The Strike Force Approach to Combatting Health Care Fraud

Bridget M. Rohde02/10/2014

The U.S. Department of Justice (DOJ), Health and Human Services Office of Inspector General (HHS-OIG) and other federal and state agencies are aggressively prosecuting health care fraud and related offenses through a strike force approach that has its roots in DOJ's historic efforts to combat traditional organized crime (or "La Cosa Nostra"). As DOJ has advised in recent press releases, this approach has been highly impactful in the health care space:

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,700 defendants who collectively have billed the Medicare program for more than $5.5 billion. In addition, HHS's Center for Medicare and Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers. 1

Below, we look at the historic organized crime strike force program, the evolution of the Medicare Fraud Strike Force (MFSF) and MFSF's current approach and seemingly ever-increasing productivity.

Historic Organized Crime Strike Forces

In the 1960s, to address the long-ignored presence of organized crime and its numerous rackets, DOJ developed an organized crime strike force program in which teams of prosecutors in cities across the country focused on the families of La Cosa Nostra operating in their local geographic jurisdictions. These prosecutors worked in partnership with investigators from a variety of federal agencies, and, sometimes local law enforcement as well. Investigations were long-term efforts, as the teams of prosecutors and agents gathered intelligence through confidential sources, electronic surveillance and other investigative techniques,and methodically built broad, deep and impactful cases.

Early on, DOJ touted the success of its organized crime strike forces in much the same way as it now does the success of MFSF: "Individuals indicted during 1968 as a result of strike force strategy numbered 71 in Brooklyn, 67 in Detroit, 34 in Buffalo, 12 in Chicago and 5 in Philadelphia." 2

At the time of the merger of the strike forces with local U.S. Attorneys Offices in 1990, there were 14 strike forces across the country, located in Brooklyn, Buffalo, Chicago, Cleveland, Detroit, Kansas City, Las Vegas, Los Angeles, Miami, New Orleans and San Francisco. 3

The success of the organized crime strike force approach (and continuing efforts of the U.S. Attorneys' Offices) was incontrovertible. Waves of prosecutions relentlessly taking down the successive hierarchies of the five New York City-based families of La Cosa Nostra is one of the more memorable local examples. While perhaps surprising at first blush, the use of a variation on this approach to combat white-collar crime, including health care fraud, now seems a logical, even inevitable, law enforcement strategy.

The Birth and Evolution of the MFSM

MFSF was initiated in March 2007, in what came to be Phase One, in the Southern District of Florida (Miami). A year later, in March 2008, Phase Two was kicked off in the Central District of California (Los Angeles). As part of the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, a joint effort by DOJ and HHS, in 2009, MFSF expanded to Detroit, Houston, Brooklyn, Tampa and Baton Rouge. In 2011, the program expanded to the total of nine cities it is today, by adding Dallas and Chicago.

Phase One of MFSF was announced in connection with a May 2007 takedown in the Southern District in Florida involving the indictment of organizations and individuals in connection with allegedly conspiring to defraud the Medicare program, making false claims and violating the anti-kickback statute. Thirty-eight individuals were arrested. Collectively, approximately $142 million was allegedly billed in Medicare. MFSF was then described as "a multi-agency team of federal, state and local investigators designed specifically to combat Medicare fraud through the use of real-time analysis of Medicare billing data," focusing on schemes involving infusion therapy and durable medical equipment (DMEs). 4

MFSF became much more. There was the noted expansion to nine cities. In addition to takedowns of discreet cases in particular cities, in late 2009, MFSF began conducting periodic nationwide takedowns, with individuals being arrested in a number of cities simultaneously in connection with healthcare-related offenses. A July 2010 nationwide takedown appears to be the largest such takedown to date, with the arrest of 94 individuals across the country for allegedly participating in schemes to submit approximately $251 million in Medicare claims. 5

Over the years that MFSF has been in existence, it has utilized other hallmarks of the strike force approach to fighting organized crime besides multi-agency cooperation and sprawling takedowns, including employing electronic surveillance techniques, expanding the range of crimes charged, obtaining (and issuing press releases regarding) long prison sentences imposed on individuals, and even having "most wanted" healthcare fugitives. Penalties of fines, forfeiture and restitution have been utilized to recoup public monies and disincentivize fraudsters.

The Current Look of MFSF Cases

A review of MFSF prosecutions in 2013 provides numerous insights into the increasingly broad scope and continuing effectiveness of the strike force approach to combatting healthcare fraud:

Many Venues of Prosecution. DOJ and its partners brought cases across the country, including in California, Florida, Illinois, Louisiana, Michigan, New York, Pennsylvania, Texas and Utah. Certain federal districts had a particularly high concentration of MFSF cases, including the Southern District of Florida, Eastern District of Michigan and Central District of California.

Variety of Health Care Providers Targeted. Cases targeted executives of a health maintenance organization; the owner/operator of an oncology center; the medical director of a hospice; the owner and program coordinator of an adult day care center; owners and others associated with partial hospitalization programs (PHPs); owners and others associated with home health care agencies; owners and others associated with DMEs; owners of ambulance services; and doctors, registered nurses and other medical professionals.

Types of Crimes Charged. Charges included healthcare fraud for submitting false and fraudulent claims to Medicare, violations of the anti-kickback statute, and, in some recent cases, money laundering.

Wide-ranging penalties. Sentences included the imposition of lengthy prison terms; fines, restitution, and forfeiture; exclusions from Medicare, Medicaid and other federal and state health programs; and compliance requirements.

Some specific matters further illustrate the scope of MFSF's efforts and its results.

