What Should I Do To Prepare For Or Help Avoid An Audit By Medi-Cal, Medicare Or Private Insurance Companies?

If you are a health care provider with a Medicare or Medi-Cal provider number -- especially in Southern California --chances are you WILL be audited or have an on-site visit at some point over the years. The audits and on-site visits (sometimes unannounced) have increased dramatically over the past years and will continue to increase as the state and federal governments face budget problems. In addition, the private insurers who administer Medicare are required by their contracts with the government to audit whether they suspect improprieties or not.

Your practice may also be subject to audits from insurance companies and health maintenance organizations (HMOs). The audit must be taken seriously since it can result in an overpayment being assessed and/or adverse administrative history. However, do not panic. Although it can seem like an intimidating event, you can increase your chances of prevailing and not having an unfair overpayment amount assessed if you prepare for any potential audit in advance and handle it properly once the request is made.

Here are some strategies and tips for helping you not only survive your audit but being prepared and prevailing to the greatest extent possible:

1. Prepare Your Staff In Advance For Understanding That Audits Are Part Of The Healthcare Business. Providers and the staff often erroneously assume that if they are being paid for claims that everything is correct and they are doing everything right. Not so. Medicare and Medi-Cal pay the provider on a "good faith" basis and reserve the right to audit. Private insurers, on the other hand, often require pre-approval before payment. Thus, it is critical that your entire staff understand that the best defense against audits is good charting, documentation, proper coding, and avoiding any upcoding, billing for services not provided or documented or anything else that may be characterized as fraud or abuse.

Once everyone understands that audits are part of the process it also helps them take control of the audit process and not let fear prevent them from handling it professionally. Most Medicare and Medi-Cal audits fall into one of three broad categories:
(1) an audit during the application or updating of application process where there is an on-site visit and review of business records and typically only a limited number of claims;
(2) prepayment audits (most common in Medicare), in which a review of claims is conducted before Medicare pays the physician, where carriers typically want to look at only one or two claims from each physician; and
(3) post-payment audits.

In a comprehensive post-payment audit or review, the carrier reviews a small statistical sample of claims and uses the results to calculate a projected overpayment for a period of months or years.

2. Identify In Advance Who Is Authorized To Speak To Auditors And Any Other Person Or Investigator Who Visits The Office In An Announced Or Unannounced Visit. First impressions count and this applies to audits and other visits by regulators or investigators. You will be better prepared if you determine in advance who is permitted to speak to government auditors or regulators. For example, you do not want the receptionist interviewed about your office's policies and procedures since anything he or she says may be used in your audit.

Establish a procedure that only an office manager, the provider or the health care lawyer are allowed to meet and discuss anything with the auditor or regulator. The other staff should be limited to contacts about establishing times and dates available for meeting unless and until they are instructed to do so by the designated persons in charge of the audit. There are many horror stories about staff meeting with auditors or regulators while the provider is out of the office and giving misinformation which was later used against the provider.

3. In Order To Anticipate An Audit Or Prevent An Adverse Audit, Understand Fully How The Medicare Or Medi-Cal Program Operates. Providers often assume that billers and office staff know how the Medicare and Medi-Cal programs operate when this is often not the case. Billers are used to working from superbills and entering codes without analyzing whether all the program rules are being followed. It should be understood by all that these programs will only reimburse "reasonable and necessary" services where there is the required documentation -- even if the services were provided. If the documentation is not present in the file -- it will be presumed that the service was not provided or that it was not medically reasonable and necessary.

We suggest that the providers have the billers and office managers create a thorough notebook regarding each of the procedure codes billed that contains the printed portions of any relevant manuals about what constitutes 'reasonable and necessary services' as defined by Medicare or Medi-Cal and what documentation is required for these services. It is then necessary to have the providers and anyone who sees patients or provides services read and understand these requirements. In addition, the provider needs to be aware of what your local carrier wants claims forms and patient records to contain because the requirements vary.

