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On June 24, the Medicare Fraud Strike Force in Detroit arrested 53 people on Medicare fraud charges, halting the defendants’ schemes to submit more than $50 million false Medicare claims, according to an HHS press release.
The Strike Force, a multi-agency team of federal, state and local investigators, executed arrest warrants in Detroit, Miami, and Denver. The defendants include not only physicians, medical assistants, and company owners, but also patients who allegedly accepted cash kickbacks in return for allowing providers to submit forms saying they had received treatments in infusion therapy and physical/occupational therapy.
Charges were unsealed Wednesday and included conspiracy to defraud the Medicare program, criminal false claims, and violations of the anti-kickback statutes.
According to the press release, the Strike Force operations in Detroit are part of the Health Care Fraud Prevention & Enforcement Action Team (HEAT), a renewed effort announced in May 2009 between the Department of Justice and HHS to focus their joint efforts to prevent fraud and enforce current anti-fraud laws around the country.
Earlier this week, the University of Medicine and Dentistry of New Jersey agreed to pay the federal government $2 million to settle a whistleblower lawsuit alleging that it bilked Medicaid in a double-billing scheme that started in 1993 and ended in 2003, according to the Department of Justice (DOJ).
The settlement marks the second time UMDNJ paid the government for the double-billing scheme. The first was in 2005 when the hospital paid $4.9 million to the state of New Jersey to settle criminal charges.
In the end, UMDNJ ended up paying nearly $7 million total for the scheme, but, according to Marcella Auerbach, managing partner at Nolan & Auerbach, the hospital could have avoided the lengthy and costly litigation and saved millions, if it had acted differently.
According to Auerbach, a former federal prosecutor who now exclusively represents whistleblowers in healthcare fraud cases, UMDNJ’s in-house attorney discovered the hospital and its physicians were billing for the same services back in 2001—before any whistle was blown. The lawyer brought the issue to the hospital’s attention, but the management looked the other way, and continued to double-bill for the three years following the warning, he says.
The fact that UMDNJ knew about the double-billing, knew it was illegal, and continued to do it, is what makes the case so interesting. The hospital could have saved millions if it ceased double-billing and came clean to the government through a self-disclosure, Auerbach says.
“It’s a bet,” Auerbach says. “They are betting on the fact they won’t get caught.”
However, UMDNJ hit one too many times and ended up going bust. Steven Simring, MD, the man who filed the whistleblower lawsuit will collect $801,000 for his efforts.
Based on the details of the case, Auerbach was not surprised to see a doctor blow the whistle on the hospital. Evidence shows that there were many discussions about the double-billing in which doctors expressed concern. Auerbach says it comes as no surprise that Simring would come forward and blow the whistle rather than risk prosecution.
Auerbach says the gambler’s mind-set is common in whistleblower cases. Rather than play by the rules and fess up, many facilities try to sweep problems under the rug and pretend they never happened. Some even go one step further. Auerbach says many times concerned employees will raise compliance concern only to be handed a pink slip for their trouble, which raises another legal problem.
“These people are fired for bringing points up,” Auerbach says, “Then they come to us and they have two claims.”
Auerbach says this case can be seen as a message to healthcare leaders. The DOJ is saying take any compliance concerns presented by employees or legal council very seriously and, when appropriate, self-disclose. The alternative is a lengthy, expensive, public whistleblower case.
The Department of Health and Human Services (HHS) failed to fully implement recommendations made by the Office of Inspector General (OIG), according to the OIG’s “Compendium of Unimplemented Office of Inspector General Recommendations”, released May 29.
The OIG provided the recommendations after completing various audits pertaining to healthcare fraud and abuse.
The OIG’s priority recommendations, which are explained in more detail in the document itself, include:
- Modify payment policy for Medicare hospital bad debts (estimated savings $340 million)
- Reduce the rental period for Medicare home oxygen equipment (estimated savings $3.2 billion)
- Modify payments to managed care organizations (estimated savings $1.97 billion)
- Extend additional rebate payment provision to generic drugs (estimated savings $966 million)
- Limit enhanced payments to cost and require that Medicaid payments returned by public providers be used to offset the federal share (estimated savings $120 million)
- Ensure Medicaid reimbursement for brand-name and generic drugs accurately reflects pharmacy acquisition costs (estimated savings $1.08 billion for brand-name drugs and TBD for generic drugs)
- RAC
- MIC
- ZPIC
- CERT
On May 20, Attorney General Eric Holder and HHS Secretary Kathleen Sebelius announced the government's latest tool in the fight against healthcare fraud and abuse—The Health Care Fraud Prevention and Enforcement Action Team (HEAT).
