Ohio Cardiologist Convicted at Trial and Sentenced to 20 Years in Federal Prison for Overbilling Medicare and Private Insurance & Allegedly Performing Unnecessary Procedures

Prosecutors are more aggressive in pursing physicians for criminal charges where just a few years ago the charges would be civil cases or administrative requests for overpayment. A high profile case out of Ohio went to trial for about three years, ended up with a jury convicting an Ohio cardiologist on 15 counts, and now a long sentence has been handed out.

Dr. Harold Persaud, 56, a cardiologist, was sentenced to 20 years in prison on December 18, 2015, for allegedly performing unnecessary catheterizations, tests, stent insertions and causing unnecessary coronary artery bypass surgeries from 2006 to 2012. The government's case was that this was part of his fraudulent billing to Medicare and other insurers.

One of the issues that arises in almost every criminal case against physicians is the issue of whether records have been falsified or whether there has been some false billing. This case was no different. Even a small percentage of false billing or fabricated records can serve to taint the case when viewed by the jury. Thirteen of the counts against the doctor were for making false statements. He was acquitted of one count of making a false statement. There was a monetary structuring charge as well of which he was convicted and this was probably brought in so that the government could argue the motive was financial or "greed."

When physicians in large practices review the allegations, one can see why compliance plans that include review of charts and billing can help prevent criminal cases. This can be more problematic with the electronic medical recordkeeping (EMR) templates that can make the charts look very similar due to the use of templates.

The government prosecutors claimed that Dr. Persaud, who was no longer practicing by the time of trial, allegedly did the following:

1. Dr. Persaud allegedly selected the billing code for each patient submitted to Medicare and private insurers and used codes that reflected a service that was more costly than that which was actually performed (known as "upcoding");

Home Health Agency Owners and Director of Nursing Indicted in Medicare Fraud Conspiracy in Houston - Alleged Kickbacks to Physicians and Patients Drive These Cases

Texas, like California, is aggressively pursuing home health care fraud and submission of claims where there are alleged violations of the Anti-Kickback Statute and/or Stark law (kickbacks to physicians for patients and to the patients themselves). 

If illegal referral fees (or kickbacks) are proven, under the law, the entire claim becomes a "false claim" and makes the fraud easier for the government to prove. This is the case even when the services were provided.

In Houston, the owners, the director of nursing and patient recruiters of a home-health agency were arrested in November 2015 and the case is set for trial on May 9, 2016.

CALIFORNIA INSURANCE AGENT SENTENCED TO STATE PRISON FOR "ADVANCE COMMISSION FRAUD" IN ORANGE COUNTY SUPERIOR COURT

We are used to insurance fraud cases brought against those who file fraudulent claims. There has been an increased number of cases against those who work for the insurance industry. 

When they are charged, our experience is that an example is sought to be made of them. A recent case involving “advance commission fraud” illustrates how long sentences and large fines can be imposed against those who work in the insurance industry.  

On December 1, 2015, an insurance agent Eric Lee was sentenced under a plea agreement to 10 years in state prison for defrauding over $1.4 million through an advance commission scheme. In state court, this means that with good time, Mr. Lee should only serve five years. 

Mr. Lee pleaded guilty to 10 felony counts of grand theft and 10 felony counts of insurance fraud with sentencing enhancements for damage exceeding $100,000, aggravated white collar crime over $500,000 and property damage over $1.3 million. Mr. Lee was also ordered to pay $1.4 million in restitution and a $2.8 million fine.

These sentencing enhancements show how the amount of loss in a fraud case in California state court, like federal court, has a significant impact on the total sentence that can be imposed. 

Frequently Asked HIPAA Questions by Health Care Providers - Get Ready for HIPAA Compliance and Audits

While we are working with clients on HIPAA compliance and risk assessment issues, including the OCR pilot request list for potential audits, we see that some very common HIPAA questions arise for health care providers. There is a great deal of misunderstanding out there.

One of the reasons that staff often do not know the rules is that many small to medium-sized health care providers do not have HIPAA compliance manuals that make the rules clear. If the staff is not trained well, this can lead to patients not understanding the rules and making meritless complaints. Since most audits for HIPAA are initiated after patient complaints or disclosures by the providers, having a well-trained staff with a resource helps prevent meritless complaints.

Here are frequently misunderstood basic issues that get raised by staff. The HHS HIPAA website has lists of FAQ in different categories to assist providers. Here are ones relating to patient communications. 

1.  Question: Can health care providers engage in confidential conversations with other providers or with patients, even if there is a possibility that they could be overheard?

1. Answer: Yes. The HIPAA Privacy Rule is not intended to prohibit providers from talking to each other and to their patients. Provisions of this Rule requiring covered entities to implement reasonable safeguards that reflect their particular circumstances and exempting treatment disclosures from certain requirements are intended to ensure that providers’ primary consideration is the appropriate treatment of their patients.

