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.

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.

The following report of health care fraud really stretches the boundaries of fraudulent behavior and the belief that the government can self regulate it’s programs to detect such activity.  As reported by Associate Press writer Shayha Mohajer on August 10, 2011, two pastors in the now-defunct Los Angeles church, Arms of Grace Christen Center, abused their congregations trust by using the parishioners’ personal information to defraud Medicare out of 14.2 million dollars.

The pastors used their parishioners’ personal information to establish several fraudulent medical supply businesses.  These businesses billed Medicare for power wheelchairs and other expensive medical devices and equipment.  The two pastors and their co-conspirators used fraudulent prescriptions and other illegally obtained documents to bill Medicare for the medical equipment, which was never needed nor provided to customers.

At the end of the two week trial Christopher Iruke, one pastor was found guilty of one count of conspiracy and seventeen counts of health care fraud.  His wife Connie Ikpoh and another employee were found guilty of of one count of conspiracy and four counts of health care fraud.

Mr. Iruke’s attorney stated that his client didn’t know the prescriptions were fraudulent.  Even if this is true, it does not address what Mr. Iruke thought of using his parishioners’ personal information to set up the medical supply business in the first place. Did he not realize this was illegal?  Did he not stop to think, or even pray about the consequences of using this information to set up these businesses?  He did not have any moral or ethical objections when entering this scheme?  Really what were they thinking?

This news story emphasizes that once again it is not the much maligned beneficiaries, the elderly and poor, of the government sponsored health care programs that are driving these programs into financial ruin.   Rather it is the providers of health care supplies, services, and pharmaceuticals that are taking advantage of a poorly self-audited government program, which allows these persons to bilk the government out of millions of dollars each year.  Perhaps the recent changes the federal government has made over the last year to better detect and stop this type of fraud, as discussed in previous posts, will lessen the opportunity for this type of fraudulent behavior.

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.

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.”

Under new proposed regulations released by the Centers for Medicare and Medicaid Services, healthcare providers would be subject to new screening measures based on their level of risk to federal health programs. The fraud, waste and abuse prevention measures were called for in the new healthcare reform law.

The screening measures include database and licensure checks, unscheduled or unannounced site visits, even criminal background checks and fingerprinting for the highest-risk providers and suppliers to Medicare, Medicaid and the Children’s Health Insurance Program. The proposed rule, which will be open for comment for 60 days, also establishes the criteria for six-month enrollment moratoriums to combat fraud and on payment suspensions during pending fraud investigations.

“More rules are necessary to ensure that the public is not cheated by health care companies,” says Joel Androphy, partner at the Nationwide Law Firm of Berg and Andropy. “Health care companies do not police themselves effectively. The fear of whistleblowers keep many honest.”

Improper payments cost federal health programs about $55 billion a year.

As reported in the Walls Street Journal last week, the U.S. Department of Justice and other government agencies charged 94 individuals across five states on Friday, accusing them of submitting a combined $251 million in fraudulent claims to Medicare, the largest takedown since the Medicare Fraud Strike Force began operating three years ago.

The government’s multi-agency task force unveiled the charges related to separate schemes in Miami, Baton Rouge, La.; Brooklyn, N.Y.; Detroit and Houston, which included using a variety of medical services and fraud schemes that overcharged the government’s health program in order for the defendants to pocket reimbursement money.

“The Department of Justice has increased efforts to combat Medicare Fraud.” says Joel Androphy, Partner at Trial Firm Berg and Androphy.  ”Criminal charges have been brought against medical service providers in 5 cities.   Although a whistleblower – qui tam – lawsuit is the best weapon to combat fraud, it is important for the DOJ to independently pursue criminal charges.   Qui Tam lawsuits are about money.   Many qui tam lawsuits are not pursued, however,  because the perpetrators have no money.  Criminal cases will send people to jail.”

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.