Medi-Cal prosecutions are beginning to show up even in rural areas such as beautiful Mt. Shasta. On October 9, 2009, the California Attorney General's Office filed criminal charges against Denise Fairhurst, the former manager of a Mount Shasta-based medical clinic, in Siskiyou County Superior Court. Ms. Fairhurst was charged with five criminal counts of grand theft, insurance fraud and submitting false claims to the government. Bail was initially set at $1 million dollar. Bail is often initially set at the amount of the alleged loss.
The criminal complaint contends that between January 2004 and December 2007, Ms. Fairhurst, acting as the manager of Alpine Healthcare Clinic, billed Medi-Cal $2.2 million for services not rendered to beneficiaries to help pay Alpine's operations and management. It was further alleged that Ms. Fairhurst used $33,492 of the funds to pay personal credit card bills.
According to the complaint, Alpine Clinic had financial problems which stemmed from Ms. Fairhurst's inability to set appropriate compensation rates for employees and physicians. The complaint alleges that a member of the maintenance staff was paid $1000 a month to work one hour a week. Other medical clinics in town allegedly lost employees to Alpine because they could not compete with its pay structure. The clinic also allegedly lost income because of an agreement Ms. Fairhurst made with doctors to provide care to patients when they were admitted to a hospital.
The fraud allegedly began to occur when, with costs rising, Mr. Fairhurst submitted false claims to Medi-Cal. She allegedly forged Medi-Cal forms, claiming that patients had received care at the clinic, even though some patients had not been to it in years. It is alleged that approximately two-thirds of the claims Ms. Fairhurst submitted were fraudulent.
A member of Alpine Clinic's board of directors allegedly discovered that payment claims had been submitted for patients who had not been seen at the clinic. The board of directors hired an accounting firm to conduct an audit of the clinic's finances. Ms. Fairhurst allegedly refused to provide any information to the firm and resigned in June 2008. The audit uncovered further evidence of Fairhurst's activities, including the use of a personal credit card that was linked to the clinic's bank account. Alpine Clinic's board of directors referred its findings to the Attorney General's Bureau of Medi-Cal Fraud and Elder Abuse for prosecution earlier this year. If convicted, Fairhurst faces up to five years in prison.
Attorney Comments: We have had number of cases where managers have made billing decisions or taken actions that put the medical office at risk for allegations of Medi-Cal fraud billing. In cases where the office manager was working for an individual provider or group it is often difficult to prove that the manager acted on his or her own without the owners being involved. We have had cases where the medical office has decreased business and the manager has billed inappropriately in order to keep the office financially solvent.
We have also had cases where billers have made mistakes that have later resulted in referrals for criminal investigations. Physicians and health care providers often rely on managers and billers to bill correctly and place too much trust in their skill and ability to navigate the health care billing rules.
Compliance plans and periodic audits need to be instituted at all offices that bill Medi-Cal, Medicare or insurance companies. Even if it is at a small scale (review of random charts and billing every quarter) it needs to be done. So much of billing is invisible to the medical providers. Many clinic managers and billers at small offices and clinics are not MBAs and do not have college degrees. Instead, they often learned their skills on the job.
Small providers should look to the way in which hospitals and larger clinics operate to find methods through internal controls for ensuring that billers and managers have an independent set of eyes reviewing their work on a periodic basis. Through early detection and reporting, providers can reduce their exposure to false billing claims, overpayments from audits, civil damages and penalties, administrative remedies, and even criminal sanctions.
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 health care fraud cases. Their website is: http://www.greenassoc.com/
