Healthcare Fraud Lawyer Blog

We’ve written a great deal in these pages about the financial costs of health care fraud. It is a crime that costs the government billions and causes financial losses throughout the health care industry that, in turn, impacts the wallet of every single one of us as past and future consumers of medical services. The “costs” of health care fraud also extend beyond the economic realm, a reality our San Francisco Medicare fraud law firm was reminded of recently as state legislators eye the potential impact of fraud on a hospital chain’s reputation.

Allegations of Exaggerated Diagnoses, Fraudulent Billings, and Unearned Reputations

According to a report in the San Francisco Chronicle, leaders of the Legislature’s state health policy committees are questioning rankings received by Prime Healthcare Services of Ontario, a San Bernadino-based hospital chain. In three of the past five years, Truven Health Analytics service listed Prime as one of the nation’s top fifteen health systems. This year eight of the networks 23 hospitals were listed among the country’s top 100 hospitals. State Senator Ed Hernandez and Assemblyman Richard Pan wrote to Truven urging them to reconsider these ratings, saying they are at odds with the chain’s reputation and record in the state.

As readers of this blog have learned, health care fraud can take many forms, even when the focus is on fraud involving public programs such as Medicare, Medi-Cal, and Medicaid. A similarly broad response applies to the related question: Who commits healthcare fraud? Perpetrators of Medicare fraud range from executives at large companies built on a culture of fraud, to the managers of medical organizations created for the sole purpose of advancing fraud, to individual providers and patients. Our California Medicare fraud attorney is committed to fighting fraud on all levels and welcomes calls from potential whistleblowers who wish to report any form of this heinous crime and any perpetrator of fraud that steals from the government and diverts monies desperately needed for the care of our country’s elderly, impoverished, and ill.

A Recent Example: Doctor Sentenced After Submitting Nearly $1 Million in Falsified Claims

With an increasing number of Medicare fraud cases in the news recently, we’ve also seen a wide range of defendants. This month, the San Francisco Chronicle carried an Associated Press report on a case involving an orthopedic surgeon in Lake Charles, Louisiana. Dr. Lynn E. Foret entered a guilty plea to charges he defrauded Medicare, Medicaid, and private insurance carriers out of almost $1 million. According to evidence presented at the plea hearing, between 2003 and 2009 Foret repeatedly injected a steroid solution into the knees of patients while billing and collecting payments from the public and private insurers for a more expensive drug called Hyalgan.

As with many other forms of fraud, cases of health care fraud often involve a few primary wrongdoers who rely on the silence and/or complicity of many for their schemes to succeed. A federal jury in our own area was recently confronted with a case that follows this pattern and is a reminder of the fact that fraudulent actors rely on the willingness of people to cooperate with their schemes. Our San Francisco Medicare fraud lawyer is committed to the fight against Medicare fraud and to working with the brave individuals who speak up for what is right when they see companies and individuals engaged in this rampant crime.

Kickbacks, Solicitations, and Conspiracy to Commit Medicare Fraud

On December 4, the Justice Department announced that a federal jury in San Francisco had convicted Patrick Adebowale Sogbein, Adebola Adefunke Adebimpe (Sogebin’s wife), and Eduardo Abad on charges stemming from a Medicare fraud scheme. According to evidence presented at trial, Sogbein began working with a physician, Edna Calaustro, in December 2006 to obtain and file bogus prescriptions for power wheelchairs and related accessories. Initially, the scheme involved Debs Medical Distributors, a company owned by Sogbein. By 2008, Medicare began scrutinizing the claims more closely, leading Sogbein to partner with his wife and submit claims through Dignity Medical Supply, a Santa Clara-based company opened in Adebimpe’s name.

As a California health care fraud law firm, we work with the brave men and women who help bring fraud to light. We are committed to the success of these cases, actions that protect the health care system and all who come into contact with it. We are also committed to protecting health care fraud whistleblowers. This includes ensuring that no adverse actions are taken against them, helping them collect rewards where appropriate, and simply helping them get through what can be a long, arduous process.