1. May 2013 Nationwide Takedown. As noted above, MFSF's sixth nationwide takedown took place in May 2013. DOJ and HHS announced arrests in eight cities of 89 individuals, including health care company owners, doctors, nurses and other licensed medical professionals, for allegedly participating in Medicare fraud schemes involving approximately $223 million in billings. Schemes involved billings for home health care, mental health services, psychotherapy, occupational and physical therapy, and pharmacy fraud, as well as infusion therapy and DMEs. Charges included conspiracy to commit health care fraud, violations of the anti-kickback statute and money laundering. 6

2. Multi-million Medicare Fraud Scheme involving Brooklyn Clinic. In addition to the nationwide takedown, MFSF also brought or continued to prosecute individual cases that further illustrate the strike force approach and its results. One illuminating local example is a case charging a $77 million Medicare fraud scheme involving a Brooklyn, New York clinic. The owner and employees of the clinic allegedly paid kickbacks to Medicare beneficiaries and used the beneficiaries' names to bill Medicare for services that were medically unnecessary or never provided. The kickbacks were allegedly paid so that beneficiaries would keep quiet about services that were not provided or would acquiesce to treatment that was unnecessary. A network of money launderers was allegedly used to generate the cash needed for the kickbacks. 7

As of late last year, 13 individuals had been convicted in connection with the multi-million scheme. The owner of the clinic, who pled guilty to one count of conspiracy to commit money laundering, was sentenced to 15 years in prison and ordered to pay approximately $51 million in restitution and $36 million in forfeiture. Another participant—an individual described as a "no-show" doctor who allegedly let the clinic use his Medicare billing number and rarely visited the clinic except to pick up his check—was sentenced to more than 12 years in prison, ordered to pay over $50 million in restitution and another half million in forfeiture and was excluded from Medicare, Medicaid and federal health programs; additionally, New York state revoked his medical license. An individual who "impersonated" the doctor—signing medical charts and prescriptions in the doctor's name and performing medical procedures on patients even though he was not a doctor—was sentenced to eight years in prison, as well as restitution, forfeiture and program exclusions. Among those awaiting sentencing is an individual who pled guilty to laundering the proceeds of the health care fraud through a number of shell companies and bank accounts. 8

In addition to the dollar amount of the fraud scheme,the inclusion of money laundering charges and the variety and size of penalties, this case is notable because the government utilized investigative techniques historically used to investigate organized crime and, in more recent years, investigate insider trading. Specifically, the government stated in press releases regarding this case that it employed a court-authorized audio/video device concealed in a room at the clinic where conspirators gave cash to Medicare beneficiaries. Fitting in with the organized crime analogy, the room included "a Soviet-era poster of a woman with a finger to her lips and the words 'Don't Gossip' in Russian." 9

Effect of Strike Force Approach

As indicated above, in 2009, DOJ and HHS formed the Health Care Fraud Prevention and Enforcement Action Team, or HEAT, which includes the strike force efforts but is more expansive. For one, HEAT is also responsible for many significant civil enforcement actions resulting in multi-million dollar settlements over the last few years. These civil enforcement actions are developed and prosecuted using what can fairly be referred to as a modified strike force approach. DOJ and HHS, often in conjunction with one or more federal or state partner, work cooperatively to investigate and bring expansive cases against pharmaceutical or medical device companies charging violations of the False Claims Act, Food Drug and Cosmetics Act, the anti-kickback statute or other laws and regulations. Commonly, based on a qui tam complaint, an investigation will target specified conduct like off-label marketing of pharmaceuticals or introduction of adulterated drugs into commerce, seek monetary penalties and require remediation of the violations and adherence to a compliance protocol going forward.

A case in point from 2013 involved Johnson & Johnson. On Nov. 4, 2013, DOJ announced a deal requiring Johnson & Johnson and three of its subsidiaries to pay more than $2.2 billion to resolve criminal exposure and civil liability arising from marketing prescription drugs for uses not approved as safe and effective by the Food & Drug Administration (FDA), as well as for paying kickbacks to doctors and the country's largest long-term care pharmacy provider for prescribing and promoting these drugs. 10

To address its criminal exposure, on November 7, Johnson & Johnson subsidiary Janssen Pharmaceuticals Incorporated pled guilty to a misdemeanor charge of misbranding, in violation of the FDCA, in the U.S. District Court for the Eastern District of Pennsylvania. Specifically, Janssen was alleged to have introduced the drug Risperdal into the market for unapproved uses from March 2002 through December 2003, namely treating behaviors of elderly, non-schizophrenic patients suffering from dementia, when it had been approved only for the treatment of schizophrenia; the criminal fines and forfeiture component of the criminal resolution is $400 million. 11

Civil lawsuits similarly claimed that Johnson & Johnson and Janssen promoted Risperdal to doctors and nursing homes for unapproved uses in the elderly, children and mental disabled. A complaint in the Eastern District of Pennsylvania specifically alleged that the FDA repeatedly advised Janssen that marketing Risperdal as safe and effective for the elderly would be misleading. It also alleged that Janssen downplayed health risks to the elderly posed by Risperdal and improperly promoted its use in children. Speaker fees were allegedly paid to doctors to encourage them to write prescriptions. In addition, Johnson & Johnson and Janssen allegedly engaged in off-label promotion of a newer anti-psychotic drug, Invega. 12

Johnson & Johnson and Janssen agreed to pay over $1.2 billion to resolve civil liability under the False Claims Act in relation to Risperdal and Invega. In addition, Johnson & Johnson agreed to pay another $149 million in connection with the alleged kickbacks that were allegedly paid to the large long-term care pharmacy. 13

An additional component of the resolution was a five-year Corporate Integrity Agreement, described as requiring major changes to the way Johnson & Johnson's pharmaceutical subsidiaries do business. Annual compliance certifications are required by certain management employees and board members. As the government stated,"[t]his agreement is designed to increase accountability and transparency and prevent future fraud and abuse." 14

A telling remark by U.S. Attorney General Holder Eric Holder, who delivered remarks at the press conference on this resolution, is that pharmacists, who were supposed to be "gatekeepers" providing independent review of patient medications, instead recommended the drugs for unapproved uses at the companies' request. 15

Conclusion

In 2014, MFSF is in full flower. There is every reason to expect the strike force approach to be utilized for the foreseeable future, unless and until health care fraud significantly diminishes as a public concern. The specific cases arising from MSFS' efforts in 2013 can help drive risk assessments and fine-tuning of compliance programs to avoid repeating the expensive mistakes made by some in the health care industry in the past. The resolutions of these cases serve as a reminder of the need to prioritize compliance.

