Lengthy Sentence Imposed Upon Patient Recruiter for Home Health Services Where Illegal Kickbacks Were Paid to Doctors and Patients

A Houston, Texas patient recruiter and home health agency owner was sentenced to 188 months in prison today for her role in a $20 million scheme to pay illegal health care kickbacks to physicians and Medicare beneficiaries in order to fraudulently bill for medically unnecessary home health services, and to launder the proceeds. Health care fraud sentences continue to get longer. One recent case involved a lengthy sentence even though it was part of a guilty plea. 

On May 29, 2019, a Houston, Texas patient recruiter Egondu "Kate" Koko was sentenced to 188 months (over 15 years) in federal prison for her role in a federal health care fraud case where she admitted she paid illegal kickbacks to physicians and Medicare beneficiaries in order to fraudulently bill for medically unnecessary home health services for four other home health agencies and her own. 

The sentence came after Ms. Koko pleaded guilty in October 2018 to one count of conspiracy to pay and receive health care kickbacks and one count of conspiracy to launder monetary instruments. This sentence was lengthier than the norm since there was a money laundering count as in her plea she admitted she laundered the proceeds through another person's bank account. 

Pharmacy Owner And Pharmacist Sentenced To 160 Months In Prison For $4.3 Million Pain And Scar Compounding Creams Where Referral Payments Received When TRICARE Insurance Billed

The compounding cream cases where pharmacies engaged in marketing to obtain patients and where there were billings to TRICARE insurance continue. 

In a recent case, after a five-day trial of one count of conspiracy to pay health care kickbacks and paying and receiving kickbacks, a long sentence was handed out by a federal district court judge to a pharmacy owner and pharmacist.  

On March 30, 2018, the owner of a Florida pharmacy, Larry B. Howard, also a licensed pharmacist, was sentenced by U.S. District Judge Paul G. Byron to serve 160 months in prison and ordered to pay $4.3 million in restitution for his role in this case.

Sales Representative Who Gave Gift Cards and Personal Checks to Medical Referral Sources Sentenced for Obstructing Federal Investigation of Health Care Offenses During Meeting With Investigators

It is becoming more common to charge individuals for "obstructing" a health care fraud investigation. Recently, on February 8, 2016,Terrence Kyle Tackett, a sales representative for multiple healthcare companies was sentenced in U.S. District Court in Boston in connection with obstructing an investigation into kickbacks paid to medical professionals.

From 2012 to 2013, Mr. Tackett worked as a sales representative in Kentucky for California-based healthcare company Cardio Dx, and from August 2013 to February 2015, he worked for Aegerion Pharmaceuticals, Inc., a Cambridge-based pharmaceutical company. 

Mr. Tackett now admits that from 2012 through February 2015 he gave medical professionals gift cards and personal checks in exchange for ordering or prescribing the products he promoted and to get access to private patient information protected by HIPAA. In May 2016, Mr. Tackett pleaded guilty to one count of obstruction of a criminal investigation of health care offenses.

However, during a January 2015 meeting with investigators, Mr. Tackett falsely denied and attempted to conceal the gift cards and checks he had been paying to physicians and their staffs for years in Kentucky and southern Ohio. 

Mr. Tackett was sentenced by U.S. District Court Judge Allison D. Burroughs to three years of probation, with the first six months in community confinement and then six months on home detention, 100 hours of community service to be completed during the last two years of probation, and a fine of $15,000. 

The obvious lesson here is not to meet with any federal investigators unless you understand your rights, the scope of the investigation and AFTER you have consulted with counsel. Importantly, not being honest with the investigators is a separate criminal offense and one that may be easier to prove than a kickback count.  

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

Hospice Care Provider Settles False Claims Lawsuit Involving Allegations that Hospice Paid Doctor for Referrals By Donating To Doctor's Charity

On December 2, 2016, Vitas Health Corporation Midwest and related entities agreed to pay $200,000 to resolve allegations that they violated the False Claims Act and the Anti-Kickback Statute by paying Dr. Farid Fata for patient referrals to its hospice care services.

In an earlier unrelated criminal matter, Dr. Fata pleaded guilty to health care fraud, conspiracy to pay and receive kickbacks and promotional money laundering, and was sentenced to a term of 45 years in prison. 

The allegations in the civil False Claims Act suit were brought to the government by a whistleblower, known as a relator, under the qui tam provisions of the False Claims Act. 

From November 2012 to January 2014, relator Rita Dubois worked at Vitas as the Director of Market Development in Southeastern Michigan. Ms. Dubois’s complaint alleged that from mid-2012 through early 2014, Vitas contributed $15,750 to the Swan For Life Cancer Foundation, which was a cancer charity that Fata established. 

In return, Fata referred 23 patients to Vitas for hospice care, the complaint alleges. The U.S. intervened in the lawsuit.  Ms. Dubois will receive $36,000 out of the $200,000 settlement for her role in filing the qui tam action.

This case was investigated jointly by the U.S. Attorney’s Office for the Eastern District of Michigan and the Department of Health and Human Services, Office of Inspector General.

Attorney Commentary: This is one of the cases where when payments are made to third parties they are deemed to be illegal referral fees. Given that Dr. Fata's criminal case seems extensive and resulted in a long sentence, this was probably a small part of the allegations in the doctor's case. The case against the hospice was not criminal, however, this qui tam case shows that payments to a doctor or his related entities must be viewed carefully and run by compliance counsel. 