Who Initiates Whistleblower Claims and Why

A fascinating (at least to us!) study from the New England Journal of Medicine (“NEJM”), published in 2010, titled “Whistle-Blowers’ Experiences in Fraud Litigation against Pharmaceutical Companies.” The study notes 90% of health care fraud cases are initiated by whistleblowers rather than the government itself, cases known as qui tam actions. Authors spoke to 26 whistleblowers, also known as realtors, most of whom worked in the industry and learned of the fraud during some form of career change. Nearly all had attempted to deal with their concerns internally before going outside the company to a lawyer or government official.

Suppose you were reviewing your credit card bill and noticed that a company had billed you twice for the same product or service. Most of us would respond with an angry call to the company and would be unlikely to accept the company’s attempt to justify the double-billing. At the very least, most consumers would refuse to give the company business in the future. Recently, the state settled a lawsuit involving allegations that one of California’s largest hospital chains engaged in double-billing. A problem in both private and public health arenas, double-billing is one of many forms of financial misdeeds that costs our health care system millions each year and it is one of the reasons our Northern California health care fraud attorney is focused on going after companies that use technical jargon to justify fraudulent billing practices.

Health Care Fraud Case Leads to Record Settlement

Earlier this month, as reported in The Sacramento Bee, Sutter Health announced that it agreed to pay $46 million to settle a lawsuit that started with a whistleblower and, according to Insurance Commissioner Dave Jones, exposed double-billing for anesthesia services. The settlement is a record-high for the Department of Insurance which joined the suit in 2011, two years after it was filed by billing auditor Rockville Recovery Associates. Despite the settlement, the health company, through spokesman Bill Gleason, continues to deny wrongdoing. Gleeson defends the company’s billing practices saying they are within industry standards, in accordance with 90% of hospitals in California, and in keeping with state and federal rules. Still, he notes that Sutter Health agrees with the commissioner’s position that the newly agreed to method will provide clarity and predictability to payers and consumers.

We have talked a good deal in recent weeks about the threat of Medicare fraud and the important roles whistleblowers play in protecting the system. In addition to the danger of fraud against our federal health care programs, there is also the potential for fraud against our state programs. As a San Francisco Medi-Cal lawyer, Attorney Brod is prepared to work with the brave individuals who report past and on-going Medi-Cal fraud schemes that seek to profit at the expense of our state’s most vulnerable.

Overview of Fraud on California’s Medicaid System

Medi-Cal is the Medicaid program for the state of California, a public health insurance program financed by State and federal funds and providing care for low-income Californians including seniors, families with children, pregnant women, disabled individuals, and people suffering from specific health problems. According to the Office of the Attorney General (“OAG”) for California, Medi-Cal fraud occurs when scammers bill the program for services/medications/supplies that are never performed, not necessary, or cost more than the actual care rendered. An additional form of fraud involves either paying or accepting kickbacks for billing referrals.

While a violation of the federal False Claims Act is a principle reason why many qui tam whistleblower lawsuits are filed, a breach of either of two other key laws, the Stark law and the Anti-Kickback law, is also grounds for launching a qui tam whistleblower lawsuit. As we will see in the final installment of this week’s series, some of the most flagrant cases of Medicare fraud involve violations of either the Anti-Kickback law, the Stark law or sometimes one or both and the False Claims Act. Regardless of the cause of action, the qui tam lawsuit specialists at the Brod Law Firm are committed to representing the brave whistleblowers who step forward with information on any of these violations.

Of the two pieces of legislation, the Stark law, 42 U.S.C. Sec. 1395nn, is the more recent to be enacted, becoming law in 2011. Under the law, named after its sponsor, former Bay Area U.S. Rep. Fortney “Pete” Stark, physicians are prohibited from referring Medicare or Medicaid patients for designated health services to a medical provider in which the physician or a family member holds a financial stake, unless an exception applies. The law also prohibits designated health services entities from submitting claims to Medicare that originate from a prohibited referral.

