Wednesday, January 25, 2017

Durable Medical Equipment Supply Owner and Operator Plead Guilty in Case Involving False Statements to Medicare About Inhalation Drugs Being Non-Compounded Drugs

Compounded medications and drugs have been under close scrutiny the past number of years. Claiming a drug is not compounded when it is compounded can be a "false claim" subjecting a business and its owners or managers subject to criminal prosecution and civil penalties. 

A recent case involving a durable medical equipment company and compounded inhalation drugs billed to Medicare shows what can happen where the drugs are not characterized properly on claims forms in order to avoid new billing rules.  

The rule being avoided was that as of July 1, 2007, Centers for Medicare/Medicaid Services revised nationwide policy regarding compounded inhalation solutions. After July 1, 2007, all compounded inhalation solutions were denied as not medically necessary for dates of service on or after July 1, 2007. 

On  December 16, 2016, Larry Carlton Jenkins and Annie Elizabeth Jenkins of Mississippi pled guilty for their roles in a case involving making false statements to Medicare about compounded inhalation solutions. Larry Carlton Jenkins pled guilty to one count of making a false statement relating to a health care matter, while Annie Elizabeth Jenkins pled guilty to one count of committing a misprision of felony.

The guilty pleas arose from business activities when from November, 2009, until August, 2010, Larry Jenkins and Annie Jenkins owned and operated Available Medical Supplies, Inc. ("AMS"), a business which provided medical equipment and compounded inhalation drugs in and around Laurel, Mississippi. 

AMS, as a medical provider, submitted claims for reimbursement to the Medicare program. During the time period charged, AMS, through Larry Jenkins, represented on claims that the inhalation drugs reflected on such claims for reimbursement were non-compounded inhalation drugs. The Jenkins admitted that AMS, after July of 2007, at the direction of Larry Jenkins, continued to compound inhalation drugs but billed Medicare for reimbursement as if they were non-compounded drugs.

Annie Jenkins, the compliance officer, admitted she knew of the false statements being made, failed to notify the appropriate authorities, and took affirmative action to conceal the fraudulent billing.

Larry and Annie Jenkins will be sentenced on March 7, 2017, at 10:00 a.m. by U.S. District Judge Keith Starrett. Larry Jenkins faces a maximum sentence of five years in prison and a $250,000 fine. Annie Jenkins faces a maximum sentence of three years in prison and $250,000 fine.  

This case shows that if a compliance officer or manager knows of fraudulent or false billing but conceals it or fails to notify authorities can be prosecuted as a conspirator or charged with "misprision of a felony" - essentially knowing that someone else is committing a crime and helping conceal it.

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


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