The following is a summary of the 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 healthcare 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 healthcare 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.

Of Note in this Issue:

  1. Diagnostic reference lab settlement for paying above fair market value for office space to physician-lessors seen as payment for referrals. Federal and Massachusetts settlement reported.

*  Corporate Integrity Agreement (not yet reported) to be executed following settlements.

  1. Three year Integrity Agreement to be executed in settlement.
  2. National dialysis provider alleged to routinely perform certain procedures with End Stage Renal Disease (“ESRD”) who were receiving dialysis, without sufficient clinical indication that the patients needed the procedures.
  3. Medicare Advantage Plan settled allegations of FCA and AKS violations in its used of gift cards to induce referrals

July 15, 2022 OIG News Release

Federal Health Care Fraud Charge Filed against Suburban Chicago Physician

IL. Defendant, physician, allegedly prescribed opioids to patients without a medical examination or visit and then fraudulently billed Medicare for the nonexistent treatment. The Defendant is accused of pre-signing blank prescriptions for opioids for patients of her pain clinic so prescriptions could be provided to patients when she was not at the clinic and patients picked up the prescriptions without having a contemporaneous examination by the Defendant. The Defendant allegedly submitted false claims seeking reimbursement from Medicare for visits that the Defendant knew did not occur, false paperwork was created by the clinic and Defendant indicating that a face-to-face exam took place when the patients only picked up the pre-signed prescriptions and did not have an actual exam.

July 14, 2022 OIG News Release

Licensed Attorney Sentenced to Prison For Defrauding Medicaid in Scheme Involving Personal Care Services – Defendant Admitted Submitting False Timesheets Over Two-Year Period

DC. Defendant, attorney, pled guilty and admitted that she was employed by two different home care agencies in DC to provide personal care services. She submitted false timesheets claiming to provide services that she did not actually render. The fraudulent timesheets reflect services rendered when the Defendant was attending law school or would be traveling related to her law school program.

Connecticut Ophthalmologist Pleads Guilty to Five-Year Health Care Fraud Scheme

MA. Defendant, CT physician, pled guilty to conspiracy with a medical diagnostics company that performed transcranial doppler (TCD) scans. The Defendant ordered medically unnecessary TCD scans in exchange for kickbacks. He and the conspirators used false patient diagnoses to order the unnecessary brain scans which the co-conspirator used to submit claims to Medicare and other insurance companies. The Defendant received cash kickbacks and a sham administrative services fees.

BioReference Laboratories and Parent Company Agree to Pay $9.85 Million to Resolve False Claims Act Allegations of Illegal Payments to Referring Physicians

MA.

Diagnostic Laboratory to Pay $10 Million to Resolve Self-Referral and Kickback Allegations – Delaware Company Illegally Paid Kickbacks to Physicians and Physicians’ Groups That Referred Testing to Its Labs; Massachusetts Will Receive More than $140,000

MA. Bio-Reference and OPKO Health, Inc. (BioReference is a subsidiary of OPKO) agreed to resolve claims that Bio-Reference allegedly paid above market rents to physician-landlords for office space to induce referrals from those physicians for lab services in violation of the FCA. BioReference inaccurately measured the space it would use exclusively and included a disproportionate share of common spaces. It also analyzed referrals from nearby health care providers, including physician-lessors when deciding to maintain or close a patient service center.

Following an OPKO audit done after OPKO’s acquisition of BioReference, the payments to physician-lessors were identified as exceeding fair market value, but no reports or overpayment returns were made to Federal healthcare programs.

The Defendant also entered into a Corporate Integrity Agreement with OIG.

The matter was initiated through a Qui Tam case.

July 13, 2022 OIG News Release

United States Files Claims Alleging Fresenius Vascular Care, Inc. Defrauded Medicare and Other Healthcare Programs by Billing for Unnecessary Procedures Performed on Dialysis Patients – Civil Fraud Complaint Alleges Unnecessary Procedures Performed on Patients with End Stage Renal Disease Were Potentially Harmful

NY. The Defendant, dialysis provider, allegedly routinely performed certain procedures with End Stage Renal Disease (“ESRD”) who were receiving dialysis, without sufficient clinical indication that the patients needed the procedures. The Defendant allegedly subjected ESRD patients, including elderly, disadvantaged minority, and low income individuals, to the procedures to increase its revenues.

The matter was initiated through a Qui Tam case.