The provider may have worked in a hospital or private setting where the documentation requirements are different from private Medicare or Medi-Cal and not realize they are failing to properly document the file. For example, state law and private insurers may allow a physical therapist assistant or physical therapy aide to perform certain tasks in physical therapy while Medicare's billing and reimbursement policies and procedures may not pay for the same treatment by these assistants or aides for Medicare treated patients. Such information typically is contained in the Medicare manual and the local carrier's local medical review policy which are all available online.

Above all else, maintain complete documentation in patient records to substantiate the services billed. Record symptoms and diagnoses, details of the services and level of care provided, and complete progress notes. Medicare considers lack of corresponding documentation as evidence that billed services were not reasonable and necessary. The auditor will consider any related reimbursement as an overpayment and require the provider to refund the applicable amount.

There should be periodic internal reviews of files and education to ensure that the documentation is being done properly. Even if this billing and procedure code notebook and research was not done before the audit, prepare it at the beginning of the audit so everyone at the provider's office is prepared and knows the billing and reimbursement policies. Often during the audit, auditors will be mistaken about documentation or medical necessity requirements.

4. Have A Health Care Attorney To Whom You Can Send Any Audit Letters Or Whom You Can Contact Anytime There Is A Visit And Request For An Interview. If you receive a letter or visit from your Medicare or Medi-Cal carrier requesting a number of charts or records, contact your attorney immediately and fax him or her the letter or business cards of the visitors. Even if the attorney only needs to be minimally involved in most of the audit and file preparation, you need an objective person to ensure that the audit is handled in the best manner possible.

It is often easier for the health care attorney to speak with the auditors and set up a timetable for any interviews or to ensure that there is sufficient time to respond to the request for documentation. In most cases, thirty or sixty minutes of a qualified health care attorney's time at the beginning of the audit is well worth it since it will reduce the risk of overpayment, help reduce the provider's time and help ensure that the audit goes smoothly and that a good impression is made.

Resist the temptation to think that if a health care attorney is involved that an auditor or regulator will think that something is "wrong." In fact, the opposite impression is given: the provider is sophisticated, professional and has an established method for responding to audits. This is especially important in "unannounced" visits where it is easier for a health care attorney to be objective and take control of the situation where an auditor simply shows up and demands records and interviews at that moment. The health care attorney can also address regulatory issues that may be beyond the provider's expertise.

5. Read Any Letters Or Lists Carefully And Make Sure You Understand What Is Requested And See If There Are Any Patterns. This is another reason to send an audit or similar letter to your health care attorney so you understand what is requested. For example, assume that records for specific dates of service are requested as to a certain number of patients. Make sure that you also send in any other documentation that would support the services rendered on that day. This could include laboratory results, X-ray reports, photographs, consultations from other physicians, etc.

When reviewing the audit letter, especially if the letter requests multiple charts, see if there seems to be some type of underlying pattern or theme in the chart notes. Were the requested patient charts all billed for one particular code, all referred by a certain physician, or is there some other pattern? This will assist you in better addressing the concerns of the audit -- which may not be told to you directly by the auditors.

6. Determine With Your Health Care Attorney Whether You Need An Expert Witness Or Coding Expert During The Audit Process. Your attorney and you should consider hiring a coding expert to review the charts, preferably before you submit them to the auditor or carrier. If the expert cannot complete the review before the deadline for producing the records, the attorney will ask for an extension or simply have the expert conduct his review at the same time that the carrier does. Your attorney should have the review done under the attorney work product privilege so that the results will be confidential. One excellent preventative measure is to have a coding expert review charts periodically so that you know that your practice is in compliance with billing and record requirements. This can also be part of a compliance plan.

7. Take Control Of The Audit. Make Sure Records Are Complete. Review Charts And Records Carefully Before Copying Them Or Providing Them To Auditors. The auditors or regulators do their best to put the burden on the provider to prove that the services were properly documented and coded. Remember that the auditors are often not medical personnel even if they have some medical training. The auditors will often ask for the charts right away in unannounced visits.