The Privacy Rule recognizes that oral communications often must occur freely and quickly in treatment settings. Thus, covered entities are free to engage in communications as required for quick, effective, and high quality health care. The Privacy Rule also recognizes that overheard communications in these settings may be unavoidable and allows for these incidental disclosures.

21st Century Oncology to Pay $19.75 Million to Settle Civil False Claims Lawsuit for Alleged Unnecessary Laboratory FISH Tests Ordered by Four of Its Urologists. No Admission of Liability But Corporate Integrity Agreement Required

On December 18, 2015, 21st Century Oncology LLC, a publicly traded entity which operates in 17 states, agreed to pay $19.75 million to the government to resolve allegations that it violated the False Claims Act by submitted claims to Medicare and Tricare forfluorescence in situ hybridization, or “FISH,” tests that were allegedly not medically necessary. As with most settlements, there was no admission of liability.

21st Century is a nationwide provider of integrated cancer care services that is headquartered in Fort Myers, Florida. False claim lawsuits often get settled once the government intervenes due to the high litigation costs and potential exposure in litigating with the government, especially oncology which relies heavily on Medicare billing. 21st Century had to pay an extra $528,000 to the qui tam relator's attorneys' fees and costs.

FISH tests are laboratory tests performed on urine that can detect genetic abnormalities associated with bladder cancer.  The government alleged that 21st Century submitted claims for unnecessary FISH tests that were ordered by four of its urologists, Dr. Meir Daller, Dr. Steven Paletsky, Dr. David Spellberg and Dr. Robert Scappa, all of whom practiced in the Fort Myers area.  

The government also alleged that 21st Century encouraged these physicians to order unnecessary FISH tests by offering bonuses that were based in part on the number of tests referred to 21st Century’s laboratory.  This type of marketing and bonus arrangement is used to show how the economics affect medical necessity decisions.

The claims here were brought to the government's attention by a former employee. The allegations were originally brought in a lawsuit filed by a whistleblower, a former 21st Century Oncology LLC medical assistant. The government intervened and this settlement resolves the lawsuits. The former 21st Century employee whistleblower will receive $3.2 million as her share of the recovery in this case.

Compliance and Corporate Integrity Agreement One of the reasons our office pushes health care businesses to have a fraud compliance plan is so that any allegations by employees are raised at the first opportunity or at the exit conference in order to avoid expensive qui tam lawsuits. Larger companies and those that are publicly traded and can afford large repayments such as the one here ($20 million) get the opportunity for Corporate Integrity Agreements while smaller companies are more hard pressed to obtain them.

As part of the settlement, the U.S. required 21st Century Oncology to enter into a Corporate Intergrity Agreement. Under this Agreement, 21st Century will be required to do the following (much of which is in a regular compliance plan) for 5 years:
(1) appoint a chief compliance officer; 
(2) maintain its existing compliance program and compliance committee;
(3) provide management certifications;
(4) screen employees to ensure they are not excluded;
(5) provide certain compliance training and education; 
(6) engage an independent review organization; and
(7) other enumerated requirements.

Failure to comply with the plan can result in 21st Century from being excluded from Medicare. Generally, companies are very careful to be compliant in these cases.

Posted by Tracy Green, Esq.
Office: 213-233-2261

Two New Orleans Doctors and a Registered Nurse Convicted by Jury for Roles in Home Health Care Billed to Medicare and Sentenced to Federal Prison. Health Care Professionals Face Challenges in Taking These Cases to Trial.

The investigative agency for Medicare is the Office of Inspector General (OIG). OIG has targeted home health services as being prone to fraud, abuse, illegal kickbacks and over-utilization. 

In cases where there is evidence of actual fraud with a knowing intent to violate the rules (providing services for patients who are not homebound), billing for services not provided, or where there are underlying illegal referral arrangements or kickbacks --  the cases will be pursued criminally.

In a recent case, two doctors and a registered nurse in New Orleans were sentenced to prison on December 16, 2015 for their roles in home health involving multiple companies. The parties went to trial and were convicted by a jury. Most of other defendants plead guilty. 

Medicare fraud cases involving claims to the government where the billing parties agree to follow all the Medicare rules can be difficult to defend especially when there is a large pattern of non-compliance. Juries often hold professionals such as doctors and nurses to higher standards. In this case, the alleged "mastermind" plead guilty as did other parties other than the medical professionals, which also complicates the defense in these types of cases.

Often the physicians who get involved in these cases are somewhat older or have some other issues, and often the others involved hide the fraud from the professionals. This case is no different. Dr. Barbara Smith is 67 and was sentenced to 80 months, Dr. Roy Berkowitz is 69 and was sentenced to 64 months, and the registered nurse Beverley Breaux is 67 and was sentenced to 50 months in prison. The case was before  U.S. District Judge Sarah S. Vance of the Eastern District of Louisiana.  Judge Vance also ordered Dr. Smith, Dr. Berkowitz and Ms. Breaux to pay $9,484,939, $4,952,816 and $2,057,179 in restitution, respectively. 

