Watch Out For Faxes, Emails Or Any Telephone Contact Asking For Medicare Or Insurance Account Information - It Could Be A Scam!

Have you ever received those spam emails from a bank asking for your account information? Identity thieves are now targeting physicians and health care providers and using the scare tactic that if the information is not received within 48 hours, the provider will suffer a gap in Medicare payments. Beware of this scam!

CMS became aware of the scam where perpetrators are sending faxes to physician offices posing as the Medicare carrier or Medicare Administrative Contractor (MAC). The fax instructs physician staff to respond to a questionnaire to provide an account information update within 48 hours in order to prevent a gap in Medicare payments. The fax may have the CMS logo and/or the contractor logo to enhance the appearance of authenticity. Medicare FFS providers, including physicians, non-physician practitioners, should be wary of this type of request.

It probably will not be long that identity thieves will pose as Medi-Cal or private insurance companies to obtain the same information. Advise your office managers and front desk persons about this scam.
If you receive a request for information in the manner described above, please check with your contractor before submitting any information. Medicare providers should only send information to a Medicare contractor using the address found in the download section of the CMS.gov website found at http://www.cms.hhs.gov/MLNGenInfo/ or http://www.cms.hhs.gov/MedicareProviderSupEnroll

Any questions or comments should be directed to: tgreen@greenassoc.com. 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: http://www.greenassoc.com/

California State Courts Will Be Closed 3rd Wednesday Of Every Month

Although attorneys will be aware of this rule, anyone else who needs to go to any state court for any reason -- whether to pay a traffic ticket, file court papers or obtain copies of documents -- should be aware that on July 29, 2009, the California Judicial Council, which oversees the state's courts, voted unanimously at a meeting in San Francisco to close the courts the third Wednesday of every month from September through July.

The closure will be treated as a holiday and litigants will receive an extra day toward meeting legal deadlines.

The move is expected to save the court system $84 million in a year in which it faced a $414 million deficit. Several trial courts, including the state's largest in Los Angeles, had already begun closing courts during regular business hours as state and local governments struggle to pay their bills in the face of historic budget deficits.

The unprecedented move, which includes shuttering the California Supreme Court along with every appellate and trial court in the state, is one of the first tangible affects of lawmakers' new deal to close a $24 billion budget deficit. In addition, the Judicial Council increased the fees many litigants have to pay when appearing in court.

Any questions or comments should be directed to: tgreen@greenassoc.com. The firm's website is: http://www.greenassoc.com/

California Case Upholds Tenured Teacher's Due Process Rights To A Hearing After Signing Agreement To Resolve Allegations Of Social & Sexual Advances

Score a legal victory for tenured community college teachers and upholding the due process rights given to teachers in the California Education Code! A recent California Court of Appeal decision Farahani v. San Diego Community College Dist., D054087 (4th Dist., July 28, 2009) is a must read for those interested in education and administrative law.

Here is a nutshell of the holding. (A more detailed analysis of the case is set forth below.) At issue in the case were the due process rights granted to community college faculty members in disciplinary matters. In California, Title 3, Division 7, Part 51, Chapter 3 of the Education Code (Chapter 3) governs the employment rights of community college faculty. These rights include the right to notice, opportunity to object, a hearing before an arbitrator or administrative law judge, and a decision by the governing board. (Educ. Code §§ 87669, 87672-87674, & 87678-87680.)

The Fourth District Court of Appeal ruled that a contract executed between a community college district and a faculty member to resolve a disciplinary dispute which purports to waive the faculty member's statutory due process rights is unenforceable.

The Court of Appeal affirmed the trial court's order granting tenured teacher Sam Farahani's petition for writ of mandate to require the San Diego Community College District ("District") to reinstate Mr. Farahani with full back pay, interest and benefits and requiring the District's governing board to determine whether Mr. Farahani should be terminated. In essence, this gave Mr. Farahani the right to a hearing. Thus, he won this battle but will still need to prevail at hearing in order to retain his tenured position.

The decision can be found at the court's website: http://www.courtinfo.ca.gov/opinions/documents/D054087.PDF

If you are reading this article after the above link has expired, a search can be done on the court's general website: http://www.courtinfo.ca.gov/

Facts of Case

The District began to receive complaints from female students and staff in 1994, alleging that Mr. Farahani had made unwanted sexual and social advances. In October 2000, after investigating some of these complaints, the District gave Mr. Farahani a written reprimand advising him that continued misconduct would result in discipline up to and including termination.

On September 20, 2004, the District sent Mr. Farahani written "Notice of Pre-Disciplinary Hearing: Suspension." The notice cited the basis for the recommended one-year suspension without pay as "a continuing pattern of inappropriate behavior toward students and employees over several years." The notice informed Mr. Farahani that he had "the right to respond to the proposed discipline either orally or in writing or both."

As a district faculty member, Mr. Farahani was covered by the collective bargaining agreement between the District's trustees and the American Federation of Teachers Guild, California Federation of Teachers Local 1931 (Union). The collective bargaining agreement provided for a hearing prior to any disciplinary action involving loss of pay.

In November 2004, an attorney for the Union presented Mr. Farahani with a proposed Agreement, and told him that the District would suspend him for a year without pay unless he signed it. Among other things, the proposed Agreement provided that Mr. Farahani: (1) accept a reduction of pay equivalent to one month's salary and (2) for a period of 18 months agree to refrain from conduct that constituted sexual harassment, "including any verbal, physical or visual conduct" on campus, and from "personal contacts and/or communications" with students off campus.

