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.  

"Honest Services" Mail Fraud and Kickback Case: How The Feds Are Asserting Jurisction in Charging a Shockwave Therapy Company and its Purported Owners, a Referring Chiropractor, Unindicted Referring Doctors and Unindicted Marketers Over Workers' Compensation Patient Referrals and Alleged Kickbacks Disguised as Agreements for Billing, Rent, Receivables and/or Management Services

For the past five years, after the conviction of former Enron CEO Jeffrey Skilling was upheld at the U.S. Supreme Court, federal authorities have been getting ready to use "honest services" mail fraud in health care fraud and kickback cases involving private insurance, workers' compensation insurance as well as Medicare and Medicaid (Medi-Cal) billing. 

In Skilling, the U.S. Supreme Court found clear congressional inent to limit honest services prosecutions to "offenders who, in violation of fiduciary duty, participated in bribery or kickback schemes." In state health care, physicians and chiropractors owe a general fiduciary and statutory duty as part of their professional duties to patients to disclose financial relationships they have with referring businesses (Bus. and Prof. Code Section 654.2) and this will be the core of the conspiracy count but the prosecutors have alleged specific violations of state law which prohibit unlawful referral arrangements for workers' compensation patients as well. 

In three California cases filed this past week, the U.S. Attorney's Office for the Southern District of California (San Diego) is using honest services mail fraud (18 U.S.C. Section 1341 and 1346) and the travel act (18 U.S.C. Section 1952) to prosecute kickbacks and unlawful referral arrangements in treatment of California workers' compensation patients. 

Apart from the fiduciary duty to patients, these honest services fraud cases are also using violation of the underlying California state laws that prohibit referring patients to providers or individuals where the referring person has a financial interest or relationship with them (Labor Code Sections 139.3 and 3125), and state laws that prohibit kickbacks or any compensation or inducement for referring patients (Bus. and Prof. Code Section 650 and Insurance Code 750). 

In one of them filed in the Southern District of California on November 6, 2015, United States v. Reese, Mathis, et al., Case No. 15CR2822, charges were filed against:


(1) Chiropractor George Reese and his professional corporation, 
(2) Foremost Shockwave Solutions, a shock wave therapy services company,
(3) Lee Mathis, a purported partial owner of Foremost who is also an attorney who allegedly owned management and/or billing companies that are referenced in the Indictment, and
(4)  Fernando Valdes who is also a purported owner of Foremost.  
Anyone charged is presumed innocent, and charges in an Indictment are not evidence.

Texas Home-Health Agency Owners, Director of Nursing And Marketers Indicted For Illegal Patient Marketing, Providing Unnecessary Services and $13 Million in Alleged Medicare Fraud

The health care fraud cases against home health and hospice owners continue to get filed in federal court. The most recent case is one in which the owners, the director of nursing and patient recruiters of a home-health agency based in Houston were arrested November 10, 2015 for their alleged roles in conspiracies to defraud Medicare, to pay illegal healthcare kickbacks and to commit money laundering in an Indictment filed in the Southern District of Texas.  

According to the Indictment, Ebong Tilong and Marie Neba used the Texas-based, home-health agency that they owned to bill Medicare for home-health services that were not provided or not medically necessary. 

The Indictment then alleges they orchestrated this scheme by paying kickbacks to a series of individuals as follows: 

First, Tilong and Neba allegedly paid illegal kickbacks to physicians in exchange for authorizing medically unnecessary home-health services. 

Second, using the money that Medicare paid for such alleged unnecessary or fraudulent claims, Tilong and Neba allegedly paid illegal kickbacks to marketers (patient recruiters) Daisy Carter and Connie Ray Island in exchange for referring Medicare beneficiaries for home-health services. 

Millennium Health Laboratories Agrees to Pay $256 Million to Resolve Qui Tam Allegations of Unnecessary Urine Drug and Genetic Testing and Illegal Kickbacks to Physicians

Millennium Health, formerly Millennium Laboratories, has agreed to pay $256 million to resolve alleged violations of the False Claims Act for billing Medicare, Medicaid and other federal health care programs for medically unnecessary urine drug and genetic testing and for providing free items to physicians who agreed to refer expensive laboratory testing business to Millennium. 

