Hill-Rom, a company located in Batesville, Indiana, manufacturers hospital beds.  In particular it produces bed supports designed to treat pressure ulcers and bedsores.  According to the recently settled  qui tam case, over the last decade Hill-Rom has been fraudulently billing Medicare for supplying beds, and bed supports to patients who did not qualify for the use of the medical equipment.  The qui tam case settled for $41.8 million. It represents the largest settlement recovered in the Eastern District of Tennessee.

According to the settlement, Hill-Rom submitted claims to Medicare for patients who did not qualify for the equipment, including patients who had died, patients no longer using the equipment or had been moved to nursing homes.  Hill-Rom provided this equipment nationwide and according to the Department of Justice there were hundreds of thousand of patients involved.  Hill-Rom provided incentives such as gift certificates and large televisions to its sales representatives for boosting sales.  Even though an internal audit in 2003 revealed the billing errors, Hill-Rom did not correct them.

In addition to the large civil monetary settlement, Hill-Rom also entered a Corporate Integrity Agreement with the Department of Justice that will ensure the company five years of close federal scrutiny.

Originally authored by Kathryn E. Nelson

A Louisville, Kentucky physician, Dr. Steven H. Stern, and his practice, Kentuckiana Center For Better Bone and Joint Health (“KCB”), have settled allegations of overbilling Medicare.  The complaint, brought by a former employee, claims that Stern and KCB falsely billed Medicare for rheumatoid arthritis infusions over a three-year period.  Specifically, the complaint alleges that Stern and KCB split vials of Infliximab across multiple patients, then billed Medicare as if an entire vial were used for each patient.

In addition to the $349,860 paid to settle the overbilling allegations, Stern and KCB will pay the attorney’s fees, costs, and expenses of the former KCB employee whistleblower.  The whistleblower will receive a payment of $70,000 as a realtor’s share.

The Medicare Strike Force in Florida is HOT, HOT, HOT!

In another banner week for the Florida Medicare Strike Force, the Department of Justice announced three new prosecutions of Medicare Fraud, totalling approximately $225 million. The three cases noted below not only demonstrate the astonishing monetary amounts prevalent in these health care fraud cases, but also demonstrate a disturbing trend in the perpetration of the fraud:  the recruiting of Medicare beneficiaries through the use of kickbacks and bribes in order to submit false claims.

In the three reported cases, all three schemes included paying Medicare beneficiaries kickback and bribes to obtain said beneficiaries billing information in order to submit claims for services that were either medically unnecessary or never provided.

In the first case reported on Monday September 19, 2011, on the Department of Justice’s (DOJ) website, Marianella Valera, owner of American Therapeutic Corporation, was found guilty of orchestrating a $205 million Medicare Fraud scheme.  Between 2002 and October 2010, Valera and her cohorts submitted false claims for treatment of severe mental illness for patients who did not qualify for such treatment, as such, the treatments were medically unnecessary or not provided.  In addition, as part of the scheme, kickbacks and bribes were paid to Medicare beneficiaries for their billing information in order to submit the false claims for the services that were medically unnecessary or never provided.

In the second case reported on Monday September 19, 2011, on the DOJ’s website, Adrian Chalarca was convicted of Medicare Fraud for submitting false claims between 2009 and 2010 for physical therapy services that were never provided.  As in the trend noted above, Chalarca and his co-conspirators paid kickbacks and bribes to Medicare beneficiaries to obtain their billing information.  They used that billing information to submit claims totaling $757,654 for services that were never provided.

The third case reported September 21, 2011, on the Department of Justice’s website, ten people in Miami conspired to fraudulently bill Medicare for $25 million in home health services.  The ten people worked for ABC Home Health Inc., and Florida Home Health Providers Inc.  In addition to falsifying records for Medicare beneficiaries to make it appear the patients qualified for such services, the ten people paid said beneficiaries kickbacks in order to use their information to bill for services that were either medically unnecessary or never provided.

Originally authored by Kathryn E. Nelson

Maryland-based Maxim Healthcare Services, Inc. (“Maxim”) agreed to pay $150 million to settle criminal and civil charges relating to a nationwide scheme to defraud state Medicaid programs and the Veterans Affairs program. Maxim will pay $130 million in civil settlements and a $20 million fine as part of a Deferred Prosecution Agreement (“DPA”). If Maxim complies with the DPA’s reform and compliance requirements, it will avoid a conviction on the health care fraud charges.