Bridget M. Rohde, a member of Mintz Levin in New York, is a former chief of the Criminal Division of the U.S. Attorney's Office for the Eastern District of New York.

http://m.newyorklawjournal.com/module/alm/app/ny.do#!/article/1457727614

Husband, wife and business associate charged with health care fraud

William Owuama, 55, Marla Owuama, 46, and Florida Holiday Island, 64, all of Houston, have been charged in an eight-count indictment alleging conspiracy to commit health care fraud, health care fraud and conspiracy to violate the federal anti-kickback statute, announced United States Attorney Kenneth Magidson.

The sealed indictment, returned Jan. 22, was unsealed this afternoon as all three defendants made their initial appearance before U.S. Magistrate Judge Frances Stacy at 2 p.m. At the hearing, Judge Stacy permitted Marla Owuama and Island be released upon posting bond. Upon surrendering his passport, William Owuama is also expected to be released upon posting bond.

The indictment alleges William Owuama was the owner of Wilmar Healthcare Systems, his wife Marla was a registered nurse and Island transported patients to and from the clinic. According to allegations, they not only paid patients for visiting the clinic in violation of the anti-kickback statute, but billed Medicare and Medicaid for vestibular testing that was never performed. The indictment also alleges the clinic billed Medicare and Medicaid under the provider number of a local doctor while that doctor was incarcerated on unrelated charges. From January 2006 through October 2009, Medicare and Medicaid paid Wilmar more than $4 million based on the alleged fraudulent claims.

If convicted, all three defendants face up to five years in federal prison and a $250,000 fine for conspiring to commit healthcare fraud and violating the anti-kickback statute. The Owuamas also face up to 10 years in prison and a $250,000 fine for the substantive healthcare fraud charges.

The investigation leading to the charges in this case was conducted by the U.S. Department of Health and Human Services – Office of Inspector General and the Texas Attorney General’s Office Medicaid Fraud Control Unit. Special Assistant United States Attorney (SAUSA) Adrienne Frazior and AUSAs Andrew Leuchtmann and John Pearson are prosecuting the case.

http://www.yourhoustonnews.com/memorial/news/husband-wife-and-business-associate-charged-with-health-care-fraud/article_13e3906b-a9f5-5b62-973f-9b3c3b2b3f2a.html?mode=jqm

20 Detroit-area Residents Charged in Medicare Fraud Strike Force Takedown for Approximately $34 Million in False Billing

Washington, DC—(ENEWSPF)—December 5, 2013. Twenty Detroit-area residents have been charged for their roles in physician home visit, home health care, chiropractic and psychotherapy schemes to submit more than $34 million in false billing to Medicare.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney for the Eastern District of Michigan Barbara L. McQuade, Special Agent in Charge Paul M. Abbate of the FBI’s Detroit Field Office and Special Agent in Charge Lamont Pugh III of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) Chicago Regional Office made the announcement.

“Medicare fraud hits every taxpayer and harms so many who are in need of critical health care,” said Acting Assistant Attorney General Raman.  “The defendants arrested yesterday and today include doctors, physical therapists and home health care agency owners who were entrusted by Medicare to provide their patients with necessary care and services.  Instead, they abused that trust for their own profit.  The Strike Force’s operation reflects our continuing and unflagging commitment to put an end to these harmful fraud schemes.”

“Doctors and clinic owners should take note that we are scrutinizing billing data to detect fraud and bring offenders to justice,” said U.S. Attorney McQuade.   “We are committed to recovering tax dollars intended for patient care.”

“These charges clearly send the message to criminals that committing fraud against government health care programs puts them squarely in the sights of the Medicare Fraud Strike Force,” said HHS-OIG Special Agent in Charge Pugh. “Taxpayers and patients should know that OIG with its Strike Force partners will continue to root out, expose, and hold accountable those who attack the Medicare program.”

“When medical doctors, physical therapists, and other health care providers conspire to defraud our government health care programs and undermine the public trust, they not only betray their profession, but also steal directly from the American people,” said FBI Special Agent in Charge Abbate. “The FBI and our law enforcement partners in the Medicare Fraud Strike Force will continue our efforts on behalf of the American taxpayer to prevent health care fraud and bring these criminal perpetrators to justice.”

Court documents unsealed this week in the Eastern District of Michigan charge defendants including physicians, owners and operators of companies, office employees and patient recruiters with submitting fraudulent claims for services that were never rendered and with paying kickbacks to obtain patients to be billed. Nineteen of the defendants were arrested or surrendered to authorities yesterday morning and this morning, and one defendant remains at large. In addition, law enforcement agents yesterday and today executed search warrants at nine locations and seizure warrants of 14 bank accounts related to the alleged fraud schemes.

The following charges were unsealed:

United States v. Goldfein, et al.

