Orange County Workers' Compensation Fraud Cases Plead Out. Aspen Durable Medical Equipment Owners Get Minimal Jail Time, Pay Over $8 Million in Restitution and Dismiss $139 Million in Liens at WCAB

In criminal fraud cases, restitution is usually key to obtaining favorable plea terms. In workers' compensation fraud cases, releasing the right to collect on liens or receivables at the Workers' Compensation Board is also an important part of plea deals especially in light of Labor Code 139.31. 

This is evidenced in two complex workers' compensation fraud cases, known as the Aspen Medical DME cases, which plead out on May 5, 2017 in Orange County Superior Court. 

The three individual owners -- Jeffrey Edward Campau, Landen Alan Mirallegro and Abraham Khorshad -- agreed to pay jointly $8,621,845.96 in restitution, dismiss liens (charged and uncharged) worth over $139 million and pay other penalties in exchange for county jail terms (with state prison suspended) and where they will be eligible for house arrest with electronic monitoring. 

Owner of Holter Labs, Cardiac Monitoring Services Company, Convicted for Health Care Fraud for Billing for Services Not Performed

On May 2, 2017, Michael Mirando, an owner of Holter Labs, which provided cardiac monitoring services, was found guilty after a week long federal trial of 15 counts of health care fraud for submitting bills to insurance companies for tests and services that were never performed from 2009 to 2016. 

This case was before Judge Percy Anderson and sentencing is scheduled for August 21, 2017.  After the jury verdict, Mr. Mirando signed a stipulation indicating that his home had been bought with proceeds from the business and thus there will likely be a forfeiture component to this case which can be used for restitution.  

Holter Labs was a company that provided physicians with equipment for cardio monitoring and let the physician bill the patients' insurance for the professional components (hookup and interpretation) and the company billed for the technical component. The government presented evidence that Holter Labs submitted bills for services never ordered (such as 30-day tests) and for services the devices could not perform (such as brain scans and oxygen studies). The government alleged that $7 million in billing was for services never performed and $1 million was for duplicate date of services and that Holter Labs collected at least $2.5 million on these false claims.

These type of companies have been under scrutiny even without alleged false billing. Companies offer physicians a revenue stream where they send the equipment for free to the physicians' offices, have the data downloaded for the physicians who get to bill for the professional component. Since holter monitoring is not a designated health service the Stark rules do not apply but it should be determined whether providing the software and printing reports could be consideration for the referral of the technical patient billing. Any arrangement with the companies should be reviewed for compliance.

Posted by Tracy Green, Esq.

Green and Associates, Attorneys at Law

Email: tgreen@greenassoc.com

Work: 213-233-2260

     

Los Angeles Dermatologist Pays $2.6 Million to Resolve False Claim Allegations He Billed Medicare for Unnecessary Mohs Skin Cancer Surgeries

On April 10, 2017,  Dr. Norman A. Brooks, M.D., the owner of The Skin Cancer Medical Center in Los Angeles paid the United States $2,681,400 as part of a settlement to resolve allegations that he submitted bills to Medicare for Mohs micrographic surgeries for skin cancers that were medically unnecessary. In settling the case, Dr. Brooks did not admit liability in the matter.

As part of the settlement, Dr. Brooks and his entity entered into a three-year Integrity Agreement with the U.S. Department of Health and Human Services, Office of Inspector General. Under the Integrity Agreement, Dr. Brooks will establish and maintain a compliance program that includes, among other things, mandated training for him and his employees and review procedures for claims submitted to Medicare and Medicaid programs.

The settlement resolves allegations made in a lawsuit filed by Dr. Brooks' former Brooks employee Janet Burke under the qui tam, or “whistleblower,” provisions of the False Claims Act, which permit private parties to sue on behalf of the government and receive a share of any recovery. For her role in the case, Ms. Burke will receive $482,652.

          

The lawsuit alleged that Brooks falsely diagnosed skin cancer in some of his patients so that he could perform, and bill for, Mohs surgeries. Mohs surgery is a specialized surgical procedure for removing certain types of skin cancers in specific areas of the body, including the face. The surgery is performed in stages during which the surgeon removes a single layer of tissue which undergoes a microscopic evaluation. 