According to the complaint, Maxim submitted more than $61 million in fraudulent billings to government healthcare programs for services not rendered or not reimbursable. From 2003 through 2009, Maxim received over $2 billion in reimbursements from programs in 43 states.

Eight former Maxim employees and the parent of a former Maxim patient pleaded guilty to federal charges arising out the submission of false billings and false statements.

According to a USA Today article printed on September 2, 2011, government health care fraud prosecution, in the first eight months of 2011, was 85% higher than last year.  This rise is attributed to increased funding and improvements to investigative tools such as the creation of HEAT task force – discussed in previous blogs.

If the first two weeks of September 2011 are an indication, these numbers are going to continue to rise and quickly.  On September 2, there were two reports of Medicare fraud convictions.  The first one out of Miami Florida, where Jasmine Williams of Thirdage.com reported that a Miami area nurse pled guilty to Medicare fraud charges for home health services that were either medically unnecessary or never provided.  Between 2006 and 2009, this nurse, Farah Perez, recruited Medicare beneficiaries who allowed the Florida Home Health Care Providers, Inc. to bill for medicare services.  In exchange for these referrals, Nurse Perez received kickbacks from the home health company.

The second story reported September 2, 2011, comes from Detroit, where Robert Snell of detnews.com reported the prosecution of eighteen people in Detroit for Medicare fraud.  In what appears to be a disturbing trend in health care prosecution – fraudulent billing for home health services – these eighteen people were prosecuted for billing Medicare for home health services that were not medically necessary or even provided.  This particular scheme included billing for psychotherapy services for persons who were dead.

The Medicare Strike Task force, part of HEAT,  announced today, September 8, 2011,  its indictment of 91 people nationwide who fraudulently billed Medicare to the amount of 295 million.  The accused include doctors, nurses and other health care professionals who fraudulently billed for a wide spectrum of medical goods and services including home health care services.  In Houston, Texas two people are responsible for $62 million in false billing for home health care services and durable medical equipment.  In another trend in Medicare fraud, the durable medical equipment equates to wheelchairs.  As in the other two cases mentioned above, these Houstonians are accused of providing Medicare benificiaries’ information to home health service companies in exchange for kickbacks.  The home health service companies then billed Medicare for services that were medically unnecessary or never provided.

As is evident in these three reports of health care fraud, and in other posts from The Healthcare Fraud Blog, fraud is rampant in the home health service industry.  The most common fraudulent billing is for wheelchairs and services that are not medically necessary or were never provided.  Hopefully with continued success and funding the government’s task force will be able to identify fraudulent billing before it reaches the dizzy proportions such as the indictment reported today.

Originally authored by Kathryn E. Nelson

The owner of Memorial Medical Supply, Sunny Robinson, was sentenced on August 30, 2011 to over 8 years in federal prison after a 5-day jury trial for alleged health care fraud and anti-kickback violations.  Robinson used names and Medicare numbers of doctors and beneficiaries to falsify  medical records on false and fraudulent claims in excess of $4.3 million to both Medicare and Medicaid. He illegally obtained protected health information including names, birth dates, medical histories, and Medicare and Social Security numbers from individuals and home health agencies.  The information was used to submit false and fraudulent claims for “Arthritis Kits,” power wheelchairs, diabetic supplies, and incontinence supplies.  In many instances, the beneficiaries did not need or order the medical equipment nor did a doctor prescribe the equipment. Claims also were submitted for medical equipment that was not provided. Memorial Medical Supply even submitted claims for reimbursement to Medicare for equipment supposedly delivered to deceased beneficiaries.

Three co-defendants, Manuel DeLuna, Lisa Jones, and Shirley Chavis, also were sentenced for their roles in the fraudulent scheme.

On August 4, 2011, federal agents in Houston, Texas arrested a nursing home administrator on allegations that he participated in a scheme that defrauded Medicare and Medicaid of almost $1 million between 2003 and 2007.

