After 6 Week Trial, New York Doctor And Physical Therapist Found Guilty Of Health Care Fraud, Conspiracy to Make False Statements Relating to Health Care Programs Medicare And Medicaid and Other Counts With Allegations of Sham Owner, Falsified Medical Records, Kickbacks.

A recent health care fraud case involved the alleged unlicensed practice of medicine and a  physician allegedly posing as the owner of medical clinics in order to satisfy New York  law that medical clinics be owned and operated by a medical professional. When that occurs the loss amounts can be large since the entire clinic can be viewed as a fraud with all billings suspect. 

On May 9, 2019, after a six-week federal jury trial, doctor Paul J. Mathieu and physical therapist Hatem Behiry were each convicted of one count each of conspiracy to commit health care fraud, mail fraud, and wire fraud; and conspiracy to make false statements relating to a health care program; as well as the substantive offenses of health care fraud, mail fraud, and wire fraud.  This trial was held in the Southern District of New York. 

Between 2007 and 2013, the government alleged that Dr. Mathieu fraudulently posed as the owner of three of six medical clinics in Brooklyn (the “Clinics”), which were all in fact owned by a non-physician and alleged co-conspirator Alexksandr Burman. Mr. Burman has already been sentenced in a related case to 120 months in prison. 

The government alleged that from 2009 to 2013, Dr. Mathieu also directly participated in the fraudulent billing practices of the clinics, by visiting several of the clinics on a weekly basis, where he would sign stacks of false and fraudulent medical charts, and issue referrals for expensive additional testing, occupational therapy, and physical therapy, including for physical therapy purportedly provided by Mr. Behiry. It was alleged at trial that during this time period, Dr. Mathieu did not see any patients and simply fabricated medical records falsely stating that he had seen and treated such patients. 

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

Korean-American Owner of California Management Company for Physical Therapy and Occupational Therapy Clinics Sentenced to 121 Months

A recent health care fraud case shows what happens when business people get in a highly regulated business and do not follow the rules or have any compliance program. It also shows what happens when business people decide to enter a healthcare business and cater to an ethnic community which wants services others than those paid for by Medicare.

In this case, it involves the Korean American community in Los Angeles and Orange Counties which is hardworking and entreprenurial but where some do not necessarily understand the full consequences when regulations are not followed. Those consequences? Audits, fines, civil lawsuits and, in this case, criminal cases with lengthy prison sentences.

On January 10, 2017, a California man Simon Hong (also known as Seong Wook Hong) who ran management companies which allegedly operated rehabilitation clinics in Walnut, Torrance and Los Angeles was sentenced to 121 months in federal prison by United States District Judge David O. Carter. At the conclusion of the sentencing hearing, Judge Carter ordered Mr. Hong remanded into custody.

This is not just a straight forward fraud case. One of the issues is providers giving patients in an ethnic community services other than physical therapy but billing and documenting for physical therapy. In addition, it is a businessman operating clinics and then getting a percentge of income for referring the business. There were traditional health care fraud issues present but it shows what happens when business people decide to operate or manage a clinic.  

Mr. Hong owned or operated physical therapy clinics operated by companies called Hong’s Medical Management, Inc., CMH Practice Solution, and HK Practice and Solution, Inc. As part of his business, Mr. Hong recruited Medicare providers and beneficiaries and provided uncovered services like massage and acupuncture for the beneficiaries. Even though many of the beneficiaries did not receive actual physical therapy, those who worked with Mr. Hong billed Medicare for physical therapy, and then paid a large percentage (allegedly 56 percent) of the reimbursement funds back to Mr. Hong's management companies.

Physicians Can Apply for Award Up To $105,000 for Serving In a Medically Underserved Area of California - Apply Dec. 1, 2016 to Feb. 28, 2017

Are you licensed in California and looking for a way to work in an underserved area and get student loan forgiveness? Physicians (allopathic or ostepopathic physician or surgeon) can apply for an award from the Steven M. Thompson Physician Corps Loan Repayment Program up to $105,000 in exchange for a service obligation in a medically underserved area of California. 

