San Joaquin County Doctor Convicted of Prescribing Opioids Without Medical Necessity to Patients in Federal Court

The problem with physicians prescribing opioid drugs to patients where there is not a proper medical and prescription history taken, lack of a proper medical examination to confirm the legitimacy of patients' pain complaints, and failure to assess the risk of addiction issues continues. 

On November 19, 2021, Dr. Edmund Kemprud, age 78, was convicted in Sacramento  federal court of 14 counts of illegally prescribing opioids and other controlled substances to patients. As is common in these cases, undercover officers went to his office in order to obtain evidence that would substantiate the charges. Usually pain medication patients do not want to testify against their physicians so undercover operations are common. 

According to evidence presented at trial, Dr. Kemprud was a physician licensed to practice medicine in California and worked in several locations around the East Bay and Central Valley. One of the more inflamatory allegations was that one of the offices was in the back room of a nail salon and medi-spa in Tracy, California. 

Dr. Kemprud prescribed commonly abused prescription drugs, including Hydrocodone, Alprazolam, and Oxycodone. The government introduced evidence that certain prescriptions were outside the usual course of professional practice and not for legitimate medical purpose. 

The government introduced evidence at trial showing that Dr. Kemprud ignored "red flags" which are indications that his patients were addicts or that they were diverting the drugs during the undercover patient visits. Dr. Kemprud charged $79 a visit and the evidence was that he often spent less than five minutes with a patient and would see 30 patients in less than a day. In family practice, those numbers are not unusual for follow up visits but when prescriptions for serious pain medications are being written -- a more extensive visit is expected.

Healthcare Partners (a Medicare Advantage Provider) to Pay $270 Million To Settle False Claims Act Liabilities

It is not only health care physicians, hospitals, medical groups, laboratories and other companies that can get sued in qui tam cases. Recently a California-based independent physician association reached a settlement in a false claims act with the government. 

The settlement came after a voluntary disclosure. While the voluntary disclosure is expensive, in the long run it is much more effective and helps ensure that the provider will not be excluded from Medicare. This settlement also resolves a whistleblower lawsuit. The claims resolved by the settlement are allegations only, and there has been no determination of liability.

HealthCare Partners Holdings LLC, doing business as DaVita Medical Holdings LLC, agreed to pay $270 million to resolve its False Claims Act liability for providing inaccurate information that caused Medicare Advantage Plans to receive inflated Medicare payments. DaVita is headquartered in El Segundo, California.

California Pharmacy Pays $75,000 Settlement for Failing to Keep Accurate Records of Controlled Substances Inventory

As part of the Drug Enforcement Administration's (DEA) increased enforcement on prescription addiction and prescribing, pharmacies are facing an increased number of inspections and audits on their inventory and recordkeeping. 

Recently, in June 2018, a pharmacy in Lakeside, California known as Archana Corporation doing business as Leo’s Lakeside Pharmacy and its owners paid $75,000 to resolve allegations that they failed to properly account for controlled substances. This is a civil settlement but it can also raise issues with the Pharmacy Board. 

Failure to comply with DEA rules and regulations can result in fines or loss of DEA permit. Schedule II prescription and inventory records must be available for two years. It is always a good idea for pharmacies to review their procedures and ensure that these records are being maintained properly since an audit can turn into an expensive and time-consuming dispute with the DEA and create collateral issues with the Pharmacy Board. 

Posted by Tracy Green, Esq.

Green and Associates

Philadelphia Personal Injury Law Firm Agrees to Start Compliance Program and Reimburse the United States for Clients’ Medicare Debts

Medicare is watching personal injury settlements and seeking to hold personal injury lawyers responsible for Medicare liens on settlements or judgment proceeds. 

On June 18, 2018, a Philadelphia personal injury law firm, Rosenbaum and its Associates, and its principal  entered into a settlement agreement with the United States to resolve allegations that they failed to reimburse the United States for certain Medicare payments the government had previously made to medical providers on behalf of firm clients who sought medical care.

The government’s investigation arose under the Medicare Secondary Payer provisions of the Social Security Act, which authorizes Medicare, as a secondary payer, to make conditional payments for medical items or services under certain circumstances. When an injured person receives a settlement or judgment, Medicare regulations require entities who receive the settlement or judgment proceeds, such as the injured person’s attorney, to repay Medicare within 60 days for its conditional payments. If Medicare does not receive timely repayment, these same regulations permit the government to recover the conditional payments from the injured person’s attorney and others who received the settlement or judgment proceeds.

Northern California Pain Management Doctors Agree To Pay $260,000 To Settle Civil Claims Following DEA Inspection Regarding Adequacy of Controlled Substances Records

Drug Enforcement Administration (DEA) inspections can have significant financial repercussions if the logs and records of controlled substances are not properly maintained. A recent case illustrates how this happens and is a reminder for practices and pharmacies to be sure their business is compliant in this regard.  

