Surrendering a Healthcare or Medical License While Disciplinary Charges Pending Will Get You a Medi-Cal Suspension

When a physician, nurse or any licensed healthcare provider has a state disciplinary proceeding pending, one of the issues that arises is whether they should surrender the license. In order to analyze this issue, one question is whether the person will be working in healthcare in any capacity in the future.

Imagine a case where a licensed physician or nurse decides to stop practicing medicine but still wants to work in healthcare businesses and wants to surrender his or her license while an Accusation is pending.  Another example is where the physician or nurse is not using their New York license and ends up on probation in New York due to being on probation in California and decides to surrender the New York license. What happens to their ability to work at a healthcare business that bills government programs?

Under California Welfare and Institutions Code Section 14043.6 if your healthcare license is suspended while an Accusation is pending (or revoked after a hearing), Medi-Cal will automatically put you on a "Suspended and Ineligible" List on the effective date of the suspension or revocation. If the individual is suspended from Medi-Cal, he or she cannot work, own or operate a business that receives Medi-Cal or Medicare funds in any capacity.

I am seeing more frequently people who surrendered their license and and did not understand that this is one of the harsh penalties of surrendering that is not set forth in the surrender agreement. It also seems some attorneys do not tell their clients that this will happen and the person finds out a year or more later of this consequence after they have been working in healthcare.

We have handled a number of cases in getting people reinstated to Medi-Cal in these situations and it is an unpredictable and long process. In one case, the healthcare provider surrendered one license and had another active one that was not surrendered but the suspension went into effect and jeopardized the ability to work in healthcare. In another case, a nurse surrendered a license while an Accusation was pending and then was not able to work at the healthcare business in which he was a part-owner in any capacity.  We have also handled audits for overpayment where a healthcare provider did business with an entity or person suspended under Medi-Cal.

In sum, in analyzing whether it makes sense to surrender any healthcare license in California, the licensee should understand that a surrender will prevent the person from working in any healthcare facility that takes government funds (Medicare and Medi-Cal) even if the person is not working as a licensed health care provider. Make sure you look at all the angles in making these decisions.

Posted by Tracy Green, Esq.
Green and Associates
Email: tgreen@greenassoc.com
Office: 213-233-2260

Two Florida Owners of Sober Homes and Alcohol and Drug Treatment Centers Plead Guilty for Filing Fraudulent Insurance Claims and Paying Kickbacks for Referrals

Audits of alcohol and drug addiction treatment centers have been on the rise. We have also seen an increase in criminal filings relating to billing for medically unnecessary services and payment of kickbacks for the referral of rehab patients. However, the facts when cases go criminal tend to be ones where there is outrageous conduct.  A recent Florida case fits that profile. 

Although the facts in this case are on one end of the spectrum, alcohol and drug treatment centers need to be very careful about paying marketing fees for the referral of patients, offering patients free or reduced rent at sober homes, paying for patients' insurance, ordering excessive lab tests for patients and any financial arrangements with laboratories.  

On March 15, 2017, Kenneth Chatman and Laura Chatman, owners of sober homes and alcohol and drug addiction treatment centers, pled guilty to one count of conspiracy to commit health care fraud in violation of 18 USC Section 1349 for the filing of fraudulent insurance claim forms and defrauding health care benefit programs. Their plea also included money laundering and sex trafficking conspiracy (the outrageous facts) counts.  

  

According to the plea agreements, Mr. Chatman established a series of sober homes, including Stay’n Alive, Inc., Total Recovery Sober Living LLC, and several other multi-bed residences operating as sober homes in Palm Beach and Broward Counties under his wife's name. These sober home facilities were in the business of providing safe and drug-free residences for individuals suffering from drug and alcohol addiction. 

Mr. Chatman admitted he paid kickbacks and bribes to sober home owners for referring their residents to Reflections Treatment Center LLC in Margate, Florida and Journey to Recovery LLC in Lake Worth, Florida for treatment. Mr. Chatman called these referral payments “case management fees,” “consulting fees,” “marketing fees” and “commissions” but the government viewed them as kickbacks. The referring sober home owners met with Kenneth Chatman on a weekly basis to collect the referral payments, which were based on the number of insured patients that received treatment each week.

Federal Jury Finds Mental Health Facility Administrator Guilty of Kickbacks for Referrals

Payment for recruiting and referral of patients. When is it marketing and when is it an illegal kickback? In a recent case, such payments were viewed as illegal kickbacks. 

On February 14, 2017, a federal jury deliberated after four days of trial and found a former Shreveport mental health facility administrator guilty Thursday of taking part in a kickback scheme. Tom McCardell of Louisiana was found guilty of 14 counts of paying illegal kickbacks. The jury only deliberated approximately four hours before delivering the guilty verdict. 

According to the evidence presented, from July of 2011 to November 2012, Mr. McCardell was the administrator of Physicians Behavior Hospital (PBH) in Shreveport, Louisiana a 24 bed behavioral health hospital. He made payments (viewed as kickbacks) to an Alabama resident, who had no medical training or background, to recruit and refer patients to PBH for psychiatric and substance abuse treatment. 

The hospital would then purchase bus tickets for the patients to travel to PBH in Shreveport. Many of the patients traveled unattended without escort. Mr. McCardell allegedly arranged for the payments to be issued in the name of the patient recruiter’s son which was used as evidence that there was knowledge it was illegal and was done to avoid detection. 

Evidence was also introduced that Mr. McCardell ordered PBH personnel to create an “employee file” in the name of the recruiter’s son in order to provide cover for the  payment (kickback) arrangement. 

Cardiologist Pleads Guilty to Federal Health Care Fraud Charges From 2010 and 2011 for Submitting False Claims and Records

On February 17, 2017, Roy G. Heilbron, a cardiologist practicing in Santa Fe, New Mexico, pleaded guilty in federal court in Albuquerque to a health care fraud charge, Count 4 from his 2015 Indictment. 

Dr. Heilbron's 24-count indictment originally charged him with health care fraud and wire fraud charges for allegedly defrauding Medicare and other health care benefit programs between January 2010 and May 2011 by submitting false and fraudulent claims in the following manner:

1.  Performing and billing for a wide array of unnecessary tests on every new patient and submitting false diagnoses with the billing claims to justify the tests to the insurance plans;

2.  Inserting false symptoms, observations, and diagnoses into patients’ medical charts to provide written support for the tests he ordered or performed;

3.  Inserting photocopied clinical notes, diagnostic test results, and ultrasound images in patients’ medical charts to create a written record of procedures that were either not performed or that had not been sufficiently documented to support the billing;

4.  Submitting the photocopied notes, results, and images to the insurance plans when the plans requested documentation to support the claims submitted;

5.  Submitting claims to health plans for procedures that were never performed;

6.  Submitting claims for procedures performed on two consecutive dates to increase the amount paid for services that were actually rendered together on one single date; and

7.  Misusing billing codes and modifiers in order to increase his rate of reimbursement.