Take your time and ensure that all reports, notes and other information are in the chart before you produce or copy it. Look for other records such as sign in sheets that will also be relevant to the audit. One of the most important things to do in preparing to respond to an audit is to ensure that the records are complete. One of the best ways to do this is to meticulously compare each medical record with its corresponding billing record. Remember, the billings are where the government’s investigation began. You can ensure that there are records for each of the dates billed, identify coding issues and have a better idea how to proceed in the audit.

Another important step is to make sure you produce the complete records. It is not enough to have them but you need to produce them and have records of the production. If you fail to produce records requested, you can be penalized financially or with adverse action against your provider number. If the auditor or regulator agrees you do not need to produce certain records or documentation, you or your health care attorney should document this agreement. It is important to document what is produced since you will be creating an administrative record. All records and documentation produced should be accompanied by a memorandum or letter itemizing the records produced and either delivered in person or with a return receipt or overnight service as proof of delivery.

8. Do Not Alter The Records. If you need to supplement the records, make sure you do not back date or alter the records. Altering records can cause problems much worse than overpayments -- Medical Board complaints and discipline. Seek the advice of counsel when it comes to supplementing records or there is any issue about missing records.

9. Understand What Circumstances Might Can Trigger An Audit. Audits can provide an education. They can be stressful, especially if the outcome is unfavorable. However, they can offer tremendous amounts of information and educational opportunities for your office. Try to remain positive while you go through this process. What are some common triggers of audits?

■ High or excessive use of specific CPT codes. Sometimes excessive use of certain ICD-9 codes may also trigger audits. Generally, doctors who are outside the bell curve with regard to billing practices may get flagged on internal carrier audit screens.

If your practice tends to be more specialized (perhaps you specialize more in geriatric patients), you will, by the nature of your practice, be billing certain codes more frequently than the other doctors in the community who have a more broader-based practice pattern. You will want to explain these issues to the auditors. Do not be afraid to bill for specialized services or think that you will avoid an audit by underbilling or billing at the lower code. Just be extra careful in the documentation. Do not alter proper billing protocols just to try to stay under the radar. Bill for what you did and let the chart defend you.

Importantly, don't stress to the auditors how you provide services for "free" and underbill. That does not help your audit in most circumstances. Are you billing for codes where you are using new technology? Did you change your practice patterns to become more specialized so that your billing patterns changed? Did you add new diagnostic or therapeutic machines to the practice? Did you purchase a practice? If so, you may flag out on a statistical basis. Explain your billing and practice changes to the auditors and the best defense is a well-documented file. Use the research notebook described above to ensure you are complying with all the documentation and medical necessity requirements.

■ Do you have an unhappy patient or patient's family? If you have an unhappy patient, review the bill if the patient had a bad outcome or received an unexpectedly large bill. Sometimes collection practices or a bad outcome can prompt a patient to launch a complaint that generated the audit. To avoid such problems in the future, make sure the patient knows upfront about the costs. Speak with the biller or collection service to alter methods of collections. Consider formulating a payment plan with the patient or allow patients to pay with a credit card. If one of the patients was unhappy, raise this with the auditors.

■ Do you have disgruntled current or former employees? All it takes is a complaint from a current or former employee to trigger a fraud audit or other review. The employee may try to get revenge and the best way to prevent this from occurring is to do the following:

--have a compliance plan that requires the employee to report suspected fraud and abuse during employment;

--conduct exit interviews where employees are asked about any suspected fraud or abuse;

--have written employee policies and maintain personnel files;

--have regular office meetings to review policies;

--address small issues before they escalate to large ones;

--make everyone in the office feel like part of the team; and

--educate the employees regarding billing and documentation requirements so that they do not mistakenly think that something is being done improperly.

