San Francisco Acupuncturist Pleads Guilty To Health Care Fraud In False Billing for Union Members for Services Not Performed or Inaccurately Billed.

Federal prosecutors have focused investigations on the billing of labor union members’ health benefit plans especially in places like San Francisco where workers have generous union contracts. A recent case illustrates the types of cases that are being prosecuted.

December 6, 2019, acupuncturist Haichao Huang pleaded guilty to health care fraud, in violation of 18 U.S.C. § 1347, and making false statements relating to health care matters, in violation of 18 U.S.C. § 1035(a)(2), in the Northern District of California. The guilty plea was accepted by the Honorable Susan Illston, U.S. District Judge. 

According to the plea agreement, Mr. Huang was a health care provider who offered acupuncture, physical therapy, massage, and other services to patients in and around San Francisco. From February 2013 through June 2018, Mr. Huang admitted that he submitted and caused to be submitted false claims for reimbursement from health care benefit programs that he knew were not properly payable, including from programs provided through federal government and labor union healthcare plans. 

Mr. Huang's plea admits that he included false and inaccurate billing codes that artificially inflated both the type of service the patient received and the time he spent with the patient. The plea agreement gives examples of the ways in which Mr. Huang submitted false and inaccurate billings for reimbursement. For example, Mr. Huang submitted requests for reimbursement for acupuncture treatment when, in fact, the patient had received much shorter periods of treatment, no acupuncture treatment, or no care of any kind at all. 

Kentucky Cardiologist Sentenced to 60 Months for Health Care Fraud and False Statements Relating to Implanting Medically Unnecessary Stents and Falsifying Degree of Stenosis in Medical Records

Credit: The Daily Independent

On May 2, 2019, well-known Kentucky cardiologist Dr. Richard E. Paulus was sentenced, by U.S. District Court Judge David L. Bunning, to serve 60 months in federal prison for health care fraud and false statements almost three years after his trial and an acquittal by the court that got reversed on appeal. 

In October 2016, a federal jury convicted Dr. Paulus of one count of health care fraud and ten counts of making false statements relating to health care matters, after hearing evidence that he exaggerated what he saw on patients' angiograms and then defrauded Medicare, Medicaid, and private insurers, by implanting medically unnecessary stents in his patients and falsifying the degree of stenosis in their medical records. The case was started by a complaint to the Board about the number of stent surgeries performed and their medical necessity.

After the trial, the district court granted Dr. Paulus’s motion for an acquittal.  The Sixth Circuit Court of Appeals later reversed that decision, on June 25, 2018, and reinstated Dr. Paulus’s conviction, resulting in his formal sentencing. This is very unusual that a district court grants the motion for acquittal and also unusual that the conviction was reversed on appeal.

Federal Charges Can Come From Billing Private Health Insurance: San Francisco Acupuncturist Indicted On Health Care Fraud Charges For Alleged False Billing and Upcoding

We are seeing an increase in investigation of acupuncturists and chiropractors relating to billings to private insurance companies. The charges can result from upcoding, billing on the wrong dates, miscoding and other acts and omissions. There is a difference between fraud and billing errors. Criminal fraud cases require proof beyond a reasonable doubt of an intent to defraud.

Health care providers have often thought that if they are not billing Medicare or Medi-Cal, they will not be the subject of federal investigation. Now that private insurance is subsidized by the government for low income individuals, there is a significant push to investigate these cases. In addition, private insurance companies are submitting the cases for prosecution. One recent case shows what these cases can look like. It also show that coding matters and claim submissions if not accurate can lead to fraud allegations.

On March 7, 2019, a federal grand jury indicted San Francisco acupuncturist Haichao Huang, charging him with health care fraud and making false statements relating to health care matters.  An indictment is not evidence and Mr. Huang is presumed innocent. 

According to the indictment, the government alleges that from February 2013 through June 2018,  Mr. Huang, age 46, was a health care provider who offered acupuncture, physical therapy, massage, and other services at his office in San Francisco.  The indictment alleges that Mr. Huang submitted claims for reimbursement to his patients’ health insurance plans, claiming that he provided reimbursable services and treatments when, in fact, he knew that the billings were false and not properly reimbursable.  

The indictment gives three examples of the ways in which Huang allegedly submitted billings for reimbursement.  First, Mr. Huang allegedly submitted requests for reimbursement for acupuncture and other treatments when, in fact, the patient had received either much shorter periods of treatment or no treatment at all.  This could be an upcoding situation or what is called "ghost billing" (billing for service that was not provided).

Second, after a patient reached the limit of acupuncture sessions allowed by the relevant insurance plan, Mr. Huang allegedly billed the plan for other types of treatments and services that were not provided in order to continue receiving improper reimbursements.  