California Janitorial Company Servicing Hotels Has Owners Indicted for Workers Compensation Premium Fraud

In California, workers' compensation premium fraud cases are aggressively investigated by the insurance companies and then presented to local county District Attorney Offices. When these cases are filed, they go back for years and the alleged "fraud" can total large amounts.  The most recent filing here in California is no different.

On December 21, 2015, a San Diego County grand jury indicted the owners of Good Neighbor Services, a janitorial company that provides cleaning staff to major hotels across San Diego, Los Angeles and Riverside Counties. 

The government alleges that Good Neighbor serviced hotels including The Hotel Del Coronado, Loews Coronado, La Costa Resort and Spa, The Grand Del Marin La Jolla, L'Auberge Del Mar, The Ritz Carlton, Four Seasons, Hilton and Hyatt hotel chains.

This was brought by Indictment which allows the District Attorney's Office to keep the investigation secret andd not allow the people charged the opportunity of challenging the evidence in a preliminary hearing.

The Indictment named Hyok "Steven" and Woo "Stephanie" Kwon as the owners, and indicted them on 11 counts of workers' compensation premium fraud, 18 counts of payroll tax evasion and one count of extortion. Six co-defendants have also been charged with workers' compensation premium fraud and tax evasion. They are Melquiades Brizuela Jr, Manuel Rodriguez, Veronica Lucas Cuin, Aimee Sunmyung Kwon, Daniel Kwon and Hyun Bung Chae for their alleged involvement as straw owners. 

An Indictment is not evidence and the individuals charged are presumed innocent.

The Indictment alleges that there was the use of six straw owners which were allegedly used to conceal the existence of hundreds of hotel workers to avoid paying additional insurance premiums and payroll taxes. There are means in which companies subcontract out workers or use other businesses, and it will be up to the government to prove beyond a reasonable doubt that there was fraud here. 

Splint Supplier and Its President to Pay Over $10 Million to Resolve False Claims Act Allegations for Splints Provided to Patients in Skilled Nursing Facilities

Maryland-based splint supplier Dynasplint Systems Inc., and its founder and president, George Hepburn, agreed on December 18, 2015 to pay approximately $10.3 million to resolve allegations that they violated the False Claims Act by improperly billing Medicare for splints provided to patients in skilled nursing facilities (SNFs). The settlement includes the monies withheld by an earlier payment suspension.

Patients staying in skilled nursing facilities, or their insurers such as Medicare, pay a bundled payment to these facilities that cover all of a patient’s needs, including such items as splints, and thus no separate Medicare reimbursement for such devices is permitted.   

To circumvent Medicare rules, defendants allegedly mispresented that patients were in their homes or other places that were not skilled nursing facilities. Thus, the government alleged that Hepburn and Dynasplint knowingly mischarged Medicare for splints used by patients in Medicare-certified SNFs. 

The settlement resolves allegations originally brought in a lawsuit filed by Meredith Deane, a former sales executive for Dynasplint, under the whistleblower, or qui tam, provisions of the False Claims Act, which allow private parties to bring suit on behalf of the government and to share in any recovery.  

The United States may intervene in such an action as it did here.  Ms. Deane and her counsel will receive at least $1.98 million for the settlement.

Medical & Dental Management Companies - United Dental Group Ordered to Pay $867,000 Settlement and Cease Business Operations in California for Unlicensed Practice Due to Management of Dental Practices

Management companies operating medical and dental practices in California have long struggled with the State's strong laws against the corporate practice of medicine, dentistry, optometry or any of the healing arts. 

A recent case against a dental management company (and related Accusations by the California Dental Board against at least two of the dentists that worked there) reveal that if the State wants to be aggressive with these arrangements, companies should be careful with the structure, the written agreements, the "unwritten" arrangements, and ensure that practice and financial arrangements comply with the law. 

In this case, the Board asked United Dental for responses and received detailed written responses from it's in-house attorney and United Dental entered into a new management contract with the dentist that was not fully compliant with the law. United Dental managed 5 practices in California. Two years later, United Dental got hit with civil lawsuit and at least one dentist got an Accusation in March 2015 for aiding and abetting the unicensed practice of medicine.

Brief Summary of Settlement of Civil Lawsuit Filed by Orange County

On December 11, 2015, the Orange County District Attorney’s Office (OCDA) obtained a settlement in a civil suit it had filed against United Dental Corporation and its California affiliates (dba “United Dental Group”), as well as its owner Jeong Hoon Kim, for engaging in the unlicensed practice of dentistry and false and misleading advertising. The Dental Board has at least one Accusation pending against a dentist who worked at United which has not settled.