Two individuals, both medical doctors, were charged in an indictment with conspiring to commit health care fraud for their roles in a $5.4 million scheme to defraud Medicare by submitting fraudulent claims for physician home services that were not provided. The indictment alleges that the fraudulent claims were submitted by a physician clinic that provides both in-home and outpatient health care services. The clinic, with locations in Livonia, Mich., and Swartz Creek, Mich., is known as Tri City Medical Centers P.C.

The defendants charged in the indictment are Aaron Scott Goldfein, 49, of Bloomfield Hills, Mich., and William Clay Sokoll, 58, of Royal Oak, Mich.

United States v. Elhorr, et al.

Three individuals, one of whom is a medical doctor and one of whom is a nurse, were charged in a superseding indictment with conspiracy to commit health care fraud for their roles in an $11.5 million scheme to defraud Medicare by submitting fraudulent claims for physician home services that were not provided. The superseding indictment alleges that the fraudulent claims were submitted by a home visiting physician practice. The practice, located in Allen Park, Mich., was known as House Calls Physicians P.L.L.C.

The defendants charged in the superseding indictment are Ali Elhorr, 44, of Dearborn, Mich.; Lama Elhorr, 31, of Hollywood, Fla. (formerly of Dearborn, Mich.); and Kelly White, 44, of Dearborn, Mich.

United States v. Khan, et al.

Ten individuals were charged in an indictment with conspiracy to commit health care fraud or conspiracy to pay and receive illegal kickbacks for their roles in a $7 million scheme to defraud Medicare. The defendants include two medical doctors and three owners of home health care agencies, one of whom is also a physical therapist, as well as patient recruiters and office staff. The indictment alleges that the defendants caused the submission of fraudulent claims to Medicare for medically unnecessary home health care services and paid kickbacks in the form of cash payments and prescription narcotics to Medicare beneficiaries for the use of their Medicare beneficiary numbers. The indictment also alleges that physicians received kickbacks in the form of cash payments to certify Medicare beneficiaries for medically unnecessary home health care services. The fraudulent claims were submitted by two home health care agencies, Advance Home Health Care Services Inc. and Perfect Home Health Care Services LLP.

The defendants charged in the indictment are Walayat Khan, 65, of Ypsilanti, Mich.; Adelina Herrero, 72, of Ann Arbor, Mich.; Amer Ehsan, 44, of Canton, Mich.; Haroon Ur Rashid, 47, of West Bloomfield, Mich.; Mohammad Rafiq, 47, of West Bloomfield, Mich.; Salman Ali Sapru, 51, of Ypsilanti, Mich.; Farhan Khan, 25, of Ann Arbor, Mich.; James Zadorski, 48, of Detroit, Mich.; Cynthia Bell, 55, of Detroit, Mich.;   and John Sanders, 59, of Pontiac, Mich.

United States v. Hassan, et al.

Two individuals were charged in an indictment with conspiracy to commit health care fraud and conspiracy to pay and receive illegal kickbacks for their roles in a $4.5 million scheme to defraud Medicare. The indictment alleges that the defendants, the owner of a home health care agency who is also a physical therapist and a recruiter, caused the submission of fraudulent claims to Medicare for medically unnecessary home health care services and paid kickbacks in the form of cash payments to Medicare beneficiaries for the use of their Medicare beneficiary numbers. The indictment also alleges that physicians received kickbacks in the form of cash payments to certify Medicare beneficiaries for medically unnecessary home health care services. The fraudulent claims were submitted by Cherish Home Health Services LLC.

The defendants charged in the indictment are Zia Hassan, 47, of Saline, Mich., and Nathaniel Miller, 52, of Detroit, Mich.

United States v. Minhas

Naseem Minhas, 47, of West Bloomfield, Mich., was charged with conspiracy to commit health care fraud and conspiracy to pay and receive illegal kickbacks for his role in a $5.7 million scheme to defraud Medicare. The indictment alleges that the defendant, the beneficial owner of a home health care agency, caused the submission of fraudulent claims to Medicare for medically unnecessary home health care services and paid kickbacks in the form of cash payments to marketers to recruit Medicare beneficiaries and to certify Medicare beneficiaries for medically unnecessary home health care services. The indictment alleges that the fraudulent claims were submitted by Tricounty Home Care Services Inc.

United States v. Lovett, et al.

The owners of a Detroit-area billing company were charged in a criminal complaint for their roles in a health care fraud scheme involving claims for chiropractic and psychotherapy services. The complaint alleges that the operators of ABIX LLC obtained the Medicare numbers of licensed medical service providers in and around Detroit and used this information to bill Medicare for chiropractic and psychotherapy services that were not provided.

The defendants charged in the criminal complaint are Elaine Lovett, 58, of Wayne County, Mich., and Michelle Freeman, 54, of Livingston County, Mich.

An indictment or criminal complaint is merely an allegation, and the defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

The Medicare Fraud Strike Force operations are part of the Health Care Fraud Prevention & Enforcement Action Team (HEAT), a joint initiative announced in May 2009 between the Department of Justice and the Department of Health and Human Services to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country.

These cases were investigated by the FBI and HHS-OIG and were brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan.   These cases are being prosecuted by Trial Attorney William G. Kanellis, Trial Attorney Matthew C. Thuesen, and Special Trial Attorney Katie R. Fink of the Criminal Division’s Fraud Section.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,700 defendants who have collectively billed the Medicare program for more than $5.5 billion.   In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.

To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to:www.stopmedicarefraud.gov .

Source: justice.gov

Fighting Medicaid Fraud, Waste, and Abuse Through Education - Medicare Blog

By Ted Doolittle, CMS Deputy Director, Center for Program Integrity

Nov. 7, 2013 - The Centers for Medicare & Medicaid Services (CMS) wants everyone to join in the fight against fraud, waste, and abuse as part of our comprehensive strategy to protect federal health care programs and taxpayer dollars.  We are now making it easier than ever before for health care providers, managed care plans, and individuals and families with Medicaid benefits to use the education and training materials on the new Medicaid Program Integrity website.

