Chicago Psychiatrist Who Received Consulting Fees (Now Called Kickbacks) While Prescribing Clozaril to Patients Sentenced to Nine Months in Federal Prison After Qui Tam Lawsuit Settlement

The consulting arrangements between physicians and pharmaceutical companies are being used to support federal qui tam and criminal cases. One case involving a psychiatrist that went criminal after a civil qui tam settlement had some extreme facts but shows how the government is being aggressive in pursuing these arrangements years after they occurred.

While the pharmaceutical companies will be ordered to pay multimillion fines, the government will pursue fines and criminal charges against individual physicians. Big Pharma just pays the fines and doctors who assume that the companies must be following the law will suffer the consequences.
  

A Chicago psychiatrist, Dr. Michael J. Reinstein (age 72), was sentenced on March 9, 2016 to nine months in federal prison for accepting nearly $600,000 in fees and benefits from pharmaceutical companies Teva and IVAX in exchange for prescribing Clozapine to his patients from 2006 to 2011. This was after he pleaded guilty last year to one count of violating the federal Medicare and Medicaid Anti-Kickback Statute for these facts.  

Dr. Reinstein has been a psychiatrist in the Chicago area since 1973, with an office in Chicago’s Uptown neighborhood.  The basis for the guilty plea and sentence was stipulated by the defense in the plea agreement that Dr. Reinstein prescribed the drug Clozaril (the brand-name version of Clozapine) to thousands of elderly and indigent patients in Chicago-area nursing homes and hospitals long after less expensive, generic versions were available, because the manufacturer of Clozaril paid him thousands of dollars to promote the drug at speaking engagements. 

In exchange for his efforts, the pharmaceutical companies provided Dr. Reinstein with consulting fees and entertainment expenses, including meals, tickets to sporting events, and all-expense-paid vacations.  At one point in the early 2000s, Dr. Reinstein was the largest prescriber of the drug to Medicaid recipients in the United States. In these type of cases, it never pays to be #1. 

California Doctor Sentenced to 6 Months in Federal Prison for Defrauding Patients and Insurers by Implanting Unapproved Copper T-380A IUDs

Over the past eight years, we have represented a number of physicians who had inadvertently used Copper T-380A intrauterine devices (IUDs) that were made outside United States and sold by distributors and suppliers here in the United States. Although the cases were being investigated by the State of California, they did not go criminal once it was shown there was lack of knowledge and no deceit.

These cases are still around since the Copper T-380A is one of the world's most used IUDs and it is essentially identical to ParaGard's version but it is the only one authorized by the Food and Drug Administration (FDA) to distribute in the United States. The price in the U.S. for this product is over $200 while in other countries the identical product can be obtained for $20 to $60. In Canada, for example, suppliers were buying them there and distributing in the U.S. 

Internet pharmacies are selling these devices from Canada and Australia in the United States. This is not allowed and even if the product is identical it is not an FDA approved device. This means that when government or insurance programs are billed for IUDs that are not FDA approved, it is not an approved claim or is a false claim.

A physician has learned the hard way what can happen if one is not careful in using devices that are not FDA approved - even if they seem identical.  According to court documents, Dr. Singh bought unapproved IUDs on the Internet and implanted them in his patients after he was warned by the FDA. 

Philadelphia Ambulance Company Employee Sentenced To 37 Months In Prison For Medicare Fraud in Transporting Patients Who Were Ambulatory and Fabricating Documentation

Non-emergency ambulance companies who bill Medicare have been a significant target for the Office of Inspector General across the United States. In these cases, physicians ordered transportation but the government has shown that the ambulance cases knew that the patients were ambulatory. A defendant in a Philadelphia case was sentenced last week.

On March 9, 2016, Fritzroy Brown of Philadelphia was sentenced to 37 months in prison for a healthcare fraud case centering on Brotherly Love Ambulance, Inc.  In addition to the prison term, U.S. District Court Judge Gerald J. Pappert ordered three years of supervised release, restitution in the amount of $2,015,712.52 to Medicare, restitution of $14,150 to the Commonwealth of Pennsylvania, and a $300 special assessment. This sentence was after a guilty plea without a trial.

Mr. Brown was a certified Emergency Medical Technician (EMT) with Brotherly Love.  While employed by Brotherly Love, Mr. Brown allegedly transported patients who were able to walk and could travel safely by means other than ambulance and who, therefore, were not eligible for ambulance transportation under Medicare requirements.  

This case was unusual since the government also charged Medicare beneficiaries with taking payments for riding with the ambulance company and for making false statements to government investigators.