The settlement requires the shut-down of United Dental Group in California on or before March 3, 2016, and an $867,000 payment in civil penalties and costs ($8,791.20 to reimburse the Dental Board for its costs of investigation and $858,208.80 in civil penalties). During the shut-down period, all operations will be solely managed and controlled by a licensed California dentist. The final judgment was entered Dec. 9, 2015, in the Orange County Superior Court presided by Judge Geoffrey T. Glass. 

A Complaint to Dental Board Triggered The Civil Lawsuit by Orange County

Most investigations in our experience are from anonymous complaints from competitors. This case seems to be no different.

United States Settles Civil False Claims Act Allegations Against Florida Hospice For More Than $3 Million. Case Study - Hospices' Need for Compliance Plans and Audit Issues.

The hospice industry has been under investigation by the Office of Inspector General and the subject of many Medicare health care fraud investigations for the past three years. California and Florida have have numerous investigations pending. These cases can proceed civilly under the qui tam false claims act, criminally or both. A recent case settled civilly which is expected to resolve any potential criminal investigation.

One redflag that triggers investigations is a hospice with patients who have lengths of stays in hospices greater than a year or patients who go from hospice to hospice. The issue in these cases is medical necessity and suspected marketing of patients where patients received hospice care from multiples agencies for over a year or two. Typically, federal healthcare programs only pay for hospice care when patients are in a terminal condition and are expected to live for less than six months. Hospice is intended to be palliative rather than curative.

In Jacksonville, Florida, the U.S. Attorney settled a civil qui tam lawsuit last month in which the government settled with Hospice of Citrus County (“HOCC”) for $3 million in restiution ($3,022,000 exactly). The allegations were that HOCC knowingly submitting false claims to the Medicare and Medicaid programs for medically unnecessary hospice care of more than 50 patients who had lengths of stays greater than 1,000 days. 

California Medical Doctor and Wife Plead Guilty to Obtaining Prescription Drugs for Themselves Prescribing Under Fake Patient Charts. Charge is Conspiring to Acquire Controlled Substances by Fraud and Deception

Drug addiction hits doctors and professionals. We have represented numerous physicians, nurses, attorneys, and professionals with drug and alcohol addiction. Sometimes, the addiction issues create criminal issues in addition to licensing isuses. 

This week, a physician and his wife a MFT intern, who have admitted to addiction issues, pleaded guilty in federal court for improperly obtaining prescription drugs through self-prescribing by the husband doctor.

On December 16, 2015, Dr. Matthew Cole, a dermatologist at Insight Dermatology with offices in San Diego and National City, and his wife, Shireen Cole, who are both in drug treatment programs, pleaded guilty to prescription drug-related charges. They admitted that they conspired to obtain scheduled pharmaceutical drugs commonly known as Percocet, Xanax and Ambien by submitting fraudulent prescriptions to pharmacies as if they were valid.

Dr. Cole used his own prescription pad with his assigned DEA registration number to write prescriptions in the names of friends with whom he had no doctor-patient relationship, and who had no knowledge of the prescriptions written in their names. He also wrote prescriptions for his wife using her maiden name.

Interpreting Service Company G&G's 2 Owners and 7 Employees Charged With Workers' Compensation Fraud in Providing Translating Services to Medical Clinics' Patients

Interpreting services in the workers' compensation system has been criticized at times as being overused and abused ancillary service. However, it was handled in lien negotiations with insurance carriers handling those services separately.

State criminal charges have been filed against nine people alleged to be part of an interpreting service company specializing in providing interpreting services to workers' compensation patients in medical clinics. 

In an apparent political move, this case is being filed just around the time that there are hearings relating to disputes between carriers and the rights of non-English speaking workers to have the right to interpreting services with certified interpreters. This case may also be used to challenge the liens by this company and the insurance carriers have a lot of power in determining who gets charged criminally in state court cases.

The prosecution allegeds that G&G billed for interpreting services that were not needed or not provided in seven different counties in Southern California. The "victims" are alleged to be insurance carriers and numerous companies that are self-insured. The alleged fraudulent billing is claimed to be more than $24.6 million from 2008 to 2012.

Former Doctor and Non-Doctor Owners of Kentucky Clinical Laboratory Indicted for Health Care Fraud Due to Urine Drug Testing

Drug toxicology was considered a lucrative field in health care. Urine drug testing is important for physicians to monitor patient use of drugs and compliance especially with pain medications or addiction treatment.

There are now a number of fraud cases arising involving drug toxicology. In California, it has been a hot area in workers' compensation fraud. There are also Medicare, Medicaid, workers' compensation insurance and private insurance fraud investigations around the country relating to drug testing. 

