Harris Beach Micro-Webinar Series on NY’s New Compliance Program Requirements

Harris Beach invites you to register for its 7 Element compliance program series addressing New York’s 2020 and 2022 updates to Medicaid Compliance Program requirements. Starting on August 16th, each live program will be no more than 30 minutes and address a separate Element over 7 consecutive Wednesdays starting at Noon.  Recordings of each program will be available. 

Please register for these micro-learning sessions and join Harris Beach’s presenters, attorneys Peter M. Hoffman and Matthew D. Babcock.

OIG Enforcement Summary: July 1, 2023 – July 31, 2023

The following is a summary of selected federal Department of Health and Human Services’ Office of Inspector General (OIG) reports of fraud and abuse enforcement activity across the country.[1]  The enforcement actions reported are based upon federal and individual states’ activity.

The summaries reflect areas of OIG’s and individual states’ current and recent enforcement activity.[2] Knowing where regulators’ attention is focused can help health care providers identify areas of focus for compliance and risk assessment activities. Although not all the enforcement actions may be relevant to any one provider’s health care business, there may be some summaries that could be used as examples in compliance program education programs (“What to avoid”), or used in developing a risk management plan. (Note: An Acronym Key appears at the end of the Report.)

Of note in this issue:

  1. Hospital system allegedly violated the False Claims Act by not meeting the conditions necessary for “incident-to” billing (July 27, 2023).
  2. Electronic medical records software provider allegedly violated the False Claims Act and Anti-Kickback Statute when it allegedly mis-represented the capabilities of the system sold to providers and paid kickbacks to customers who made referrals to other providers for the software (July 17, 2023). 
  3. Pain management clinic established protocols creating series of medically unnecessary procedures for patients and when patients refused to undergo treatments, providers were directed to reduce those patients’ pain medications (July 14, 2023).

July 28, 2023 OIG Listserv Release

U.S. Settles Lawsuit Alleging Medical Staffing and Services Companies Defrauded Medicare By Submitting Claims Under The Names Of Doctors Who Did Not Perform The Services

NY. The defendants allegedly submitted or caused to be submitted false claims to Medicare using the names and identifying information of physicians who did not perform or supervise the medical services claimed, and in many cases were no longer employed by defendants. It is alleged that subject claims used the NPIs of physicians who did not render or supervise the services on the claims, rather than the NPIs of the physicians who actually rendered the services.  The defendants received substantial reimbursement from Medicare as a result of claims the resulted in unwarranted payments.  

The matter was initiated through a Qui Tam action.

St. Louis Area Doctor, Office Manager Accused of Health Care Fraud

MO. The defendants – physician-owner of multiple urgent care centers and his office manager allegedly conspired to make false statements to Medicare and Medicaid by billing for physician services, when the services were actually performed by multiple assistant physicians (APs) who were working without the required physician supervision.  Some AP services were billed when the defendant physician was out of town. The defendants recruited physicians to supervise APs by falsely telling physicians that they only needed to sign blank, undated Collaborative Practice Arrangement (CPA) forms to fulfill their roles. APs are expected to receiving training from supervising physicians, training allegedly was not provided because physicians were not continuously present despite requirements for their presence. Additionally, the defendant’s clinics allegedly were ineligible to use CPAs since at least one location did not meet the requirement that it be located in a medically underserved rural or urban area.

Pharmacy Owner Convicted of Payment of Illegal Kickbacks and Money Laundering

TX. The defendant – owner of several compounding pharmacies, was convicted of paying illegal marketing kickbacks when he allegedly worked with others to create and market expensive compounded medications, which are typically intended to be “custom-tailored” to individual patient needs. Marketers were paid to recruit physicians to write prescriptions for the expensive compounded medications and structured the program so physicians writing the scripts could profit from pharmacy operations. Kickbacks were allegedly paid in order to launder the unlawful proceeds. 

July 27, 2023 OIG Listserv Release

Lansing-Area Health System Agrees to Pay $671,300 To Settle False Claims Act Allegations Relating To Improper Billing

MI. The defendant – health system, allegedly violated the FCA through misuse of “incident-to” billing, which allows an Advanced Practice Provider (APP), including nurse practitioners and physician assistants, to treat a patient, but bill the encounter under the physician’s name and reimbursement rate if certain criteria are met. The allegations involve the defendant billing at a physicians’ rate when the conditions for use incident-to billing for APP services were not met. 

The matter was initiated through a Qui Tam action.