The government alleged that Mr. Brown and other conspirators falsified reports to make it appear that the patients needed to be transported by ambulance when he knew that the patients could be safely transported by other means and, in fact, many of them could walk.  In addition, the government further alleged that Mr. Brown and other conspirators paid kickbacks to patients to ensure that they would use Brotherly Love Ambulance for services which were not medically necessary.  

The company also allegedly transmitted bills for ambulance services for patients who were not transported by ambulance, but whom Mr. Brown and others drove in personal vehicles.  The government further claimed that Mr. Brown and others completed documentation of these transports that made it appear that the individuals had been transported in an ambulance when they had not, and that misrepresented the medical care provided to and safety precautions taken for these patients. 

Court of Appeal Rules In Favor of Defense Challenges to Indictments in Two Orange County Workers Compensation Fraud Cases (Landmark - People v. Ahmed & People v. Charbonnet). Only One Count Left In Ahmed Case and Three Counts Left in Charbonnet Case Unless Prosecutor Resubmits Cases to Grand Jury.

The Orange County District Attorney's Office has been dealt a setback in two workers' compensation fraud cases (known as the Landmark cases) due to amending and adding counts to the Indictments without returning to the grand jury. See the March 10, 2016 decision by the Court of Appeal in People v. Superior Court (Ahmed) (Charbonnet). 

In the Landmark cases -- known as People v. Ahmed (with 3 named defendants) and People v. Charbonnet (which has 12 named defendants), the defenses’ writ to the Court of Appeal has successfully forced the prosecution to have to return to the grand jury if they want to add these additional counts. 

The cases are not dismissed in their entirety but they have been gutted of almost all the individual counts. The Court of Appeal on March 10, 2016 ordered the Orange County Superior Court to vacate its order last year that denied defendants’ motion to set aside the indictment. The Superior Court is now required to issue a new order granting the motion with respect to:

(1) all counts in the Charbonnet indictment except counts 1, 298 and 323; and 

(2) all counts in the Ahmed indictment except count 1 (a conspiracy count to file a false medical claim).  

The court is further directed to, at the prosecutor’s election, order the case resubmitted to a grand jury pursuant to Penal Code Sections 997, 998, and 1009. 

In the federal criminal system, proceeding to grand jury is the usual way to charge a defendant. State district attorney's office rarely go to grand jury and when they do, there are often multiple errors due to the state prosecutors being used to preliminary hearings that allow hearsay evidence, do not require the presentation of exculpatory evidence and other procedural requirements. Prosecutors in multi-defendant fraud cases or complex cases where the defendants are well represented prefer grand juries so the defense attorneys will not have the opportunity to cross-examine the witnesses. 

This short cut does not seem to be serving the prosecutors well in Orange County workers' compensation fraud cases but their office seems to be patient and willing to let the cases take years. The Landmark Indictments are from June 2014. State court judges are also often unfamiliar with the rules governing Indictments and tend to apply the more lax rules governing preliminary hearings and Informations. This is what happened in this case. The details about the original Indictments and the amended Indictments are in the Court of Appeal decision.

Kansas Doctor Charged in Federal Indictment With Prescribing Outside Course of Medical Practice and Unlawful Distribution. Allegation that Patient Died From Methadone and Xanax Prescription. Eight Patients Charged With Unlawful Distribution.

In a recent case, not only is the physician charged but patients as well who obtained Schedule II and III medications and sold them.  This is a new trend in charging both the patients and physicians where there has been diversion of the medications.

A federal indictment unsealed on January 14, 2016 in Kansas federal court alleges a Wichita doctor diverted prescription drugs to the streets, resulting in one of his patients dying from an overdose. Eight people who got prescriptions from the doctor also are charged with unlawfully distributing prescription drugs.

In all cases, defendants are presumed innocent until and unless proven guilty. The indictments merely contain allegations of criminal conduct.

Dr. Steven R. Henson who operated Kansas Men’s Clinic in Wichita is charged with:

Conspiracy to distribute prescription drugs outside the course of medical practice (Counts 1 and 2); Unlawfully distributing oxycodone (Counts 3 through 15); Unlawfully distributing oxycodone, methadone and alprazolam (Count 16); Unlawfully distributing methadone and alprazolam, resulting in the death of a victim on July 24, 2015, identified in court records as N.M. (Count 17); Unlawful possession of a firearm in furtherance of drug trafficking (Count 18); Presenting false patient records to investigators (Count 19); Obstruction of justice (Count 20); and Money laundering (Counts 21 through 31).