On December 1, 2015 arraignment was held after a federal grand jury in Kentucky returned a 100-count indictment charging five men, who owned a clinical laboratory, with billing health care third-party payors for urine drug tests that were medically unnecessary and not eligible for reimbursement.

Why Do So Many Health Care Fraud Cases Go To Trial? Poor Plea Offers and Aggressive Prosecution. Case Example - California Ambulance Company Owner, Operator and Employees Sentenced to Prison for Medicare Fraud

In June 2013, I wrote an article about a nonemergency ambulance company whose owner, operator and managers were charged in federal court in Los Angeles. Here is an update.

After two years, the case went to trial on August 18, 2015, and after a ten day jury trial, four of the defendants were convicted of one count of conspiracy to commit health care fraud and five counts of health care fraud. One defendant was found not guilty. One of my colleagues represented the person who was found not guilty. Sentencing happened last week.

What were the sentences like in this case? One of the sentences for the owner was long (102 months - 9 1/2 years) and the other sentences were two years and three years. It would be interesting to know whether the plea offers would have provided a sentence significantly lower than that for the employees. It is now more favorable for defendants with little evidence against them to go to trial so the jury and the judge can evaluate the evidence rather than relying on the government's claims to probation during sentencing. 

Query: Why are these cases going to trial? First, the plea agreements being offered by the U.S. Attorney's Office are not very favorable. The sentences are potentially high with little benefit of plea agreements especially where some of the individuals are employees who are not highly educated as was the case with at least two of the defendants. The acquitted defendant had little day to day business contact or evidence against him but was forced to go to trial or plea to a prison term. Even employees who were not highly paid are being required to agree to restitution to the entire amount.

In Home Personal Care Worker Agency and Owners Agree to Civil Resolution of Federal False Claims Case in Wisconsin - Why Health Care Providers Need Compliance Plans

There has been an increased number of lawsuits filed under the qui tam – or whistleblower – provisions of the False Claims Act, which allows private citizens with knowledge of health care fraud on the state or federal government to bring a civil action on their behalf. These cases can also involve claims submitted to state Medicaid programs (Medi-Cal in California) since they are in part federally funded. 

I discuss below how to develop compliance programs so a health care provider can show that there are no "false claims" and reduce the risk of having a lawsuit filed against them. False claims are not claims that were negligent or mistakes. Instead, false claims only cover claims that were submitted with deliberate knowledge of the falsity of the claim or deliberate ignorance of the falsity of the claim. Compliance programs - even modest ones - help prevent a whistleblower from claiming that there was deliberate knowledge or ignorance. 

A recent case that was settled involved claims submitted for personal care worker services to the Wisconsin Medicaid Program. In California, this is known as the IHHS (In Home Supportive Services). The private citizen whistleblower alleged that Atlas Healthcare, Inc., and its owners, Deana Bajanen and Sheena Jones knowingly submitted false claims for personal care worker services to the Wisconsin Medicaid Program for patients that did not need the services or did not need the level of services for which Atlas billed the Medicaid program. Atlas is located in Wisconsin. 

Medical Supply Company Owner Convicted in $4 Million Medicare Power Wheelchair Fraud Case in Los Angeles

The Medicare fraud cases relating to durable medical equipment (DME) companies allegedly providing power wheelchairs to patients who did not need them are not quite over. Just last month, a federal jury in Los Angeles on November 4, 2015, convicted a Los Angeles man and owner of a medical supply company for his role in an alleged $4 million Medicare fraud scheme. A sentencing hearing is scheduled for February 29, 2016, before U.S. District Judge S. James Otero of the Central District of California, who presided over the trial. 

According to evidence presented at trial, Valery Bogomolny, used his company, Royal Medical Supply, to bill Medicare $4 million between January 2006 and October 2009 for power wheelchairs (PWCs), back braces and knee braces that were medically unnecessary, not provided to beneficiaries or both.  The evidence the government presented further showed that Mr. Bogomolny created false documentation to support his false billing claims, including creating fake reports of home assessments that never occurred.  

Evidence at trial was presented that Mr. Bogomolny personally delivered PWCs to beneficiaries who were able to walk without assistance and signed documents stating that he had delivered equipment when the equipment was not actually delivered. Mr. Bogomolny's company ultimately received $2.7 million from Medicare on these alleged false claims.

President Of Ambulance Company Pleads Guilty To Perjury In Connection With Responding to Civil Investigative Demand for Documents in Health Care Claims Investigation

Health care fraud cases are more frequently being prosecuted as perjury cases. Fabricating documents or signing responses to subpoenas or requests for documents has been easier to prove than the alleged fraud. 

I have urged clients for years not to alter or add to records for this exact reason. In addition, changing the records can be used to show proof of fraudulent intent. When records are incomplete or missing, there are ways to address the issues.