 July 26, 2023 OIG Listserv Release

Reading Owner of Telemedicine Companies Charged with $44 Million Medicare Fraud Scheme

MA. The defendant allegedly used his companies to enter into business relationships that generated leads by targeting Medicare beneficiaries. Telemarketers paid the defendant’s companies on a per-order basis to generate DME and genetic testing orders. The defendant worked with medical staffing companies to find doctors and nurses who would review and sign pre-populated orders, typically without any patient contact. Allegations include that the medical records falsely represented that the medical providers performed a legitimate examination of beneficiaries. The pre-signed orders were provided by the defendant to telemarketing companies that sold the orders to DME suppliers and labs.  The defendant allegedly knew the said orders would be used to submit claims to Medicare for DME and genetic testing despite being not medically necessary and based on false documentation and kickbacks.

July 24, 2023 OIG Listserv Release

Suburban Chicago Doctor and His Surgical Center To Pay More Than $750,000 To Settle False Claims Act Suit

IL. The defendants – a physician and his surgical center, allegedly violated the FCA by performing multiple mole removal procedures on patients on a single date, but submitted claims to government programs that made it appear as though the procedures were performed on multiple dates.  This unbundling practice resulted in a higher payment to the defendants than would have been paid had the procedures been billed on the same date as they were actually performed. 

The matter was initiated through a Qui Tam action.

July 21, 2023 OIG Listserv Release

Missouri and Texas Physicians and Medical Practices Agree to Pay Over $525,000 to Settle Kickback Allegations Involving Laboratory Testing

TX & MO. The defendants – physicians and their medical practices, agreed to resolve FCA allegations that they received illegal kickbacks in violation of the AKS in return for referring patient for lab testing. The kickbacks were paid to defendants through multiple vehicles, including payments to defendants through purported MSOs and commissions paid to an independent contractor recruiter who made payments to defendants, in return for lab referrals.  

July 19, 2023 OIG Listserv Release

Justice Department Files False Claims Act Complaint Against Laboratory Companies and Their Owner

DoJ. The defendants – owner of multiple lab companies and the owned labs, allegedly violated the FCA when they offered COVID-19 testing to NHs as a way to bill Medicare for medically unnecessary respiratory pathogen panel (RPP) tests. The tests were alleged to be medically unnecessary because the beneficiaries had no symptoms and the tests were for uncommon respiratory pathogens. Also alleged are that tests were not ordered by physicians, Medicare was billed for tests that were never performed, and nasal swab test samples were supposedly collected after the date of death of beneficiaries.  

July 18, 2023 OIG Listserv Release

Suburban Chicago Physician Sentenced to Federal Prison for Prescribing Opioids Without a Medical Exam

IL. The defendant-physician pled guilty to health care fraud when she pre-signed prescriptions for hydrocodone, oxycodone, and fentanyl for patients of her pain clinic so that the prescriptions could be provided when the defendant was not at the clinic. False paperwork was created indicating that the defendant conducted a face-to-face exam when no such exam took place and the patient only came to the clinic to pick up the prescription. The defendant knowingly submitted false claims seeking Medicare reimbursement for exams that never took place.

Two Men Plead Guilty to $67M Medicare Fraud Scheme

FL. The defendants, the call centers’ owner and an employee, allegedly conducted deceptive telemarketing campaigns targeting Medicare beneficiaries to solicit them for unnecessary genetic testing and DME. One defendant acted as a straw owner for a lab that submitted false genetic testing claims. The defendants paid kickbacks and bribes to telemedicine companies in exchange for completed doctors’ orders, sold doctors’ orders to labs and DME companies in exchange for kickbacks, forged doctors’ and patients’ signatures, and tricked medical providers into ordering medically unnecessary genetic testing.

July 17, 2023 OIG Listserv Release

Knoxville Man Sentenced To 24 Months In Prison And Ordered To Repay $411,963 For Health Care Fraud Scheme

TN. The defendant, who was responsible for the day-to-day operations of a medical clinic, allegedly paid kickbacks to co-conspirators in exchange for signed doctors’ orders for DME that were medically unnecessary and which were then billed to Medicare. “Leads” resulted from recorded calls between a telemarketer and Medicare beneficiaries who provided their Medicare information.  The recordings were provided to doctors who used the information to complete DME orders, regardless of medical necessity, in the absence of a pre-existing doctor-patient relationship, without a physical exam, and sometimes based only on a short telephone call. The defendant attempted to conceal the conspiracy by creating sham contracts to disguise the kickbacks as legitimate payments for marketing and consulting services.  