The link for the physican scholarship is: http://www.oshpd.ca.gov/HPEF/Programs/STLRP.html 

For more information go the website for this program (and for other health care provider scholarships) at State of California Office of Statewide Health Planning and Development, Health Professions Education Foundation.  There are also scholarships for Registered Nurses, LVNs, Dentists, Physician Assistants, Occupational Therapists, Pharmicists, SpeechTherapists, Certified Midwifes, Nurse Practitioners, and other health care providers and those deadlines vary. Review the website for deadline and application information.

This underserved area covers most of the state and is close to major urban areas. Visit the website link above for the map of the area covered.

Woman Excluded By OIG Indicted For Health Care Fraud for Failing to Notify Employer Home Health Agency of Her OIG Exclusion

In the past, individuals and entities excluded by the Office of Inspector General (OIG) have usually not been prosecuted for fraud. A recent Indictment shows that the government is going to be more aggressive in pursuing individuals excluded by OIG if they fail to notify their employers of their exclusion. 

If OIG excludes an individual or entity it means that no payment can be made by a federal health care benefit program (or state program that received federal funds) for services provided by that individual. 

The United States Attorney’s Office for the Middle District of Pennsylvania announced on March 31, 2016 that China Scott of Pennsylvania was indicted by a federal grand jury for Health Care Fraud for allegedly failing to notify her employer at Cool Waters, a home health care agency that she was an "excluded person" by OIG. Ms. Scott was excluded by OIG due to two previous health care fraud convictions.

According to the Indictment, between November 2015 and January 2016, Ms. Scott provided home health care services to a disabled individual through her employment at Cool Waters, a home health care agency. Since Ms. Waters is an excluded individual, the home health agency cannot receive payments from Medicare or Medicaid or other federally funded programs for her services and must return any payments. Ms. Scott allegedly failed to notify the agency that she is an excluded person.

Indictments and criminal informations are only allegations. All persons charged, including Ms. Scott, are presumed to be innocent unless and until found guilty in court. The investigation was conducted by the U.S. Department of Health and Human Services.

Attorney Commentary: This is a reminder to those in the health care business to run background checks on their employees, independent contractors, and employees of independent contractors who provide services. And simply because Medicare or Medi-Cal or Medicaid is not being directly billed, there are many government programs through HMO contracts, TriCare and other entities that it is very difficult to tell when a patient is Medicare or Medi-Cal (Medicaid) or TriCare.  

In addition, individuals should also check their background since we have seen cases where individuals were excluded and did not know for reasons such as student loan defaults. Finally, if excluded, individuals and entities need to remember that they must apply for reinstatement. It is not automatic. 

Posted by Tracy Green, Esq.

Southern California Prosecution of More Than Ten Individuals For Billing Medicare for Physical Therapy Services Never Provided

Physical therapy services billed to Medicae are governed by a wide array of rules and regulations. These rules govern ownership, documenting services billed, which services are covered, where the services are provided, payment of referral fees, management arrangements, and every facet of the business. Anyone operating a physical therapy clinic needs to be aware of and compliant with rules and regulations in order to avoid being charged years later with Medicare fraud. 

The U.S. Department of Health and Human Services – Office of Inspector General (OIG) and the U.S. Attorney's Office are aggressively pursuing physical therapy clinics, businesses that provide management and billing for them, and marketers who provide patients to the clinics. Many of the cases being filed now relate to claims submitted years ago. It is not uncommon for charges to be filed right before the expiration of the statute of limitation.

In recent months more than ten individuals have been charged with Medicare fraud relating to physical therapy. A number of these cases include billing massage and acupuncture as physical therapy in the Korean American community which is not covered under Medicare. The cases also involve management arrangements between clinics and other individuals or entites that were billing.

The cases involve numerous clinics in the Los Angeles and Orange County areas. One group of criminal cases revolve around clinics called Rehab Dynamics, RSG Rehab and Innovation Physical Therapy that operated at various locations in Los Angeles and Orange counties. These clinics were allegedly owned and operated by Joseff Sales, a licensed physical therapist, and Daniel Goyena, a licensed physical therapist assistant – who were indicted in October. Mr. Sales pleaded guilty on January 25, and Goyena pleaded guilty on December 17. Both men pleaded guilty to health care fraud and paying illegal kickbacks before United States District Judge Dean D. Pregerson, who is scheduled to sentence them later this year.