Resources available on the website include videos, fact sheets, and checklists, made specifically for providers and beneficiaries.  These tools are national in scope, but some information can be personalized by your State of residence (or where you live) upon request. 

One of the key resources is a brochure on how people with Medicaid can protect themselves and the Medicaid program from fraud. You can also email MedicaidProviderEducation@cms.hhs.gov for the state contact number for reporting fraud.

State program integrity professionals and counselors will also find valuable education and training materials on the site – all available at no cost.  We have developed toolkits to address hot issues and frequently asked questions about Medicaid program integrity, including beneficiary protections and compliance resources for dental professionals and managed care organizations. 

Take a moment to learn more about the CMS Medicaid Program Integrity education and training materials available by clicking on this link, that will take you to the CMS.gov website.

Click here to join our listserv to receive timely notices of new material as it becomes available. Listserv members are also notified when new training, education, or speaking events are scheduled.

We value your feedback, recommendations, questions, and requests and encourage you to e-mail the Education Medicaid Integrity Contractor at medicaidprovidereducation@cms.hhs.gov for further information.

Thank you for being a partner in Medicaid program integrity!

And for more information on CMS’s efforts to protect consumers in the Health Insurance Marketplace, please visit:http://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-Sheets/2013-Fact-Sheets-Items/2013-09-18.html

Eight Tips to Consider as Momentum Builds in the Quality Fraud Arena

Reprinted from REPORT ON MEDICARE COMPLIANCE, the nation's leading source of news and strategic information on Medicare compliance, Stark and other big-dollar issues of concern to health care compliance officers.

By Nina Youngstrom, Managing Editor

September 16, 2013Volume 22Issue 32More Sharing Services

With momentum building for more administrative and enforcement actions against providers over quality deficiencies, hospitals and physician groups should be monitoring quality metrics and thinking carefully about the marketing and compensation moves they make.

“Quality fraud is an underappreciated liability in the Medicare and Medicaid programs,” says Philadelphia attorney Alice Gosfield.

In addition to false claims cases for medically unnecessary stents implanted in hospitals and substandard care in nursing homes and the August arrest of a physician for medically unnecessary cancer treatment(RMC 8/12/13, p. 1), there is growing risk of fraud allegations for inaccurate reporting for pay for performance and other quality improvement programs — especially with whistleblowers and their lawyers expanding into new areas.

There’s no shortage of weapons in the enforcement arsenal for quality failures. Providers can be excluded from federal health care programs for providing items or services substantially in excess of patient needs (42 USC 1320a-7(b)(6)(B), Gosfield notes. OIG also can impose civil monetary penalties for (1) submitting claims for a pattern of items or services that the provider knows or should have known are not medically necessary; (2) providing false or misleading information that could be expected to lead to premature discharge from the hospital, (3) hospital payments to physicians to reduce services; and (4) physician incentive plans that put physicians at substantial financial risk, she says.

Poor Quality of Care Can Be ‘Criminal’

There’s also the risk of criminal liability for poor quality care. In June 2013, cardiologist Sandesh Rajaram Patil pleaded guilty to charges that he exaggerated the blockage in a patient’s arteries to justify stent placements and falsely recorded the severity of the patient’s illnesses to collect reimbursement for a cardiac stent at Saint Joseph’s Hospital in London, Ky. (RMC 6/17/13, p. 3). He agreed to a 30- to 37-month prison sentence and the hospital repaid the government $256,800 for Patil’s stent procedures. In another case, Peninsula Regional Medical Center in Salisbury, Md., paid $1.8 million to settle false claims allegations in connection with physician John R. McLean’s stent implants. McLean was sentenced to eight years in prison after a jury found him guilty of one count of health care fraud and five counts of making false statements relating to health care matters (RMC 8/15/11, p. 1).

OIG has also sharpened its focus on quality in recent years through its work plans. Gosfield says OIG began mentioning quality and safety in 2003 and has since “manifested increasing sophistication.” It published a document with the American Health Lawyers Association on the board’s responsibility for health care quality that emphasized oversight of quality as part of the board’s core mission. “In health care, we are not making widgets, so the business standards that also apply aren’t enough to fulfill the fiduciary standards the board has,” she says. OIG work plans show a progression of interest in quality of care. In 2009, OIG did a study of hospital never events and present-on-admission coding and the following year continued with POA coding but expanded to adverse events. In 2011, OIG continued its focus on adverse events, and drilled down into the types of facilities that most frequently transferred patients with certain diagnoses that were present on admission. Hospitals don’t want those patients on their tab so they transfer them. “OIG thinks it’s problematic,” she notes. In its 2012 Work Plan, OIG continued to study the types of facilities that transferred patients with certain diagnoses that were POA conditions. In 2013, ambulatory surgery centers attracted more attention, with an OIG review of safety and quality of care and adverse events, she says.

Work plans are not the only arena for OIG’s oversight of quality deficiencies. OIG now has corporate integrity agreements (CIAs) tailored for quality-related fraud settlements, and a dedicated section of the website where they are housed. On top of the usual CIA requirements, organizations must hire a peer review consultant — not just an independent review organization, Gosfield notes.