In January 2014, the DEA inspected the controlled substance ordering and dispensing records relating to Pain Medicine Consultants, Inc., a medical practice which had offices in multiple Bay Area locations (Novato, Pleasant Hill, and Pleasanton). 

The government alleged that the DEA inspection uncovered multiple violations of the Controlled Substances Act, 21 U.S.C. § 801 by the practice and the physicians in the group who have the DEA registrations. The government specifically alleged that between January 10, 2012, through January 17, 2014, the medical practice and the physicians failed to:

(1) keep and maintain adequate records pertaining to controlled substances, as required by 21 C.F.R. § 1304, et seq.; 

CVS Pharmacy Inc. Pays $5 Million to Settle Alleged Violations of the Controlled Substance Act in Sacramento Federal Case

As is the norm, national chain pharmacies get fines and compliance plans while small businesses get criminally prosecuted. A recent settlement between the Department of Justice and Drug Enforcement Administration (DEA) with a national chain pharmacy is no different.

On or about July 5, 2017, CVS Pharmacy Inc. agreed to pay $5 million to resolve federal Controlled Substances Act (CSA) allegations that its pharmacies in the Eastern District of California failed to keep and maintain accurate records of Schedule II, III, IV, and V controlled substances. This payment covered only one federal court district. 

CVS also agreed to an administrative compliance plan with the DEA. The payment and plan resolve the United States’ allegations that during the period from April 30, 2011, through April 30, 2013, CVS pharmacies failed to provide effective controls and procedures to guard against diversion when CVS allegedly failed to:
(1) record the amount received and the date received of Schedule II drugs on DEA-222 Forms;
(2) maintain DEA-222 Forms and keep them separate from other records;
(3) record the date of acquisition of controlled substances in Schedules II through V; and
(4) maintain invoices for drugs in Schedules III through V and keep the records separate from non-controlled substance records; and conduct a biennial inventory on one specific day.

Under the settlement reached July 5, 2017, CVS acknowledged that its DEA-registered pharmacies were and are required to comply with the CSA, and that nine CVS pharmacies in the Eastern District of California failed to fulfill these recordkeeping obligations in a manner fully consistent with CVS’s responsibilities under the CSA. The settlement and compliance plan cover the 168 CVS pharmacies that operated in the Eastern District of California from April 30, 2011, through April 30, 2013.

The allegations resolved by this settlement were uncovered during a DEA investigation that began in 2012 after CVS self-reported thefts and losses of hydrocodone, a Schedule III drug at the time, at five of its Sacramento-area pharmacies. Under the CSA, DEA-registered pharmacies are obligated to report any thefts or significant losses of controlled substances to DEA.

On the compliance side, to address the issues uncovered by this investigation, CVS made improvements to its pharmacies in the Eastern District of California by, among other things, instituting annual CSA compliance training of its pharmacy staff, increasing loss prevention oversight, and excluding controlled substances prescriptions from the volume metric that can impact pharmacy staff compensation.

All non-chain pharmacies can learn from this compliance plan and how record keeping issues can result in large fines. It's especially critical for non-chains since they can get their DEA pulled and even criminal prosecution.

Posted by Tracy Green, Esq.

Email: tgreen@greenassoc.com

Office: 213-233-2260

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

California Facilities Owned By Rideout Health to Pay Civil Monetary Penalties and Agree to 3-Year Compliance Plan to Resolve Controlled Substance Act Claims

The Drug Enforcement Administration (DEA) is becoming more aggressive about enforcing recordkeeping and other rules for controlled substances in hospitals, surgery centers, urgent care clinics and so on. We have handled audits by the DEA and fines are a significant part of their enforcement. A recent case shows what can happen to health care facilities when the recordkeeping rules are not followed. This case also shows that even with cooperation the fines can be significant.

On December 6, 2016, Rideout Health entered into a settlement agreement in which it will pay the United States $2,425,000 to settle the federal claims of alleged violations of the Controlled Substances Act including record keeping. The alleged violations were by three of Rideout Health’s facilities in Yuba and Sutter Counties: Rideout Memorial Hospital, Fremont Medical Center, and Feather River Surgery Center. There were no allegations of diversion or improper prescribing. 

This settlement arises from a DEA investigation that began after DEA received information from the California State Board of Pharmacy that Fremont Medical Center’s DEA Registration had expired, and that from October 23, 2012, to October 23, 2014, pharmacy technicians at Rideout Memorial Hospital were transporting controlled substances between Rideout Health facilities with little or no security controls in place.

In addition, Rideout Health has agreed to a three-year compliance plan. The payment and plan resolve the United States' claims that the three Rideout Health facilities failed to properly record and maintain thousands of transactions involving controlled substances in violation of the Controlled Substances Act and its implementing regulations.