Electronic Health Records Vendor NextGen Healthcare Inc. to Pay $31 Million to Settle False Claims Act Allegations

DoJ. Vendor-NextGen Healthcare Inc. (NextGen), an electronic health record (EHR) vendor, agreed to resolve allegations that it violated the FCA by misrepresenting the capabilities of a certain version of its EHR software when it falsely obtained certification for its software in connection with the 2014 Edition certification criteria published by HHS. The NextGen release lacked certain required functionalities that were required by HHS standards. Additionally, it was alleged that NextGen violated the AKS when it provided a credit of up to $10,000 to current customers that recommended the NextGen products that were purchased. Other remuneration (tickets to sporting events and entertainment) were also alleged to have been provided. The matter was initiated through a Qui Tam action.

July 14, 2023 OIG Listserv Release

Attorney General Bonta Announces $11.4 Million Settlement Against Owner of Pain Clinics for Medi-Cal Fraud

CA. The defendant-owner of a chain of pain management clinics settled allegations that the defendant conducted medically unnecessary tests and procedures which were billed to Medi-Cal.  The defendant allegedly created a protocol across the clinics to conduct a battery of medical procedures on all patients regardless of medical necessity or the treating provider’s request or consent. The protocol also instructed providers to reduce pain medication for patients who did not consent to undergo certain procedures, additionally, the defendant directed that skin biopsies be interpreted by a family member who did not have the required pathology training to conduct interpretations. He also terminated a contract with a pathologist who refused defendant-clinic’s request to approve skin biopsy results without interpreting them himself.   

Dermatologist Agrees to Pay $6.6 Million to Settle Allegations Of Fraudulent Billing Practices

TN. The defendant-physician and his practice, which operates 13 dermatology clinics, allegedly violated the FCA for submitting false claims for Mohs Micrographic Surgeries and other dermatological procedures. The allegations included that the defendant billed as if he performed the surgical and pathology portion of the procedures when in fact one portion as performed by other individuals. Additional allegations were that the defendant violated Medicare’s “multiple procedure reduction rule” when the clinics billed for multiple procedures, performed on the same patient, on the same day. The matter was initiated through a Qui Tam action. The defendant entered into an Integrity Agreement with HHS OIG. 

Owner Of Health Care Company Pleads Guilty to Federal Charge For Conspiracy To Commit Health Care Fraud

MD. The defendant pled guilty to a conspiracy to commit health care fraud in connection with bribes and kickbacks paid to Medicaid beneficiaries to induce them to visit the Defendant’s mental health services provider. The co-conspirators caused Medicaid beneficiaries to be transported to the defendant’s location. Beneficiaries were paid a cash bribe ($5 or $10) in exchange for the visit.  The payment was falsely described as a transportation stipend, even when the defendant’s facility conducted the transport or when the beneficiary did not have any transportation expenses. A non-profit created by the defendant was falsely represented as providing the transportation funds.  Front desk staff was directed to use a sign-in sheet that used the non-profit’s name to falsely reflect that the non-profit was making the payments. Additionally, false treatment notes were entered into the defendant’s electronic healthcare system for billings for community support workers who did not perform services. Not addressed in this summary are the allegations related to the defendant’s fraudulent Economic Injury Disaster Loan (“EIDL”) program under the CARES Act. 

July 13, 2023 OIG Listserv Release

Diversicare and Two Occupational Therapy Assistants to Pay Over $1.3 Million to Resolve False Claims Act Allegations

AL. The defendants agreed to the payment to resolve allegations that they violated the FCA by submitting claims to Medicare for occupational therapy services that were not provided. The Qui Tam complaint alleged that the individuals (OT Assistants) falsified therapy records when they “clocked into work at” a Diversicare facility, left the premises, and worked for other home health companies while billing Diversicare for services not performed. It was alleged that Diversicare permitted and condoned this practice and knowingly submitted false claims to Medicare. Initiated through Qui Tam action.

July 12, 2023 OIG Listserv Release

California Doctor and Medical Practice Agree to Pay $11.4 Million to Resolve False Claims Act Allegations Relating to Skin Biopsies, Spine Surgeries, and Urine Drug Testing

CA. The defendants agreed to settle allegations that they violated the FCA for medically unnecessary skin biopsies, spinal cord stimulation surgeries and urine drug testing. The defendants admitted they directed their non-provider staff to order at least 150 skin biopsies per week without the consent of the patients’ treating providers. The biopsy orders reported symptoms that were inconsistent with the patients’ actual symptoms. Patients who refused a skin biopsy were allegedly told by the defendants that the patients’ opioid medication would be reduced and defendants instructed providers to immediately taper the medication.