And now hospitals and physicians face a new frontier of quality-related fraud risks. All the Medicare and commercial pay-for-performance programs that link payment to quality improvement, such as value-based purchasing, the Physician Quality Reporting System and state reporting of adverse events, “are potentially subject to false claim liability,” she says. DOJ has identified the kinds of risks that arise in the data reporting arena. They include reporting false data, submitting false statements in support of a claim and making false statements to avoid repaying the government. “DOJ also talks about the implicit quality issues in claims,” she says. In DOJ’s eyes, when claims are submitted, providers are attesting to the medical necessity of the services and conveying that the services met all quality requirements — “personnel were appropriately licensed and properly supervised; supervisors were appropriately trained and had appropriate clinical privileges,” she says, which may go well beyond what people perceive to be what they attest to when submitting a claim.

Data integrity is no small matter. The myriad of health care delivery arrangements driven by health reform depend on the accuracy of data. But if it isn’t consistent and reliable, the arrangements are at risk and whistleblowers may have a field day.

Whistleblowers Have Lots of Places to Look

Whistleblowers — usually insiders at a health care organization — may base quality-related FCA allegations on an insufficient number of nurses on a unit to provide necessary care; inadequate equipment; lack of sufficient resources to live up to clinical practice guidelines; the use of untrained, unqualified personnel to perform skilled services; and insufficient supervision of services, she says. Backed by their attorneys, more whistleblowers are hammering away at providers even if the DOJ does not intervene.

In light of all these developments, Gosfield recommends hospitals and physicians consider the following eight “action steps”:

(1) Review marketing and advertising for quality promises made to the community. “The mere puffery that exists in health care advertising can come back to bite you in terms of holding yourself out as meeting a standard of care. The quality better be factual and supportable by the data back at the mothership,” she says.

(2) Consider the “page six” version of any quality-related initiatives, Gosfield says, referring to the gossipy section of the New York Post. She recounted a consultation with a Texas hospital, which had a “restive” medical staff after the hospital cut a $2 million deal to recruit out-of-town academic researchers because it lost its local medical school affiliation. The independent staff physicians were unhappy about the deal with the new physicians and asked Gosfield if the hospital could pay them for improving quality. She said “yes,” but wondered what they had in mind, and asked them to page-six it for her. “Enthusiastic physicians helping hospitals to improve mortality, from 97% survival rate to 98%.” She told them that was not how it would look. Instead, the page-six version would be “Greedy local physicians, already making millions, seek more money not to kill patients.”

(3) The boards of hospitals and physician groups should be well-versed in their quality metrics and transparency initiatives and understand what data populates them.

(4) Make sure you know who in your organization reports quality data and what data they report.

(5) Monitor the data for “accuracy, consistency among reports, timeliness, completeness and clues to other problems,” Gosfield says. “You need a plan for this, with signed responsibility.

(6) Your compliance program should have a quality oversight component.

(7) Compliance officers, risk managers and quality assurance managers should team up. “Compliance should not be in splendid isolation from quality.”

(8) Physician practices should clinically integrate and hospitals that employ physicians should help their physicians clinically integrate (e.g., form ACOs). “I cannot overemphasize how much true clinical integration can forestall many of these problems,” she says. “It is about generating data that help you change behavior and standardizing to evidence-based criteria.”

http://aishealth.com/archive/rmc091613-03

State temporarily suspends doctor charged in Sacred Heart health care fraud case

The state has temporarily suspended the license of a doctor charged in the Sacred Heart Hospital Medicaid and Medicare fraud scandal after his attorneys asked a judge in Indiana to delay his unrelated trial there because he is was "medically unfit."

Dr. Subir Maitra, one of four doctors named in the alleged Sacred Heart conspiracy, faces trial in November in the Northern District of Indiana on similar fraud charges. This week his attorneys asked a judge to delay the start of that trial, saying the 73-year-old was physically frail, had suffered several medical setbacks recently and had lost the ability to concentrate for long periods.

That filing prompted the Illinois Department of Financial and Professional Regulation on Friday to temporarily suspend Maitra's license, saying the filing indicates he "may be "physically and/or mentally impaired" and his practice "presents an immediate danger to the safety of the public."

A hearing on the suspension is set for next week. Thomas Anthony Durkin, Maitra's attorney, declined to comment.

Maitra and three other doctors are charged along with hospital CEO Edward Novak and its chief financial officer, Roy Payawal, in a scheme that allegedly involved paying kickbacks for patient referrals and performing unnecessary procedures, including tracheotomies. Five deaths tied to tracheotomies performed at the hospital are under investigation as part of the probe.

Novak sought to last month have his unusually high $10 million cash bond reduced, based on what his attorneys said were emerging questions about the evidence against him. U.S. Magistrate Judge Daniel Martin on Thursday denied the request, saying it was not appropriate for him to weigh the evidence. He also noted Novak's extraordinary wealth.

"Mr. Novak's personal wealth is estimated at approximately three times the amount posted on his behalf," Martin wrote in his order. "He has set forth no argument demonstrating any type of financial difficulty suffered as a result of the cash amount posted."

http://my.chicagotribune.com/#section/-1/article/p2p-77397961/

Ambulance Company Owners Sentenced to Prison for Fraud Scheme

The two men have also been ordered to repay more than $3 million in restitution for their health care fraud scam that used falsified reports to bilk money out of the federal Medicare program.

The owners of a Feasterville-based ambulance company have been sentenced to federal prison after they pled guilty to 41 counts of health care fraud, wire fraud and related charges, according to a press release from the Department of Justice.

Aleksandr N. Zagorodony, 39, of Upper Southampton, was sentenced to 78 months in prison for a fraud scheme involving MedEx Ambulance Inc., located in Feasterville. Zagorodny was the president and a founder of MedEx Ambulance. 