For reasons only known to the administrator, Mr. Washington decided to risk his nursing home administrator’s license and career on a kickback scheme that netted him $20, 000 dollars over the four year period.  He now faces a possible criminal fine ten times that amount and fifteen years in prison.

A nursing home administrator is responsible for the overall operations of a nursing home.  The administrator is ultimately responsible for the healthcare and well-being of the resident patients of the nursing home.  The administrator is also responsible for operating the nursing home in accordance with state and federal laws and regulations which includes Medicare and Medicaid.  Accepting money in exchange for referrals is not allowed under Medicare and Medicaid laws.  Neither is billing for services for patients that do not reside at the nursing home.

In apparent disregard for the laws, Mr. Washington allegedly entered an agreement with an ambulance company that involved getting doctors to sign orders for the transportation of dialysis patients residing at the nursing home. The ambulance company billed Medicare and Medicaid for the transportation services and paid Mr. Washington for the continuing referrals.  Not only are the alleged kickbacks for the referrals in violation of Medicare and Medicaid laws; but apparently the patients being transported weren’t even residents of the nursing home making all the submitted claims fraudulent.

Mr. Washington’s and the others’ actions create an impact that reaches far beyond this single nursing home and community.  The cumulative fraud perpetrated nationwide each year costs the Medicare and Medicaid programs an estimated $60 billion a year.  That is money the programs cannot use to carry out the agencies’ missions of providing health care to the poor and elderly in this country.  The continued fraudulent activity results in cuts to the beneficiaries either through a reduced number of people eligible for such services and/or a reduction in available services.  And the resulting costs of these cuts to our society make these needless fraudulent actions that more egregious.

In the ongoing struggle against healthcare fraud government entities over the course of the last six months have taken one step forward and one step back.

The step forward is the proposed rule by the federal Department of Health and Human Services’ Office of the Inspector General permitting the state Medicaid Fraud Control Units (MFCU) the use of federal matching funds to identify fraud through the screening and analyzing of State Medicaid claims data.

The new rule found in 42 CFR Part 1007 will allow MFCUs’ to use Federal Financial Participation (FFP) to cover costs for activities known as “data mining.” See, State Medicaid Fraud Control Units; Data Mining, 76 Fed. Reg. 14637- 14641 (Mar. 17, 2011) (to be codified as 42 C.V.R. pt. 1007).  Data mining refers to the electronic sorting of Medicaid claims through statistical models and intelligent technologies to reveal patterns and relationships in said claims activity and history to identify “aberrant utilization and billing practices that are potentially fraudulent.” Historically, the burden of analyzing state data has fallen on the MFCUs.  With limited resources and technology, the MFCUs had to depend on referrals from other MFCU’s or outside sources regarding potential fraudulent activity.  By allowing MFCU’s to claim FFP, the state entities will be able to conduct more efficient data mining with better technology.  This will enhance the MFCU’s ability to identify early fraud indicators and detect emerging fraud and abuse schemes and trends.  The federal government believes that allowing the MFCU’s to participate in FFP it will allow MFCU to “marshal their resources more effectively and take full advantage of their expertise in detecting and investigating Medicaid fraud.”  Id. at 14638.

Coupled with the Medicaid Fraud Strike Forces and HEAT task forces discussed in an early blog, it looks like the government has placed a high priority on detecting, investigating and putting a stop to Medicaid fraud.  Theseactions have the potential to save the taxpayers a lot of money as the rampant fraud existing today costs millions of dollars each year.  Perhaps then the Medicaid program can focus on its primary objective – providing quality health care to those citizens most in need.

The one step back was taken by New York Governor Andrew Cuomo when he recently asked for James Sheehan’s, the state’s first Inspector General for New York’s Medicaid program, resignation.  Mr. Sheehan, appointed by former Governor Eliot Spitzer had come to New York from the United States Department of Justice’s Philadelphia office with an impressive resume of prosecuting healthcare fraud matters, handling over 550 matters, as well as managing all civil litigation for the federal Eastern District of Pennsylvania.  The Corporate Crime Reporter in its July 18, 2011 article, titled “Why Did Andrew Cuomo Get Rid of James Sheehan?” noted that with Mr. Sheehan at the helm, New York State in 2008 recovered more than 550 million from Medicaid fraud.  According to this article, that was double the goal set for the state.  See, Why Did Andrew Cuomo Get Rid of James Sheehan, 25 Corporate Crime Reporter, July 18, 2011 available here.