Importantly for this case, the proposed Agreement stated that if Mr. Farahani failed to comply with its provisions, he could be "terminated at the Chancellor's discretion, without the issuance of charges under the Education Code or District policies and without right of appeal . . . ." The proposed Agreement also included the following provision: "Farahani waives any and all appeal rights he may otherwise have to challenge the discipline or otherwise pursue any appeal relating to the pre-disciplinary notice."

When encouraging Mr. Farahani to sign the Agreement, the Union attorney told Mr. Farahani that although the Agreement was probably illegal, it would be best to "[g]ive your 18 months and get it over with." Although Mr. Farahani believed that the charges were baseless, he felt "compelled" to sign the Agreement.

While the Agreement was in effect, the District received new complaints about Mr. Farahani from female employees. The chancellor concluded that Mr. Farahani's conduct towards these women "constituted unwanted social advances which could create an uncomfortable work environment and/or conduct which could be considered sexual harassment." She terminated Mr. Farahani effective June 9, 2006, pursuant to the Agreement. The termination letter stated, "Since you are being terminated from employment because of a violation of the [Agreement], you do not have a right of appeal." (Our emphasis added.)

Mr. Farahani wrote members of the District's governing board, requesting reinstatement and an opportunity to meet. He received no response. Mr. Farahani's attorney wrote Carroll on July 14, 2006, demanding Mr. Farahani's reinstatement plus backpay and benefits. The District's response reiterated that "Mr. Farahani was not entitled to the issuance of formal charges or right to appeal his termination under the provisions of the [Agreement]."

Legal Procedural History

Mr. Farahani filed a petition for writ of mandate on March 7, 2007. The trial court issued a peremptory writ directing the District to: (1) reinstate Farahani with full back pay, interest and benefits and (2) require its governing board to determine whether Farahani should be terminated, "all in compliance with the requirements of the Education Code, including appropriate notice and opportunity to be heard." The District appealed.

Legal Analysis

The first paragraph of Education Code section 87485 provides that, except for agreements pertaining to reductions in force, "any contract or agreement, express or implied, made by any employee to waive the benefits of [the statutory rights set forth in Chapter 3] is null and void." The District contended that section 87485 was inapplicable to the Agreement signed by Farahani, which it described as a waiver in response to discipline.

The appellate court concluded that the District interpreted section 87485 too narrowly. Prior decisions had applied section 87485 to bar waiver of statutory classification and tenure rights. (Stryker v. Antelope Valley Community College Dist. (2002) 100 Cal.App.4th 324; Kalina v. San Mateo Community College Dist. (1982) 132 Cal.App.3d 48; Covino v. Governing Board (1977) 76 Cal.App.3d 314.) Each of the above involved the faculty member's waiver of a statutory right set forth in Chapter 3. Disciplinary due process rights also fall within Chapter 3 and thus also fall within the purview of section 87485. Because teachers are public employees and their tenure rights are elaborately regulated by the Education Code which reflects the public policy of the state, such rights cannot be waived by contract.

Nevertheless, the District argued that Mr. Farahani's petition for writ of mandate should have been denied based on three equitable defenses, each of which the appellate court rejected.

First, the District argued that Mr. Farahani's petition was barred by the doctrine of laches (unreasonable delay by Mr. Farahani and prejudice to the District). The District maintained Mr. Farahani's petition was barred by laches because he filed it nine months after his termination and the District had hired his replacement. The court found no delay, in that Mr. Farahani had advised the District one month after his termination that he was challenging denial of a hearing, and no prejudice because the District hired Mr. Farahani's replacement several months after his writ petition was filed.

Second, the District argued that Mr. Farahani acted with "unclean hands," i.e., in bad faith, by signing the Agreement with no intention of performing (given the Union attorney's counsel that the Agreement was probably illegal). The court found the evidence insufficient to suggest that Mr. Farahani signed the Agreement with the intent of not performing.

Finally, the District argued that Mr. Farahani failed to exhaust his administrative remedies under the collective bargaining agreement before filing his writ petition. The court found no merit in the District's contention, because the District had repudiated the administrative procedures.

Attorney Commentary

There are three issues that jump out at us in this case. First, with the cutbacks in education funding, and recent news coverage regarding problem teachers, we can expect an increase in disciplinary actions and attempts by cash-strapped school districts to cut corners in affording statutory due process rights. Schools will use contracts and other means to get tenured teachers to give up their rights.

Second, as troubling as the District's total disregard of Mr. Farahani's due process rights is the advice given by the Union attorney to sign an agreement believed to be illegal in order to settle a disciplinary dispute. While we often encourage clients to negotiate with public agencies or governing boards to resolve disciplinary disputes, illegalities should never form the basis of a settlement agreement.

Third, the underlying allegations of "unwanted sexual and social advances" are every teacher's worst nightmare. These allegations -- even if false and not proven -- can ruin a teacher's career. Even exonerated teachers can lose their careers. It does not help that some students might see a sexual harassment allegation as a lottery ticket and will be represented by contingency counsel that can get a significant settlement from a District.