The indictment alleges Dr. Henson:

Wrote prescriptions without a medical need;

Wrote prescriptions without a legitimate medical exam; 
Wrote prescriptions in return for cash; 

Post-dated prescriptions; and 

Wrote prescriptions for people other than the ones who came to see him.

The eight patients are named as co-conspirators in some of the same counts as the physician. The counts charged against the physician carry sentence exposure up to a maximum of 20 years.

Southern California Prosecution of More Than Ten Individuals For Billing Medicare for Physical Therapy Services Never Provided

Physical therapy services billed to Medicae are governed by a wide array of rules and regulations. These rules govern ownership, documenting services billed, which services are covered, where the services are provided, payment of referral fees, management arrangements, and every facet of the business. Anyone operating a physical therapy clinic needs to be aware of and compliant with rules and regulations in order to avoid being charged years later with Medicare fraud. 

The U.S. Department of Health and Human Services – Office of Inspector General (OIG) and the U.S. Attorney's Office are aggressively pursuing physical therapy clinics, businesses that provide management and billing for them, and marketers who provide patients to the clinics. Many of the cases being filed now relate to claims submitted years ago. It is not uncommon for charges to be filed right before the expiration of the statute of limitation.

In recent months more than ten individuals have been charged with Medicare fraud relating to physical therapy. A number of these cases include billing massage and acupuncture as physical therapy in the Korean American community which is not covered under Medicare. The cases also involve management arrangements between clinics and other individuals or entites that were billing.

The cases involve numerous clinics in the Los Angeles and Orange County areas. One group of criminal cases revolve around clinics called Rehab Dynamics, RSG Rehab and Innovation Physical Therapy that operated at various locations in Los Angeles and Orange counties. These clinics were allegedly owned and operated by Joseff Sales, a licensed physical therapist, and Daniel Goyena, a licensed physical therapist assistant – who were indicted in October. Mr. Sales pleaded guilty on January 25, and Goyena pleaded guilty on December 17. Both men pleaded guilty to health care fraud and paying illegal kickbacks before United States District Judge Dean D. Pregerson, who is scheduled to sentence them later this year.

California Medical Board Can Subpoena Medical Records From Physicians Even If Patients Object to Production

A recent opinion by the Court of Appeals is an administrative subpoena case that gives additional guidance to doctors and other professionals who have their records subpoened even when the patients or clients object to the production of records. The case is David Fett, MD v. Medical Board of California, No. B262469.

We often see cases where the Medical Board approaches patients and asks them to sign consent forms for records release while telling them at the same time that if they refuse to sign, they will simply subpoena the records. We have also had cases where the "patients" were undercover officers and the records release was simply a way to build a case against the physician.

Our experience has been that the Superior Courts will enforce the subpoenas even against the objection of the patient or where there is a criminal investigation.  This Court of Appeal case confirms that at this time, the courts will not allow patients to prevent the production of their personal medical records where the Medical Board can show good cause.

San Diego MedTech Consultant Pleads Guilty to Defrauding Investors by Selling Fake Stock in Medical Research Company

Health care investment fraud is on the rise. On February 16, 2016, Oceanside businessman Greg Ruehle admitted to securities fraud (15 U.S.C. §§ 78j, 78ff) involving more than 160 people out of investments totaling nearly $2 million. As part of his plea to securities fraud charges, Mr. Ruehle admitted being hired by local medical research firm ICB International, Inc. (ICBI) to identify investors who could fund their research. 

Instead, Mr. Ruehle collected millions of dollars from investors and used the money for his own gambling and other personal expenses.  Mr. Ruehle disguised and concealed his fraud by issuing the investors fake stock certificates and failing to report the purported “investment” to the company. In a parallel action, the Securities and Exchange Commission today announced civil charges against Ruehle.  

In 2015, some of the investors asked for proof that their money was being used at ICBI.  In response, Ruehle sent them a letter on what appeared to be company letterhead, and purportedly signed by the company’s CEO.  In fact, the letter was a forgery, which was borne out by the fact that Mr. Ruehle misspelled the CEO’s name.  

ICBI remained unaware of these “investors,” and never received a penny of their $1.9 million investments. San Diego-based ICBI’s mission is to develop technologies to transport therapeutic treatments through the blood-brain barrier to treat neuro-degenerative diseases like Parkinson’s and Alzheimer’s disease.  Mr. Ruehle’s plea agreement requires that he forfeit the $1.9 million in proceeds and pay restitution to the victim investors.

Health care businesses and investors need to be vigilent about due diligence when investing in health care businesses. We have seen many investment disputes which were not properly documented and investors were not properly issued shares.