Solera Specialty Pharmacy Agrees to Enter into Deferred Prosecution Agreement; Company and CEO to Pay $1.31 Million for Submitting False Claims for Anti-Overdose Drug

MA. The Defendant, specialty pharmacy, entered into a deferred prosecution agreement and agreed to a civil monetary settlement to allegations that it dispensed Evzio (highest-priced naloxone on the market and for which many insurers require a prior authorization request) without the physician’s authorization on prior authorization requests. The Defendant’s contact information was substituted for the treating physicians’ information. The Defendant submitted prior authorization requests that contained false information to obtain the approvals and the Defendant waived Medicare beneficiary copayment obligations without first determining if the patient had a financial hardship.

The Defendant agreed to a three year Integrity Agreement as part of the settlement.

The matter was initiated through a Qui Tam case.

Jury Convicts Man of $600 Million Health Care Fraud, Wire Fraud, and ID Theft Scheme

NY. The Defendant operated a medical billing company that billed for procedures that were either more serious or entirely different than those his physician-clients actually performed. The Defendant directed his clients to schedule elective surgeries through the ER so billing insurance companies would be at a higher rate. When insurers denied the inflated claims, the Defendant impersonated patients who demanded that the insurers pay the outstanding balances. He was convicted of conspiracy to commit healthcare fraud, wire fraud and aggravated identity theft.

July 12, 2022 OIG News Release

Suburban Chicago Doctor Charged with Health Care Fraud in Connection with Alleged False Claims to Medicare and Private Insurer

IL. The Defendant, physician specializing in removing moles to screen for cancer, was charged with submitting fraudulent claims that falsely represented that certain healthcare services, including mole removal procedures, had been provided to patients when the Defendant knew those services were not provided as represented on the claims and, at times, were medically unnecessary. It is alleged that the Defendant removed more moles than were medically necessary and then dictated notes and provided paperwork to employees to submit fraudulent claims for reimbursement for those services.

July 11, 2022 OIG News Release

Bingham Farms Physician Convicted of Drug and Health Care Fraud Charges

MI. The Defendant, physician, was convicted for unlawful distribution of controlled substances and for healthcare fraud. The Defendant allegedly wrote medially unnecessary prescriptions for controlled substances, he prescribed controlled substances after receiving cash from patient recruiters who brought patients to his practice, and he wrote prescriptions for no legitimate medical purpose in exchange for compensation.  Many patients had no need for the drugs.  He allegedly submitted claims asserting he provided necessary treatment to patients listed on the false and fraudulent insurance claims.

The controlled substances conviction is outside the scope of this summary.

East Windsor Man Admits Role in Oxycodone Prescription Fraud Scheme

CT. The Defendant admitted his role in a scheme to acquire and distribute oxycodone obtained through fraudulent prescriptions when he obtained blank prescription paper from employees at various CT medical practices. The Defendant allegedly sold some of the prescription paper to others who recruited “runners” who received Medicaid and Medicare benefits to fill fraudulent prescriptions at various pharmacies. The Defendant and co-conspirators filled out the prescription paper using the runner’s identifying information and a forged doctor’s signature on the prescription.  The runner used their Medicare or Medicaid benefits to fill the forged scripts.

July 8, 2022 OIG News Release

Jury Convicts Doctor of Health Care Fraud Scheme

NY. The Defendant, ENT physician, billed Medicare and Medicaid for an incision procedure of the external ear for patients when all he did was perform an ear exam or ear wax removal. Medicare and Medicaid data demonstrated that the Defendant was an outlier and the highest biller for the procedure in NY.

July 7, 2022 OIG News Release

West Virginia Hospital to Pay $1.5 Million to Settle Allegations Concerning Impermissible Financial Relationships with Referring Physicians

WV. The Defendant, hospital, agreed to make the payment (dollar amount determined based upon the hospital’s financial condition) to resolve allegations that it violated the FCA by knowingly submitting or causing the submission of claims to Medicare in violation of the Stark Law. The Defendant made a self-disclosure that it billed Medicare for certain services referred by physicians with whom the hospital had a financial relationship. The violations of the Stark Law involve payment of compensation to referring physicians that allegedly exceeded fair market value or took into account the volume or value of referrals by the physician.