In a recent case, the president of a nonemergency ambulance transportation company pleaded guilty to Perjury in North Carolina for producing records under oath that the records she produced were responsive to a Civil Investigative Demand (CID). In fact, some of the records were fabricated.

On November 5, 2015, Jamime Leonard Smith, the president of CCMT, Inc., doing business as Crystal Coast Medical CCMT, Inc., doing business as Crystal Coast Medical Transport (CCMT) pleaded guilty to a felony count in federal court.  CCMT was a nonemergency ambulance transportation company.

In 2012, CCMT and its president Smith became the subject of investigation after a member of the public videotaped CCMT employees routinely transporting patients in CCMT ambulances when the patients had the ability to walk or ride in wheelchairs.  

Medicare and TRICARE generally do not cover nonemergency ambulance transportation services when the patient has the ability to walk or ride in a wheelchair.  Additionally, for reimbursement to be covered by Medicare and TRICARE, the ambulance company must obtain an order, known as a Physician’s Certification Statement (PCS), from the patient’s physician indicating that the ambulance trip is medically required. 

U.S. Attorney’s Office Files Civil Qui Tam Lawsuit Against New Jersey Couple And Two Diagnostic Companies For Falsifying Diagnostic Test Reports And Failing To Properly Supervise Tests

Medicare and OIG have targeted diagnostic companies for the past five years. There has been an increase in whistleblower and false claims cases involving diagnostic companies as well.

On November 19, 2015, the government intervened in a False Claims Act lawsuit and filed a complaint against a New Jersey couple and their diagnostic imaging companies for knowingly submitting false claims to Medicare for thousands of falsified diagnostic test reports and the underlying tests. This followed the owners' guilty pleas to health care fraud relating to the qui tam claims in the civil lawsuit.

Nita K. Patel and Kirtish N. Patel of New Jersey were and/or are owners and operators of Biosound Medical Services Inc. and Heart Solution PC. The Patels pleaded guilty November 17, 2015, to health care fraud charges set forth in an Information related to this conduct.

The civil complaint alleges that the Patels and their companies:
(1) created fraudulent diagnostic test reports, 
(2) forged physician signatures on these reports, and 
(3) billed Medicare for the fraudulent reports and the underlying tests that were used solely to create these reports. 

Former Doctor Charged With Conspiring To Defraud The FDA in Marketing His Hyperbaric Chamber as Approved Medical Device And Billing Medicare and Carriers for Alleged Unsafe and Unnecessary Treatments

On November 18, 2015, a former doctor and others were charged with making misrepresentations to the  Food and Drug Administration (‘FDA”)  in order to obtain clearance for a "hyperbaric chamber" that Mr. O’Brien marketed under the name "Hyperox 101."  

This case probably would not have been prosecuted but for the fact that approxmimately $15 million in claims for treatments were submitted to insurance carriers and Medicare. The Medicare billings in this case appear to have triggered the investigation.

William J. O’Brien III of Philadelphia, Pennsylvania was charged in an indictment with conspiring to defraud the FDA and a separate conspiracy to commit health care fraud. 

A hyperbaric chamber is a sophisticated medical device in which patients breathe 100% pure oxygen for a prolonged period in a pressurized environment.  To achieve a therapeutic effect, the chamber is pressurized to at least 1.4 atmospheres below sea level.  The pressure creates a biochemical reaction that increases oxygen absorption into the blood.  A hyperbaric chamber for treating patients must be constructed using pedigree steel and certified as a pressure vessel for human occupancy. 

Dermatology and Cosmetic Center Pays $150,000 to Settle False Claims Act Allegations of Upcoding Medicare Claims for Surgical Closure Procedures

The False Claims Act was used to resolve billing allegations of upcoding. Two related dermatology and cosmetic medical entities, Rhode Island Dermatology and Cosmetic Center, LLC, and Rhode Island Dermatology OBS, LLC recently paid $152,043.25 to resolve civil allegations that they violated the federal False Claims Act by billing Medicare for some patient services and procedures performed at rates higher than were warranted.

The investigation was conducted by the U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG) and the United States Attorney’s Office. The United States alleged that between 2009 and 2014, Rhode Island Dermatology, which provides dermatology, plastic surgery, and cosmetic surgery services, billed Medicare for surgical closure procedures at a higher rate of complexity than was supported by certain patients’ condition or the circumstances of the closure, and which should properly have been classified at a lower billing rate for less complex procedures.  

Michigan Doctor Sentenced to Long Sentence For Unlawful Prescriptions and Health Care Fraud in Case Involving Illegal Patient Marketing

The criminal cases for physicians improperly prescribing pain medications continue. Pain management physicians and regular practitioners will realize that the facts in most of these cases are fairly outrageous and not typical. 