The Stark law may be relatively new, but it has already managed to land several violators in court, including a case against one that is believed to have generated the largest damage amount against a community hospital in U.S. history. The case, against the Tuomey Healthcare System of South Carolina, revolved around lucrative compensatory arrangements Tuomey had with several part-time physicians to refer patients to its medical facilities. The jury in the federal lawsuit found that Tuomey’s arrangements violated both the Stark law and the False Claims Act, and a federal judge this month ordered Tuomey to pay more than $276 million in fines and penalties. The judge also rejected Tuomey’s motions for a new trial, according to The State.
As its name would imply, the Anti-Kickback law, 42 U.S.C. Sec. 1320a-7b(b), prohibits the offering, tendering, soliciting or receiving anything of value to induce or compensate for referrals or generate federal healthcare program business. First enacted in 1972, the act stipulates explicitly that “a claim that includes items or services resulting from a violation” of the act will be considered a bogus or fraudulent claim that falls under the False Claims Act.

One of the biggest cases to trigger an invocation of the Anti-Kickback law was one already cited in this series, the notorious Columbia/HCA qui tam lawsuit that led its successor company, HCA, to plead guilty and pay fines of more than $1.7 billion for, among other things, offering kickbacks to doctors. However, there have been numerous other examples involving a violation of the Anti-Kickback law, including these recent cases in just 2010:

• The Health Alliance of Greater Cincinnati and the Christ Hospital in Mount Auburn, Ohio, agree to pay $108 million to settle accusations they payed physicians kickbacks in exchange for referring cardiac patients to the hospital
• The St. Joseph Medical Center, based in Towson, Md., agrees to pay $22 million to settle a lawsuit alleging payment of kickbacks to MidAtlantic Cardiovascular Associates for purported professional services deals in return for MidAtlantic’s referrals to the medical center.
• The former owners of the City of Angels Medical Center in Los Angeles agree to pay $10 million for a scheme that involved doctors at the center allegedly paying recruiters kickbacks to find homeless patients, who were administered medical treatments, many of which were deemed unnecessary but were billed to the federal government.

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The leading legal framework for so-called qui tam lawsuits, in which a private individual reports past or present fraud committed against the government and sues the perpetrator, is the federal False Claims Act. The act of filing such claims is known as whistleblowing, and there is perhaps no form of fraud as evocative of the governing False Claims Act as when medical providers submit fake or phantom bills for services that were either not necessary or in some cases not even performed. We at the Brod Law Firm take great pride in having served as advocates for whistleblowers in such cases.

One of the most notorious cases of fake or phantom billing fraud committed against Medicare or Medicaid came to light just last year, according to Money magazine. In February of 2012, federal authorities announced that Dr. Jacques Roy, a Dallas-area physician, allegedly soaked Medicare and Medicaid for almost $375 million over five years, which would rank as the biggest healthcare fraud ever committed in the United States. In the case, which was delayed until the middle of this year, Roy was charged with fraudulently billing Medicare for more than $350 million and Medicaid for more than $24 million by using “recruiters” to bring beneficiaries under the two programs to him so that he could bill them for unneeded services.

Statements made by federal authorities concerning the indictment of Roy suggested that the scope of the fraud was indeed breathtaking.

“The conduct charged in this indictment represents the single largest fraud amount orchestrated by one doctor in the history of the Health Care Fraud Prevention and Enforcement Action Team and our Medicare Fraud Strike Force operations,” said U.S. Deputy Attorney General James Cole.