The settlement also resolves the United States’ contention that the system Rideout Health used during that time to distribute controlled substances between these facilities failed to provide sufficient security controls. 

There was a lot of cooperation here once the investigation began. Rideout Health worked with the DEA and the United States Attorney’s Office to develop a detailed compliance plan to address the deficiencies in Rideout Health’s handling of controlled substances. 

Rideout Health also took proactive steps to reorganize its Compliance Department to improve controls with respect to the purchase, storage and dispensing of controlled substances. The compliance plan with the DEA is designed to advance Rideout Health’s ability to meet its record keeping requirements and enhance its ability to detect and prevent drug diversion. These are the type of actions that begin once any entity becomes aware of an investigation. Being proactive is very important and does not indicate weakness or constitute an admission of wrongdoing. It is just good practice.

Posted by Tracy Green, Esq.
Email: tgreen@greenassoc.com
Green and Associates, Attorneys at Law

California Registered Nurse Who Ordered Botox From Canadian Company Via Internet for Medical Spa Pleads Guilty to Federal Charge of Receipt and Delivery of a Misbranded Drug

One important issue for all medical providers is to understand where FDA medications and injectables come from. Ordering on the Internet or from unauthorized distributers can create serious legal issues, including criminal charges, license discipline and in cases where insurance or Medicare/Medi-Cal (Medicaid) has been billed there will be demands for overpayment and allegations of fraudulent billing.

A registered nurse who owned and operated a day spa in Laguna Niguel, California has learned this lesson the hard way. This month she agreed to plead guilty to a federal charge related to the illegal distribution of Botox that was not approved for use in the United States.  

Bridget “Gigi” Goddard, who allegedly owned Pure Indulgence Skin Rejuvenation in Laguna Niguel, has agreed to plead guilty to one count of receipt and delivery of a misbranded drug, a crime that carries a statutory maximum penalty of three years in federal prison. It would be highly unlikely she would receive the maximum but it is a felony and will likely have license repurcussions.

Lesson of the Case. The issue is often whether there is criminal intent and there have been thousands of physicians purchasing. How is that shown? One way is whether the individual received a letter from FDA about it and continued to order from other countries.  FDA has been transparent about notifying medical providers about illegal use of Botox and other medications from outside the U.S. On the FDA website there's a list of medical providers who were notified from 2013 to the present and there's a list of "repeat offenders." Ms. Goddard unfortunately was one of those listed as having been notified in 2013 and apparently still used product from outside the U.S. The undercover agent was key in her case. 

Government Has List of Providers Who Bought From SB Medical, Inc., TC Medical and Gallant Pharmaceutical. This case comes out of a larger federal case against SB Medical that was filed in Alexandria, Virginia against SB Medical, Inc. and its principals. In that case, the company plead guilty and was ordered to pay a $45 million fine and to forfeit $30 million for smuggle misbranded pharmaceuticals into the United States. The government sent letters to medical clinics and medical spas who had bought Botox and other injectables from SB Medical, Inc. and other companies under investigation and then followed up with them. Other entities that were also prosecuted include Gallant Pharmaceutical. 

Allegations Against Ms. Goddard. The government alleged that the Botox that Ms. Goddard purchased had been manufactured for distribution in foreign nations such as Turkey and was not approved by the FDA for distribution in the United States. All Botox products approved for distribution in the United States by the United States Food and Drug Administration are manufactured by Allergan and must be administered under the supervision of a licensed physician. 

Ms. Goddard admitted in her plea agreement that, over the course of several years, she ordered Botox over the internet from Canadian companies that sold unapproved drugs to customers in the United States. In April 2016, the government send an undercover FDA agent to Pure Indulgence which compounded Ms. Goddard's legal issues.  The government alleges that at this undercover visit, Ms. Goddard told the undercover agent that the undercover agent did not need to be examined by a physician before the Botox injections were administered, and she knowingly misled the agent as to whether the Botox was approved for use in the United States.

Ms. Goddard is scheduled to make her first appearance in this case in United States District Court in Santa Ana on December 12. The investigation into Goddard was conducted by FDA’s Office of Criminal Investigation. The case is being prosecuted by Assistant United States Attorney Scott D. Tenley of the Santa Ana branch office.

Attorney Commentary. The high price of Botox and other injectibles have caused entrepreneurs to buy overseas and sell in the U.S. in person or through the Internet. The salespersons represent that the product is the "same" but often that is not the case. In addition, even if the product were Allergan from overseas - if the drugs are not distributed by Allergan and sold in the U.S., it is illegal to import the products from outside the U.S. One of the reasons is that there are counterfeiters who repackage, are not using real product, and the chain of custody is not guaranteed. In addition, there is product liability insurance in the U.S. that is not available for products purchased from outside the U.S. 