Teachers, especially high school and college teachers, need to be careful of social situations in which the word of one student can be used to immediately suspend a teacher. Any teacher -- especially male -- should have their own boundaries and social rules to avoid these issues.

If there is any allegation (no matter how small it may seem at the time), the teacher should definitely seek legal advice before giving any statements. Anything you say can be used as evidence and your statements may not be properly recorded or reported. Investigations need to be handled properly at the beginning stage. Do not make the unsophisticated mistake of thinking that "you will look guilty" if you seek representation or have an attorney present during an interview.

In order to avoid problems, here are some common boundary rules to be followed:

--not being alone with a student except for professional reasons (but always with a door open);

--not making any comments regarding appearance;

--not giving out personal email addresses and cell phone numbers (except for professional emergencies);

--not driving alone with a student or having a student stay alone overnight in your home;

--not forming personal attachments that cloud your judgment;

--documenting and discouraging any advances by students;

--involving appropriate third parties if issues with a student arise; and

--using common sense and seeking the advice of trusted peers or professionals if you have any doubt as to how this could look to a third party.

Any questions or comments should be directed to: tgreen@greenassoc.com. 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 individuals and companies in administrative and disciplinary proceedings and have represented teachers in those proceedings. They also have a personal interest in representing teachers since

Ms. Green was formerly on the Executive Committee of the PTA for her son's public school. The firm's website is: http://www.greenassoc.com/.

San Bernardino Woman Charged With Insurance Fraud And Perjury Based On Alleged Exaggerated Injuries And False Deposition Testimony In Civil Lawsuit

On July 20, 2009, in San Bernardino County Superior Court, a criminal complaint was filed charging Esther De Leon of Rialto, California with four counts of insurance fraud in violation of Penal Code Sections 550 (A) (1) and 550 (B) (1) PC and two counts of perjury in violation of Penal Code Section 118. Her bail was set at $50,000.

A felony criminal complaint contains allegations that a defendant has committed a crime. Every defendant including Ms. De Leon is presumed innocent until and unless proven guilty.

This case is somewhat unusual in that it arose out of an automobile accident that actually occurred and where there was a subsequent civil personal injury lawsuit. The criminal charges arose from the statements that were made under oath by Ms. De Leon in a deposition the civil lawsuit.

The underlying alleged facts are as follows. On November 7, 2007, De Leon was driving a Chevy Avalanche and stopped in heavy traffic in Fontana. Her car was struck in the rear by a San Bernardino County vehicle going a few miles an hour. There was minor damage to the Chevy and at the time of the accident, Ms. De Leon refused any medical attention. Soon after the accident, Ms. De Leon began to see several doctors claiming the traffic accident caused numerous major medical problems. She obtained an attorney and they sued the County of San Bernardino. A doctor hired by the county examined her and could find nothing wrong with her. The county also hired a private investigator who followed her and taped her daily activities.

In the civil lawsuit, she had her deposition taken and testified under oath that she could not go to work, go out of her house, pick up her grandchild, or even comb her hair because one of her medical complaints was, her right arm was numb. The investigators found her working at a dry cleaner's and lifting heavy objects without any noticeable problems.

Attorney Commentary: For years in civil personal injury lawsuits, exaggerated injuries have not been uncommon but are usually not prosecuted. In fact, in some personal injury cases, minor injuries would be overtreated and medical and therapy bills would help build up the value of the cases.

This case illustrates several trends. First, this case probably obtained the attention of law enforcement because the civil defendant was San Bernardino County and not an individual or private company.

Second, insurance companies and government agencies are being aggressive about insurance fraud and the special units in the County District Attorney's Offices are not hesitant about filing these cases.

Third, although we do not know Ms. De Leon or how her testimony arose, it is not uncommon for unsophisticated and uneducated people to assume that if they are not completely disabled or injured that they will not recover any money for their actual injuries. The fact that Ms. De Leon refused medical attention at the accident site is not proof of fraud since soft tissue injuries can take time to develop. But we have seen sophisticated, educated people exaggerate simply because they do not realize that telling the truth in a detailed manner will help their case and that exaggerations will simply weaken their credibility and their case. We have seen much more perjury in civil lawsuits that in criminal cases.

Fourth, this may be an interesting trend for our society as a whole. With the large fraud cases such as the Bernie Madoff case, the real estate mortgage debacle, and a society which seemed to sanction cheating as long as someone made money at it -- the tide has shifted. Defenses such as "everyone else is doing it" are not persuasive and if a person has the bad luck of being the one person prosecuted for what everyone else is doing, that person will be used as an example and will be prosecuted to deter others.

Any questions or comments should be directed to: tgreen@greenassoc.com. 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 individuals and companies in fraud investigations and federal and state cases. Their website is: http://www.greenassoc.com/

Case Dismissed Against Orange County Doctor Charged With Insurance Fraud Relating To Alleged Work Related Injury At Kaiser

POST-SCRIPT - CASE DISMISSED

Back in July 2009, I wrote about a physician who had been arrested. The DA's Office issued a press release when the case was filed. However, they did NOT file a press release when the case was dismissed on December 28, 2009. The case was dismissed after the physician showed substantial evidence of her chronic pain conditions and that she would likely prevail at trial. This case is evident why it is critical to evaluate all evidence in the case and be prepared to defend a case. This criminal filing could have ruined the physician's career but the dismissal not only prevented a conviction but any Medical Board action as well.