The Roy case, while spectacularly large, has been by no means the only case of mega-fraud uncovered by federal prosecutors. as a broad-based scheme that was revealed in 2010 made quite clear. In a story the New York Times detailed with the telling headline, “Real Patients, Real Doctors, Fake Everything Else,” a ring of gangsters billed Medicare for more than $100 million and collected $35 million over at least four years.
According to federal prosecutors, the band of mobsters invented 118 fictitious health clinics in 25 states, stole the identities of doctors, and then associated them with legitimate Medicare recipients whose identities were also stolen. The entire doctor-patient-clinic illusion provided the basis for submitting false claims for a variety of medical services that were never performed, from ultrasound exams to magnetic resonance imaging tests to heart tests and more.

Many cases of fraud against Medicare or Medicaid are able to slip under the radar because much of our healthcare billing is based on an honor system, with the healthcare providers usually the front-line actors relied upon to determine what is a justifiable medical procedure and what is not. Thus, it is easy to see how unethical medical providers, sometimes working in tandem with equally unethical patients and other healthcare providers, can purloin major money out of government coffers.
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Earlier this month, we talked about how on a micro level Medicare fraud can inflict a toll on individuals and the ways in which beneficiaries can play a role in combatting it. But for many people who aren’t directly hurt by Medicare fraud, the chief way they can relate to its ills is on the macro level, e.g., the big-picture, national impact it can have. We at the Brod Law Firm are proud to serve as advocates for Medicare fraud victims nationwide. This week we will delve into the major forms of Medicare fraud and how its broad scope of scamming translates into a national outrage that receives too little attention.

Amid all the battles over the national debt ceiling, the budget, taxes, and the cost of healthcare, the public doesn’t seem to get proportionate information on one factor that has the potential to adversely impact all these issues: Medicare fraud. Some estimates have calculated that the various forms of Medicare fraud cost taxpayers $250 billion per year, but unfortunately there are few reliable figures out there. However, it is interesting to note that in 2010, the year that President Obama signed his Affordable Health Care Act into law and pledged to cut $500 billion in Medicare spending over 10 years, the federal Government Accountability Office filed a report claiming that it had found $48 billion worth of “improper payments” from Medicare. That figure for fraud is just from one year, but some estimates place the annual losses to Medicare fraud at tens of billions of dollars more, and that doesn’t even take account the losses Medicaid sustains every year due to fraudulent activity.

Healthcare scammers employ many means and channels to defraud Medicare and Medicaid, with the players in such schemes often from hospitals, medical practices, nursing homes and other long-term care facilities, hospices, laboratories, home healthcare providers and ambulance services. The methodology of schemes against Medicare or Medicaid, though, often falls into one of these three general categories:

• Coding fraud – Upgrading the billing code and therefore the cost of medical services or employing other fraudulent billing methods to inflate the cost of healthcare.
• Fake or Phantom billing – The submitting of bills for unnecessary procedures or medical tests or the billing for procedures or tests that were never performed.
• Kickback schemes – A joint venture in which a patient takes a kickback from a medical provider in return for going along with the provider’s fraudulent billing.

Coding fraud typically involves what’s known as a “CPT code,” or Current Procedural Terminology, and usually takes the form of a medical provider “upcoding,” or submitting a code that doesn’t accurately reflect the treatment that was provided but results in a higher bill because it is purportedly for more extensive and/or expensive care. Coding fraud can also take the form of the “unbundling” of billing, which involves separate charges for a series of related procedures or tests, and “split billing,” which tries to claim that services provided on one day were performed over more than one day.

One of the biggest, most notorious recent examples of coding fraud came to light in 1996, when The New York Times began its investigation on Columbia/Hospital Corporation of America, a globally gigantic for-profit operator of healthcare facilities since the merger that formed it in 1993. The FBI launched a probe into Columbia/HCA in 1997, and in 1999 the company, by then known as HCA, admitted to fraudulently billing Medicare and other programs by upgrading diagnostic codes and to offering kickbacks to doctors in the form of hospital partnerships for recruiting patients and submitting the inappropriate codes. HCA ultimately pleaded guilty to more than a dozen civil charges and payed fines of more than $1.7 billion through 2002, of which more than $500 million went to two whistleblowers.
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