While the pricing structure of pharmaceuticals and medical devices may not seem fair, it is the law and medical providers must be careful and instruct office managers and nurses to order from the manufacturer or authorized distributors. If there is an investigation or visit by an FDA agent, it is important to not handle this alone and seek experience counsel since mistakes during an interview can have serious repurcussions.

How do you prevent an FDA investigation from turning into a criminal case? The government looks for criminal intent. The FDA had been heavy handed in some cases and was even named the Botox Police. Allergan had its own financial interest in pursuing charges. 

Tips. First, if there is an interview request -- and trust me, the agents do not call for an appointment and simply show up in pairs -- be polite and ask for time to have an attorney present and so you can gather all your records and prepare for an interview (or decide not to be interviewed depending on the facts). 

Second, do not lie. Do not fabricate records. Do not ask anyone else to lie or fabricate an invoice. This is what the government loves - when someone panics and acts like a foolish teenager and lies without thinking - since it shows "criminal intent." 

Third, do not minimize the importance of these investigations and attempt to handle it on your own. When you are stressed, part of your brain shuts down and at the time of the interview, the FDA or other goverment agency knows a lot more facts than you.

Finally, each case is different and there could be an additional 10 tips but it will be case specific. Even chain pharmacies have counterfeit and fake drugs and over the counter medications. Counterfeiting is a huge business. Be smart and breathe, take your time to get experienced representation and prepare for an interview like you would anything else.

Posted by Tracy Green, Esq.

Green and Associates, Attorneys at Law
Email:  tgreen@greenassoc.com
Office: 213-233-2261

Dallas Compounding Pharmacy and Three Individuals Agree to Consent Decree With Permanent Injunction to Prevent Distributing Adulterated Drugs

Compounding pharmacies have been under scrutiny, and a recent case shows the difficulties compounding pharmacies are having complying with recent changes in the law and regulations. Compoung pharmacies are also under scrutiny due to billing issues with insurance which has also put them under the spotlight.  A recent case shows what happens when retail pharmacies engage in compounding with regulation by the state and what happens when the U.S. Food and Drug Administration (FDA) alleges the drugs are adulterated.

There are some hot issues on new compounding regulations and how they affect the Compounding Quality Act signed into law in 2013 and the FDA's increased audits and inspections of outsourcing facilities or pharmacies who may not be properly classified. Compounding pharmacies are having issues in determine whether they fall within the 503A and 503B rules and are complying with the federal regulations.

The U.S. District Court for the Northern District of Texas entered a consent decree on January 11, 2016, for permanent injunction against Downing Labs LLC, Ashley Michelle Downing, Christopher Van Downing and Roger E. Mansfield to prevent them from distributing adulterated drugs in interstate commerce.

Downing Labs was a state pharmacy regulated by the state. When Downing was named in a news investigation of having billed for compounding creams and gels not delivered to patients, they became a target of investigation. In addition, Downing decided to obtain FDA approval as an outsourcing facility and after inspection did not agree to recall drugs as demanded by the FDA.

In Home Personal Care Worker Agency and Owners Agree to Civil Resolution of Federal False Claims Case in Wisconsin - Why Health Care Providers Need Compliance Plans

There has been an increased number of lawsuits filed under the qui tam – or whistleblower – provisions of the False Claims Act, which allows private citizens with knowledge of health care fraud on the state or federal government to bring a civil action on their behalf. These cases can also involve claims submitted to state Medicaid programs (Medi-Cal in California) since they are in part federally funded. 

I discuss below how to develop compliance programs so a health care provider can show that there are no "false claims" and reduce the risk of having a lawsuit filed against them. False claims are not claims that were negligent or mistakes. Instead, false claims only cover claims that were submitted with deliberate knowledge of the falsity of the claim or deliberate ignorance of the falsity of the claim. Compliance programs - even modest ones - help prevent a whistleblower from claiming that there was deliberate knowledge or ignorance. 

A recent case that was settled involved claims submitted for personal care worker services to the Wisconsin Medicaid Program. In California, this is known as the IHHS (In Home Supportive Services). The private citizen whistleblower alleged that Atlas Healthcare, Inc., and its owners, Deana Bajanen and Sheena Jones knowingly submitted false claims for personal care worker services to the Wisconsin Medicaid Program for patients that did not need the services or did not need the level of services for which Atlas billed the Medicaid program. Atlas is located in Wisconsin. 

Nurse Practitioner Bill Suffers A Setback in California

Nurse practitioners in California suffered a setback in their ability to practice independently of physicians if they are part of a medical team such a clinic or group practice. On August 30, 2013, Senate Bill 491 (Hernandez), which would remove patient barriers to health care services by permitting nurse practitioners in California to practice to the full extent of their training and expertise was held in the Assembly Appropriations Committee. The bill was not voted upon and will not move during this legislative session. The California Medical Association vigorously opposed this bill. The Los Angeles Times' article on SB 491 provides more background on the lobbying and issues present. 