So why did the Governor ask for the resignation of such a highly successful civil servant?  Bluntly stated, the health care lobbyists pressured him into it.  The hospital and pharmaceutical industry complained, a lot apparently, that Mr. Sheehan was too aggressive.  Too aggressive against companies that routinely defraud the government health care programs, programs that provide health care to those people who otherwise could not afford access to such care?  Sadly, Mr. Sheehan success could not withstand the hospital and pharmaceutical industry’s lobbying efforts.  It will be interesting what Mr. Sheehan’s successor will accomplish.

Estimates are that healthcare fraud costs the taxpayers between 60 to 100 billion dollars a year. Regardless the exact cost, the loss is simply too staggering for the federal government to continue to absorb. And continue it does, on Tuesday June 7, 2011 there were three instances of health care fraud reported in the news. The first case was reported from Atlanta, Georgia where a psychologist pleaded guilty to two counts of health care fraud for billing, between July 2007 and October 2009, for counseling services to patients in nursing homes, which he did not actually provide. What makes this case most egregious is the fact that a number of the patients he continually billed for were in fact deceased.

The second case involves the City of Dallas, Texas. The City will pay 2.5 million dollars to settle a case regarding allegations that the City fraudulently billed Medicare and Medicaid for ambulance services provided in response to 911 calls between the years 2006 through 2010. The City allegedly required that all the billing for ambulances dispatched in response to 911 calls be coded at the highest levels of reimbursement regardless of the actual services provided.

Finally, the third case also takes place in Texas. An orthodontist in Amarillo billed for services that he did not provide. Between the years 2008 and 2010, his assistants performed the services that were billed for while he was out of town.

What, if anything, is being done to prevent such fraud, waste and abuse of the government health care systems that results in such exorbitant losses to the taxpayers? In 2009, the Department of Justice and the Department of Health and Human Services, Office of the Inspector General responded by forming the Health Care Fraud Prevention and Enforcement Action Team (HEAT). HEAT is teams of federal investigators whose mission it is to crack down on persons and entities, as mentioned above, from perpetrating fraud against the government health care systems. HEAT’s criminal investigations and resources are in addition to the civil federal qui tam cases and recoveries under the federal False Claims Act. Currently the teams are active in the Baton Rouge, Brooklyn, Detroit, Houston, Los Angeles, Miami-Dade and Tampa Bay areas. With a new mission, adequate funding, and cooperation between local, state and federal health care agencies, the goal is to prevent further fraud from occurring while increasing the amount of monies recovered from existing fraudulent activity.

Were you aware that fraud and abuse accounts for almost ten percent of total Government Medicaid and Medicare spending on healthcare, or approximately $120 billion per year? The potential harm caused by fraud in the Medicaid/ Medicare healthcare industry cannot be overstated. There are six types of qui tam cases often pursued in the area of Medicaid / Medicare healthcare fraud. They include:

1. Fraudulent Billing
2. Anti-Kick Back
3. Self-Referral
4. Best Price
5. Best Value
6. Off-Label Marketing

The types of False Claims Act qui tam claims involving Medicaid / Medicare healthcare vary depending on the level of care needed and provided. Under the category of "Fraudulent Billing," there are five potential areas in which qui tam cases arise in the area of “treatment issues” for which Medicare or Medicaid claims are submitted. They are:

1. Total Neglect or No Services
2. Worthless Services
3. Inadequate Services and Products
4. Standard of Care
5. Aggressive Patient Treatment

Other areas of billing fraud may involve misrepresentation of credentials, upcoding of services, unbundling of services, and misrepresentation of patient data or populations.

Today we will expound on the treatment issue of Total Neglect or No Services Provided. The most obvious case of FCA liability imposed on a physician for fraudulent billing occurs when he submits a claim for services he did not provide. For example, a physician submitted reimbursement claims to Medicare for surgeries he never performed. The Government sued to recover for payment of thirty-one false claims, and the court found him liable.

Check back next month when we will explain the treatment issues, "Worthless Services" and "Inadequate Services" as they relate to Medicare / Medicaid fradulent billing qui tam cases.