Articles Posted in Whistleblowers and Qui Tam Lawsuits

Health care continues to be a major topic of debate on news shows and in living rooms across the nation. While there may be debate about the root causes and the best solutions, most Americans agree that health care fraud is a significant problem. To be honest, we’d argue that if they didn’t agree that this high-cost crime against the government and against every honest user of health services, that they are either personally profiting from fraud or simply not paying attention. As a California health care fraud law firm, we are committed to keeping the public informed about health care fraud, including but not limited to Medicare, Medicaid, and Medi-Cal fraud. We also work with brave whistleblowers to help confront this problem, two related efforts that we believe are critical to bringing an end to fraud, recovering diverted funds, and bringing criminals to justice.

Fiscal Year 2013 and the Federal Government’s Health Care Fraud Fight

In February 2014, the Department of Health and Human Services and The Department of Justice co-authored an Annual Report on the Health Care Fraud and Abuse Control Program for Fiscal Year 2013. It was the seventeenth year for the collaborative program, created under the Health Insurance Portability and Accountability Act of 1996 and aimed at identifying and prosecuting the most egregious cases of health care fraud, preventing future cases, and protecting the beneficiaries of the healthcare programs.

For many of us, the term “organized crime” brings to mind images, gathered from movies and televisions, of smoky back rooms where a boss is flanked by well-muscled thugs ready to enforce their own code of justice via brass knuckles or cement shoes. There are, however, many kinds of organized crime, including organized schemes focused on defrauding the Medicare and Medi-Cal programs. While the perpetrators may wear suits, or even doctors’ long-white coats, the crimes are still a serious threat and coming forward to report them still requires a brave individual. Our San Francisco qui tam lawyer is proud to work with such brave whistleblowers to bring an end to these costly schemes.

Convictions in Scheme Involving Dangerous Anti-Psychotic Medications

Last month marked a major milestone in the fight against health care fraud, with the key convictions in the first case involving an organized scheme to profit from the filing of fake claims for anti-psychotic medications. As detailed in a Justice Department press release, the evidence showed that the operators and employees of Manor Medical Imaging in Glendale, California produced thousands of these false prescriptions. The conspirators used stolen identity information from elderly Vietnamese Medicare and Medi-Cal beneficiaries, military beneficiaries who’d taken part in drug rehab program, and “denizens of Skid Row,” creating false patient files to justify the need for high-cost anti-psychotic drugs. After the prescriptions were filled and paid for by either Medicare or Medi-Cal, they were sold on the black market and eventually used to fulfill new, wholly-separate claims, ultimately causing the health care programs to paying for the same drugs again.

In a late-February post on these pages, the main topic of discussion was the fact that the federal government was able to report a record $4.3 billion in recovered funds from healthcare fraud schemes in 2014. As a corollary to that record figure, the Obama administration was able to point out that the government’s most recent three-year monetary investment spent investigating healthcare fraud was providing the largest three-year return on investment in the 17 years that the federal Health Care Fraud and Abuse Control Program has existed. However, San Francisco qui tam lawsuit attorney Gregory J. Brod suggested that a possible reason why Washington was enjoying such great success could be attributed to one of two reasons: either the government was improving its methods for identifying healthcare fraudsters or there was a significant uptick in the number of people attempting to steal money from the government, or both.

A variation on the theme that the number of people who have entered the business of defrauding the government’s healthcare programs such as Medicare came to light in a report issued by the inspector general of the Department of Health and Human Services, who determined that the government may not be getting properly informed on potential fraud linked to Medicare’s drug program and thus is missing much of the fraudulent activity.

The inspector general’s findings, reported in Fox News, were very similar to the conclusions set forth in a ProPublica investigation published in December, when it was found that Washington does little to stop thieves from pilfering funds from Medicare’s Part D. According to the inspector general’s report, fewer than half of the insurance companies that have been paid to administer Medicare Part D reported data to the feds concerning potential fraud and abuse between 2010 and 2012. That equation was little changed from a prior inspector general report in 2008, when it was found that most cases of fraud and abuse were reported by a fraction of the number of Medicare Part D insurers.

It should be noted that Medicare does not require insurers to report data on fraud. The Centers for Medicare and Medicaid Services, which is a devision of HHS, as recently as January 2010 urged Medicare Part D plan insurers to report data on their anti-fraud activities every year. That, the agency said, would help them control fraud and abuse. The inspector general, though, recommended that the CMS mandate that insurers report cases of fraud to Medicare. Oddly enough, some Medicare and CMS officials have expressed the position that data reporting should be voluntary and that if it were required from insurers the agencies would be swamped with data.