Nation’s Largest Nursing Home Therapy Provider (Kindred/Rehabcare) Pays $125 Million to Settle Civil False Claims Act Allegations For Physical, Speech and Occupational Therapy Services Improperly Billed to Medicare

Skilled nursing facilities (SNFs) face many challenges in providing, documenting and billing therapies (speech, occupational and physical) to its patients. A recent large settlement in a false claims case brought by former employees, where the government intervened, against the nation's largest nursing home therapy provider shows other SNFs and therapy providers what they need to monitor in order to avoid similar allegations.

On January 12, 2016, contract therapy providers RehabCare Group Inc., RehabCare Group East Inc. and their parent, Kindred Healthcare Inc., agreed to pay $125 million to resolve a government lawsuit alleging that they violated the False Claims Act by knowingly causing skilled nursing facilities (SNFs) to submit false claims to Medicare for rehabilitation therapy services that were not reasonable, necessary and skilled, or that never occurred.

The government’s complaint alleged that RehabCare’s policies and practices, including setting unrealistic financial goals and scheduling therapy to achieve the highest reimbursement level regardless of the clinical needs of its patients, resulted in Rehabcare providing unreasonable and unnecessary services to Medicare patients and led its SNF customers to submit artificially and improperly inflated bills to Medicare that included those services.  Specifically, the government’s complaint alleged that RehabCare’s schemes included the following:

(1) Presumptively placing patients in the highest therapy reimbursement level, rather than relying on individualized evaluations to determine the level of care most suitable for each patient’s clinical needs;

(2) During the period prior to Oct. 1, 2011, boosting the amount of reported therapy during “assessment reference periods,” thereby causing and enabling SNFs to bill for the care of their Medicare patients at the highest therapy reimbursement level, while providing materially less therapy to those same patients outside the assessment reference periods, when the SNFs were not required to report to Medicare the amount of therapy RehabCare was providing to their patients (a practice known as “ramping”);

Owner of Rehabilitation Facility (CORF) Pleads Guilty To Mail Fraud For Submitting False Claims To Medicare

On June 21, 2013, an owner and chief executive officer of a comprehensive outpatient rehabilitation facility (CORF) pleaded guilty to mail fraud for submitting claims to Medicare for services that were not prescribed by treating doctors. This case had been pending for over two years since the Indictment was filed in March 2011.

This case involves Medicare billings by Fountain Valley Healthcare Center (FVHC), a CORF that Tuan Duc Tran owned and operated since 2001. Mr. Tran admitted that he submitted bills to Medicare based on false claims that Medicare beneficiaries had been referred to FVHC by a physician for physical and respiratory therapy. Mr. Tran admitted that the names of the referring physicians were falsely identified. In order for medical necessity to exist, the patients must be referred by a treating physician and these claims for payment violated Medicare rules because the treating doctors had not referred the beneficiaries for rehabilitation.

Under the plea agreement, Mr. Tran will be required to pay $777,291 in restitution to Medicare. Even though the services were provided, the entire amount collected is to be treated as a loss amount and required to be repaid as restitution. 

U.S. District Judge Josephine Staton Tucker scheduled Mr. Tran’s sentencing for November 8. The mail fraud count carries a maximum statutory sentence of 20 years in federal prison. However, under the plea agreement, Mr. Tran will be at an offense level 16 in the federal sentencing guidelines with a guideline sentencing range of 21 to 27 months although the parties can argue for a sentence outside the guideline range and Judge Tucker is not bound by the parties' agreement in the signed plea agreement.

Attorney Commentary: These health care fraud cases are often difficult for those charged to understand where the services have been provided and were even of benefit to the patients. In this case, part of the government's offer of proof was that Mr. Tran had agreed to be familiar with the Medicare rules and regulations and to comply with them. In his case, the fact that the physician names listed on the superbills were not the patients' referring physicians was one of the facts that shifted this case from a billing error case to a fraud case.