Addiction Treatment Facilities’ Medical Director Sentenced in $112 Million Addiction Treatment Fraud Scheme

FL. The Defendant, physician, allegedly billed for addiction treatment services that were never rendered and/or were medically unnecessary at two addiction treatment centers where he was the medical director. The Defendant and others admitted patients for medically unnecessary detox services – the most expensive treatment the facilities offered. Patient recruiters offered kickbacks to induce patients to attend the programs and gave them illegal drugs to ensure admittance for detox services at one location. The Defendant submitted false and fraudulent claims for excessive, medically unnecessary urinalysis drug tests that were never used in treatment. Defendant and others authorized the re-admission of a core group of patients who were shuffled between the two facilities to fraudulently bill for as much as possible, even though the patients did not need the expensive treatment they were admitted for. The Defendant prescribed a “Comfort Drink” to sedate them, ensure they stayed at the facility, and to keep them coming back. His computer log-in was used, with his knowledge, to allow others to sign electronic medical records to make it appear as if the Defendant provided the treatment himself, when he did not.

Others involved in the conspiracy had previously pled guilty or been found guilty.  An attorney pled guilty to conspiracy to commit money laundering and was sentenced to 13 months in prison.

July 6, 2022 OIG News Release

Two Sentenced for Scheme to Steal and Sell Vaccination Cards

UT. The Defendants pled guilty to misdemeanor conspiracy to steal or convert government property stemming from the Defendants’ agreement to sell stolen CDC COVID-19 Vaccination Record Cards that they admitted were sold for $50 each. One Defendant admitted to stealing 20 vaccination record cards that would be used to sell to others for $50 each.

CEO of Raleigh Healthcare Company Pleads Guilty to Multi-Million Dollar Healthcare Fraud

NC. Defendant controlled two companies that were licensed with Medicare to supply DME to Medicare beneficiaries. She allegedly billed Medicare for DME without supporting physician orders, without shipping products, and when patients returned equipment received in the mail, the Defendant did not reimburse Medicare for the equipment. Additionally, her companies allegedly billed Medicare in the names of 422 deceased individuals and during Medicare audits when asked to produce orders for equipment, she forged the physician orders if none existed in the files.

July 1, 2022 OIG News Release

Attorney General Josh Stein Announces $11.2 Million Multistate Medicaid Settlement

NC. The Defendant, a multi-state operator of skilled nursing facilities, settled to resolve allegations that the Defendant billed Medicaid for medically unnecessary rehabilitation therapy services and provided substandard skilled nursing services that did not meet federal requirements for some residents or established treatment protocols. Under the scheme, therapy billed to Medicare and Medicaid was either not reasonable and necessary, not skilled, or not covered by Medicare Part A and Medicaid coinsurance benefits. It is alleged that the Defendant violated the Federal and NC FCA.

The matter was initiated by a Whistleblower lawsuit.

Acting AG Platkin Announces the Arrest of Hudson County Pharmacist Charged with Selling Fake COVID-19 Vaccination Record Cards to Individuals Who Did Not Receive the Vaccine

NJ. The Defendant, pharmacist, was arrested for allegedly selling fake COVID-19 vaccination record cards without actually administering the vaccine and then entering the false information into a State managed database of COVID-19 vaccination records.

MCS Advantage Agrees to Pay 4.2 Million Dollars to Resolve Allegations that it Violated the False Claims Act and Anti-Kickback Statute

PR. Defendants, a Medicare Advantage program, agreed to settle allegations that it submitted claims for payment to Medicare related to a gift card incentive program which violated the FCA and the AKS. The Defendant distributed gift cards to administrative assistants of providers to induce the assistants to refer, recommend or arrangement for enrollment of Medicare beneficiaries into the Defendant’s plan. In reaching the settlement, the Federal authorities considered the Defendant’s cooperation in the investigation, its implementation of controls and revisions to internal policies to promote and help future compliance.

Department of Justice Settles Lawsuit Against Spine Device Distributor and its Owners Alleging Illegal Kickbacks to Physicians

UT. Defendants, distributor of spinal implant devices, its owners and two physician-owned distributorships, agreed to resolve allegations they violated the FCA by paying physicians to use the Defendant-distributor’s medical devices in spinal surgeries. The physician-owned distributorships were alleged to be vehicles for payment of kickbacks to induce physicians to use the medical devices in their surgeries. The physicians were allegedly paid based on referrals, made false statements to healthcare providers, and terminated physicians who did not refer enough patients.

If you have any questions on any of the summaries, or if you would like assistance in developing a compliance plan (including compliance training materials) to address any OIG Enforcement activity or other compliance or risk management matter, please contact Matthew Babcock at Harris Beach, PLLC at mbabcock@harrisbeach.com or (518) 225-4731.

Key:

  • 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
  • IA = Integrity Agreement
  • LTC = Long Term Care (usually facilities)
  • MCO = Managed Care Organization (typically Medicaid)
  • MFCU = Medicaid Fraud Control Unit
  • MSO = Management Services Organization
  • 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.