What I often see in my practice is that the physicians who engage in this activity are oblivious to the risks they are taking with the license and their liberty. Often, like in this case, marketing new patients is a flood gate to problems especially when outside marketing individuals are hired.

In this case, on  November 16, 2015, Dr. Hussein Awada, 46, a physician who practiced in Warren, Michigan, was sentenced to 84 months in prison  for writing prescriptions for oxycodone and other controlled medications without medical justification, and for health care fraud. He was sentenced by U.S. District Judge Nancy Edmunds.

What happened in this case to cause such a long sentence?

1. Marketing. From 2010 through early 2012, the doctor worked with a marketer, James Lyons. One of the serious issues with marketers is that they are incentivized to bring patients whether there is medical necessity or not. The marketers will often coach the patients In addition, marketers are often paying patients or engaged in other misconduct. In this case, the marketers then bought the pills from the “patients” and re-sold them to street dealers.

OWNER OF PROPERTY MANAGEMENT AND ASPHALT COMPANIES ARRAIGNED ON STATE CHARGES FOR FAILING TO REPORT PAYROLL PROPERLY TO AIG AND SCIF - “WORKERS COMPENSATION PREMIUM INSURANCE FRAUD”

On November 25, 2015, in Orange County Superior Court in Santa Ana, California, a business owner Darrin Shawn Wilson was charged with a number of counts which relate to alleged workers compensation “premiuminsurance fraud”:

(1) 15 felony counts of misrepresenting facts to the State Compensation Insurance Fund (SCIF),

(2)  5 felony counts of misrepresenting facts to a workers’ compensation insurance company,

(3)  20 felony counts of failing to file a return with the intent to evade tax,

(4)  20 felony counts of willful failure to pay employment taxes, and

(5)  a sentencing enhancement for white collar crime and committing a theft exceeding $500,000 and a taking that exceeded $200,000.

Mr. Wilson is presumed innocent as these are merely charges. Bail was set for  $500,000. These charges are being brought against businesses and their owners for “premium insurance fraud” when audits show underreporting to workers’ compensation carriers. In this case, Mr. Wilson is accused of treating employees as independent contractors. The damages rack up quickly in these cases since the insurance audits go back years. Here they went back four years.

Employers learn from this case

It is never too late to become compliant with the law. Doing so lessens the likelihood that there will be a claim or other occurrence that causes the insurance carriers to perform an audit. 

What is workers compensation premium insurance fraud?

California law requires that all employers maintain workers’ compensation insurance for their employees. Payroll records showing the number of employees and their income must be submitted to both the insurance company and Employment Development Department (EDD), who oversee the audit and collection of payroll taxes and employment records for workers in California. 

Wisconsin Home Health Business and Owner Agree to Criminal and Civil Resolution of Health Care Fraud Charges

The Acting United States Attorney for the Eastern District of Wisconsin announced November 18, 2015 that the United States has filed a criminal information charging Deaconess Home Health, Inc. ("Deaconess") and its owner, Lazarus Bonilla, with committing health care fraud against the Wisconsin Medicaid Program.  

Deaconess has agreed to plead guilty to the crime under a plea agreement filed with the information.  Mr. Bonilla and the United States have entered into a deferred prosecution agreement.  The United States also reached a civil settlement agreement with Deaconess and Bonilla for $3,724,000 pursuant to the federal False Claims Act.

The agreements arose out of an investigation into the false billing of personal care worker services Deaconess (formerly known as Outreach Home Health) to the Wisconsin Medicaid Program.  The Wisconsin Medicaid Program pays for personal care services, which are medically orientated services intended to assist a recipient with activities of daily living necessary to maintain a recipient in his or her place of residence in the community.  

San Diego Pharmacy Owners Pay $750,000 to Resolve Civil Drug Diversion, Record Keeping and Logbook Allegations After DEA Audit

On November 17, 2015, a group of San Diego pharmacies and their owners paid $750,000 to the federal government to resolve allegations that they mishandled significant amounts of highly addictive and frequently abused prescription narcotics, as well as ephedrine or pseudoephedrine products. This was a civil settlement with the DEA and any true wrongdoing of a criminal nature appeared to be done by pharmacy technicians.

In addition to paying $750,000 in settlement to the government, Medical Center Pharmacy has committed to implementing new inventory control procedures to assure full accountability of all controlled substances.

New York Doctor Sentenced To 46 Months In Prison For Payments for Test-Referrals With New Jersey Clinical Lab. Payments Were Made to Doctors Under Lease, Consulting, Service or Management Agreements With Doctors Where Referrals Occured Were Called "Bribes" or "Kickbacks" and Agreements Were Called "Sham"

A doctor, Brett Halper MD, with a practice in Rockville Centre, New York, was sentenced November 18, 2015 to 46 months in prison for accepting payment in exchange for test referrals from by Biodiagnostic Laboratory Services LLC (BLS) in New Jersey billed to Medicare. Dr. Halper plead guilty in Newark federal court and did not go to trial.