*  Medically unnecessary surgery was performed to implant spinal cord stimulators for treatment of chronic pain.  The defendant physician paid a psychiatrist to report to Medicare and Medicaid that the psychiatrist performed a necessary psychological evaluation prior to surgery and reported that the patients did not have any preexisting psychological or active substance abuse disorders that would adversely affect patient response to surgery. The defendants admitted they knew the psychiatrist did not perform in-person evaluations and ignored indications that patients suffered psychological or substance use disorders before receiving surgery.

*  Medically unnecessary definitive urine drug testing was provided through blanket orders without regard to patients’ individualized medical necessity and orders were for the maximum number of drug panels for each patient. 

The defendant physician agreed to a 5-year exclusion from federal healthcare programs. The settlement amount was based on the defendants’ ability to pay. 

July 10, 2023 OIG Listserv Release

Health Connect America Fined Over $4.6 Million for Improper Billing Practices

VA. The defendant, Health Connect America (HCA), agreed to resolve allegations that it billed three Medicaid program services when no services were provided.  The services involved:

*  Therapeutic Day Treatment (a school-based program) services were allegedly provided to students who were absent from school;

*  Intensive In-Home Services (home-based program for children with mental health diagnoses at risk for being removed from their home) were billed for services provided by an employee who was having a sexual relationship with a juvenile patient; and

*  Behavioral Therapy Services and Applied Behavioral Analysis (specialized mental health service for children with various mental health diagnoses which require services to be provided by an appropriately trained mental health professional) services were provided by individuals not properly trained or credentialed. Additionally, the defendant used a provider’s NPI  for a provider that never saw the patients. HCA was reported to have agreed to a 5-year compliance and oversight program in which failure to comply with the obligations may result in a criminal prosecution.

July 7, 2023 OIG Listserv Release

Attorney General Ford Announces Sentencing of Health Care Provider and Owner in Medicaid Fraud Case

NV.  The defendant allegedly billed Medicaid for rehabilitative mental health services that were not provided to recipients. Additionally, the defendant allegedly failed to maintain the required documentation supporting the purported services. 

July 3, 2023 OIG Listserv Release

Two Texas Medical Practices to Pay More Than $500,000 to Resolve False Claims Act Liability for Fraudulently Billing Medicare for P-Stim Devices

TX. The defendants allegedly improperly billed Medicare for P-Stim devices (electro-acupuncture device affixed behind a patient’s ear with needles inserted into the patient’s ear using adhesives).  Medicare does not reimburse for P-Stim. The defendants allegedly claimed they implanted neuro-stimulators which is a surgical procedure, requiring an operating room and which is a procedure covered by Medicare.      

Ocean County Man Admits $21.7 Million Health Care Fraud Scheme and COVID-19 Wire Fraud Scheme

NJ. The defendant pled guilty to a DME kickback scheme. Orthotic braces were provided to private and federal healthcare and Medicare beneficiaries without regard to medical necessity. Kickbacks and bribes were paid to marketing call centers who also used telemedicine companies to obtain DME scripts. Defendant’s DME company submitted false attestations to HRSA claiming that it provided diagnoses, testing, and care for individuals with possible or actual cases of COVID-19 after 1/31/2020 when the company ceased billing for any services in April, 2019. Attestations related to the use of the COVID-19 payments were also alleged to be false. 


AG = Attorney General
AKS = Anti-Kickback Statute
CIA = Corporate Integrity Agreement
CMP = Civil Monetary Penalties
CMS = Centers for Medicare and Medicaid Services
CPT = Current Procedural Terminology Codes                  
DME = Durable Medical Equipment
E&M = Evaluation & Management services
FEHBP = Federal Employees Health Benefits Program
FMV = Fair Market Value
DOJ = United States Department of Justice
FCA = False Claims Act
FWA = Fraud, Waste & Abuse
HHS = Department of Health and Human Services
HRSA = HHS’s Health Resources and Services Administration
IA = Integrity Agreement
LTC = Long Term Care (usually facilities)
MCO = Managed Care Organization (typically Medicaid)
MFCU = Medicaid Fraud Control Unit
MSO = Management Services Organization
NH = Nursing Home
NPI = National Provider Identifier
OIG = Office of Inspector General in HHS
OT = Occupational Therapy
PBM = Pharmacy Benefit Managers
PT = Physical Therapy
SNF = Skilled Nursing Facility

[1] Not included in the summaries are prosecutions related solely to drug diversion and inappropriate prescriptions, patient fiscal or physical abuse, or non-healthcare related matters. The summaries also do not include enforcement announcements of arrests with no report of an indictment or civil complaint.

[2] The summaries should be considered to reflect allegations and not necessarily be considered to be statements of fact.