ORIGINAL POST

On July 21, 2009, physician Maryam Bahramfarsi was arrested and charged with 10 felony counts of making fraudulent statements and representations to fraudulently collect insurance in Orange County Superior Court Case No. 09CF1651. Dr. Bahramfarsi is being accused of claiming a hospital work-related injury that left her unable to sit, stand, or walk, with the intention of committing insurance fraud. This case is being prosecuted by the Orange County District Attorney’s Office.

A felony complaint contains allegations that a defendant has committed a crime. Every defendant including Dr. Bahramfarsi is presumed innocent until and unless proven guilty.

Dr. Bahramfarsi worked as a physician for Kaiser Permanente Medical Center in Aliso Viejo. On July 10, 2007, Dr. Bahramfarsi is accused of calling the name of a medical assistant from an examination room, where she was found laying on the floor. She is accused of claiming that she was unable to get up after slipping on an oily substance on the floor and falling on her lower back and neck. Between July and December 2007, Dr. Bahramfarsi is accused of visiting two doctors claiming to be suffering from severe pain as a result of her fall.

She is accused of complaining that the pain made her unable to sit, stand, or walk for more than five minutes at a time, and telling the doctors that she spent most of her time lying on her side in bed. Dr. Bahramfarsi is accused of claiming that all the prescribed pain medication and physical therapy was not effective, and that she was unable to sleep or rotate her body due to the pain. She is accused of arriving to several of the doctors’ appointments in a wheelchair, stating that she was in constant pain and was unable to walk or stand for more than 10 minutes. She is accused of claiming that she had trouble finding rides to make it to her appointments.

She is also being accused of being placed by doctors on modified work restrictions, but failing to return to work at all after Kaiser Permanente was unable to accommodate her restricted terms. Various examinations, x-rays, MRIs, and bone scans allegedly detected no abnormalities and offered no explanation as to the pain from which Dr. Bahramfarsi claimed to be suffering.

This case arose after Kaiser Permanente hired an investigative service to conduct surveillance of Dr. Bahramfarsi on three occasions between September and November 2007. While unknowingly being observed and videotaped, Dr. Bahramfarsi is accused of participating in physical activities such as sitting, standing, and walking, which she had claimed to doctors she was unable to do as a result of her injury from falling at work.

Under surveillance, Dr. Bahramfarsi is accused of carrying two 1-gallon jugs of water and placing them in the trunk of her car without apparent struggle. She is accused of walking and carrying items to and from a gravesite at El Toro Memorial Park, standing to clean a grave, and stepping onto and off of a step stool while cleaning and decorating the grave and a tree above it. On one occasion, she is accused of driving herself to a doctor’s appointment, getting out of her car without visible trouble, and then being pushed in her wheelchair by a male companion into the doctor’s office. Dr. Bahramfarsi is also accused of repeatedly entering and exiting her car without apparent restriction to her movement and driving and sitting for extended periods of time.

This seems like a defensible case since a physician must have examined her and certified her as disabled. There is also a difference in being able to sit for hours at a time and to sit at all. This appears to be criminalization of a dispute over a work injury.

Any questions or comments should be directed to: tgreen@greenassoc.com. 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: http://www.greenassoc.com/

Six Defendants Sentenced In Alleged Health Care Fraud Crime Ring In Los Angeles County Superior Court

On July 16, 2009, the final defendant in a multi-defendant health care fraud case filed by the Organized Crime Unit of the Los Angeles County District Attorney's Office was sentenced in LASC Case No. BA338353 by Superior Court Judge Larry P. Fidler.

The six defendants, all from the North Hollywood, Glendale and Van Nuys areas, were charged with conspiracy, money laundering and grand theft of personal property and were accused of running a crime ring that stole nearly $2 million from federal and private health insurers. It was alleged the crimes occurred between March 2005 and September 2006. The sentences in these cases were state prison terms ranging from four years to 16 months.

Defendant Edkar Mikirtijyan was sentenced on July 16, 2009 to a four-year state prison term by Judge Fidler. Mr. Mikirtijyan pleaded guilty on June 9 to conspiracy to commit grand theft and money laundering. He also admitted the aggravated white collar crime enhancement, which adds time to any sentence. Judge Fidler also ordered Mr. Mikirtijyan and the other defendants to pay $1.987 million in restitution to Medicare.

The other defendants and their sentences are:

Karapet Khacheryan, four years in state prison for conspiracy and money laundering;

Hovik Joe Altunyan, four years state prison for conspiracy and money laundering;

Grigor Khorikyan, 16 months for conspiracy and money laundering;

Vahan Harutyuyan, four years from conspiracy and money laundering; and

Smbat Khachtryan, 24 months for conspiracy, money laundering and possession of an assault weapon.

All defendants except Khorikyan and Khachtryan admitted the excessive taking enhancement.

Attorney Commentary: This case was notable since it was filed by the Los Angeles County District Attorney's Office and was referred to the District Attorney’s Office following an investigation by the U.S. Immigration and Customs Enforcement’s (ICE) Office of Investigations in Los Angeles. It began as a drug and money laundering investigation, later expanding to include health care fraud. Federal and state agencies cooperated on the health care fraud issues. The District Attorney's Office is becoming more involved in these cases, especially where there are other state crimes alleged.