After Losing At Trial, Mississippi Physician Sentenced to 42 Months in Prison for Role in Prescribing Allegedly Medically Unnecessary Compounded Medications to Patients and for Falsifying Patient Records to Make it Appear He Had Examined Them Before Prescribing

Physicians who consider "telemedicine" or writing prescriptions to patients they have not physically seen or any other unusual arrangement for seeing patients and prescribing medications or supplies should consider a recent case. 

In this case, a 78 year old Mississippi physician, Albert Diaz, M.D., went to trial after the key people in the compounding pharmacy and marketing plead guilty. I often see older or impaired physicians get brought into these arrangements and this case fits the pattern.

On March 2, 2018, after a five-day jury trial, Albert Diaz, M.D. in the Southern District of Mississippi was convicted of one count of conspiracy to commit health care fraud and wire fraud, four counts of wire fraud, one count of conspiracy to distribute and dispense a controlled substance, four counts of distributing and dispensing a controlled substance, one count of conspiracy to falsify records in a federal investigation and five counts of falsification of records in a federal investigation. 

On June 8, 2018, Dr. Diaz was sentenced to 42 months in federal prison and was denied bail pending surrender. According to government evidence presented at trial, between 2014 and 2015, Dr. Diaz participated with others in defrauding TRICARE and other insurance companies by prescribing medically unnecessary compounded medications, some of which included ketamine, a controlled substance, to individuals he had not examined.  The government's trial evidence claimed that, based on the prescriptions signed by Dr. Diaz, Advantage Pharmacy in Hattiesburg, Mississippi, dispensed these medically unnecessary compounded medications and sought and received reimbursement from TRICARE and other insurance companies totaling more than $3 million. 

Southern California Physician Indicted For Illegally Prescribing Controlled Drugs Including to Out-of-State Residents Without an In-Person Physical Examination

The investigations of physicians for prescribing scheduled drugs to patients including Oxycodone, Xanax, Soma and other medications continues. Last week on July 6, 2017, a physician Jeffrey Olsen D.O. was Indicted in the Central District of California, Case No. SA CR-17-76. Dr. Olsen is presumed innocent and an Indictment is not evidence. 

One issue I have with these criminal cases is that in order to "catch" the physicians, the DEA will wait for a year or more to get the "evidence" to support criminal cases. In Dr. Olsen's case, the charges date from 2013 to January 2016. While it is not clear here, most cases I see have the government investigators sending in undercover agents and seeking to get evidence to support the criminal charges. In the meantime, allowing the physician to continue to prescribe. Public safety is being sacrificed to make sure the "criminal" case is as open and shut as possible. 

In Dr. Olsen's case, the DEA went in on or about March 18, 2016 and suspended his DEA registration. There was no arrest or charges at that point in time but I suspect that his charts were seized or reviewed by the DEA.

The Indictment alleges that Dr. Olsen allegedly sold prescriptions to addicts and drug dealers in exchange for fixed cash fees, without any medical basis for the prescriptions. It is also alleged that during the investigation, Dr. Olsen also sold hundreds of prescriptions to addicts in other states, such as Oregon, without ever seeing the “patients” for an in-person examination. 

It is alleged that in text messages to these out-of-state customers, Dr. Olsen allegedly told customers that, in exchange for fees up to $3,000, he would write prescriptions for them. It is alleged that Dr. Olsen let the patients select the medications and that he failed to follow the standard of practice and determine whether they were actually taking the prescribed drugs or whether they were getting additional narcotic prescriptions from other doctors. 

It is alleged that Dr. Olsen's prescriptions resulted in more than 1.2 million pills of narcotics, which were almost entirely at maximum strength, in addition to hundreds of thousands of pills of other controlled drugs such as the sedatives Xanax and Soma. Dr. Olsen was charged with 34 counts of drug related charges under 21 U.S. Code Section 841(a)(1) for "distributing" oxycodone, amphetamine salts, alparzolam and hydrocodone to various patients who are listed by initials in the Indictment. 

One questions why the Medical Board is not used to get an immediate administrative suspensions along with DEA when there is significant evidence of improper prescribing. Is it wise for the government to wait one or two years to "investigate" and build criminal cases just to make sure they can get high sentences against physicians? 

The final count was for a violation of 21 US Code Section 843(a)(4)(A) for making an alleged False Statement in a DEA Registration Application. This relates to Dr. Olsen applying for DEA registration on or about May 23, 2016 and failing to disclose his DEA suspension on March 18, 2016. It is critical for physicians to ensure they do not make any misrepresentations in filling out these forms.

It is not clear if the government offered Dr. Olsen the opportunity to plea or cooperate before Indictment. However, these charges are heavy handed and could expose Dr. Olsen to 20 years' in custody and a mandatory minimum term. I still wonder what would have happened if the conduct had been stopped back in 2013 or 2014.

Posted by Tracy Green, Esq.

Green and Associates

Email: tgreen@greenassoc.com

Office: 213-233-2260