“We believe that requiring Part D sponsors to report all potential fraud and abuse would have the potential to inundate the agency and our contractors with an unwieldy amount of information that would not necessarily yield a better outcome in terms of stopping Part D fraud,” wrote CMS administrator Marilyn Tavenner in a response to the inspector general’s report.
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It is a measure of how the problem of healthcare fraud is so pervasive and ever-changing, that there was news emanating from Washington, D.C., this week that was encouraging as well as dismaying on this issue. And, as San Francisco qui tam lawsuit attorney Gregory J. Brod would remind us, the latest news suggests that there are still many battles to be fought and won on behalf of taxpayers, the U.S. Treasury and honest Americans who avail themselves of government healthcare programs such as Medicare and Medicaid.

Midweek, the McClatchy Washington Bureau reported that the Obama administration recovered a record $4.3 billion in pilfered healthcare funds last year, a figure that surpasses the $4.2 billion mark set in 2012. The White House also reported on Wednesday that for every dollar the government spent investigating healthcare fraud and abuse over the last three years, it recovered $8.10. The latest investment-to-return ratio is the largest three-year return on investment in the 17-year history of the federal Health Care Fraud and Abuse Control Program.

“With these extraordinary recoveries, and the record-high rate of return on investment we’ve achieved on our comprehensive healthcare fraud enforcement efforts, we’re sending a strong message to those who would take advantage of their fellow citizens, target vulnerable populations, and commit fraud on federal healthcare programs,” said Attorney General Eric Holder, who was one of the two key Cabinet officers at the administration’s press conference trumpeting the new numbers.

Holder’s Justice Department reported that it opened 1.013 new criminal fraud investigations in fiscal year 2012 that resulted in 718 people being convicted of healthcare fraud charges. The more robust numbers can be read one of two ways, however: either the government is getting better at identifying healthcare fraudsters or there has been a significant growth in the number of people who attempt to defraud the government, or both.

“We’ve cracked down on tens of thousands of healthcare providers suspected of Medicare fraud,” said Health and Human Services Secretary Kathleen Sebelius, who was the other major Cabinet officer at Wednesday’s press conference. “New enrollment screening techniques are proving effective in preventing high-risk providers from getting into the system, and the new computer analytics system that detects and stops fraudulent billing before money ever goes out the door is accomplishing positive results – all of which are adding to savings for the Medicare Trust Fund.”

While the comments of HHS Secretary Sebelius suggest that the government has found improved techniques to foil or flush out Medicare fraudsters, the other news coming from Washington this week suggests that those with thievery on their minds have come up with more creative ways of stealing money from the government.

According to the Dallas Morning News, the top-ranking members of the House Committee on Energy and Commerce on Wednesday notified the Centers for Medicare & Medicaid Services, which is a division of the Department of Health and Human Services, that they were “investigating the adequacy of CMS screening” of healthcare providers. The House committee is demanding answers from CMS in the wake of finding out that a Texas hospital chain allegedly bilked a stimulus program out of $18 million.

“The case in Texas raises broader questions about CMS’ ability to detect fraud in its programs,” according to letters sent to the agency and the HHS inspector general’s office.

In the letters from Capitol Hill to the executive branch, the committee members demanded answers regarding the practices of Dr. Tariq Mahmood’s now-defunct rural Texas hospital chain, which allegedly stole stimulus money intended to help modernize medical records. Government money was funneled to Mahmood’s hospitals despite his facilities’ long record of patient safety violations and allegations of billing fraud. Worse yet, employees told the Dallas Morning News that most of the funds were never used on a record-keeping system.
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As San Francisco qui tam lawsuit attorney Gregory J. Brod has pointed out in his blogs, there are several common schemes that fraudsters employ to steal funds from Medicare and other healthcare government programs, including coding fraud, fake billing and kickback schemes, among others. These schemes, in turn, rob the U.S. Treasury and taxpayers and drive up healthcare costs for the rest of us. And over the last week, there were two notable textbook cases of healthcare fraud in the United States, one in Florida and the other in Illinois, in which fake, or phantom, billing was the fraudulent method of choice.

In the Florida case, a Sarasota doctor agreed to pay $750,000 to settle allegations that he and his clinic in Sarasota and later Bradenton, Fla., billed Medicare for office visits and examinations that he never performed. According to the Tampa Bay Business Journal, federal investigators charged that the physician in question, Dr. Steven Chun, billed Medicare from 2006 through 2011 for office visits at the highest level possible, as well as falsely claiming that he conducted comprehensive examinations with complex problems. The allegations were detailed in a written statement from U.S. Attorney A. Lee Bentley III.