In the Los Angeles area, for the past years prosecutors have been prioritizing cases where Armenian and/or Russian speaking individuals are suspected of being part of an organized group involved in health care fraud cases.

In addition, these defendants were not licensed professionals but were individuals accused of taking the proceeds of Medicare and laundering them. It should be noted that in order for there to be Medicare billing a licensed professional has to be involved somewhere along the chain -- whether as a referring or treating physician. Thus, at some point along the way, a licensed professional will usually be involved unless there is simply pure fraud and identity theft.

Any questions or comments should be directed to: tgreen@greenassoc.com. 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: http://www.greenassoc.com/

Update: Ruth Ann Terry Resigns As Executive Director Of California Board Of Registered Nursing

In an update to posts this week, Ruth Ann Terry, Executive Director of the California Board of Registered Nursing, resigned on July 14, 2009 -- the day after Governor Schwarzenegger replaced 6 out of 7 members of the Board of Registered Nursing.

There is an article in the July 15, 2009 edition of the Los Angeles Times regarding the resignation:

http://www.latimes.com/news/local/la-me-terry-nurse15-2009jul15,0,6112190.story

Any questions or comments should be directed to: tgreen@greenassoc.com. 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: http://www.greenassoc.com/

After Recent L.A. Times Article, Governor Replaces Six Out Of Seven Nursing Board Members

Attorney Commentary On Axing Of Nursing Board Members:

As predicted, the Los Angeles Times article about the California Board of Registered Nursing caused some heads to roll. Governor Schwarzenegger fired three Board members and one resigned. Governor Schwarzenegger in his press release stated that he fired the Board members due to the unacceptable time it takes to discipline nurses accused of egregious misconduct.

The governor then appointed six new members (out of the seven total) thereby replacing most of the Board. The positions do not require Senate confirmation. Here is the Los Angeles Times' article on the Governor's action:

http://www.latimes.com/news/local/la-me-nursing-board14-2009jul14,0,5570676.story

Is this simply an act that seems political and does not address what would need to be done to speed up the process? How about hiring more investigators, experts and attorneys to work on these cases and expedite them? What about hiring more administrative law judges so there is not a backlog that makes it difficult to obtain a hearing in under a year?

Let's remember that the Board members who had been fired had all been appointed by Governor Schwarzenegger.

The firing of Board members does not affect the true leader of the Board of Registered Nursing, Executive Director Ruth Ann Terry, who has been the Board's executive officer for nearly 16 years and a staff member for 25. Only the Board has the power to hire and fire the executive director.

There is an argument that the leadership of the Board should be able to move these cases along. And how much are Board members paid? $100 per day.

The discipline cases do not even get to the Board until there has been a settlement or hearing and the decision needs approval.

This seems like surface change without a true analysis of what is happening at the Nursing Board. As it is, the budget has made it difficult for many of the Boards to function timely where there are mandated furloughs. Certainly, leadership can make a difference but there must be a number of reasons that have contributed to the delays and many of those are probably structural and may relate to the budget and the state's resources.

True leadership takes time. Changes to organizations that are effective should not be window dressing. Changes are needed to the Nursing Board but those need to be addressed within the organization and in an intelligent, well-planned manner.

Any questions or comments should be directed to: tgreen@greenassoc.com. 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: http://www.greenassoc.com/

Miami Owners Of Durable Medical Equipment Company Indicted In Medicare Fraud Case

There have been a number of Medicare fraud indictments in Miami, Florida these past two weeks. On June 30, 2009, Jose Luis Perez and Reinaldo Guerra were indicted on charges of conspiracy to commit Medicare fraud, Medicare fraud, and aggravated identity theft in the Southern District of Florida.

Guerra was arrested and Perez allegedly fled the United States for Cuba, Dominican Republic, Mexico or Costa Rica according to government officials.
According to the Indictment, the alleged fraud involved durable medical equipment (DME), which is equipment that can be used in the home on a repeated basis for a medical purpose. Where DME is prescribed or ordered by a physician, an authorized Medicare provider who supplies the equipment to a Medicare beneficiary may be eligible for reimbursement by Medicare.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty.

The Indictment charges that Perez and Guerra owned and operated 21 corporations that purported to supply DME to Medicare beneficiaries pursuant to physicians’ prescriptions or written orders, using straw or nominee owners to disguise their control over the companies. They allegedly submitted approximately $179 million in fraudulent claims to Medicare for DME that had not been prescribed or ordered by a physician nor delivered to a Medicare beneficiary.

Based on those claims, Medicare paid the DME companies approximately $56 million. In addition to health care fraud, the defendants were charged with aggravated identity theft for using physicians’ Medicare identification numbers without the physicians’ authorization. Related court documents and information may be found on the website of the District Court for the Southern District of Florida at http://www.flsd.uscourts.gov/ or on http://pacer.flsd.uscourts.gov/.

Medicare Fraud Attorney Comments: For those under investigation for Medicare fraud, bail will be more of an issue in large cases. According to government officials, over 60 persons charged with Medicare fraud have fled the country for mostly Latin American countries. Here is a related articled in the Miami Herald:

http://www.miamiherald.com/news/miami-dade/watchdog/medicare/story/629378.html

In some federal cases, prosecutors are asking there be no bail for those defendants with foreign ties. For smaller investigations, it will still be important to establish an intent to stay and defend the charges. This can easily be done through an attorney who is experienced in these types of matters. In state cases, we are noting larger bail demands that are often linked to the amount of the alleged fraud.

