Physicians Performing Work Outside the U.S. Need to Be Careful of IRS and FBAR Rules: Recent Case of Beverly Hills Plastic Surgeon Who Did Procedures in Dubai and Plead Guilty to Failing to Disclose A Foreign Bank Account to the IRS

Physicians have been more likely the past 10 years to travel abroad and perform medical procedures there. Whether it's Russia, Dubai, Mexico, Canada or Korea, two issues to be aware of are reporting the existence of foreign financial accounts and reporting the earnings on a U.S. tax return. 

A recent case shows the perils of not following the Internal Revenue Service (IRS) and foreign bank account reporting rules carefully.

The basic rule on foreign bank accounts is that United States citizens who have an interest in or authority over a financial account in a foreign country with assets over $10,000 are required to disclose and report the foreign financial account to the United States Department of Treasury for each year the financial account exists.

The case study here which all can learn from is as follows. According to the plea agreement filed in this case, Dr. Marc Edward Mani, a Beverly Hills plastic surgeon, began to travel to Dubai in 2011 to perform plastic surgery for a foreign medical center. 

Tennessee Couple and Utah Pharmacy Indicted in San Diego Federal Court for $65 Million TRICARE Fraud Allegations Relating to Compounded Medications Mailed to Active Duty Military

Compounded medication cases continue to be filed by federal and state prosecutors. A case filed two weeks ago in San Diego (a military town) involves recruiting active military duty patients, a Utah pharmacy that shipped compounded medications, and a medical clinic in Tennessee who had doctors prescribe the medications based on telemedicine exams that did not meet TRICARE rules. 

The billing at issue here is solely  TRICARE, a government health care program that covers United States service members, retirees, and their dependents. It is not clear if there was also billing to third party insurance.  

On or about January 26, 2018, Jimmy Collins and Ashley Collins, a married couple living in Tennessee were Indicted and arraigned in San Diego federal court that they illegally billed TRICARE more than $65 million in pharmacy reimbursement funds.

Two Northern California Doctors Face Sentencing in April 2018 After Being Convicted by Jury of Health Care Fraud After 8 Week Trial for Billing for Unperformed Services, Unseen Patients and Other False Billing Statements

Years ago, health care fraud cases would only be brought in extreme cases for ghost billing or outrageous conduct. We are seeing cases involving upcoding the office visit, not adding a physician to the group or not dropping the physician to the group, and for exaggerating conditions. A recent case seems to fit in that profile.  

Two physicians who went to trial and were convicted of some counts are awaiting sentencing. Dr. Vilasini Ganesh, a family practice physician and head of Campbell Medical Group, was convicted of 10 health care fraud and false statements relating to health care matters and Dr. Gregory Belcher (an orthopedic surgeon) was convicted of one count of making false statements relating to health care matters. Both were acquitted of some counts. There was an 8 week trial before the Honorable Lucy H. Koh, U.S. District Court Judge, and sentencing is now set for April 4, 2018 before the same judge.

The government contended that the evidence at trial showed that from 2009 to 2014, Dr. Ganesh submitted false and fraudulent claims to several health care benefit programs for services that she knew were not properly payable, by including claims for days when the patient had not been seen by the provider, exaggerated the amount of time spent with the patient, and submitting claims showing patients were seen by another physician provider who was no longer affiliated with her practice. There was alleged billing when the office was closed or the doctors or staff were out of state.  The government also contended that Dr. Belcher had on at least one occasion submitted a false claim in connection with a billing matter related to his physical therapy practice.  

This case moved relatively quickly since it was in July 2017 that the doctors were indicted by a federal grand jury charging them with one count of conspiracy to commit health care fraud, in violation of 18 U.S.C. § 1349; one count of conspiracy to commit money laundering, in violation of 18 U.S.C. § 1956(h); and multiple counts health care fraud, in violation of 18 U.S.C. § 1347, and 2 and false statement relating to health care matters, in violation of 18 U.S.C. § 1035.   

The maximum sentence is not indicative of what the sentence will be but it still frightens any physician or individual faced with these charges. The maximum statutory penalty for each count in violation of 18 U.S.C. Section 1347 is 10 years imprisonment and a $250,000 fine plus restitution, if appropriate.  The maximum statutory penalty for each count in violation of 18 U.S.C. Section 1035 is five years imprisonment and a $250,000 fine plus restitution, if appropriate.  However, any sentence will be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553. 

I would assume that there may be motions for a new trial, possible appeals and potential resolutions given that the acquittals on the money laundering counts and some of the other counts.

Posted by Tracy Green, Esq.
Green and Associates  

Scripps Health to Pay $1.5 Million to Settle False Claims Act for Services Rendered by Physical Therapists Who Did Not Have Billing Privileges or Were Not Supervised by Authorized Provider

One issue I see happen with medical groups or providers is when physicians or other health care providers are not properly added to the group before they provide services to patients. Often this occurs when the administrators do not ensure it is done and then when it goes to billing, the biller can't use the NPI number of the rendering provider and so they use the NPI of a different provider. This can be a false claim when done this way. 

There are also complexities when a decision is made to bill the service as "incident to" a physician services but the rules here are complex and if not followed correctly that can also be viewed as a "false claim." A recent case show that this can happen at hospitals or large providers as well.

On or about January 19, 2018, Scripps Health (Scripps), a health care system based in San Diego, California, agreed to pay $1.5 million to resolve allegations that it violated the False Claims Act by charging federal health care programs for physical therapy services that were rendered by therapists who did not have billing privileges for these programs and were not supervised by an authorized provider.  The settlement resolves allegations filed in a federal qui tam lawsuit filed by a former employee where the U.S. decided to intervene and join. The settlement is not an admission of wrongdoing. 

  

Medicare and TRICARE (and private insurance and Medi-Cal/Medicaid as well) limit billing privileges to enrolled providers. Services from unenrolled providers can be billed as “incident to” the services of an enrolled physician, but only if the physician provided direct supervision. Direct supervision is quite specific in what falls under it.  

In this civil health care lawsuit dispute, the United States alleged that Scripps billed Medicare and TRICARE for physical therapy services provided by therapists without billing privileges and without the appropriate supervision by a physician. The United States intervened in a whistleblower lawsuit filed by a former Scripps employee.

Suzanne Forrest, a former Scripps employee, filed a federal lawsuit under the qui tam provisions of the False Claims Act (FCA). The FCA permits private individuals to sue for false claims on behalf of the government and to share in any recovery.  The civil lawsuit was filed in the Southern District of California and is captioned United States ex rel. Forrest v. Scripps Health, Case No. 16-CV-0634. As part of this settlement, Ms. Forrest will receive $225,000. 

While the claims resolved by this settlement are allegations only and there has been no determination of liability, this is an expensive lesson for the hospital. It is one that other providers can learn from. Understanding how billing "incident to" is allowed, the scope of "direct supervision," and when providers need to be added to a group or hospital will help prevent civil qui tam lawsuits, audits for overpayment and/or criminal investigations. 

Posted by Tracy Green, Esq.

Green and Associates, Attorneys at Law