Under current law, NPs have a difficult time providing services at the point of care because of requirements for physician approval to initiate or continue care that patients need.  This bill would increase autonomy for NPs to be able to provide this care. The California Association for Nurse Practitioners viewed SB 491 as especially important with the coming implementation of the Affordable Care Act, and the expected influx of up to 7 million new patients into the health care delivery system in California. The Los Angeles Times wrote an article indicating that this is a step in the right direction.

The argument in favor of the bill was that NPs would not be performing outside of their level of education and training, but would be utilized to their full practice potential without the archaic and restrictive barriers that prevent patients from receiving high quality, effective care. In addition, 18 other states and the District of Columbia permit autonomous delivery of primary care services by nurse practitioners.  

We can expect to see a revised bill presented next year regarding expanding the use of nurse practitioners in clinic and group practice settings.

Posted by Tracy Green, Green and Associates, Attorneys at Law

You can reach Ms. Green at tgreen@greenassoc.com or 213-233-2260

How Do I Get Reinstated To OIG For Medicare After My Exclusion Period Has Ended?

One of the frequent issues we handle is OIG exclusion following a conviction for health care related offense.  An OIG exclusion bars a health care provider from working with any provider that received any federally funded program funds. For example, if an individual received a 5 year OIG exclusion, he or she cannot work as an employee, independent contractor or volunteer for any Medicare provider with some very limited exceptions for that time period. However, after the 5 year period it is important to know that reinstatement is NOT automatic.

We have assisted clients over the years with their OIG reinstatement. Here are a couple of facts to know. First, there is no way to obtain early termination of the exclusion time period once it has been effective. If you received an OIG exclusion notice, it is important to submit information at that time to help make sure that the period will not be longer than the minimum 5 years. If you fail to submit information at that time, you will not be able to do it later. The only exception is for emergency services. There is an appeal process.

For example, OIG sent a notice to one of our clients that because a former owner was excluded by OIG, that entity was going to be excluded. We submitted proof that the entity had been sold, that the former owner was no longer involved and that the entity should not have been excluded. If that information had not been provided within the first 30 days, then the entity would have been excluded and lost its right to appeal. Thus, if there is an exclusion letter received, act on it right away.

Second, if you have been excluded, you can begin the reinstatement process 90 days before your exclusion period is to end. If we send the reinstatement package before that date, it will not be considered.

Third, there are a number of factors that OIG considers in determining reinstatement. One of them is whether you have been providing services to Medicare providers during your exclusion period. This also includes management and administrative services. There will be a request for information as to all places you have worked and or provided services. OIG also conducts a background check. 

Fourth, remember that in California even if you are reinstated by OIG, you also have to seek reinstatement from the Medi-Cal program. When Medi-Cal issues a suspension following a conviction, it is lifetime and you must seek to be reinstated. It is best to start this process after you have been reinstated by OIG as that is an additional ground for lifting the suspension.

This is only a starting point but it is important to remember the rules regarding OIG exclusion. If an OIG excluded provider works with any Medicare or Medi-Cal provider, that provider will be strictly liable for having to repay those funds. It can also subject the excluded provider to civil penalties.

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

Adventist Health and White Memorial Medical Center In Los Angeles Pay $14.1 Million to Resolve False Claims Act Allegations Involving Physician Referral Payments

On May 3, 2013, a qui tam federal lawsuit filed by Los Angeles physicians Hector Luque and Alejandro Gonzalez was settled with Adventist Health System/West, dba Adventist Health, and its affiliated hospital White Memorial Medical Center. 

The qui tam lawsuit was originally filed in June 2008 under seal in the Eastern District of California. Negotiations have been ongoing for some time, and on May 3, 2013, the United States and the State of California intervened on the day the settlement was announced and the lawsuit was unsealed. The lawsuit is captioned U.S. ex rel. Hector Luque et al. v. Adventist Health et al. USDC Case No. 2:08CV1271 (E.D. Cal.). 

Under the terms of the settlement, the have agreed to pay the United States and the State of California $14.1 million to settle claims that they violated the False Claims Act. The Justice Department announced the settlement.  Adventist Health is headquartered in Roseville, Calif., in the Eastern District of California, and operates 19 hospitals and over 150 clinics in California, Hawaii, Oregon and Washington.  White Memorial Medical Center is a teaching hospital located in East Los Angeles (Boyle Heights) with a significant percentage of patients on Medi-Cal and Medicare, and it is the focus of the lawsuit.