If you suspect that a current or former employee triggered the audit, bring the disgruntled employee up in the audit and explain why he or she is not credible if he or she is the source. The auditor may not identify the complainant but this may help defuse the employee's allegations.

■ Are You Overusing Pre-Printed Forms Or Template Shortcuts? Be careful with the use of templates especially in electronic records. Although templates are acceptable charting methods, they can look very repetitive, especially when it comes to routine care and services. Each chart note should clearly reflect the chief complaint, history, examination and treatment you rendered on that date for that patient.

Cutting and pasting templates/macros from previous dates of service and simply using that language again in subsequent chart notes does not necessarily indicate what happened on that specific date of service. It makes for a bigger charts but once it looks repetitive or like filler, it can cause an issue with the audit where your office might be characterized as a "mill" or you are questioned about the amount of time spent with the patient.

Look for these triggers and others as they will help you defend the audit. Do not be afraid of negative facts or problems that you have found. If there are weaknesses or mistakes, discuss with your health care attorney whether you should concede certain issues at the audit level for credibility reasons. Do not assume that if you admit certain problems that the auditors will be fair to you or not seek overpayment. You need to have a strategy and having an outside objective person such as a health care attorney can be useful so you do not make a tactical mistake that could cause later problems or result in an overpayment.

10. Be Professional. Treat the auditors with respect even when you disagree with them or their position. This is another reason to have an objective health care attorney for you to rely upon. It is easy to get emotional and defensive when your medical services seem like they are under attack and you already feel underpaid by the carriers.

11. Maintain A Notebook Of Administrative And Professional Records. In advance of the audit, have a notebook or file with all the key documents you need for an audit. You will be prepared and then update these on an annual basis at the beginning of the year. These records include but are not limited to the following:

--All Medicare and Medi-Cal applications and supplemental applications (see if there is an issue with failure to update these applications);

--Malpractice insurance, workers' compensation insurance; liability insurance and any other insurance required by the programs; --Copies of all licenses held by providers and staff;

--Other business documentation required by the programs such as office leases, contracts with laboratories, contracts with suppliers, etc. (this will depend upon the type of provider);

--Equipment lists where the equipment is diagnostic or used for billing; and

--Any other documentation required by the program and its manuals.

12. Request An Exit Conference Or Meeting Upon The Conclusion Of The Audit. Depending on the type of audit or visit, you want to have an exit conference or meeting where you can address any outstanding issues in the audit. You also may want to or submit a letter that is reviewed or drafted by your health care attorney showing that you have fully complied with all record requests and documenting any positions regarding coding, billing, medical necessity or other issues that have arisen. Having an excellent record of your submissions will be important to obaining a favorable result and creating a good record if there is a subsequent hearing.

13. Conclusion. Audits happen to all providers. It does not necessarily mean you are a bad provider or that you should immediately leave the Medicare or Medi-Cal programs. With increasing financial pressures on health programs and practices, it is important to be forward thinking and create compliance plans and self-audit so your practice does not get assessed an overpayment.

During the audit, do your best to turn a potentially negative situation into a positive learning experience to correct any legitimate problems that the audit may uncover as well as to minimize the chance of future audits. Being stubborn and continuing to bill improperly will not help your practice. The carrier may still monitor your subsequent claims to see if your billing practices have actually changed and comply with the program's rules and regulations. Be proactive, anticipate audits in advance and handle audits intelligently and you will prevail to the greatest extent possible.

Any questions or comments should be directed to: tgreen@greenassoc.com.  Tracy Green is a principal at Green and Associates. They focus their practice on the representation of individuals, businesses and licensed professionals, particularly health care professionals including individual physicians, corporate providers and group practices. Their website is: http://www.greenassoc.com/

Can My Criminal Fraud Case Be Dismissed Based On Statute Of Limitations? Review Of Recent California Case Involving Public Funds (Welfare Fraud)

The government prosecuting agencies often take years to investigate fraud, embezzlement and other types of regulatory and white collar crime cases. Often one of the first tactics considered is filing a motion to dismiss based on the statute of limitation. In California state cases, under Penal Code Section 803(c), any charge in which intent to defraud is an element of the offense (such as grand theft, embezzlement, forgery, etc.) - the statute of limitation does not expire or run out until 4 years after the "date of discovery" by the victim or law enforcement.