The United States alleged that Millennium caused physicians to order excessive numbers of urine drug tests, in part through the promotion of “custom profiles,” which, instead of being tailored to individual patients, were in effect standing orders that caused physicians to order large number of tests without an individualized assessment of each patient’s needs. 

The United States also alleged that Millennium’s provision of free point of care urine drug test cups to physicians—expressly conditioned on the physicians’ agreement to return the urine specimens to Millennium for hundreds of dollars’ worth of additional testing — violated the Stark Law and the Anti-Kickback Statute.  The Stark Law and the Anti-Kickback Statute generally prohibit laboratories from giving physicians anything of value in exchange for referrals of tests.

Millennium, headquartered in San Diego, is one of the largest urine drug testing laboratories in the United States and conducts business nationwide.

Pain Management Physicians' Treatment Plans And Records Are Being Reviewed With Great Scrutiny - How To Respond To Request For Records and Interview

Board certified pain management physicians are beginning to have records requested from the California Medical Board with greater frequency. In many cases, the Medical Board has requested them due to complaints from family members or pharmacists. 

It is critical to be prepared and handle any requests for records or interviews with great care and seek expert attorney and expert witness review at the earliest time. 

It is also important to review your office's systems and documentation standards now before any records are requested. Remember, if any complaint is made it is highly likely that records will be requested and patient charts are not usually perfectly documented and the standards 

What You Can Learn From One Pain Management Physician's Medical Board Case. 

Here is a sample case of a pain management physician that ended up in a Medical Board Accusation being filed against him for unprofessional conduct, gross negligence, repeated negligence, and excessively prescribing to a patient without a proper medical indication in violation of California Business and Profession Code Section 725, 2234(b)(c) or (d), and 2242(a) relating to several patients.  This was a highly trained and regarded physician in the field of pain management.

How did this case end up as an Accusation and what can you do to avoid a similar situation? 

1.  Documentation Issues - Especially With Long Term Patients. The pain management physician had treated each of the patients for over ten (10) years and as trust and time goes on, the documentation is not always as thorough as it is for short-term patients. Document the rationale for decreasing or increasing dosages or changing medications even if it is brief. Document the treatment plan with the objective for caring for the patient, treating the underlying condition causing the pain, and addressing the pain.

New York Physician Assistant Arrested For Conspiracy To Illegally Prescribe Oxycodone

A physician assistant, Michael Troyan, who operated two urgent care clinics on the east end of Long Island was arrested on November 4, 2015 after being indicted on federal charges of conspiring to illegally distribute oxycodone. At the time of his arrest, the DEA executed search warrants at these two clinics: East End Urgent and Primary Care in Riverhead, New York.

The indictment and public filings allege that between November 2011 and October 2015, physician assistant Troyan with authority to prescribe controlled substances, issued prescriptions for thousands of oxycodone pills to co-conspirators for the purpose of illegally re-selling the pills for cash.  PA Troyan was allegedly captured on video in an undercover operation writing medically unnecessary prescriptions for OxyCodone and receiving large quantities of cash at his Riverhead medical office for prior illegal sales.  It is alleged that PA Troyan was receiving half of the profit from the sale of the oxycodone pills.

The DEA is taking great interest in these cases due to the link now determined between heroin addiction and the taking of prescription painkillers.  The federal sentencing laws for distributing OxyCodone are potentially harsh in that if convicted, PA Troyan faces a maximum sentence of 20 years’ imprisonment and a $1 million fine.

Attorney Commentary: In a case like this, there was significant investigation before the Indictment and search warrant was executed including surveillance and recording. There are physicians who also worked at these clinics who were hired by the physician assistant to be his supervisors. While those physicians would not have written the prescriptions, they would have some responsibilites as supervising physician. Long Island has had a signficiant heroin addiction problem and the DEA is being aggressive in investigating physicians and advanced care providers who prescribe painkillers.

Posted by Tracy Green, Esq.