The Dr. Chun case highlights an often important element in many healthcare fraud cases – a whistleblower or whistleblowers step forward to expose the alleged fraud. In this case, Cathia Gavin and Penelope Thomas, who once worked as nurses for Chun, blew the whistle on the fake billing that made up the bulk of the allegations in the complaint filed in Tampa federal court. The case also demonstrates how private citizens such as Gavin and Thomas were able to sue on behalf of the federal government by filing the complaint under the whistleblower provisions of the False Claims Act, and to ultimately receive a share of the recovery. The agreement in the Dr. Chun case was announced Tuesday.

In the Illinois case, a suburban Chicago pharmacist was sentenced on Friday to seven years in prison for collecting more than $1.7 million in fake health insurance claims and using the proceeds to finance what federal prosecutors called “a lavish lifestyle.” According to the Chicago Sun-Times, Robert Kielar, of Mundelein, Ill., operated a pharmacy in Chicago from which more than 600 false claims were issued between 2004 and 2010 that resulted in a $1.7 million illegitimate gain from Blue Cross and Blue Shield of Illinois.

Court documents indicated that Kielar used patients’ insurance information to bill the insurance companies for the drug Procrit, which stimulates the production of red blood cells. The insurance companies were billed for the drug in spite of the fact that the patients were never given a prescription for it, much less provided with the medication or authorized the use of their personal information. After being indicted, Kielar proceeded to forge prescriptions, patient receipts and invoices in an attempt to make the claims appear legitimate.

Through the fraudulent acquisition of funds, Kielar was able to pay salaries to himself and his ex-wife as well as pay mortgages on three properties in three states. He will now have to pay more than $1.7 million in restitution.
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A most unusual application of the federal False Claims Act came to light recently, when it was reported that for-profit schools have bilked the government out of millions of dollars by falsifying records of students so that they could enroll them and draw the federal financial aid that was available for the schools’ technical programs, even as the students were ineligible for a variety of reasons. As San Francisco qui tam lawsuit attorney Gregory J. Brod would point out, the revelations of alleged wrongdoing are an example of the creative lengths to which accused fraudsters will go.

According to The New York Times, the lawsuit, which was unsealed and made available to the public last fall, accuses Harris and its Philadelphia-based parent Premier Education Group of keeping ineligible students – including those who lacked mental stability, academic skills or English proficiency – on the books so that they could collect $112 million in federal Pell grants and federal student loans during the 2011-12 timeframe. The lawsuit, charging that Harris and Premier defrauded the federal government, was filed under the federal False Claims Act. And if Harris and Premier are found to have violated the False Claims Act they, like any other defendant found liable under the act, they would be subject to triple the actual damages. The whistleblowers in the case would stand to reap up to 30 percent of any verdict award.

While the news about the Harris-Premier case made headlines, there were plenty of other examples in February of more traditional applications of the False Claims Act in the realm of Medicare and Medicaid fraud from coast to coast, including the following examples:

• An Atlanta doctor was sentenced to more than four years in prison and fined $3.5 million Feb. 20 for allegedly bilking Medicare and the Internal Revenue Service of about $16 million during a period of five years, according to the Atlanta Journal-Constitution. Prosecutors said that the convicted doctor schemed to induce Medicare patients from all over the country to be treated at his clinic by awarding them free travel to the clinic through a bogus charity fund. After receiving millions of dollars from Medicare, prosecutors say that the doctor evaded $1 million federal income taxes by deducting as charitable donations payments he made to the fake fund.
• A Palisades Park, N.J., doctor pleaded guilty on Feb. 21 to charges that he recruited patients by offering free lunches, recreational classes and spa services and then falsely billed Medicare for more than $13 million for physical therapy and other services that were neither necessary or nor provided, according to eNews.
• Federal indictments were announced Feb. 20 in connection with the arrest of more than 20 people in a case federal law enforcement officials are calling the largest uncovered healthcare fraud scheme in the history of the District of Columbia, according to the Washington Post. In the case, those charged were accused of billing the government for in-home healthcare services that were never provided. Through various schemes, 10,000 beneficiaries were allegedly billing the government for $280 million through 2013.
• A Glendale, Calif., trio of clinic workers were convicted Feb. 20 of healthcare fraud conspiracy, aggravated identity theft, conspiracy to misbrand pharmaceutical drugs, making false statements to the federal government, and conspiracy to use other persons’ identification documents to advance their scheme, according to the Los Angeles Daily News. Federal prosecutors said the schemes netted fraudulent billings worth $20 million.