Posted by Tracy Green, an attorney specializing in representing and defending health care professionals in health care fraud, Medicare fraud and Medi-Cal fraud allegations, audits, investigations and charges. Email: tgreen@greenassoc.com  Office: 213-233-2260

Website: Green and Associates, Attorneys at Law 

Alert To California Professionals And Licencees: Potential License Denial Or Suspension For Failure To Pay California Taxes Starting In July 2012

Effective July 1, 2012, ALL of the licensing boards in California (Medical Board, Board of Psychology, State Bar, Dental Board, Contractors Board, Veterinary Board,  Accountancy Board, Optometry Board, Pharmacy Board, Board for Professional Engineers, etc.) are required to deny an application for licensure and to suspend the license/certificate/registration of any applicant or licensee who has outstanding tax obligations due to the Franchise Tax Board (FTB) or the State Board of Equalization (BOE) and appears on either the FTB or BOE's certified lists of top 500 tax delinquencies over $100,000. This is pursuant to legislation AB 1424, Perea, Chapter 455, Statutes of 2011.

Once it has been determined that an applicant or a licensee is on a certified list, the applicant or licensee has 90 days from the issuance of a preliminary notice of suspension to either satisfy all outstanding tax obligations or enter into a payment installment program with the FTB or BOE. Any such person who fails to come into compliance will have his/her license denied or suspended until the Medical Board of California receives a release from the FTB or BOE. The form for requesting a release will be included with the preliminary notice of suspension.

The law prohibits the Boards from refunding any money paid for the issuance or renewal of a license where the license is denied or suspended as required by AB 1424.

The FTB and BOE are currently expanding the certified lists from 250 to 500, but you can check if you are currently on the FTB's certified list at: www.ftb.ca.gov/individuals/txdlnqnt.shtml or the BOE's certified list at: www.boe.ca.gov/cgi-bin/deliq.cgi. If you believe you are on either list in error, please call the FTB at (866) 418-3702 or the BOE at (916) 445-5167.   

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 California board attorney, administrative attorney, and California licensing 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 California and throughout the country. Their website is: http://www.greenassoc.com/

Vice-President of Tampa Physical Therapy Company Pleads Guilty to Conspiracy To Commit Health Care Fraud

Medicare fraud criminal cases involving physical therapy are not that common but a recent case out of Florida went criminal based on allegations that involved pure fraud in billing for services not provided.  On May 27, 2011, Andres Cespedes, an owner and vice-president of a physical therapy company, Dynamic Therapy Inc.  pleaded guilty to one count of conspiracy to commit health care fraud for his role in a scheme to defraud Medicare before U.S. Magistrate Judge Mark A. Pizzo in Tampa, Florida.

According to court documents, Mr. Cespedes was the vice president of Dynamic Therapy Inc. Mr. Cespedes and his co-conspirators purchased Dynamic from its prior owners and transformed it into essentially fraudulent enterprise. Dynamic purported to provide physical therapy services to Medicare beneficiaries, but in reality obtained patient information through kickbacks and bribes and billed Medicare for physical therapy that never occurred.

According to court documents, from fall 2009 to summer 2010, Mr. Cespedes submitted and caused the submission of $757,654 in fraudulent claims to the Medicare program by Dynamic. Mr. Cespedes admitted that he and his co-conspirators paid and caused the payment of kickbacks and bribes to Medicare beneficiaries in order to obtain their Medicare billing information, and used it to submit claims to Medicare for physical therapy services that were never provided. According to court documents, the owners and operators of Dynamic also stole the identities of a physical therapist and Medicare beneficiaries in order to submit additional false claims to Medicare.

Mr. Cespedes admitted that he knew the Medicare beneficiaries, on whose behalf claims were submitted to Medicare by Dynamic, never received the services billed to Medicare. At sentencing, Cespedes faces a maximum penalty of 10 years in prison and a $250,000 fine. A sentencing date has not been set.

Attorney Commentary - Providers: Watch Out For Identity Theft:  For health care providers including physical therapists, the biggest concern raised by this case is how the identity of the physical therapist was stolen. We have seen the identities of physicians and other health care providers stolen before in a very simple manner. Companies or individuals who want to steal identities sometimes place advertisements for jobs in a newspaper or website and then the applicants will send ALL the information attached to their CV including UPIN number, social security number, license number and other identifying information. That information is then submitted on a Medicare or Medicaid application to obtain a provider number for a new location.  Therefore, be careful when applying for jobs and sending your information to blind addresses.