Green and Associates

Work: 213-233-2260

Prosthetic Limb Maker CEO Charged With State Insurance Fraud For Billing Anthem For Prosthetic Arm After Patient Died and Forging Patient's Name on Delivery Slips

Peter Lira, CEO of Am-Pro Prosthetics and Orthotics in Whittier, was arrested on three felony counts of insurance fraud in Los Angeles County Superior Court for allegedly billing Anthem Blue Cross for a $170,000 prosthetic arm for a Los Angeles County Public Defender who died of cancer after Mr. Lira was notified the patient had died. Mr. Lira was released on bond pending trial on these charges.

Mr. Lira is presumed innocent unless and until he is proved guilty beyond a reasonable doubt. These are only charges at this time.

The Department of Insurance alleges that detectives found evidence that Mr. Lira allegedly submitted fraudulent invoices and forged the deceased patient's signature on the delivery receipt to collect payment for manufacturing a prosthetic arm even though the patient has died. The Department of Insurance also alleges that Mr. Lira is believed to have changed the circumstances under which the arm was needed, claiming the man was still alive and needed the limb because of an industrial accident.

Suspecting fraud, Anthem referred the claim to the Department of Insurance for investigation. This case is being prosecuted by the Los Angeles County District Attorney's Office. Mr. Lira faces a maximum exposure of five years in prison, if convicted on all counts.

Attorney Commentary: There are times where billing for medical equipment could occur if a patient has died between the time of the order and delivery. In addition, there are times when billing mistakes occur. Statistically, that is the case.

In this matter, the Prosecution needs to prove beyond a reasonable doubt that Mr. Lira personally had “intent” to defraud. This is why there are allegations that the deceased patient’s signature was “forged” and that the “reason” the arm was needed was changed.

In a case like this, only the “billing” need to have occurred and even if the prosthetic company was not paid for the prosthetic arm, the insurance fraud charge can be alleged. Insurance companies are being more aggressive in private insurance in reporting suspected fraud. It used to be that there was simply a denial of claim but now the referrals are being made even when government insurance (Medicare or Medi-Cal) are not involved. In our office, we also see more referrals for "suspicious" claims where the patients are current or former government employees.

Posted by Tracy Green, Esq.

Green and Associates, Attorneys at Law

Office: 213-233-2260

Doctor Arrested For Accepting Free Meals and Speaker Fees From Pharma Company

A gynecologist Rita Luthra, M.D. in Springfield, Massachusetts, was indicted and arrested last week in connection with allegedly accepting free meals and speaker fees from a pharmaceutical company Warner Chilcott in return for prescribing its osteoporosis drugs, allowing pharmaceutical sales representatives to access patient records, and lying to federal investigators.Warner Chilcott is a unit of Allergan.

Dr. Luthrow is presumed innocent of all charges and through her attorney she denies them. She was charged with one count of violating the Anti-Kickback Statute, one count of wrongful disclosure of individually identifiable health information, and one count of obstructing a criminal health care investigation by lying to federal agents and directing an employee to do the same. The Indictment also seeks $23,500 in criminal forfeiture which is the amount of payment Dr. Luthra received from Warner Chilcott.

According to court documents, Warner Chilcott, a pharmaceutical company, allegedly paid Dr. Luthra $23,500 to prescribe its osteoporosis drugs (Actonel and Atelvia) from October 2010 through November 2011. On thirty-one occasions, a Warner Chilcott representative allegedly brought food to Dr. Luthra's medical office for her and her staff, and paid $750 to speak with Dr. Luthra for roughly thirty minutes, while she ate. Warner Chilcott also paid to cater a barbeque hosted by Dr. Luthra at her home, and paid Dr. Luthra $250 for speaker training, despite the fact that there are no records where she spoke to any other physicians.

It is alleged that Dr. Luthra's rate of prescribing Warner Chilcott's osteoporosis drugs increased during the time she was paid by the company, and abruptly declined once she stopped being paid by Warner Chilcott. Additionally, it is alleged that Dr. Luthra allowed Warner Chilcott to access protected health information in her patients' medical files without appropriate authorizations.

When Dr. Luthra was interviewed about her relationship with Warner Chilcott by federal agents, she allegedly provided false information to those federal agents and allegedly instructed at least one of her employees to also lie and provide false information to the federal agents.