This was part of a large investigation which resulted in 38 guilty pleas – 26 of them doctors – in connection with the lab kickback arrangement. The investigation has so far recovered more than $11.5 million to date through forfeiture.

The fact that 26 doctors were charged shows that simply because a large number of physicians enter into these arrangements does not mean that they are legal or will pass muster. The government contended that these were "sham" agreements even though attorneys had drafted them.

The lab BLS and four of its executives were also charged. The referral or "bribe" arrangements were the ones that were common in the clinical lab business: lease, service or consulting agreements.

HIPAA Audit - Learn From Recent $750,000 Settlement Between Medical Practice and HHS and OCR on Deficiencies in HIPAA Compliance After Data Breach

In our practice, we conduct HIPPA and HiTECH compliance audits for health care clients and business associates (companies that service health care companies). We also represent them when a HIPAA complaint has been filed or reported. 

We do this as a law firm since our communications are protected by the attorney-client privilege unlike regular consultants. 

Most small and mid-sized practices are not fully compliant and have not had audits. We go in, evaluate all existing policies and documents, create or revise a HIPAA compliance plan and employee handbook, document updated employee training, and peform a HIPAA HITECH initial audit which is confidential. 

We work on a flat fee that gets spread out over the year and includes phone calls, emails and meetings to avoid high hourly charges and encourages efficiencies. We help make sure that HIPAA is integrated into the culture.

Some companies or practices have staff to implement changes and other times we perform them. During our attorney-client privileged meetings, we have a master list and then implement a master action plan that will culminate in a final HIPAA audit to be documented. We bring in less expensive consultants as needed to save money for the company or practice as needed. 

Why is it important these audits be documented? If there is a HIPAA complaint by a patient or a data breach reported to OIG or Office for Civil Rights (who handles HIPAA complaints) or to the State of Californa DHCS Officeof HIPAA Compliance, they conduct audits. If there is a breach but it is found that there was prior compliance, proper policies and procedures, documented training, and a documented audit in place - the fines and punishment will be far less. It also helps avoid civil lawsuits by patients for state privacy breaches (since HIPAA does not give a private right of action). 

Injured Worker's Hearing Representative and Interpreter Charged With Insurance Fraud for Cashing Settlement Check Intended for Deceased Client

On an unusual case that arose from a workers’ compensation lawyer’s office, a hearing representative from the law office was charged with multiple felony counts of insurance fraud and grand theft on November 12, 2015. There is no allegation that the lawyer knew of the alleged fraud. The case is being prosecuted by the Los Angeles County District Attorney's Office in Los Angeles County Superior Court. 

Miami-Area Pharmacy Owner Sentenced to 42 Months in Prison for Role in $1.5 Million Medicare Part D Fraud Scheme

A Miami-area pharmacy owner,Tamara Esponda, was sentenced November 17, 2015 to 42 months in prison for her role in the submission of more than $1.5 million in fraudulent claims to Medicare Part D. This was a case of ghost billing - billing for drugs that were not prescribed or provided to patients.

This is the kind of black and white case that one expects in health care fraud and is not one that involves complex regulatory issues. This also involves identity theft issues where there is billing of patients' Medicare without their consent. Miami, Los Angeles, and New York continue to be the areas with the most health care fraud prosecutions.

Recent Federal Indictments in Workers Compensation Cases Show Efforts to Obtain Hard Evidence by Secret Recordings, Text Messages, Emails and Mailings to Strengthen Their Cases

In the three Indictments filed last week by the Southern District in San Diego where the medical treatment and billings were California workers' compensation patients, one thing is clear. 

In order to prove that payments for rent, consulting, management or other professional services were, in fact, illegal payments for referrals -- it appears to have been decided that "hard" evidence of conversations, text messages, emails where the parties admitted that the payments were for patient referrals were needed. 

Each of the three Indictments contain details that reveal detailed conversations and unindicted coconspirators who are not named as defendants. This level of detail may be used -- as well as the Indictments filed themselves -- to persuade other targets to cooperate or plea in order to obtain more favorable treatment before an Indictment is filed.

For years, the U.S. Attorney's Office has shown little interest in prosecuting cases that did not involve federal funded government programs.  The wave of Indictments that is expected to exceed fifty (50) providers within the next year will show that informal policy has changed.

In one case, United States v. Grusd, et al, Case No. 15CR2821, the federal authorities targeted a provider, Dr. Ronald Grusd, who had been part of a federal qui tam case years before. While Dr. Grusd's entities reached a settlement in July 2010 and he was ultimately dismissed, it seems the federal authorities' interest in him did not. Defendants are presumed innocent and an Indictment is not evidence.

A review of the Indictment shows how this case is being put together. Other cases will probably follow a similar pattern.