One of the frequent fact patterns we see in California is the presence of "managers" or "management companies" in health care fraud cases. Why is that? It has to do with California's prohibition that prohibits non-physicians from owning medical practices. It also has to do with some of the people that open health care businesses without realizing the level of regulation and the potential consequence of not following the rules and regulations. When business people want to open a medical practice in California, they need to open the clinic in a doctor's name and sometimes the doctor is a nominal owner and he has little or no control over the practice and relies on the managers to run it properly.
A recent case illustrates the ugly side of health care fraud involving unscrupulous managers. On January 9, 2011, Carolyn Ann Vasquez, 47, from Los Angeles medical clinic manager, was sentenced to 60 months in federal prison after having pleaded guilty to using fraudulent medical clinics and the stolen identities of physicians to defraud Medicare of more than $6.2 million. U.S. District Judge Consuelo B. Marshall of the Central District of California sentenced Ms. Vasquez and also ordered her to pay $6.2 million in restitution.
Originally, Ms. Vasquez was charged with two other persons: (1) physician assistant David Garrison and (2) co-manager Eduard Aslanyan. Mr. Aslanyan pleaded guilty in April 2011 to conspiracy charges related to this case and is scheduled for sentencing on February 6, 2012. David Garrison, a physician assistant who worked at the fraudulent medical clinics with Vasquez and Aslanyan, is scheduled for trial on January 24, 2012. Mr. Garrison has a prior state health care fraud case that may be complicating his sentence that also arises from working at a clinic run by a manager.
In March 2011, Mr. Vasquez pleaded guilty to conspiracy to commit health care fraud. In her plea agreement, Ms. Vasquez admitted that from 2007 to 2008, she conspired with others to use a series of fraudulent Los Angeles-area medical clinics to defraud Medicare. Ms. Vasquez admitted that her co-conspirators used the identities and Medicare provider numbers of physicians who both worked and did not work at the clinics to submit false claims to Medicare for reimbursement for services the physicians did not perform and for power wheelchairs, medical equipment and diagnostic tests that the physicians did not order or prescribe. So the physician is not at the clinic but his name is on the prescription pads that are signed by the PAs or the manager using a stamp signature or even forging the name, and he may have no idea that power wheelchairs are being prescribed to patients and only look at the medical chart that shows a routine medical visit with no improper billing at the medical clinic.
According to court documents, Ms. Vasquez physician assistants recruited to work at the clinics by Vasquez, and working at her direction and the direction of others, performed services that were medically unnecessary and prescribed and ordered the wheelchairs, medical equipment and diagnostic tests that were medically unnecessary.
According to court documents, Ms. Vasquez obtained access to physicians’ personal and Medicare information, which she stole to further the fraud scheme at the medical clinics. For example, Ms. Vasquez admitted that in approximately 2007, a physician contacted her about a job at one of the medical clinics, but the physician decided not to accept the job. Nevertheless, Ms. Vasquez’s clinic printed prescription pads with the physician’s name and Medicare provider number on them. Ms. Vasquez admitted that she instructed a physician assistant working at one of the medical clinics to use the prescription pads to write fraudulent prescriptions and medical documentation for diagnostic tests, power wheelchairs and other medical equipment in the physician’s name even though Ms. Vasquez knew that the physician did not work at the clinic.
Attorney Commentary: For those managers that are unethical or are seeking a doctor's license to use for their own purpose, they will target doctors who are desperate for money, older or have some other issues (alcoholism, depression, etc.) and use that doctor's license and NPI number to run their business without regard for how it will ruin the doctor's provider numbers, expose them to great financial liability and jeopardize their license. In some cases, there is actual identity theft of the physician's license and NPI number.
In many cases, the clinics offer to employ the physician, pay them several thousand dollars per month and tell the physician that they do not have to come to the clinic except once or twice a month since a Physician Assistant (PA) is seeing the patients and all that the physician needs to do is to supervise the PA. The manager will reassure the physician that the clinic is well run and has been in business for years without any issues. For physicians who are looking for extra easy money, they often fall prey to these offers without seeking legal counsel about the legality and fail to do any due diligence about the managers running the clinic.
What the physician or physician assistant often do not know is that the manager also has ownership interest in other businesses related to the clinic: pharmacy, durable medical equipment, diagnostic company, etc. Even if the manager does not make much money on the medical clinic, the prescriptions for these ancillary services can be very profitable. So everything can look pretty good at the clinic but if someone is not paying attention to the prescriptions for potentially unnecessary ultrasounds, DME (expensive wheelchairs or beds) or drugs, the fraud may not be apparent to the physician.
In the Vasquez case and other cases, all that the manager needs to do is to post an advertisement in the Los Angeles Times or other publication and unsuspecting physicians will fax in resumes that list all their identifying information. Physicians should be very careful in sending identifying information in response to job ads and should not list license or DEA or NPI numbers unless and until they have done due diligence on the medical clinic.
In addition, in any situation where there is a mangement agreement, physicians should have their own legal representation to ensure that the arrangement is legal and that there is little or minimal chance for any fraudulent conduct to occur. Physicians and those in the health care field often tend to be trusting but trying to clean up fraudulent billing and identity theft -- including the loss of a provider number or addressing a large overpayment incurred -- can take years and can be very expensive. Practice preventative measures BEFORE you enter into any such arrangements.
If you have questions regarding your own situation, please call Tracy at 213-233-2260 or email at tgreen@greenassoc.com to schedule a complimentary 15 minute consultation.
The firm Green and Associates 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.