In related federal cases, Warner Chilcott has agreed to plead guilty to health care fraud and pay a $23 million criminal fine and $102 million to whistleblowers in a qui tam case. In addition, the former CEO of Warner Chilcott was also charged with conspiracy to pay kickbacks to physicians and his case is pending. Three former district managers of Warner Chilcott have agreed to plead guilty to conspiracy to commit health care fraud and other violations.

Attorney Commentary

Lessons of the day. First, when federal investigators come to your office, do not speak to them, do not instruct your staff to do anything or do anything unless and until you seek advice of counsel. 

This “lying to federal investigators” portion of the case reminds me of the Martha Stewart case except it involves a physician. I see many cases that proceed criminally because prosecutors have found mistruths during interviews, telling others to not be truthful or altered or destroyed records.

Second, federal and state anti-kickback statutes can be far reaching and are now being prosecuted more aggressively. Massachusetts has state laws that require public disclosure of physician payments and gifts to be reported which allows prosecutors to then see if there are any patterns in prescribing. This probably made it easier for the federal authorities to prosecute this case.

While actual sentences for federal crimes tend to be less than the statutory maximum penalties, the charges Dr. Luthra is facing each come with heavy possible penalties. Worse are the collateral consequences to Dr. Luthra’s medical license, her ability to participate in Medicare and Medicaid programs, her insurance provider contracts, and so on. Even if Dr. Luthra wins the criminal case, the Medical Board can pursue under a lower burden of proof. Further, a qui tam civil lawsuit can be filed.

In other words, a case like this can end or hobble a medical career. For this reason, it is critical to avoid the filing of charges if ever possible. Just the filing of charges starts a chain reaction that makes practicing medicine difficult. Compliance while engaging in marketing or receiving benefits from health care providers or companies is critical. See what the "safe harbor" is when doing marketing in health care. Make sure your practice is compliant and use health care attorneys.

Advice of counsel can be a critical defense in a case. For example, if Dr. Luthra could show that she consulted with an attorney who stated that it was not a violation of law, that could show her good faith and demonstrate that she did not have “scienter” to violate the Anti-Kickback Statute. One of the reasons prosecutors charge defendants like Dr. Luthra with lying to federal investigators is to show that there was knowledge that the conduct was wrong and an attempt to cover it up. Clearly, no one would choose to ruin their medical career over $25,000 in meals and compensation but what everyone was doing in marketing years ago does not pass muster any longer and criminal prosecutions and qui tam cases are being filed with greater frequency.

Posted by Tracy Green, Esq.

Green and Associates

Tracy Green Interviewed About "Blood-Testing Startup Theranos, Inc. Is Trading Blows With the Wall Street Journal"

Legal Broadcast Network recently interviewed Los Angeles attorney Tracy Green, and expert in health care regulatory issues, on the possible outcomes of the dispute between Theranos, a $9 billion valued private biotech company started by Elizabeth Holmes, and The Wall Street Journal.

Theranos is offering a new technology solution to an old problem.  In October, the Wall Street Journal published a report alleging that Theranos’s claims about its transformative diagnostic technology, including needle-free blood tests that yield faster results than industry standard tests, do not hold up. Theranos fired back with a denial, offering a rebuttal to statements in the article and suggesting that the reporter, John Carreyrou, had been trying to “take down” Theranos.

As to the possibility of a libel action against the Wall Street Journal, Green points out that “libel cases are hard to win.” Green is involved in a case involving reporting by John Carreyrou, and she says that he is meticulous in detailing what he does. Green says that an FDA report released this week will affect any decision to sue. The FDA report is a public record, so it would be important in any issue as to the truth of what the Journal printed.

Green also notes that Carreyrou apparently did a good job of cultivating sources—employees and former employees of Theranos. Whether Carreyrou acted in good faith and checked his facts would also be important. Green says that Theranos has been known to be “incredibly secretive.” The company worked in hidden buildings with no indication of what was going on there. Getting information from insiders will be an important consideration, especially if this information tracks with what the FDA reported.

Posted by Green and Associates

Office: 213-233-2260