Post-Script/Follow-up: Reinaldo Guerra plead guilty in November 2009 and was sentenced to 14 years in federal prison and ordered to pay $35 million in restitution. Jose Luiz Perez originally went to Mexico and was extradicted from Cancun, Mexico in January 2010. 

Any questions or comments should be directed to: tgreen@greenassoc.com. Tracy Green is a principal at Green and Associates, Attorneys at Law, 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 in Medicare audits, Medicare fraud investigations and Medicare fraud claims.

Los Angeles Times Publishes Series Of Articles On California Board Of Registered Nursing And Discipline Of Nurses

The July 12, 2009 edition of the Los Angeles Times has an article regarding the oversight of nurses and the California Board of Registered Nursing. This article is entitled "Problem Nurses Stay On As Patients Suffer" and is one of a series of reports and can be found at:

http://www.latimes.com/news/local/la-me-nurse12-2009jul12,0,2185588.story

A related story entitled "Lives Ruined And Worse" ran in the same L.A. Times edition:

http://www.latimes.com/news/local/la-me-nursecases12-2009jul12,0,2930799.story

Nursing Board Attorney Commentary:

he article is sure to engender an outcry for the Board to be tougher on nurses and to speed up the discipline process. The article, however, focuses on certain cases, the length of time it takes for the Board to investigate a case and give the licensed nurse his or her legal right to a hearing. the article further neglects to consider how many licensed nurses are in California and that the Board can often be heavy handed when it comes to discipline.

The L.A. Times does not address why the hospitals, supervising physicians, health care agencies and other employers of nurses are not taking responsibility for the nurses. When nurses are not properly trained or there is insufficient staffing, errors can occur.

Instead of an even handed analysis of the issue, the articles create a dire view of the situation when, in fact, a few bad cases are not the rule. Discipline and investigations should ensue but it should not be an overreaction to simply take away a person's license without adequately investigating the case and providing full due process.

Any questions or comments should be directed to: tgreen@greenassoc.com. Tracy Green is a principal at Green and Associates, Attorneys at Law, 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 including registered nurses and licensed vocational nurses.

Medi-Cal Fraud Indictment Names 42 Persons Who Worked At Two Related Companies Using Unlicensed Nurses For Home Health Care

On June 25, 2009, a 41-count indictment was returned in the Central District of California and charged 42 defendants with conspiracy to commit health care fraud relating to allegedly using unlicensed individuals to provide in-home health care to disabled patients, many of them children with cerebral palsy or developmental disabilities.

It is alleged that these services were billed to Medi-Cal as if licensed nurses performed the services. The total billings at issue amount to $4.6 million. On July 9, 2009, approximately 20 of the defendants were arrested.

An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty.

The indictment is part of a joint state and federal investigation called “Operation License Integrity” that related to the operation of two related Santa Fe Springs-based companies: Medcare Plus Home Health Providers and one of its subsidiaries Medcare Excel Plus Home Health Services.

There have already been two prior federal criminal cases that involved the owner of these entities and a key assistant. Last year, Priscilla Villabroza, a registered nurse who ran Medcare Plus Home Health Providers, pleaded guilty in federal court last year to five counts of health care fraud. Ms. Villabroza has yet to be sentenced and is most likely cooperating in the new case.

In a separate federal health care fraud case, Susan Bendigo, who was a registered nurse and allegedly a key assistant to Ms. Villabroza, was indicted and fled the country. Government officials believe that she has fled to the Philippines. Both Ms. Villabroza and Ms. Bendigo are originally from the Philippines.

According to court documents, Villabroza and others hired unlicensed individuals to provide care to disabled Medi-Cal patients at home and in school, many of whom were children and young adults served under a program called Early and Periodic Screening, Diagnosis, and Treatment (EPSDT) Supplemental Services. None of the children are alleged to have suffered any injuries from these services.

The indictment alleges that from August 2004 through the end of 2007, Villabroza and others hired unlicensed individuals at the rate of $8 to $12 per hour to provide services to the disabled Medi-Cal patients and billed Medi-Cal as if they were licensed vocational nurses (LVNs). Some of the unlicensed individuals allegedly had foreign training, but never passed a nursing exam here. Some of them allegedly had no medical training at all.

It is alleged that the identities of actual licensed nurses were unlawfully appropriated by using the license of former workers of the registry or by placing ads in Craigslist and seeking resumes at job fairs. The home health agency then indicated in the health care records and billing that the work was perform by licensed individuals using the misappropriated license numbers.

The unlicensed nurse defendants visited the patients at home and at school and provided nursing services that included administering medications, adjusting ventilators, and feeding through gastronomy tubes. Some parents and patients reported to authorities that the “nurses” lacked basic skills.

Villabroza, Bendigo and supervisors involved in the scheme allegedly directed the unlicensed nurse defendants to lie about their licensing and qualifications by telling the parents or guardians of the disabled Medi-Cal beneficiaries that they were LVNs, according to the indictment. The unlicensed nurse defendants falsely presented themselves as professionals, concealed their unlicensed status from the parents or guardians of the disabled Medi-Cal beneficiaries, and in some cases affirmatively misrepresented themselves as LVNs.