The settlement resolves allegations that White Memorial improperly compensated physicians who referred patients to the White Memorial facility by transferring assets, including medical and non-medical supplies and inventory, at far less than fair market value.  The lawsuit alleged that lines of credit to physicians were not paid back. Additionally, Defendant White Memorial allegedly paid referring physicians teaching stipends at its family practice residency program for those who referred patients above fair market value the complaint alleged that, in contrast, those physicians who received patient referrals from the hospital, such as Ob-Gyns, did not receive any teaching stipends.

The United States alleged that these payments violated the Anti-Kickback Act and Stark Statute, and by extension, the False Claims Act.  Approximately $11.5 million of the settlement will be paid to the U.S. Government, most of which will benefit the Medicare Trust Fund.   The remaining $2.6 million will be paid to California’s Department of Health Care Services.  The two physician whistleblowers in this case will collectively receive $2,839,219 of the recovery. 

As part of the settlement, White Memorial has entered into a comprehensive five-year Corporate Integrity Agreement with the Office of Inspector General of the U.S. Department of Health and Human Services to ensure its continued compliance with federal health care benefit program requirements.

This case shows the important of having loans, stipends, purchases and other business arrangements by physicians and health care providers reviewed by counsel. At least if the agreements have been reviewed and cleared by counsel, any potential issues can be flagged in advance and it can help avoid qui tam or criminal investigations since there is the defense of reliance on the advice of counsel.  

Posted by Tracy Green, Esq. Please email Ms. Green at tgreen@greenassoc.com or call her at 213-233-2260 to schedule a complimentary telephonic or in person consultation.  

Any questions or comments should be directed to Tracy Green an experienced physician attorney, health care litigation attorney, and health care fraud attorney. The firm website is: http://www.greenassoc.com/ 

Court of Appeal Upholds Utilzation Controls On Psychology Services Provided By Community Mental Health Clinic

In a setback to community health and the State of California's attempts to handle its budget issues by cutting back services to those most in need, a recent Court of Appeal decision, Mendocino Community Health Clinic v. State Department of Health Care Services, upheld utilization controls imposed by the Department of Health Care Services on psychology services at the rate of two visits per month an outpatient to a community mental health clinic. The Third District Court of Appeal ruled that this regulation does not violate the federal Medicaid Act.

The statute at issue is Welfare and Institution Code Section 14132(a) which provides that Medi-Cal, which implements the federal act, will cover outpatient psychological services rendered at a federally-qualified health center (FQHC) “subject to utilization controls.” The Department then adopted a regulation limiting Medi-Cal coverage of psychology services to a maximum of two per month.

After the two-visit-per-month regulation was adopted, Medi-Cal told the Mendocino clinics it would not reimburse them for more visits than that for fiscal years 2003-2004 and 2004-2005. The clinics sought administrative review in the Sacramento County Superior Court and won at that level by ruling that that as a “federally-qualified health center” under the act, it was entitled to payment for all necessary treatment rendered to its Medi-Cal patients.

The clinics argued that the regulation limiting payment was intended to address overbilling by individual practitioners, not by federally-qualified health centers, or FQHCs, which have a special status under the Medicaid Act. They also argued that they provide “core services” that must be paid for by Medi-Cal under federal law.

The Department appealed. The Court of Appeal overturned the Superior Court and ruled in favor of the Department. The Opinion reasoned that although federal law  requires full reimbursement for core services provided by FQHCs, it does not preclude states from enacting utilization controls in limiting the number of such visits.  

In sum, the Department cannot pay less than 100 percent of reimbursement but it can impose utilization controls. The fact that the federal legislation did not address utilization controls one way or the other was a significant factor in the Court of Appeal's opinion. 

For the mentally ill, limiting services to two per month regardless of the severity or need for treatment is contrary to the intent of federal law. 

Posted by Tracy Green, Esq., a Medi-Cal attorney in Los Angeles, California. 

Tracy Green Quoted On Physician Accused Of Second Degree Murder And Excessive Prescribing Due To Accidental Overdoses by Patients

Tracy Green was quoted in the Los Angeles Times regarding her newest former physician client who pleaded not guilty to all counts (including second degree murder and excessive prescribing) on Friday, September 27 before Judge Schnegg. The article entitled "RowlandHeights Physician Charged With Murder Pleads Not Guilty" states as follows:

"Tracy Green, a Los Angeles attorney who recently began representing Tseng, said she is "extremely confident" her client will be acquitted."

"This isn't a murder case," Green said. "In America, we believe in personal responsibility.... When [Tseng] prescribed these medications to the three patients at issue, they … had their own agenda, which was to seek drugs."

For more information, feel free to contact Tracy Green at tgreen@greenassoc.com or at her office at 213-233-2260. The firm's website also has additional information about her and her firm. 

