In the continued prosecution of the mental health company, American Therapeutic Corporation, its management company Medlink Professional Management Group Inc, and various owners, doctors, therapists and other participants to a fraudulent Medicare billing scheme resulting in over $200 million in medically unnecessary services, the Department of Justice,on November 30, 2011, announced that Joseph Williams, owner and operator of Avondale Manors Retirement Home and the Diversified Marketing Group Inc., in Pompano Beach Florida, pled guilty to receiving kickbacks from American Therapeutic Corporation (“ATC”).

In this particular part of the Medicare billing scheme, Mr. Williams received monetary kickbacks from ATC in exchange for delivering patients to ATC to receive “partial hospitalization program services” for which the patients were ineligible to receive.  ATC paid Mr. Williams $30.00 per patient for each day the patient attending ATC.

Mr. Williams also pled guilty to fraudulently billing Medicaid for services allegedly provided at his Avondale Retirement Homes.  Mr Williams paid the owners and operators of halfway houses for Medicaid enrollees’ personal identifier information. Mr. Williams used that information to bill Medicaid for services the patients never received.

Mr. Williams is facing a maximum prison term of ten years and a $250,000 fine for each count.

This week three cases involving the fraudulent billing of Medicare for services or supplies that were never provided illustrate that Medicare Fraud is pervasive nationwide.

In Louisville, Kentucky authorities are tracking down Rodolfo Bouza owner of Newberg Services Inc., for fraudulently billing Medicare for $750,000 for bandages and durable medical equipment that were never produced.  In court documents Bouza’s scheme allegedly started in Miami, Florida and spread nation wide.

In Kittery, Maine Peter Ensinger was convicted for billing Medicare and other insurance companies for products that were never delivered to the patients, billing for more expensive products than the product that was actually delivered, and for continuing to bill for the product after the patient had returned the equipment.

In Humble, Texas Lula Thurman pleaded guilty to bilking Medicare and Medicaid of $483,833 by utilizing special modifier codes established for replacing medical equipment lost or damaged during a catastrophe or disaster such as Hurricane Katrina.  Thurman, owner of LT’s Faith-N-Action provided her customers new wheelchairs utilizing this code even though the customers did not qualify to receive the equipment under that code.

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.

Late last month federal authorities in a healthcare fraud strike force moved to shut down a massive Medicare fraud operation in Miami. Four people were arrested, two of whom were top officials at American Therapeutic Corporation, a leading chain of community mental health centers and charged them with Medicare fraud. It’s alleged the Miami company preyed on patients with severe dementia to bill $200 million for services it never delivered. American Therapeutic Corp is among the nation’s largest chain of community mental health centers licensed by Medicare.

The ATC case is part of an ongoing push by federal officials to crack down on widespread Medicare and Medicaid fraud. Since its inception in 2007, the strike force has indicted more than 825 individuals nationwide. According to Assistant Attorney General Lanny Breuer, the ATC case was the largest fraudulent billing scheme ever prosecuted by the strike force.

These arrests come just one week after an Armenian-American crime group was charged in New York with operating phantom healthcare clinics that tried to cheat the federal program out up to $163 million, which US authorities claimed was the “the largest Medicare fraud scheme ever perpetrated by a single criminal enterprise.”

“Medicare and Medicaid fraud are problems for our country’s health care system”, says attorney and partner Joel Androphy of Berg & Androphy. “Criminal and civil sanctions are necessary.”

In the previous fiscal year, the department of Health and Human Services reported winning and settling over $1.63 billion worth of fraud cases in court. In addition to this fraud money returned, the Health Care Fraud and Abuse Control Program, within the HHS, reported the transfer of $2.51 billion in new funds to the Medicare Trust Fund. A total of 583 defendants were convicted on health care fraud-related charges.

On the whole, $2.576 billion was deposited with the Department of the Treasury and the Centers for Medicare and Medicaid Services. The money was gained through criminal fraud penalties, civil monetary penalties, and gifts and bequests made toward the funds.

The Office of Inspector General excluded a total of 2,556 individuals and entities from the healthcare sphere during the previous year. These were based on criminal convictions for crimes related to Medicare and Medicaid and other healthcare programs, and also expanded to patient abuse or neglect.

A pilot program run by Medicare in three states (California, New York and Texas) claimed $900 million in fraudulently claimed money in the last three years. The program focused on regaining taxpayer money that had been paid out to hospitals and doctors based on fraudulent or overcharged bills.

This week, President Obama announced the expansion of the program to a Federal level. Auditors, known around the White House as “bounty hunters” have been deployed around the nation to identify and investigate fraudulent Medicare and Medicaid charges.

Auditors will receive a small percentage of the regained money as an incentive to finding improper payments. “It’s estimated that improper payments cost taxpayers almost $100 billion last year alone,” President Obama said on Wednesday, “If we created a Department of Improper Payments, it would actually be one of the biggest departments in our government.”

The program works by empowering auditors to use state of the art computer programs that troll through records to identify fraudulent claims. Auditors then use more traditional means to track and investigate suspicious claims.