The determination of the "date of discovery" and the identification of the person who first discovered the fraud become issues in litigating these cases. Discovery and investigation may yield facts supporting a statute of limitations defense. Ideally, a motion to dismiss on statute of limitation grounds would be filed before trial. Otherwise, the defense have to present the statute of limitation defense to a jury.

The recent California Court of Appeal case of People v. Moore, B207616 (2d Dist., Aug. 11, 2009) demonstrates some of the difficulties of proving when the "victim" discovered the fraud and winning a motion to dismiss based on statute of limitations. An additional twist here is that in cases involving fiscal crimes against a government entity, the "victim" for purposes of statute of limitation analysis is defined as a public employee occupying a supervisorial position who has the responsibility to oversee the fiscal affairs of the governmental entity and thus has a legal duty to report a suspected crime to law enforcement authorities.

In this case, the trial court denied the motion to dismiss on the statute of limitation on the ground that the true victim in this case was a government agency (DPSS )and not the business that distributed the government funds to the defendant. The Court of Appeal upheld the denial of the motion and affirmed the conviction. This case is a good lesson in the operation of California's statute of limitation in a fraud or white collar case where government funds are at issue.

FACTS OF CASE

During the early 2000s, the County of Los Angeles Department of Public Social Services (DPSS) contracted with Crystal Stairs, a nonprofit child development agency, to help the department (along with other agencies) distribute funds to child care providers. Crystal Stairs received funds from DPSS, and then distributed those funds to child care providers in accord with directives from DPSS.

The defendant, Kyron J. Moore, was charged with one count of grand theft and 10 counts of perjury by declaration. Between October 1, 2000, and March 31, 2002, Michelle Davis (Moore’s sister), applied to Crystal Stairs for child care funds. The applications, made under penalty of perjury, falsely reported that Moore was caring for Davis’s four children. Crystal Stairs, in turn, disbursed $44,026 to Moore, and he and Davis split the money. During this same time frame, the Long Beach YMCA actually provided care for Davis’s children.

On May 8, 2002, a child care coordinator at the YMCA mailed a letter to Crystal Stairs, along with supporting documentation, showing that Davis’ children had been receiving child care at the YMCA. Crystal Stairs received the YMCA’s letter on May 10, 2002. On May 28, 2002, a fraud prevention specialist at Crystal Stairs referred the matter to DPSS for investigation, because DPSS was “the only one that [could] conduct an investigation.” [These date and facts are obviously important for statute of limitation analysis on who is the victim and the date of discovery.]

On May 17, 2006—nearly four years after the date that DPSS was notified of the potential fraud—the People filed a criminal complaint against Moore. Thereafter, the People filed an information charging Moore with one count of grand theft (“to wit $44,026 ... in child care funds the property of Crystal Stairs,” which was alleged to have occurred “[o]n or between October 1, 2000 and March 31, 2002”) and with 10 counts of perjury by declaration on specific dates in 2001 and 2002.

In a strategic move, Moore moved to dismiss the charges against him, arguing the charges were barred by the applicable four-year statute of limitations (Penal Code § 801.5). Moore contended that Crystal Stairs, not DPSS, was the "victim" of the alleged crime. Because Crystal Stairs became aware of the alleged fraud on May 8, 2002 (through the letter from the YMCA) and the State didn't file the criminal complaint until May 17, 2006 (over four years later), Moore argued the complaint was untimely and the charges were required to be dismissed.

The trial court rejected that argument and denied the motion to dismiss. Thereafter, Moore pled no contest to one count of grand theft. Among other things, the trial court ordered Moore to pay victim restitution to Crystal Stairs. Moore then appealed his conviction, arguing that the trial court had erred in denying his motion to dismiss. The court of appeal affirmed.