MedEx Ambulance was ordered to be dissolved after it has been excluded from participation in Medicare and its assets are transferred to the government to satisfy restitution and forfeiture obligations. Each defendant had pleaded guilty to all counts in a 41-count indictment including health care fraud, false statements in connection with health care matters, wire fraud, and conspiracy to commit health care fraud and wire fraud.His 36 year-old brother, Sergey Zagorodny, from Philadelphia, the former vice-president and co-owner of the company, was sentenced to 60 months in prison for his involvement in the health care fraud scheme. 

Defendant MedEx Ambulance and its owners transported patients who were able to walk and could travel safely by means other than ambulance and who were not eligible for ambulance transportation under Medicare requirements. 

Falsified reports made it appear that the patients needed to be transported by ambulance when the defendants and their employees knew otherwise. The defendants billed for the ambulance services as if those services were medically necessary. The Medicare program was bilked out of more than $3.4 million through this fraud.

U.S. District Court Judge Berle M. Schiller also ordered restitution to Medicare in the amount of $3,418,358.81, a special assessment of $4,100 for each individual defendant and $16,400 for the corporation, and a three-year term of supervised release for the individuals and five years of probation for the corporation. 

The court ordered the forfeiture of four ambulances that had been purchased for more than $200,000, as well as forfeiture of bank accounts worth more than $40,000, and entered a money judgment against the defendants for $3,418,358.81. 

In connection with the sentencing, the company agreed to sell its base of operations and to provide the proceeds of that sale to the government in partial satisfaction of the defendants’ restitution obligations. The defendants and their wives also pledged to sell their family homes, as well as additional property, and to provide the proceeds of the sale of those assets to partially satisfy the defendants’ restitution obligations.

http://lowersouthampton.patch.com/groups/police-and-fire/p/ambulance-company-owners-sentenced-to-prison-for-health-care-fraud-scheme

La. ranks #1 in recovered Medicaid fraud money

Baton Rouge, La. - State health officials said recent figures show Louisiana led the nation in recovered Medicaid fraud funds last year.

The Department of Health and Hospitals released details in a news release on Tuesday. DHH says the state Medicaid fraud unit recovered more than $124 million during the past fiscal year, according to the Centers for Medicare and Medicaid Services.

The numbers showed that represented nearly 2 percent of all spent Medicaid dollars in Louisiana. On average, states recover less than 0.6 percent of their respective Medicaid budgets.

DHH Secretary Kathy Kliebert credited the work done by their Program Integrity division, and the agency's improving relationship with the Attorney General's Office.

"We take fraud and abuse of the Medicaid system very seriously in Louisiana," Kliebert said.

Kliebert also said a number of improvements were being made in the division to help continue to combat Medicaid fraud, as well as detect and correct billing errors.

http://www.fox8live.com/story/23130347/la-ranks-1-in-recovered-medicaid-fraud-money

Documents shredded at Cameron hospital involved in investigation

A mediated settlement agreement filed on July 25 in Milam County has put to rest some of the troubles surrounding Central Texas Hospital in Cameron. But the legal tussles are far from over as attorneys for Dr. Tariq Mahmood prepare to fight for assets that his company, Cameron Hospitals Inc., claims to own.

Mark Humble, board president for CTH Inc., the nonprofit corporation that owns the hospital, said on Friday that Mahmood's administrators left close to $50,000 of unpaid bills and taxes on the books. He said the value of any assets should be outweighed by the debt owed to the hospital. On Monday, however, Humble said the sheriff's department discovered some shredded documents that could bring the hospital further into the federal investigation surrounding Mahmood.

FBI public affairs specialist Katy Chaumont said the bureau "had been made aware of documents that may have been destroyed." Chaumont could not confirm if the documents were from the Cameron hospital.

The week prior to the discovery, Judge John Youngblood appointed Milam County Sheriff David Greene as master in chancery over the hospital. The order handed the responsibility over to Greene after Mahmood tried to shutter the hospital's operations. Because Mahmood, or one of his agents, was attempting to close the facility, the company was breaking its lease agreement with CTH, according to Humble.

"When we filed this request for master in chancery and the temporary restraining order, that's an extremely dangerous legal maneuver," Humble said. "You're asking someone's business to be taken away from him without notice, and Texas law does not favor such things."

On July 19, the day the order was handed down, Humble said, he went against the sheriff's advice to evacuate the CTH campus -- a professional building, a former dorm for nuns and the main hospital building. Humble said administrators with Cameron Hospital Inc., Mahmood's company, told him they needed access to paperwork that was due in court the following Monday. Despite the warning from the sheriff, Humble allowed them to stay.

"One of Mahmood's employees was allowed to stay a couple days and handle what had to be handled with [Mahmood's] other operations," Humble said. He noted that CTH Inc. was only focused on gaining control of the Cameron hospital.

On Thursday, Chief Deputy Chris White told those in attendance at the settlement talks that he discovered a trash bag full of shredded documents and a box on the shredder that was full with debris. According to Humble, White had been in the hospital's copier room on July 19 to make copies of the court order. There were no signs of document shredding at the time. When White returned to the room last week, he found the bag. Humble said there were "multiple possibilities" for how someone could have gained access to the room.

"We don't know exactly how it happened. [White] said there was a window to the room that was unsecured. I think he said it was being held shut with tape or something to that effect. He moved a filing cabinet up against that window as a precaution," Humble said.

When the sheriff became master in chancery, he closed the rest of the hospital, directing all traffic through the emergency room as a precaution, Humble said. Over the course of several days, the department oversaw the changing of the locks on the hospital doors. Humble said the task probably took a couple of days to complete.

"What happened in that room is not the sheriff's fault," Humble added. "The sheriff and his deputy have gone way beyond what anybody should reasonably be asked to do. This is not what sheriffs do."