Attorney Commentary: This new indictment has been claimed by the U.S. Attorney’s Office to be "the largest Medi-Cal fraud case ever filed in the State of California." Health care fraud cases are starting to sound like drug cases where each new indictment is the largest ever.

This claim appears to contain some hyperbole since the defendants are supervisors and workers from the same two entities. There are 42 defendants but many of them are low-level individuals who were probably earning only $8 to $12 an hour and were used by the company and were probably desperate for a job. All these defendants appear to be Filipina women. In years past, these lower-level individuals would probably not have been charged but would have been treated as victims who were being used. However, in this case it appears that the owner/operator plead first and now the case against all the others proceeds.

There is some logic to tagging these defendants with felonies so that none of these people can work in the health care field again where it is proven that they knew they were required to be licensed and were misrepresenting themselves to patients and to Medi-Cal. However, a federal felony can adversely affect their lives for many years and for almost off of them it is certainly their first contact with the criminal justice system. Unlike a state charge which can be expunged, these federal felony charges can have a devastating impact on the individuals' ability to obtain any future employment.

We urge the prosecutors to use their discretion to ensure that only those who are knowingly engaging in fraud are charged. We further would like the government to educate licensed personnel (especially those in the ethnic communities) about the rules and consequences of engaging in any fraudulent conduct or working for those who may be engaging in fraudulent conduct.

For law abiding providers, does this case hold any lessons? It is still important to remember that it is important to be careful about which services can be billed as "incident to" physician services and what services require a licensed physician professional. We have handled many audits where there were issues of unlicensed personnel providing the services. For example, we have handled cases where physical therapy was billed but unlicensed medical assistants provided the services. Or we have seen cases where the medical assistant has started an IV, given a shot or written in the chart and the physician has later co-signed the chart. There are many more examples and it especially occurs where the medical assistant was a physician or a nurse in a foreign country before moving to the U.S.

In prior years, these types of cases may have simply gone administrative with an audit and a demand for overpayment where the services were provided. However, providers need to be vigilant that there is no pattern of having unlicensed personnel provide services that can only be provided by licensed personnel.

Any questions or comments should be directed to: tgreen@greenassoc.com. 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: http://www.greenassoc.com/

9th Circuit Court of Appeal Blocks Medi-Cal Cuts

Medi-Cal providers won an important ruling on Thursday, July 8, 2009. A federal appeals court in San Francisco today upheld a lower court ruling blocking a 10 percent cut ordered by the state Legislature in 2008 in Medi-Cal payments to doctors, dentists, pharmacies and other providers. The decision is Independent Living Center of Southern California, Inc., et al. v. David Maxwell-Jolly, Director of the Department of Health Care Services, State of California (9th Cir. Case No 08-56422).

A copy of the decision can be found at:
http://www.ca9.uscourts.gov/datastore/opinions/2009/07/09/0856422.pdf

The 9th U.S. Circuit Court of Appeals said the California Department of Health Services violated federal law by failing to consider the impact of the cut on quality and access to health care.
A three-judge panel upheld a preliminary injunction issued by U.S. District Judge Christina Snyder in Los Angeles last year. The reductions would have amounted to several hundred million dollars.

Medi-Cal is the California version of the federal Medicaid program, which is jointly funded by the state and federal governments and pays for health services for uninsured low-income parents, children and people with disabilities. The program currently serves 7.1 million Californians.

The appeals court said a state budget crisis could not be used as a justification for illegal cuts in the program. Ninth Circuit Judge Milan Smith wrote, "We do not doubt the severity of the fiscal challenges facing the state of California," but said, "A budget crisis does not excuse ongoing violations of federal law." Smith further wrote: "There is a robust public interest in safeguarding access to health care for those eligible for Medicaid, whom Congress has recognized as the most needy in the country."

The cuts were due to go into effect on July 1, 2008. Later last year, the Legislature replaced those cuts with a 5 percent reduction for pharmacies and hospitals effective in March 2009, but those cuts were also blocked by court orders. The state is challenging the orders halting the second round of planned cuts in a separate appeal.

The decision held that the injunction against the 10 percent cuts should apply retroactively for the period between July 1, 2008, when the reduction went into effect, and Aug. 18, 2008, when the injunction was issued.

Attorney Commentary: The budget crisis will continue to impact California and Medi-Cal providers to a significant degree. Whether in enrollment, audits or the elimination of ancillary services -- the budget will continue to drive the agency. Med-Cal providers need to realize that for the next few years the budget will impact their practice and their ability to be paid.

Any questions or comments should be directed to: tgreen@greenassoc.com. Tracy Green is a principal at Green and Associates, Attorneys at Law, 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 who are Medicare and Medi-Cal providers.

Can Accountants Pay Or Receive Referral Fees Or Commissions?

Frequently Asked Questions From Certified Public Accountants:
Question 1: Can I pay a referral fee or commission to obtain a client?

Summary Answer 1: You cannot pay a referral fee or commission to obtain a client. However, this rule does not preclude payments for the purchase of an accounting practice.

Question 2: Can I receive payments for commissions?
Summary Answer 2: As a licensee, you may accept commission-based compensation for defined services - as long as the fees are disclosed in writing and various prohibited services are not performed. However, you are still prohibited from accepting any fee or commission solely for referral of a client to a third party.