Giftcards To Patients: Walgreens Pays $7.9 Million To Settle Lawsuits That Its Giftcards Were Kickbacks To Illegally Induce Transfer Of Prescriptions To Its Pharmacies

Have you ever seen a chain pharmacy's offer that if you transfer a prescription, you will receive a $25 gift card for use at their store? I have and I always wondered how their legal counsel could have signed off on that proposal given that if one of my non-chain pharmacies had ever given a gift card for $25 to patients, they would have been charged criminally. 

The difference between large chains and small providers is that large chains usually have legal opinions that help prevent criminal prosecutions and the ability to pay large fines. This is what happened to Walgreens.

On April 20, 2012, Walgreens, the largest drugstore chain in the nation, paid the United States and participating state governments $7.9 million to settle allegations that it paid kickbacks to illegally induce the transfer of prescriptions to its pharmacies. The settlement was announced on April 20 when the federal and state governments learned that federal judges had unsealed allegations contained in two “whistleblower” or qui tam lawsuits filed against Walgreens by two Walgreens employees. The federal lawsuits were filed in Los Angeles and Detroit.

The settlement resolves allegations that Walgreens illegally offered gift cards and other incentives as kickbacks to customers covered by government-funded health insurance programs to induce the transfer of prescriptions from other stores to its pharmacies. As part of the settlement, Walgreens did not admit wrongdoing.

The federal and state governments contended that these gift cards and incentives were "kickbacks" which resulted in the governments paying for unneeded prescriptions, small-business pharmacies unfairly losing customers to Walgreens, and patients making decisions based upon monetary incentives rather than legitimate health care needs. 

Commentary: One way that some pharmacies have attempted to ensure that such promotions do not violate state and federal law is to limit it to cash or private pay insurance and not allow any Medicare or Medi-Cal/Medicaid patients to receive any gift cards or incentives for transferring prescriptions. However, mistakes can be made and it is not clear what policies and procedures Walgreens had in place. Other chain pharmacies like CVS have had such programs as well but for smaller pharmacies or health care providers, it is critical that any such incentive programs be reviewed by health care counsel before being offered to any potential patients. 

Posted by Tracy Green, Esq. Please email Ms. Green at tgreen@greenassoc.com or call her at 213-233-2260 to schedule a complimentary 30-minute consultation.  

 Any questions or comments  should be directed to Tracy Green, a very experienced health care fraud attorney and civil qui tam defense attorney at tgreen@greenassoc.com. The firm focuses its practice on the representation of licensed professionals, individuals and businesses in civil, business, administrative and criminal proceedings. They have a specialty in representing licensed health care providers in white collar criminal and civil qui tam matters in California and throughout the country. Their website is: http://www.greenassoc.com/

Reminder For All California Physicians: Beginning June 27, 2010 Your Office MUST Provide Notices Or Post Signs Informing Patients Of Medical Board's Contact Information

Beginning June 27, 2010, all of the State of California's physicians must provide notices or post signs stating the following: "Notice to consumers, medical doctors are licensed and regulated by the Medical Board of California, (800) 633-2322, www.mbc.ca.gov."

This is a new regulation (Title 16, California Code of Regulations section 1355.4), mandated by California Business and Profession Code Section 138. The purpose of this new requirement is to inform consumers where to go for information or with a complaint about California medical doctors. There are 3 ways that physician may provide this notice as described below.

Physicians may provide this notice by one of three methods:

(1)  Prominently posting a sign in an area of their offices conspicuous to patients, in at least 48-point type in Arial font.  This will be the easiest method and least paperwork intensive. You can cut and paste the notice below, make sure it is in the proper font and frame it in the office. 

(2)  Including the notice in a written statement, signed and dated by the patient or patient’s representative, and kept in that patient’s file, stating the patient understands the physician is licensed and regulated by the board.

(3)  Including the notice in a statement on letterhead, discharge instructions, or other document given to a patient or the patient’s representative, where the notice is placed immediately above the signature line for the patient in at least 14-point type.

The information must read as follows:

NOTICE TO CONSUMERS

Medical doctors are licensed and regulated by the Medical Board of California

(800) 633-2322

www.mbc.ca.gov

Any questions or comments should be directed to Tracy Green, a very experienced health care attorney, at tgreen@greenassoc.com. Tracy Green is a principal at Green & Associates.

The firm focuses its practice on the representation of licensed professionals, individuals and businesses in civil, business, administrative and criminal proceedings. They have a specialty in representing licensed health care providers in California and in other states. Their website is: http://www.greenassoc.com/

L.A. Times Article On Lap Band Surgery Centers: What Other Legal & Consumer Issues Are Raised Here?

The Los Angeles Times has recently run two articles on TopSurgeons, its recent regulatory issues and the limited jurisdiction that the State of California has over freestanding ambulatory surgery centers. Free-standing surgical centers owned by a physician are exempt from licensing by the Department of Public Health.