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 California health care attorney who has represented physical therapists and a variety of other health care providers 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 health care legal matters in California and throughout the country. Their website is: http://www.greenassoc.com/

FAQ: Can Health Care Professionals In California Form Limited Liability Companies?

One question we receive from newly licensed health care professionals is whether under California law, they can form a limited liability company (LLC).

In general, the answer is that if their business provides services requiring a license, certification or registration pursuant to the Business and Professions Code the answer is: "No."

If the business provides services that require only a nonprofessional occupational license, then the answer is "yes." Here is a link to an Attorney General Decision on limited liability companies that addresses this issue:

http://www.ptbc.ca.gov/forms_pubs/ag_opinion_04_103.pdf

Before you form a corporation, make sure you consult an experienced accountant and regulatory attorney. In this day of do-it-yourself corporations, a consultation may save you time, money and limit your professional exposure.

Any questions or comments should be directed to: tgreen@greenassoc.com. Tracy Green is a principal at Green and Associates, Attorneys at Law, in Los Angeles, California. They focus their practice on the representation of licensed professionals and businesses in civil, business, administrative and criminal proceedings, with a specialty in health care providers.

Physical Therapy Company Settles Federal Qui Tam Lawsuit And Pays Over $200,000

On April 13, 2009, after a settlement was reached, the government moved to dismiss a qui tam, or “whistleblower,” lawsuit with Interstate Rehabilitation LLC, a Glendale physical therapy company that contracts with Southern California Hospitals to operate hospital therapy departments and its owner/operators James Pietsch, Sandra Pietsch and Beth Celo. Interstate Rehabilitation and the other defendants agreed to pay the settlement of $233,345 to the government without admitting any wrongdoing to settle allegations in a “whistleblower” lawsuit that they caused the submission of false claims to Medicare.

The background of the case is as follows. A lawsuit was filed against Interstate Rehabilitation under the qui tam, or whistleblower, provisions of the False Claims Act in 2002. The complaint alleged that the company improperly billed Medicare for services that were supposed to be provided by licensed physical therapists, when in fact the services were not.

The lawsuit was filed by former Interstate Rehabilitation employees Janine Gostel and Sonia Sarmiento, who will split 16 percent of the settlement.

According to the lawsuit, from mid-1998 through the end of 2002, Interstate Rehabilitation violated Medicare rules by using clerical employees and other non-professional staff to provide physical therapy services without the presence of a licensed physical therapist. The services were allegedly provided to patients at skilled nursing facilities at area hospitals, which caused the facilities to submit false claims for payment to Medicare.

The affected facilities included California Hospital Medical Center, Community Hospital of Gardena, East Los Angeles Doctors Hospital, Memorial Hospital of Gardena, VitalCare Skilled Nursing Facility, Bay Harbor East Hospital, Bay Harbor West Hospital, Santa Teresita Hospital, Hemet Valley Medical Center, St. Vincent Medical Center, and Doheny Villa Skilled Nursing Facility.

On April 3, United States District Judge Stephen V. Wilson unsealed the whistleblower case. On April 13, 2009, the government moved to dismiss the lawsuit pursuant to the settlement.

Attorney Comments: Small to medium-sized providers often are concerned about potential criminal investigations without thinking about the potential for qui tam cases. There are both federal and state qui tam statutes. For these providers, prevention is an essential element of any False Claims Act strategy. Companies and individuals that regularly submit billings, invoices or reimbursement requests to the government should have a top-notch compliance program to try to avoid the submission of a potentially false claim.

A company that is the target of a False Claims Act investigation should examine its compliance program to see if it needs updating, particularly if there is a white collar investigation and/or a suspension and debarment proceeding. A state-of-the-art compliance program, or an upgrade to an existing program, may go a long way to persuade the government not to take drastic measures, such as indicting the company or its owners/operators or debarring it from receiving future government contracts.

Any questions or comments should be directed to: tgreen@greenassoc.com. Tracy Green is a principal at Green and Associates in Los Angeles, California. They focus their practice on the representation of individuals, businesses and licensed professionals in civil, business, administrative and criminal proceedings, with a specialty in health care providers and defense of qui tam cases.