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.

Originally authored by Kathryn E. Nelson

Novo Nordisk will pay $25 million to the U.S. Government to settle allegations of improper marketing of the anti-clotting drug NovoSeven. The complaint alleged that the company improperly promoted NovoSeven for indications not approved by the Food and Drug Administration.

Novo Nordisk also agreed to pay $1.725 million to the U.S. Government and four states to resolve allegations that its sales representatives paid Rite Aid pharmacists to recommend the diabetes drugs Novolin and Novolog.

Novo Nordisk made no admission of wrongdoing in either settlement.

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.

Vermont, the second smallest state by population in the Union, signed into law one of the largest health care reform bills in the fifty states. On May 26, 2011, Democratic Governor Peter Shumlin signed House Bill 202 creating Vermont’s Green Mountain Care System, the first single payer health care plan for a state.  As section 1(a) of the bill sets out, Green Mountain Care will provide “….. comprehensive, affordable, high-quality, publicly financed health care coverage for all Vermont residents in a seamless manner regardless of income, assets, health status, or availability of health coverage.”

Although the legislative intent is for seamless coverage, creating the Green Mountain Care System and the financing thereof may be anything but seamless.  The enactment of this bill is a big step, the next steps before the legislature will be hurdles by comparison. The Vermont legislature wants the law to be operational by 2014.  The first hurdle Vermont faces in meeting that goal is receiving a waiver from the U.S. Department of  Health and Human Services under the recently passed Affordable Care Act.  The Affordable Care Act currently only allows states to implement their own alternative plans to the federal law in 2017.  Two pending bills before the 112th Congress, H.R. 844 and S. 248 will allow states to implement alternative plans in 2014.  So Vermont waits on Congress.

In the meantime, the legisltature has to establish the necessary financing for the Green Mountain Care System, recruit the necessary health care professionals to implement the system and create the actual health care coverage that will be available to all Vermont residents. In order to accomplish these objectives, the legislature will start by appointing the five members of the Green Mountain Care Board.  The Board members are responsible for the development and implementation of Green Mountain Care.  The Board will be creating the system with the input from all Vermonters — health care providers, small business owners, insurance companies and the general public.  The Board must also accomplish these monumental tasks with the rest of the nation looking on.

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.”

Today’s students are tomorrow’s lawyers, judges and court clerks. Learn more about how Berg & Androphy has been working with a local community college to give students real-life experience that will make the next generation’s justice process authentic and well executed.

ACC Students Learn From Mock Trial
Alvin Community College students enrolled in the criminal justice, paralegal and court reporting programs had the unique opportunity to address these issues, gain valuable courtroom experience and be part of an intriguing case with the help of attorneys from the Houston law firm of Berg & Androphy during a mock trial at the Friendswood Municipal Court on April 22. Read More

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.