Here is a link to the March 4, 2010 article (which links to the writer Michael Hiltzik's prior article):

Lap-band promoters' troubled history - latimes.com
(photo is from the L.A. Times article)

The L.A. Times article is trying to protect the consumer which I applaud. However, I question whether the writer understands the business well enough to give advice to the consumer or State on what needs to be done to better regulate free-standing surgery centers or companies such as TopSurgeons.

I think the real issue here is that a company is advertising aggressively directly to consumers for lap-band surgeries. The company then refers those potential lap-band patients to physicians who, in turn, perform the surgeries in centers which may be owned or affiliated with the referring company. This is what I see as the real crux of the issue - even in terms of better protecting the consumer. The surgery center accreditation is the tip of the iceberg.

So if I drive by and call the 1-800 number, is a doctor employed by TopSurgeons going to perform the surgery? No, not to my understanding. TopSurgeons is going to "refer" the case to a physician who will meet with the patient and evaluate whether he or she is a candidate and then this physician performs the surgery. This physician is under the jurisdiction of the Medical Board by the way.

Then usually other big issues will be:

(1) Who provides the financing for the patients who want these surgeries?
(2) What is the business relationship between the physician who performs the surgery and TopSurgeons?
(3) How does the surgeon decide which surgery center to use? and
(4) What is the business relationship between the referring agency TopSurgeons and the surgery center?

The purpose of laws prohibiting referral fees is to ensure that patients are referred to the best place or physician and not because someone has a business relationship with the referring business. Who do I want to be referred to? Best lap-band surgeon in L.A. or a second-rate or poorly trained one that pays fees to a company that advertises on billboards and the Internet.

Now if the best lap-band surgeons are paying for advertising - that's great but that is what the consumer needs to know. Some consumers assume that all physicians are created equal. It's like any other profession in that some are more experienced than others. Bariatric surgery is a real specialty.

What does TopSurgeons do? According to TopSurgeon's website says "TopSurgeons is a premier referral provider of surgical services on the west coast." Thus, it appears that TopSurgeons people (such as Dr. Omidi) are not performing the surgeries. They are referring the business to physicians. Now there could be an issue of whether they are in compliance with the Business & Professions Code on referrals and how those referrals are paid. In addition, they may be referring the business to physicians with the understanding that those surgeries are to be performed in TopSurgeons' centers.

The article conceded that "Robert Silverman, an attorney representing the Omidis, points out that his clients "have no involvement in the performance of weight loss surgeries themselves." However, the article does not explain what role TopSurgeons has perhaps because that information was not provided to the writer.

It is important for patients to know who owns and operates a surgery center (since those fees often greatly exceed the surgeon's operating fees). In other words, surgery centers can be where the real money is made in health care.

It is critical for patients to know whether the surgery center has its accreditation. It appears that the present surgery center referenced in the article is certified by the Joint Commission.

It is critical for patients to know who will be the anesthesiologist and what the plan is if there is a complication that requires hospitalization.

It is also important for the patient to know the physician and how he or she decides which surgery center to select. Is the surgeon picking the best free-standing surgery center? Or is the physician selecting a surgery center that refers him or her the surgeries?

For the record, I have no involvement with TopSurgeon or anyone affiliated with it and have never represented them.

If you want real protection for the consumer -- understanding the facts is important. The article gives some of the facts but does not appear to understand how the business is run. The article discusses "the people behind TopSurgeons" who according to the article "are the Omidi brothers -- Julian, whose medical license was revoked in 2009, and Michael, who was placed on three years' probation for gross negligence in 2008, according to the Medical Board of California." However, neither of those men are performing surgeries.

The article claims that "TopSurgeons attracts customers in part by pitching the lap-band to people who, according to conventional medical guidelines, shouldn't need major surgery to shed weight." The article does not mention that a physician will have to make a determination whether the patient meets the medical criteria for having lap-band surgery. This would not be up to the Omidis or TopSurgeon but to the physician performing the surgery.

For health care providers, they need to ensure that their referral arrangements with surgery centers and companies that advertise (on the Internet and elsewhere) comply with California laws prohibiting the giving of any consideration (money or other things of value) for the referral of a patient. See, for example, California Business and Profession Code Section 650.

Remember as well that payment for advertising is different than payment for referrals but legal advice is needed to determine where the line is between advertising and referral fees. By the way, the District Attorney's Office and Attorney General's Office have jurisdiction over everyone (physician or not) since violation of such laws is a misdemeanor or felony.

Should you have any questions regarding your own situation or this post, you can email physician attorney Tracy Green at tgreen@greenassoc.com. Green and Associates is located in downtown Los Angeles, California and focuses their practice on the representation of licensed professionals, individuals and businesses in civil, business, administrative and criminal proceedings. They have a specialty in representing health care providers. Ms. Green is a member of the Board of Directors of the California Naturopathic Doctors Association. The firm website is: http://www.greenassoc.com/


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