Wednesday, December 14, 2016

New Jersey Woman Pleads Guilty to Role In Medicare Fraud by Clinical Laboratory Billing for Genetic DNA Testing on Seniors Where Healthcare Providers Were Paid for Authorizations

Fraud prosecutions in clinical laboratories are on the rise. Marketing is usually at the heart of these cases. A recent case involving DNA testing shows marketing issues on the patient side and on the referring or authorizing physician side as well as issues of medical necessity. 

One of the reasons that paying outside marketers commissions creates issues is that the health care provider often does not know how the marketer finds the patients or accounts. This case shows how creative outside marketers can be in finding patients and health care providers to earn commissions. 

On December 1, 2016, Sheila Kahl of New Jersey pleaded guilty before U.S. District Judge Anne E. Thompson in Trenton federal court to an information charging her with one count of conspiring to commit health care fraud and one count of conspiring to wrongfully access individually identifiable health information and pay illegal remunerations to health care professionals. Sentencing for Ms. Kahl is scheduled for March 14, 2017.

Ms. Kahl's actions involved an entity known as The Good Samaritans of America which the government alleged was not a true not-for-profit and was a marketing company front to get elderly patients to submit to genetic testing so it could get commission payments from clinical laboratories. 

According to documents filed in the case and statements made in court, from July 2014 through December 2015, Seth Rehfuss, Ms. Kahl, and others used The Good Samaritans of America to gain access to low-income senior housing complexes. Mr. Rehfuss and others claimed that The Good Samaritans of America was a “trusted non-profit” that assisted senior citizens in navigating federal benefit programs. The government alleged that The Good Samaritans of America was a front to present information about genetic testing and they used advertisements for free ice cream to ensure attendance at the presentations.

The government alleged that in order to convince senior citizens to submit to genetic testing, Mr. Rehfuss made presentations to senior citizens indicating they would be vulnerable to heart attacks, stroke, cancer and suicide if they did not have the genetic testing and claimed that the genetic testing allowed for “personalized medicine.” Mr. Rehfuss and others allegedly took DNA swabs in the community rooms where the presentations took place or made arrangements to visit the senior citizen’s apartment on another day to take the DNA swab.

Regardless of the timing or location of the swabbing, it is alleged that the DNA swab was collected without the involvement of any healthcare provider and without any determination by a healthcare provider that such testing was medically necessary or appropriate.  In order to get the tests authorized, the government alleged that Mr. Rehfuss used advertisements on Craigslist to recruit healthcare providers for the scheme. After entering into contractual relationships with The Good Samaritans of America, the healthcare providers received requisition forms that often included a patient’s personal information, Medicare information, medication lists and diagnosis codes.

The healthcare providers were allegedly paid thousands of dollars per month by Ms. Kahl and Mr. Rehfuss to sign their names to requisition forms authorizing testing for patients they never examined and were in no way involved in the patients’ care or treatment. It is also alleged that Ms. Kahl used fraudulent email accounts to access the individually identifiable health information of the senior citizens, specifically the results of the DNA analysis. 

The government alleges that Ms. Kahl, Mr. Rehfuss and others caused the Medicare program to pay more than $1 million to two clinical laboratories. Mr. Rehfuss allegedly obtained over a hundred thousand dollars in commissions from the laboratories and distributed commissions to Ms. Kahl of tens of thousands of dollars. Mr.  Rehfuss was originally charged for his role in the scheme on Dec. 2, 2015 and the pending charges against him are merely allegations, and he is considered innocent unless and until proven guilty. 

The healthcare fraud conspiracy charge carries a maximum potential penalty of 10 years in prison and a $250,000 fine, or twice the gross gain or loss from the offense.  The conspiracy to wrongfully access individually identifiable health information and to pay kickbacks charge carries a maximum penalty of five years in prison and a $250,000 fine, or twice the gross gain or loss from the offense. 

One of the issues will be whether the clincial laboratories knew or should have known that the commissions paid to Mr. Rehfuss violated state and federal anti-kickback laws and whether they knew that there was a lack of medical necessity and that the marketers were hiring the medical providers. This is the type of case that with billing data it is now far easier for the government to see that the physician did not see the patient, did not bill for any visit and leads to a pattern showing lab authorizations where there was no pre-existing physician-patient relationship. 

Posted by Tracy Green, Esq.
Green and Associates, Attorneys at Law
Phone: 213-233-2260


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