LEGAL ANALYSIS

Penal Code § 801.5 provides that prosecution of grand theft “shall be commenced within four years after discovery of the commission of the offenses....” The four-year limitation period does not commence until the "victim" or a responsible "law enforcement official" learns of facts which, if investigated with reasonable diligence, would have revealed a crime had occurred. Penal Code § 803(c); People v. Kronemyer, 189 Cal. App. 3d 314, 330-331 (1987); People v. Lopez, 52 Cal. App. 4th 233, 246 (1997).

Moore contended Crystal Stairs must be defined as the “victim” because DPSS had already transferred funds to Crystal Stairs when he committed his crimes. Indeed, he cited the fact that the court ordered restitution to be paid to Crystal Stairs established Crystal Stairs' status as the "victim." The appellate court rejected the argument, reasoning that Crystal Stairs never “owned” the money that it disbursed. Therefore, Crystal Stairs was not “directly injured” by Moore’s fraud because it did not lose any money that it owned.

As mentioned above, in cases involving fiscal crimes against a government entity, the "victim" for purposes of statute of limitation analysis is defined as a public employee occupying a supervisorial position who has the responsibility to oversee the fiscal affairs of the governmental entity and thus has a legal duty to report a suspected crime to law enforcement authorities.

Although Crystal Stairs was obligated to report suspected fraud to DPSS, it had no responsibility over DPSS affairs. It was DPSS' responsibility to investigate the matter and to report suspected criminal activity to the appropriate law enforcement authorities. Therefore, DPSS, not Crystal Stairs, was the "victim" of Moore's crime, and the People's filing of the complaint within four years of Crystal Stairs' referral on May 28, 2002 was timely.

Attorney Commentary: There are good public policy reasons for statutes of limitation. Moreover, if we can prove that the statute of limitation has expired or run out - the court has no jurisdiction and the charge must be dismissed. In state fraud cases, however, where date of discovery is an issue, the motions become more complicated. We have sought evidentiary hearings on statute of limitation issues due to the proof issues required in winning such motions.

Any questions or comments should be directed to Ms Green at tgreen@greenassoc.com or 213-233-2260. Tracy Green is a principal at Green and Associates in Los Angeles, California. They focus their practice on the representation of licensed professionals, individuals and businesses in civil, business, administrative and criminal proceedings. They have significant experience in defending individuals, licensed professionals and businesses in fraud cases and investigations. Their website is: http://www.greenassoc.com

Notice: California Board Of Registered Nursing Rules Change On Issuance Of Temporary Licenses Or Interim Permits

Effective Monday, August 10, 2009, the Board of Registered Nursing (BRN) will not issue a Temporary License or Interim Permit until the processing of fingerprints is completed by the Department of Justice and the Federal Bureau of Investigation and have notified the BRN of the results. This will result in no Temporary Licenses or Interim Permits being issued at the counter, unless the processing of fingerprints have been completed.

This is a change from prior BRN policy. This change probably relates to the prior issues where nurses with prior criminal history had not been screened at the time of license application. Thus, all applicants should get their fingerprints and screening done as soon as possible in order to process their application timely.

Any questions or comments should be directed to: tgreen@greenassoc.com or 213-233-2260. Their website is: http://www.greenassoc.com/

San Bernardino Man Charged With Workers' Compensation Fraud, Giving False Statements During Deposition And Not Disclosing Prior Injuries

Criminal cases prosecuting individuals for exaggerating or fabricating injuries in workers' compensation cases continue to be filed. During economically difficult times, workers' compensation claims typically increase and the insurance companies and government respond by increasing their investigations.

On July 29, 2009, Jose Haro-Arriaga, a San Bernardino man, surrendered following the filing of nine felony counts related to workers' compensation fraud. Bail was set at $25,000. The felony complaint alleges that in December 2005, Haro-Arriaga filed a workers' compensation claim alleging an injury after two subjects stole a backpack leaf-blower he was wearing and operating during his employment as a landscape worker.