This provision is similar to the American Institute of Certified Public Accountants Rule 503, but has significant exceptions. California's disclosure rules are more stringent for consumer protection and must be in detailed written form.

Under Section 5061 of the Business and Professions Code, a CPA or public accountancy firm is not allowed to collect a commission for the sale of goods or services to a client (or in some instances to the officers and directors of the client) if the firm also performs an audit, a review of a financial statement, a compilation to be used by a third party where the lack of independence is not disclosed or an examination of prospective financial information. Disclosure requirements are contained in Accountancy Regulation 56.

Question 3: Can I perform services on a contingency fee?

Summary Answer 3: California Accountancy Regulation 62 prohibits CPAs from performing for a contingent fee any professional services for a client for whom the licensee or the firm performs services that require independence and in a number of specified circumstances: an audit or review of a financial statement; compilation of a financial statement when the licensee expects that a third party will use the statement and the compilation report does not report the lack of independence; original tax returns; amended tax returns; claims for tax refunds or perform an engagement as a testifying expert witness.

A contingent fee is essentially defined as a fee established for the performance of any service pursuant to an arrangement in which no fee will be charged unless a specific finding or result is attained or the fee is dependent upon the finding or the result of the service. Fees are not considered contingent if they are fixed by courts or governmental entities acting in a judicial or regulatory capacity.

Commissions
It is important to research any commission or referral fee payment arrangements. The facts and law must be analyzed as to each circumstance. Where there is marketing or advertising, that needs to be analyzed to determine if it violates the professional rules prohibiting the payment of a referral fee.

Under Section 5061(c) of the California Business and Professions Code, CPAs are not allowed to accept commissions as compensation for services in the following circumstances:

"(c) A person engaged in the practice of public accountancy is prohibited from performing services for a client, or an officer or director of a client, or a client-sponsored retirement plan, for a commission or from receiving a commission from a third party for providing the products or services of that third party to a client, or an officer or director of a client, or a client-sponsored
retirement plan, during the period in which the person also performs for that client, or officer or director of that client, or client-sponsored retirement plan, any of the services listed below and during the period covered by any historical financial statements involved in those listed services:"

􀂃 An audit or review of a financial statement; or
􀂃 A compilation of a financial statement when the licensee expects or
reasonably should expect that a third party will use the financial statement
and the licensee's compilation report does not disclose a lack of
independence; or
􀂃 An examination of prospective financial information; or
􀂃 Any other attest engagement when the licensee expects or reasonably should
expect that a third party will use the related attestation report; or
􀂃 Any other services requiring independence.
􀂃 Prepare an original tax return for a contingent fee.
􀂃 Prepare an amended tax return, claim for tax refund, or perform other similar tax
services for a contingent fee.
􀂃 Perform an engagement as a testifying expert for a contingent fee.

This means that if you are not performing any of the services described above in Section 5061(c) and you comply with the disclosure requirements Section 5061(d), you may accept a fee or commission for providing a client with the products or services of a third party where the products or services of a third party are provided in conjunction with professional services provided to the client by you while you are engaged in the practice of public accountancy. Disclosure requirements are contained in Accountancy Regulation 56.

The law is clear that nothing in Section 5061 allowing commissions under limited circumstances "shall be construed to permit the solicitation or acceptance of any fee or commission solely for the referral of a client to a third party."

Full Disclosure Of Commissions

If you are receiving commissions, the disclosure must comply with all of the following:

(1) Be in writing and be clear and conspicuous;
(2) Be signed by the recipient of the product or service;
(3) State the amount of the commission or the basis on which it
will be computed;
(4) Identify the source of the payment and the relationship
between the source of the payment and the person receiving the
payment; and
(5) Be presented to the client at or prior to the time the
recommendation of the product or service is made.

Other restrictions and conditions are included in Regulations 56.1-56.4. A CPA or a CPA firm that may receive a fee or commission must notify clients on firm letterhead prior to or at the time a recommendation of products or services is made that a fee or commission will be paid for the services and that the fee or commission may not be accepted solely for the referral of the client to the third party.

The disclosure must describe the products or services being recommended and identify the third party expected to provide the product and the business relationship with the CPA or CPA firm. A description of the fee or commission that may be received, including the dollar amount of the commission or fee, or the basis on which the payment will be computed, also must be included.

The disclosure is to be signed by the licensee and signed and dated by the client. The disclosure must be clear and conspicuous (in at least 12-point type) and must be retained by the licensee for a minimum of five years. The client also must receive a copy.

Where the products or services cannot be identified at the time of the initial disclosure, the information must be included in a supplemental disclosure within 30 days of receipt of the fee or commission. To qualify as a commission rather than a prohibited referral fee, the commission must be based on services that provide some form of value to the client. At a minimum, this must include consultation with the client regarding the third party's product or service in relationship with the client's circumstances.

In analyzing these issue, it should be remembered that under 5061(f), the term "fee" is defined broadly and "includes, but is not limited to, a commission, rebate, preference, discount, or other consideration, whether in the form of money or otherwise."

Any questions or comments should be directed to: tgreen@greenassoc.com. Tracy Green is a principal at Green and Associates in Los Angeles, California. They focus their practice on the representation of licensed professionals and businesses (including accountants) in civil, business, administrative and criminal proceedings.

Their website is: http://www.greenassoc.com/