly reflect the chief complaint, history, examination and treatment you rendered on that date for that patient.

Cutting and pasting templates/macros from previous dates of service and simply using that language again in subsequent chart notes does not necessarily indicate what happened on that specific date of service. It makes for a bigger charts but once it looks repetitive or like filler, it can cause an issue with the audit where your office might be characterized as a "mill" or you are questioned about the amount of time spent with the patient.

Look for these triggers and others as they will help you defend the audit. Do not be afraid of negative facts or problems that you have found. If there are weaknesses or mistakes, discuss with your health care attorney whether you should concede certain issues at the audit level for credibility reasons. Do not assume that if you admit certain problems that the auditors will be fair to you or not seek overpayment. You need to have a strategy and having an outside objective person such as a health care attorney can be useful so you do not make a tactical mistake that could cause later problems or result in an overpayment.

10. Be Professional. Treat the auditors with respect even when you disagree with them or their position. This is another reason to have an objective health care attorney for you to rely upon. It is easy to get emotional and defensive when your medical services seem like they are under attack and you already feel underpaid by the carriers.

11. Maintain A Notebook Of Administrative And Professional Records. In advance of the audit, have a notebook or file with all the key documents you need for an audit. You will be prepared and then update these on an annual basis at the beginning of the year. These records include but are not limited to the following:

--All Medicare and Medi-Cal applications and supplemental applications (see if there is an issue with failure to update these applications);

--Malpractice insurance, workers' compensation insurance; liability insurance and any other insurance required by the programs; --Copies of all licenses held by providers and staff;

--Other business documentation required by the programs such as office leases, contracts with laboratories, contracts with suppliers, etc. (this will depend upon the type of provider);

--Equipment lists where the equipment is diagnostic or used for billing; and

--Any other documentation required by the program and its manuals.

12. Request An Exit Conference Or Meeting Upon The Conclusion Of The Audit. Depending on the type of audit or visit, you want to have an exit conference or meeting where you can address any outstanding issues in the audit. You also may want to or submit a letter that is reviewed or drafted by your health care attorney showing that you have fully complied with all record requests and documenting any positions regarding coding, billing, medical necessity or other issues that have arisen. Having an excellent record of your submissions will be important to obaining a favorable result and creating a good record if there is a subsequent hearing.

13. Conclusion. Audits happen to all providers. It does not necessarily mean you are a bad provider or that you should immediately leave the Medicare or Medi-Cal programs. With increasing financial pressures on health programs and practices, it is important to be forward thinking and create compliance plans and self-audit so your practice does not get assessed an overpayment.

During the audit, do your best to turn a potentially negative situation into a positive learning experience to correct any legitimate problems that the audit may uncover as well as to minimize the chance of future audits. Being stubborn and continuing to bill improperly will not help your practice. The carrier may still monitor your subsequent claims to see if your billing practices have actually changed and comply with the program's rules and regulations. Be proactive, anticipate audits in advance and handle audits intelligently and you will prevail to the greatest extent possible.

Any questions or comments should be directed to:  Tracy Green is a principal at Green and Associates. They focus their practice on the representation of individuals, businesses and licensed professionals, particularly health care professionals including individual physicians, corporate providers and group practices. Their website is:

Wednesday, August 12, 2009

Can My Criminal Fraud Case Be Dismissed Based On Statute Of Limitations? Review Of Recent California Case Involving Public Funds (Welfare Fraud)

The government prosecuting agencies often take years to investigate fraud, embezzlement and other types of regulatory and white collar crime cases. Often one of the first tactics considered is filing a motion to dismiss based on the statute of limitation. In California state cases, under Penal Code Section 803(c), any charge in which intent to defraud is an element of the offense (such as grand theft, embezzlement, forgery, etc.) - the statute of limitation does not expire or run out until 4 years after the "date of discovery" by the victim or law enforcement.

The determination of the "date of discovery" and the identification of the person who first discovered the fraud become issues in litigating these cases. Discovery and investigation may yield facts supporting a statute of limitations defense. Ideally, a motion to dismiss on statute of limitation grounds would be filed before trial. Otherwise, the defense have to present the statute of limitation defense to a jury.

The recent California Court of Appeal case of People v. Moore, B207616 (2d Dist., Aug. 11, 2009) demonstrates some of the difficulties of proving when the "victim" discovered the fraud and winning a motion to dismiss based on statute of limitations. An additional twist here is that in cases involving fiscal crimes against a government entity, the "victim" for purposes of statute of limitation analysis is defined as a public employee occupying a supervisorial position who has the responsibility to oversee the fiscal affairs of the governmental entity and thus has a legal duty to report a suspected crime to law enforcement authorities.

In this case, the trial court denied the motion to dismiss on the statute of limitation on the ground that the true victim in this case was a government agency (DPSS )and not the business that distributed the government funds to the defendant. The Court of Appeal upheld the denial of the motion and affirmed the conviction. This case is a good lesson in the operation of California's statute of limitation in a fraud or white collar case where government funds are at issue.


During the early 2000s, the County of Los Angeles Department of Public Social Services (DPSS) contracted with Crystal Stairs, a nonprofit child development agency, to help the department (along with other agencies) distribute funds to child care providers. Crystal Stairs received funds from DPSS, and then distributed those funds to child care providers in accord with directives from DPSS.