In the felony complaint, Haro-Arriaga is alleged to have misrepresented the facts of his industrial injury and presented false or fraudulent statements in support of his claim for compensation, in order to obtain benefits in excess of $39,000. In addition, Haro-Arriaga is alleged to have given false statements during a deposition, and willfully concealed and knowingly failed to disclose his prior industrial injuries.

Attorney Commentary: For employers, the prosecution of false, fraudulent or exaggerated injuries is welcome news. However, the workers' compensation system with its adversary system has caused exaggeration and misrepresentations on both sides (insurance companies and workers).

We urge attorneys and medical providers in the workers' compensation field to educate the applicants and employees of the perils of fabricating claims. Further, when the employees are arrested and charged, their defense may be that the attorney or physician knew that the claims were not legitimate or were exaggerated. The target of many of these investigations are the attorneys and doctors rather than the employees themselves.

Any questions or comments should be directed to: tgreen@greenassoc.com or 213-233-2260.

Tracy Green is a principal at Green and Associates in Los Angeles, California. They focus their practice on the representation of licensed professionals, individuals and businesses in civil, business, administrative and criminal proceedings. They have significant experience in defending individuals, health care providers, attorneys and businesses in workers' compensation fraud cases and investigations. Their website is: http://www.greenassoc.com/

Capper/Patient Recruiter In Medical Fraud Prosecution In Orange County Sentenced To 10 Years State Prison

On August 7, 2009, Sue Nanda, a patient recruiter for Unity Outpatient Surgery Center (Unity) was sentenced on August 7, 2009 to 10 years in state prison in Orange County Superior Court in Santa Ana. Ms. Nanda had pleaded guilty on February 20, 2009, to 22 felony counts including conspiracy, capping, failing to file tax returns, filing fraudulent tax returns, grand theft, and sentencing enhancements for white collar crime.

The plea and charges arose out of Ms. Nanda recruiting over 170 healthy patients (many from other states) to undergo unnecessary and allegedly dangerous surgeries to fraudulently bill medical insurance companies.

We have posted previously regarding the Unity case. One article related to Dr. Hampton who was sentenced to 16 years (running concurrently with a federal sentence) and referenced Ms. Nanda's guilty plea. See this article for more details regarding the case:

http://greenandassociates.blogspot.com/2009/05/attorney-health-care-fraud-doctor.html

Of the 19 defendants charged in the Unity case, 11 are awaiting trial which is presently scheduled for October 26, 2009, at the Central Justice Center in Santa Ana.

Attorney Commentary: This is a large state case and the sentences in this case for pleas have been lengthy. This is a trend that we can expect to see in health care fraud cases and other fraud cases. The U.S. Attorney General recently stated that health care fraud cases will be "data driven" and thus, we can expect to see more federal and state prosecutions for cases that were not previously prosecuted. Compliance should be the name of the game for those in the health care industry. The risks of having a criminal prosecution for regulatory crimes are too great.

Any questions or comments should be directed to: tgreen@greenassoc.com or 213-233-2260. Tracy Green is a principal at Green and Associates in Los Angeles, California. They focus their 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. Their website is: http://www.greenassoc.com/

California State ADP Employee Who Inspected Rehab Clinics Indicted on Charges for Allegedly Taking Cash Bribes

The California Department of Alcohol and Drug Programs (ADP) is responsible for administering prevention, treatment, and recovery services for alcohol and drug abuse and problem gambling. The ADP has the sole authority in state government to license adult alcoholism or drug abuse recovery or treatment facilities. ADP also receives federal funding and certain programs bill Medi-Cal.

An ADP employee, Gary Eugene Goethe of Sacramento, was indicted in United States District Court in Los Angeles on August 4, 2009 with four counts of “honest services” wire fraud, four counts of extortion and two counts of bribery charges for allegedly demanding more than $100,000 in bribes from the owners of two rehabilitation clinics that were seeking state certifications.