The shredded documents were taken to the sheriff's department for safe-keeping. The FBI asked hospital administrators to make a copy of the surveillance footage; however, when techs went to review the tape on Friday, they discovered the system had been offline for a week, Humble said. He did not know how the system was disabled. Because there is no footage, investigators are unable to name a suspect at this time.

Several calls to White's office were not returned.

The major highlight of the settlement is Mahmood's relinquishing of hospital operations to CTH Inc.

"It is agreed that Central Texas Hospitals Inc. shall not have any connection with Cameron Hospitals or Dr. Tariq Mahmood's federal or state provider numbers," the settlement states.

Sheriff Greene and Little River Healthcare, the company contracted to run the hospital in the interim, retain control of Central Texas Hospital under the settlement.

CTH Inc. retains all valid licenses obtained by Mahmood and Cameron Hospitals Inc.

A court date is set for Aug. 19 to continue the resolution. Attorneys for Mahmood must provide a list of all assets Cameron Hospitals is claiming it owns. If those assets are valued less than the outstanding debt, then they will be forfeited to CTH Inc.

Some of the debt includes an outstanding utility bill for $59,000 and unpaid taxes amounting to $13,000. The CTH president said the hospital's financial status is in good working order and said the debt issues stem from Mahmood's mismanagement.

"A couple months ago, Dr. Mahmood overreached when he took over the Terrell hospital. I'm guessing they were robbing Peter to pay Paul," Humble said.

Mahmood was indicted by a federal grand jury on April 11, and charged with conspiracy to commit health care fraud and seven counts of health care fraud. According to the indictment, from April 2010 to April 2013, Mahmood and others are alleged to have carried out a scheme to defraud Medicare and Medicaid through the submission of false and fraudulent claims.

On July 20, aides said Gov. Rick Perry had ordered a "deep and comprehensive look" at health care facilities owned by the Dallas-area physician, whose rural hospitals have violated safety regulations without drawing state scrutiny.

The Associated Press contributed to this report.

By Jordan Overturf jordan.overturf@theeagle.com | Posted: Thursday, August 1, 2013 12:00 am

http://m.theeagle.com/mobile/news/local/article_399642b5-f06f-56dc-ac09-c32877de55d2.html

Indictments returned in Georgia Medicaid fraud cases

ATLANTA, GA -- 
From a press release issued by the Office of the Georgia Attorney General:
On July 25, 2013, a Cobb County Grand Jury issued an indictment against co-defendants Garry Hankerson, Lisa Hankerson, Pierre Hixon and Londrea Buchanan on charges of violating the Georgia Racketeer Influenced and Corrupt Organizations Act (RICO) (O.C.G.A. § 16-14-4(c)), Conspiracy to Defraud the State (O.C.G.A. § 16-10-21(a)) and Medicaid Fraud (O.C.G.A. § 49-4-146.1(b)).

The indictment alleges that Garry Hankerson and Lisa Hankerson, husband and wife, submitted false billing to the Georgia Medicaid program over the course of four years. Their company, First Step Counseling Services, Inc., was enrolled in a Medicaid program known as Intensive Family Intervention (IFI), which provides in-home mental health counseling to youths diagnosed with severe behavioral disorders. According to the indictment, First Step was paid over $650,000 by the Georgia Medicaid program between 2006 and 2010 while falsely billing counseling services. Mr. Hixon and Mr. Buchanan allegedly signed their names to patient progress notes purporting to have provided IFI services when in fact no services had been rendered, and patient chart documents to support billing for unrendered services were revealed to contain forged signatures.

Violation of the RICO Act carries a five to twenty year prison sentence, as well as a fine of up to three times the financial gain realized by those engaged in the racketeering activity. Medicaid Fraud is punishable by one to ten years in prison and a fine of $10,000. Conspiracy to Defraud the State is punishable by one to five years in prison.

The case is being prosecuted by Assistant Attorney General Lyndie Freeman, with assistance from Samuel M. Shapiro, a third-year law student at Georgia State University College of Law practicing under Georgia’s Third-Year Practice Act. Investigator Bradford Bartels and Investigative Auditor Amy Snow investigated the case with the assistance of Criminal Analyst Tish Murray, and the Georgia Department of Community Health.

An additional release has also been issued by the Attorney General's Office:

On Thursday, July 25, 2013, a Cobb County Grand Jury indicted Timothy Robinson on four counts of Medicaid Fraud (O.C.G.A. § 49-4-146.1 (b) (1)) and four counts of Identity Fraud (O.C.G.A. § 16-9-121) for falsely billing Georgia Medicaid for services that were not provided.

Robinson was the owner and operator of Robinson Rehabilitation Services, Inc., which offered speech therapy services. He employed four speech therapists to provide speech therapy services, mainly around the Metro Atlanta area. He was authorized to submit billing on their behalf to Georgia Medicaid during their employment with Robinson Rehabilitation.

An investigation revealed that the speech therapists terminated their employment, each at different times in 2009 and 2010. From roughly 2009 until February of 2013, Robinson submitted false claims for reimbursement to Georgia Medicaid using the four speech therapists’ provider identification and provider numbers after they had terminated employment with Robinson Rehabilitation. In total, Robinson fraudulently received $549,326.05 in Medicaid payments to which he was not entitled.

Medicaid Fraud is punishable by one to ten years in prison and a fine of $10,000. Identity fraud is punishable by one to ten years in prison and a fine of up to $100,000.

Assistant Attorney General Henry A. Hibbert is prosecuting the case on behalf of the State of Georgia. The case was investigated by Investigator Ralph Harper and Auditor Investigator Aaron Cohen of the Georgia Medicaid Fraud Control Unit.

http://www.mysouthwestga.com/news/story.aspx?id=927239#.Ufco4Y2siSo