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Medicine is always evolving. In addition to discovering new treatments and other improvements in medicine itself, the way medicine is practice has changed dramatically in recent years. One of the biggest changes is the use of health information technology including electronic health records (“EHRs”). While EHRs provide many benefits to both providers and patients, many have voiced concern about misuse. Although a lot of attention has been paid to privacy concerns, there has been less discussion about another threat: Medicare fraud using EHRs and related technology. It is a very real concern to our California health care fraud law firm and fighting EHR-fraud is part of our overall commitment to ending the fraud epidemic.

An Overview of EHRs and Their Use in California

On the section of the website dedicated to EHRs, The Centers for Medicare and Medicaid Services (“CMS”) website describe an EHR as “an electronic version of a patients [sic] medical history.” EHR files are maintained by the medical provider and contain a wide array of information such as vital signs, medications, patient problems, and progress notes. In addition to automating access to information and streamlining provider workflow, CMS suggests the electronic records can strengthen patient-provider relationships and reduce the frequency of medical errors.

Why is health care fraud one of our focal areas at The Brod Law Firm? We understand that millions of Americans are struggling to pay their medical bills. Health care costs are high for many reasons. Fraud is one of these reasons. We believe that our work as a Sacramento health care fraud law firm allows us to play a role in making health care affordable for all Americans. We also believe this work helps promote the interests of justice, making the perpetrators of fraud pay and rewarding people who bravely come forward when they witness fraudulent acts.

Health Care Fraud by Doctors in California Clinics

Doctors take an oath promising to “do no harm,” an oath that is violated when doctors commit health care fraud. Last month, the Sacramento Business Journal reported on the sentencing of a California physician who took part in a “vast conspiracy of Medicare fraud.” The Sacramento federal court sentenced Dr. Emilio Louis Cruz, III to three years and two months in prison for his part in a Medicare fraud scheme that involved bogus clinics in Carmichael, Richmond, and Sacramento. He was also ordered to pay restitution in the amount of $601,581.

As those who follow these blog postings have seen, Medicare fraud can come in a variety of guises, and the perpetrators of schemes to defraud the federal government can range from small medical practices all the way up to hospitals and medical organizations. Then there are the really brazen schemes of various sizes that can even surprise seasoned observers of healthcare fraud, such as qui tam lawsuit attorney Gregory J. Brod of San Francisco.

One especially eyebrow-raising alleged plot to fleece the U.S. Treasury surfaced Friday when, according to The New York Times, the Justice Department announced that it had joined eight separate lawsuits in six states against Health Management Associates, a for-profit hospital chain based in Naples, Fla. And the charges against HMA describe an organization that encouraged its physicians to meet its targets for fraud much as any corporation would set quarterly or year-end goals for profit.

HMA allegedly used scorecards to grade participating doctors, assigning the optimum green color coding for those emergency room physicians who met their target by admitting at least one-half of all patients over 65 years old; with doctors on the bubble of the desired number of patient admittances assigned a yellow code; and physicians way off the mark given a failing red color code.

The Justice Department lawsuits detail a strategy that involved sophisticated software systems, financial incentives and threats in order to boost HMA’s payments from Medicare and Medicaid. And whistleblowers who stepped forward with the details about the schemes have pointed to former HMA chief executive Gary D. Newsome as the driving force behind the alleged fraud.

HMA administrators were allegedly asked to keep track of the number of patients being admitted through the use of the customized software program Pro-Med, whose findings were then used to grade physicians on the scorecards. According to the federal lawsuit, Newsome put in place the new protocols associated with the software that was geared to “drive admissions” at HMA hospitals.

According to the lawsuit, a former division vice president and chief executive of an HMA-owned facility told Newsome that member physicians were concerned that the new protocols were clinically inappropriate and would result in unnecessary tests and admissions and added that his doctors refused to do things that way. Newsome’s reply, according to the lawsuit, was straightforwardly unambiguous: “Do it anyway.”

While the wheels of the alleged scheme were turning, patients who did not require inpatient treatment were often admitted, which allowed the hospital to bill Medicare and Medicaid more money for the care, according to a former physician who cited numerous examples.

HMA’s alleged attempt to cover up its scheme to defraud the government was about as brazen as the fraud itself. When one experienced accountant in hospital management sought an independent review and presented its findings that showed a higher admission rate, he was told to “burn it,” according the qui tam lawsuit the accountant filed, which states that he was soon fired.
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