The indictment followed Mr. Goethe’s arrest on July 9 by special agents with the Federal Bureau of Investigation as he was leaving a meeting where he allegedly accepted a $3,500 cash payment that was part of a $10,000 bribe he had negotiated. Mr. Goethe was initially charged in a criminal complaint, a charging document that is now superseded by the grand jury indictment.

Mr. Goethe worked for ADP as a “drug Medi-Cal monitoring supervisor” who traveled to alcohol and drug treatment clinics throughout California to inspect records and documentation related to Medi-Cal billings. The indictment alleges that Mr. Goethe solicited and accepted bribes from rehabilitation facility owners in exchange for his promise of approvals and other benefits.

The indictment alleges that in one case Mr. Goethe told a clinic owner that he could help the owner obtain certifications that would allow the owner to expand service offerings to include mental health treatment. Mr. Goethe allegedly promised that, in exchange for cash bribery payments, he could “guarantee” that the clinics would be certified to provide mental health treatment services. Mr. Goethe allegedly demanded $92,000 in bribery payments from the owner.

In relation to another facility, Mr. Goethe is accused of revealing to the owner that the facility was being investigated by the California Department of Justice (DOJ), but that, in exchange for cash bribe, Mr. Goethe could “help” the clinic owner by providing confidential information about the subjects and progress of the investigation, as well as steering DOJ away from the clinic. Mr. Goethe allegedly demanded $10,000 in bribe payments from the owner of this facility.

After being arrested last month, Mr. Goethe was freed on a $50,000 bond. He is scheduled to be arraigned on the indictment August 10. The charge of “honest services” wire fraud carries a statutory maximum penalty of 20 years in federal prison. The charge of interference with commerce by extortion under color of official right also carries a maximum penalty of 20 years in prison. The charge of bribery concerning programs receiving federal funds carries a maximum penalty of 10 years in prison. An indictment contains allegations that Mr. Goethe has committed a crime. Every defendant, including Mr. Goethe, is presumed innocent until and unless proven guilty.

Attorney Commentary:

One issue we have seen in our practice is that it has been very difficult to obtain licenses and/or certification from the ADP in a timely manner. We have clients that opt to operate nonresidential recovery programs since they realize it can take one or two years to become licensed. Further, the power of Cal DOJ and the fear of audits can make ADP owners willing to take dangerous risks in order to preserve their business. There are individuals and businesses committed to recovery but face significant government bureaucracy and red tape in order to operate.

Generally, any residential facility providing detoxification; group, individual or educational sessions; and/or recovery or treatment planning to adults must be licensed. See California Code of Regulations (CCR), Title 9, Section 10501 et seq. Nonresidential programs are not required to be licensed. In addition to licensure, ADP provides a voluntary certification process to identify programs which exceed a minimal level of service quality and are in substantial compliance with the Department’s standards. Certification is available to both residential and nonresidential programs. Obtaining certification is considered advantageous in gaining the confidence of both potential residents and third party payers.

For providers and those wanting to operate residential facilities, seeking experienced legal counsel or consultants to help streamline the process of becoming licensed or responding to audits and investigations is an excellent idea. Attempting to short-cut the process through "old-fashioned handshakes" will cause more problems than it will solve. We have represented several people accused of bribing government officials in order to get Medicare or Medi-Cal provider numbers or to speed up the process. We would prefer to help individuals and businesses avoid any adverse legal exposure.

Any questions or comments should be directed to: tgreen@greenassoc.com at 213-233-2260. Tracy Green is a principal at Green and Associates in Los Angeles, California. They focus their practice on the representation of licensed professionals and businesses in civil, business, administrative and criminal proceedings. They have represented a number of alcohol and drug rehabilitation programs (residential and non-residential). The firm's website is at: http://www.greenassoc.com/