The surgeon performs additional stages, if necessary, until all of the cancer is removed. Given the complexity and time required to perform the procedure, Mohs yields a higher Medicare reimbursement than other procedures used to remove skin lesions.

Dermatology is under greater scrutiny by government billing programs (Medicare, TriCare, etc.) and we have seen an increased rate of audits. A compliance plan is never too late to start and can help prevent whistleblower cases when a practice self-reports or discovers the employee's allegations during employment or at an exit interview.

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

When Is Physician Billing for In Office Prescriptions, Compounded Medications and Urine Toxicology Screening for Workers’ Compensation Patients Illegal? Orange County DA Charges Doctors, Pharmacists and Business Owners Alleging Insurance Fraud and Illegal Referral Fees

For years, there have been companies who approach physicians and offer ways they can add to their revenue stream.  This has been more common with physicians who treat workers’ compensation patients.  

Some of the common revenue enhancements are:  

(1) dispensing oral prescription medications in-office to patients;

(2) dispensing a 3-day supply of compound medications in-office to patients; and

(3) performing point of care urine toxicology testing on patients in-office.

Under California workers’ compensation law, there are ways for these medically necessary services and goods to be legally provided and billed. However, if the laws and regulations are not followed, the claims can be denied or the basis for insurance fraud charges.

A recent criminal prosecution in Orange County Superior Court shows what happens when workers' compensation insurance fraud and illegal referral fees are alleged in providing these types of goods and services (prescription medications, compounded medications and toxicology laboratory testing) to patients.

The Orange County District Attorney’s (OCDA) Office filed 26 felony criminal complaints in April 2017 against 25 physicians, a physician assistant, two pharmacists and the two owners of the billing and medical management companies King Medical King Medical Management, Inc., Monarch Medical Group, Inc. and/or One Source Laboratories, Inc. for services and goods provided and/or billed from 2011 to 2015.

Links to the Orange County DA criminal complaints are on the Department of Insurance press release issued on this investigation.  All physician defendants are presumed innocent and a felony complaint is not evidence.

It appears the OCDA decided to file a criminal case against each provider separately in order to not have a single multi-defendant case that would progress slowly and for other tactical reasons. However, there is a conspiracy count in each criminal complaint filed against the physicians or pharmacists in which the owner(s) of the medical management and billing companies are named as uncharged co-conspirators. The OCDA views the management billing companies as the hub in these cases.

Unnecessary Genetic Testing on Medicare Skilled Nursing Facility Patients Alleged in Federal Qui Tam Case Involving California Based Laboratory

Genetic testing is currently the subject of numerous qui tam cases and investigations by the Office of Inspector General. This is in addition to any investigations by private insurance carriers. A recent federal qui tam case shows that the government is going after those involved in the ordering of such tests as well as the laboratories.

One issue that arises is where genetic tests are ordered by physicians who are not the regularly treating physicians of the Medicare patients. In order to be considered medically necessary and thus reimbursable under Medicare, the general rule is that the laboratory test must be ordered by the physician treating the resident. 

What happens when a laboratory test is ordered by a physician who is not the regular treating physician of the patient? For example, what if the physician is an outside physician whose only role is ordering a genetic test? In a recent case, a federal qui tam (false claims) lawsuit was filed as a result against skilled nursing facilities who gave a laboratory access to its patients. This lawsuit and settlement can serve as a teaching moment for those who order genetic testing. 

On April 10, 2017, a multi-state nursing home company Prestige Administrative Services, LLC d/b/a Prestige Healthcare (Prestige) based in Kentucky agreed to pay the United States $995,500 to resolve allegations that it violated the False Claims Act with regard to its role in an alleged scheme to falsely bill Medicare for unnecessary genetic testing on skilled nursing home patients in four facilities located in Wisconsin.

The United States alleged that in 2014, Prestige was approached by an entity known as Genomix, LLC, which claimed that it could perform genetic testing on Prestige’s Medicare residents in order to ascertain whether Prestige’s patients were properly metabolizing their medications. 

The United States alleged that in 2014 and 2015, Prestige provided Genomix with insurance and personal medical information, as well as access to Prestige patients in nursing homes in several states, including Wisconsin, for purposes of conducting the testing. Genomix conducted the testing by taking cheek swabs of each Prestige patient and then sending the cheek swab to a laboratory for analysis.