The conflict of interest in donating to a doctor's charity create the appearance of payment for referrals. The payment of $200,000 is far less than the costs of trying the lawsuit and the risks of losing so it makes good business sense but it is far better to avoid such situations. 

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

Chicago Psychiatrist Who Received Consulting Fees (Now Called Kickbacks) While Prescribing Clozaril to Patients Sentenced to Nine Months in Federal Prison After Qui Tam Lawsuit Settlement

The consulting arrangements between physicians and pharmaceutical companies are being used to support federal qui tam and criminal cases. One case involving a psychiatrist that went criminal after a civil qui tam settlement had some extreme facts but shows how the government is being aggressive in pursuing these arrangements years after they occurred.

While the pharmaceutical companies will be ordered to pay multimillion fines, the government will pursue fines and criminal charges against individual physicians. Big Pharma just pays the fines and doctors who assume that the companies must be following the law will suffer the consequences.
  

A Chicago psychiatrist, Dr. Michael J. Reinstein (age 72), was sentenced on March 9, 2016 to nine months in federal prison for accepting nearly $600,000 in fees and benefits from pharmaceutical companies Teva and IVAX in exchange for prescribing Clozapine to his patients from 2006 to 2011. This was after he pleaded guilty last year to one count of violating the federal Medicare and Medicaid Anti-Kickback Statute for these facts.  

Dr. Reinstein has been a psychiatrist in the Chicago area since 1973, with an office in Chicago’s Uptown neighborhood.  The basis for the guilty plea and sentence was stipulated by the defense in the plea agreement that Dr. Reinstein prescribed the drug Clozaril (the brand-name version of Clozapine) to thousands of elderly and indigent patients in Chicago-area nursing homes and hospitals long after less expensive, generic versions were available, because the manufacturer of Clozaril paid him thousands of dollars to promote the drug at speaking engagements. 

In exchange for his efforts, the pharmaceutical companies provided Dr. Reinstein with consulting fees and entertainment expenses, including meals, tickets to sporting events, and all-expense-paid vacations.  At one point in the early 2000s, Dr. Reinstein was the largest prescriber of the drug to Medicaid recipients in the United States. In these type of cases, it never pays to be #1. 

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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New York Hospital Official Pleads Guilty To Conspiring To Rig Bids

On January 12, 2010, Freddy Deoliveira, a New York Presbyterian Hospital (NYPH) purchasing official pleaded guilty to conspiring to rig bids on re-insulation services contracts for the hospital.

Mr. Deoliveira, who held various supervisory positions at the NYPH, pleaded guilty in U.S. District Court in Manhattan. According to the charge, between approximately October 2000 and March 2005, Mr. Deoliveira conspired with others to create the appearance that contracts at NYPH were awarded in accordance with NYPH’s competitive bid policy, when, in fact, they were not.

Mr. Deoliveira admitted that he designated which company would submit the low bid on a contract, and which company or companies would submit higher, complementary bids, to ensure that his designated company would be awarded the contract. To create the illusion of a competitive bidding process, Mr. Deoliveira’s co-conspirators would use each other’s letterhead to submit the high, noncompetitive bids.

In exchange for awarding the contracts to the designated bidder, Mr. Deoliveira received cash kickbacks from his co-conspirators.

The bid rigging violation with which Mr. Deoliveira is charged carries a maximum penalty of 10 years in prison and a $1 million fine. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victim of the crime, if either of those amounts is greater than the statutory maximum fine.

To date, seven individuals and three companies have pleaded guilty to charges arising out of the same investigation.

Attorney Commentary: In many (most) countries of the world, "kickbacks" are routine, expected and legal, even if not quite ethical. In such countries, sellers know that they will make no sales or get business unless a portion of the price is kicked back to the buyer's agent or the person making the referral, and companies know that their employees and agents are soliciting and accepting kickbacks. In the United States, the rules are different.

Here is a quick summary of 5 types of kickbacks that are illegal in the United States in almost all circumstances.

(1) It is illegal to pay a kickback for the referral of a patient or for medical services (and for other professions such as legal services). It is also illegal to deduct these improper kickbacks for tax purposes.

(2) It is illegal to pay a kickback to obtain government contracts.

(3) It is illegal for a publicly traded company to pay kickbacks that are deducted for U.S. tax purposes. In practical effect, this means that publicly traded companies cannot legally pay kickbacks in foreign countries, even if kickbacks are legal and necessary in those foreign countries.

(4) It is illegal for an employer to accept kickbacks from employees. Although it is illegal, it is an unfortunate fact that many employees are forced to pay kickbacks to their bosses just to get and keep a job in the U.S.

(5) It is illegal for any public official to solicit or accept kickbacks and/or bribes.

For people who are employed by companies, accepting kickbacks can also be prosecuted as an embezzlement from the company. The theory is that the employee is taking a benefit that should belong to the company. For example, the employee could have negotiated a discount instead of keeping the kickback for himself or herself.

There are numerous referral arrangements in businesses (commissions, referral fees in certain private businesses) that are not illegal. In fact, there are some referral fees that could be immoral or civilly wrongful but are not illegal. It is important for any licensed professional or person who bills the government or insurance companies to seek a legal opinion on whether the referral fee is legal under governing statutes, rules and regulations.

Posted by Tracy Green. Should you have any questions regarding your own situation or this post, you can email Tracy at tgreen@greenassoc.com. Green & Associates in Los Angeles, California focuses their practice on the representation of licensed professionals, individuals and businesses in civil, business, administrative and criminal proceedings. She has handled hundreds of cases involving payments of referral fees or kickbacks. The firm website is: http://www.greenassoc.com/