The defendant, Kyron J. Moore, was charged with one count of grand theft and 10 counts of perjury by declaration. Between October 1, 2000, and March 31, 2002, Michelle Davis (Moore’s sister), applied to Crystal Stairs for child care funds. The applications, made under penalty of perjury, falsely reported that Moore was caring for Davis’s four children. Crystal Stairs, in turn, disbursed $44,026 to Moore, and he and Davis split the money. During this same time frame, the Long Beach YMCA actually provided care for Davis’s children.

On May 8, 2002, a child care coordinator at the YMCA mailed a letter to Crystal Stairs, along with supporting documentation, showing that Davis’ children had been receiving child care at the YMCA. Crystal Stairs received the YMCA’s letter on May 10, 2002. On May 28, 2002, a fraud prevention specialist at Crystal Stairs referred the matter to DPSS for investigation, because DPSS was “the only one that [could] conduct an investigation.” [These date and facts are obviously important for statute of limitation analysis on who is the victim and the date of discovery.]

On May 17, 2006—nearly four years after the date that DPSS was notified of the potential fraud—the People filed a criminal complaint against Moore. Thereafter, the People filed an information charging Moore with one count of grand theft (“to wit $44,026 ... in child care funds the property of Crystal Stairs,” which was alleged to have occurred “[o]n or between October 1, 2000 and March 31, 2002”) and with 10 counts of perjury by declaration on specific dates in 2001 and 2002.

In a strategic move, Moore moved to dismiss the charges against him, arguing the charges were barred by the applicable four-year statute of limitations (Penal Code § 801.5). Moore contended that Crystal Stairs, not DPSS, was the "victim" of the alleged crime. Because Crystal Stairs became aware of the alleged fraud on May 8, 2002 (through the letter from the YMCA) and the State didn't file the criminal complaint until May 17, 2006 (over four years later), Moore argued the complaint was untimely and the charges were required to be dismissed.

The trial court rejected that argument and denied the motion to dismiss. Thereafter, Moore pled no contest to one count of grand theft. Among other things, the trial court ordered Moore to pay victim restitution to Crystal Stairs. Moore then appealed his conviction, arguing that the trial court had erred in denying his motion to dismiss. The court of appeal affirmed.


Penal Code § 801.5 provides that prosecution of grand theft “shall be commenced within four years after discovery of the commission of the offenses....” The four-year limitation period does not commence until the "victim" or a responsible "law enforcement official" learns of facts which, if investigated with reasonable diligence, would have revealed a crime had occurred. Penal Code § 803(c); People v. Kronemyer, 189 Cal. App. 3d 314, 330-331 (1987); People v. Lopez, 52 Cal. App. 4th 233, 246 (1997).

Moore contended Crystal Stairs must be defined as the “victim” because DPSS had already transferred funds to Crystal Stairs when he committed his crimes. Indeed, he cited the fact that the court ordered restitution to be paid to Crystal Stairs established Crystal Stairs' status as the "victim." The appellate court rejected the argument, reasoning that Crystal Stairs never “owned” the money that it disbursed. Therefore, Crystal Stairs was not “directly injured” by Moore’s fraud because it did not lose any money that it owned.

As mentioned above, in cases involving fiscal crimes against a government entity, the "victim" for purposes of statute of limitation analysis is defined as a public employee occupying a supervisorial position who has the responsibility to oversee the fiscal affairs of the governmental entity and thus has a legal duty to report a suspected crime to law enforcement authorities.

Although Crystal Stairs was obligated to report suspected fraud to DPSS, it had no responsibility over DPSS affairs. It was DPSS' responsibility to investigate the matter and to report suspected criminal activity to the appropriate law enforcement authorities. Therefore, DPSS, not Crystal Stairs, was the "victim" of Moore's crime, and the People's filing of the complaint within four years of Crystal Stairs' referral on May 28, 2002 was timely.

Attorney Commentary: There are good public policy reasons for statutes of limitation. Moreover, if we can prove that the statute of limitation has expired or run out - the court has no jurisdiction and the charge must be dismissed. In state fraud cases, however, where date of discovery is an issue, the motions become more complicated. We have sought evidentiary hearings on statute of limitation issues due to the proof issues required in winning such motions.

Any questions or comments should be directed to Ms Green at or 213-233-2260. Tracy Green is a principal at Green and Associates in Los Angeles, California. They focus their practice on the representation of licensed professionals, individuals and businesses in civil, business, administrative and criminal proceedings. They have significant experience in defending individuals, licensed professionals and businesses in fraud cases and investigations. Their website is:

Tuesday, August 11, 2009

Notice: California Board Of Registered Nursing Rules Change On Issuance Of Temporary Licenses Or Interim Permits

Effective Monday, August 10, 2009, the Board of Registered Nursing (BRN) will not issue a Temporary License or Interim Permit until the processing of fingerprints is completed by the Department of Justice and the Federal Bureau of Investigation and have notified the BRN of the results. This will result in no Temporary Licenses or Interim Permits being issued at the counter, unless the processing of fingerprints have been completed.

This is a change from prior BRN policy. This change probably relates to the prior issues where nurses with prior criminal history had not been screened at the time of license application. Thus, all applicants should get their fingerprints and screening done as soon as possible in order to process their application timely.

Any questions or comments should be directed to: or 213-233-2260. Their website is:


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