The United States alleged that Prestige failed to ensure that physician orders were obtained for the genetic testing prior to its being conducted, and that Prestige's physicians were not aware of and did not agree with the medical necessity of the testing. 

United States also alleged that Prestige failed to ensure that its patients (or, in some cases, their family members responsible for their medical decisions) were appropriately informed of the testing prior to its being conducted and provided with the opportunity to decline the testing. Finally, the United States alleged that the lack of physician orders and patient consent was discovered during a survey conducted by state regulators in late 2015.

While it is not unusual for skilled nursing facility (SNF) operators, such as Prestige, to coordinate in placing orders with clinical laboratories for medically necessary diagnostic laboratory tests for their residents, the treating physician must order the test. This is a basic tenet that in order to be considered medically necessary and thus reimbursable under Medicare, the laboratory test must be ordered by the physician treating the resident. 

The settlement announced resolved only Prestige’s civil liability and did not resolve any liability of any other individuals or entities, including that of Genomix, which is a separate entity headquartered in Southern California. As part of the settlement, Prestige agreed to cooperate in the United States’ ongoing investigation. 

Based on what we hear in the healthcare legal community, we can expect to see more investigations, lawsuits and even potential criminal prosecutions involving genetic testing. There are allegations in other cases indicating that physicians are being paid as experts or researchers by laboratories to order genetic tests on their patients and that in some cases, these fees are disguised kickbacks. Any physician in such an arrangement with a laboratory should ensure that it is compliant with federal and state law.  

Posted by Tracy Green, Esq.
Green and Associates, Attorneys at Law
Work: 213-233-2261
Email: tgreen@greenassoc.com

Billing for Prescriptions Not Dispensed to Patients Results in 4 Year Sentence for Los Angeles Medical Clinic Manager After Federal Trial

Federal prosecutors used to devote healthcare fraud resources to mainly government programs and allow private insurance carriers to handle the cases with special investigation units or with state prosecutions. A recent case shows how private insurance healthcare fraud is being pursued forcefully. This is in large part due to the overlap between private and public and the fact that the federal government pays subsidies for tens of millions of people who have private insurance.

The recent case was one of ghost billing. On March 28, 2017, Michael Huynh, the office manager and purported part-owner of a Los Angeles area medical clinic in Reseda was sentenced to 51 months in federal prison for his role in billing private insurance plans for prescription medication that was never dispensed to insured patients and failing to report such income on his federal income tax returns. Following a seven-day trial in September 2016, Mr. Huynh was found guilty of one count of conspiracy to commit healthcare fraud and 11 counts of filing false tax returns.

Mr. Huynh, age 67, was sentenced by United States District Judge Otis D. Wright II. In addition to the prison term, Judge Wright ordered Mr. Huynh to pay just over $1.9 million in restitution to the victim insurance companies and back taxes – estimated to be nearly $950,000 – to the Internal Revenue Service.

      

The evidence introduced at trial showed that between January 2004 and November 2009 Mr. Huynh and a pharmacist (Farhad N. Dany Sharim,  a co-owner of Century Discount Pharmacy in Reseda) participated in a healthcare fraud scheme that billed private insurance plans for prescription medication that was never dispensed to insured patients. Mr. Sharim, age 57, previously pleaded guilty to conspiracy to commit healthcare fraud and will be sentenced by Judge Wright on May 1.

The evidence at trial was that Mr. Huyhn provided Mr. Sharim with fabricated prescriptions purportedly for patients of the medial clinic who were insured by healthcare benefit programs. Mr. Sharim's pharmacy then submitted false and fraudulent bills for prescription drugs that had not been dispensed to the patients and received substantial payments from various health care benefit programs to which it was not entitled. Mr. Sharim allegedly paid Mr. Huyhn and/or the medical clinic more than $1.1 million.

In addition to the healthcare fraud scheme, Mr. Huynh was charged with filing false federal tax returns for tax years 2007 through 2011 that underreported the medical clinic’s gross receipts and sales by more than $1.6 million.

Posted by Tracy Green, Esq.

Green and Associates, Attorneys at Law

Office: 213-233-2260

Email: tgreen@greenassoc.com