With what appears to be an intended pun, Sebelius said in an HHS press release, "Today, we are turning up the heat on perpetrators who steal from the taxpayers and threaten the future of Medicare and Medicaid."
The HEAT team will consist of senior Department of Justice and HHS employees. Their task will be to strengthen existing fraud prevention tools and investigate new ways to root out and prevent fraud, which, according to Office of Inspector General Chief Counsel Lewis Morris, accounts for about 3%—or more than $60 billion—of the government's annual healthcare investment.
The team will build on demonstration projects created by the HHS Inspector General and the CMS that focus on the vulnerable durable medical equipment (DME) industry. This includes:
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Increasing site visits to potential suppliers to prevent imposters from posing as legitimate DME providers
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Increasing training for providers on Medicare compliance, and offering providers the resources and the knowledge they need to help identify and prevent fraud
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Improving data sharing between CMS and law enforcement to identify patterns that lead to fraud
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Strengthening program integrity activities to monitor and ensure Medicare Parts C (Medicare Advantage plans) and D (prescription drug programs) compliance and enforcement
Holder and Sebelius also announced the expansion of the Medicare Fraud Strike Forces. Since their inception in 2007, the Medicare Fraud Strike Forces have recovered more than $240 million in fraud and abuse cases in South Florida and Los Angeles. The targets for the latest expansion are Detroit and Houston.
The creation of the HEAT team, the expansion of the Medicare Fraud Strike Forces, and the creation of a new healthcare fraud hotline (www.hhs.gov/stopmedicarefraud or 1-800-HHS-TIPS) continue President Barack Obama's push for greater healthcare fraud enforcement. Obama has made strengthening the integrity of the Medicare and Medicaid programs a priority for 2010, allotting $311 million of the $3.4 trillion budget on healthcare fraud and abuse prevention.
On May 20, President Barack Obama signed the Fraud Enforcement and Recovery Act of 2009 (FERA), which gives additional resources to law enforcement for fighting fraud and abuse and strengthens fraud laws and statutes.
Although the bill's primary function is to prevent the growing number of mortgage fraud cases, it also the most significant change to the federal False Claims Act since 1986, according to the bill's cosponsor Senator Chuck Grassley (R-IA). The changes to the False Claims Act can affect any organization that submits claims to the government for payment, including healthcare providers.
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The claim is presented to a government official or employee
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The U.S. government has physical custody of the money
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The defendant specifically intended to defraud the U.S. government
"If the bill becomes law, it is easier for the government and private whistleblowers to succeed in false claims act cases," said Claire Turcotte, healthcare attorney with Bricker & Ecker LLP in West Chester, OH.
Not that False Claims cases have been particularly unsuccessful. In a press release, the bill's co-author, Senator Patrick Leahy (D-VT), called the False Claims Act the "one of the best civil tools available to root out fraud in government." Leahy also said from 2000–2008 the Justice Department recovered more than $15 billion in fraud using the False Claims Act.
The bill redefines terms in the False Claims Act to more accurately reflect the intention of the law, according to Leahy. In particular, the term "knowingly" has been redefined in the new legislation.
The language now specifically states that intent is not a requirement of the False Claims Act and the prosecution only needs to show the violator did one of the following:
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Had actual knowledge of the information
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Acted in deliberate ignorance of the truth or falsity of the information
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Acted in reckless disregard of the truth or falsity of the information
Critics of FERA claim the change in language will unfairly expand the scope of the False Claims Act to cover innocent mistakes, but Tim McCormack of Phillips & Cohen LLP, doesn't see it that way.
"The confusion on this point likely comes from the way that ‘knowing' is commonly defined in legal proceedings. A person can ‘know' that something is false in several ways. Obviously, a person who is actually aware that a claim is not true, ‘knows' that it is false. In addition, in legal terms, a person may ‘know' a claim is false if they suspect or should suspect it is not true and do nothing to confirm whether it is," McCormack said.
Basically what the bill does is protect the government from organizations that look the other way when they suspect a claim to be false in order to get out of any liability. The logic being if they do not investigate suspicious claims, they can always say they never knew about it.
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