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What Every Medical Professional Needs to Know About Health Care Fraud and Compliance
The attorneys at the Health Law Group are some of the nation’s top-ranked legal health care consultants and answer questions from some of the largest corporate health care providers in the country.
What is “Health Care Fraud?”
Health care fraud most commonly involves the overbilling of third-party insurance companies such as Medicare and Medicaid through the submission of false medical insurance claims.
Example – Billing Procedures
The most common examples of health care fraud involve willfully or intentionally having medical professionals or their staff bill for:
- Medically unnecessary procedures;
- Medical procedures that were not provided;
- Medical procedures that were improperly coded; and
- Accepting kickbacks for referrals.
What Laws Apply to Health Care Fraud?
Various federal laws are used to prosecute cases of health care fraud. These laws include:
- Federal Health Care Fraud Statute (18 U.S.C. § 1347.) - Federal health care fraud is generally prosecuted under 18 U.S. Code § 1347. This statute makes it illegal to knowingly or willingly engage in a scheme to defraud a private insurance company, a government insurance program or any health care benefit program. It is the most prominent criminal health care fraud statute.
- The False Claims Act (31 U.S.C. §§ 3729-3733.) - The False Claims Act is one of the most common federal laws used to prosecute health care fraud. This law holds professionals legally responsible for submitting false medical claims to medical and insurance providers.
- The Anti-Kickback Statute (42 U.S.C. § 1320a-7b(b).) - The Anti-Kickback statute forbids medical providers from improperly taking financial remuneration from other medical providers in exchange for making referrals to other medical facilities or providers.
- The Physician Self-Referral Law (also known as Stark Law) (42 U.S.C. § 1395nn.) - Stark law prohibits physicians from referring patients to entities that the physician or an immediate family member has a financial relationship with. Stark law is a strict liability statute. This means that the prosecution will not have to prove your intent to violate the statute (as is generally required with other health care fraud statutes.)
What are the Penalties for Violating the Health Care Fraud Statute? – 18 U.S. Code § 1347
Penalties for violating the Health Care Fraud Statute, 18 U.S. Code § 1347, include:
- Imprisonment up to 10 years; and
- Criminal fines up to $250,000.
Medical providers who violate health care laws and commit acts of federal program fraud may be face federal prison sentences of up to 10 years under 18 U.S. Code § 1347. These sentences may be enhanced up to 20 years in the event that the program fraud results in personal injury.
What are the Penalties for Violating the False Claims Act? – 31 U.S. Code § 3729
The criminal penalties under the False Claims Act are:
- A fine up to $250,000; and
- Up to 5 years imprisonment for each false claim submitted.
The civil penalties under the False Claims Act are:
- $11,000 for each false claim; and
- Up to three times the damages to the government for the claim.
What are the Penalties for Violating the Anti-Kickback Statute? – 42 USC § 1320a-7b(b)
Penalties for violating 42 USC § 1320a-7b(b) include:
- Criminal monetary penalties up to $25,000; and
- Up to 5 years imprisonment.
What Entities Investigate Health Care Fraud?
Federal investigations typically involve the participation of the:
- The Federal Bureau of Investigations (“FBI”);
- The Office of the Inspector General (“OIG”);
- The Drug Enforcement Administration (“DEA”);
- The Internal Revenue Service (“IRS”);
- The Department of Health and Human Services (“HHS”); and
- The Medicare or Medicaid Fraud Criminal Division.
All of these actors coordinate their efforts to investigate allegations of prescription drug fraud, tax fraud, mail fraud, and other overlapping federal offenses relative to the conduct of physicians and other medical professionals that work with them in providing medical services.
The FBI has become the primary investigative agency in the most serious cases involving federal health care fraud. The FBI has targeted several health care initiatives in investigating, auditing and prosecuting medical professionals including:
- An outpatient surgery fraud initiative;
- An auto accident insurance fraud initiative;
- An internet pharmacy fraud initiative; and more.
What Entities Prosecute Health Care Fraud?
Federal prosecutions typically involve the participation of the:
- U.S. Attorney’s Offices;
- The Department of Justice (“DOJ”).
State prosecutions typically involve the participation of the:
- States Attorney General Office (“AG”); or
- District Attorney’s Office (“DA”), also known as the State Attorney’s Office.
How Does the Government Detect Health Care Fraud?
The various federal investigative agencies enumerated above may conduct financial external and internal audits of each physician’s offices including their electronic records, progress notes, patient histories, and medical billing data.
Audits may be conducted by inspectors from the Office of Inspector General or by field Investigators from the Centers for Medicaid and Medicare Services. These audits may result in informal recommendations or voluntary settlements with the Office of Inspector General.
More serious health care fraud may be referred to the FBI, IRS or DOJ for subsequent criminal investigation and potential prosecution. This process may involve the examination of health care professionals by CPA’s and Forensic Accountants as well as other qualified law enforcement investigators in tandem with state and federal law enforcement.
Who Can File Health Care Fraud Actions?
Federal actions are typically filed by the Department of Justice, Office of Public Affairs. They may also be filed by private “whistleblowers” under the False Claims Act. Other participants typically may include the FBI, HHS Office of Inspector General, and the Criminal Investigation Unit of Medicaid and Medicare.
What is a “Whistleblower?
A “whistleblower” is a person who exposes illegal activity. The False Claims Act contains “whistleblower protections” for individuals who report fraudulent behavior.
What are “Whistleblower Protections?”
The False Claims Act incentivizes the reporting of fraud by allowing whistleblowers to collect a portion of the damages obtained in a civil lawsuit on behalf of the federal government.
What if I am Accused of Retaliation Against a Whistleblower?
The False Claims Act separately punishes – with jail time – any attempts by the perpetrator of the fraud to retaliate against a whistleblower.
Whatever structures you may have in place to prevent such reporting, it is imperative to understand that potential whistleblowers can easily learn through a google search that any retaliation you take against them will result in a severe escalation of your penalties.
Moreover, the promise of monetary compensation in exchange for information regarding your fraud is designed to tip the scale in favor of reporting you.
What if the Whistleblower is a Co-Conspirator?
Where the potential whistleblower is a co-conspirator or simply someone who works in close enough proximity to know about the fraud, the chance of reporting can be even greater.
Even if the whistleblower is not a direct participant, if they consult with a criminal defense attorney that attorney will likely instruct them that revealing your misconduct will mitigate the co-conspirators chance of being associated with your crime or at least limit the penalties they face as a co-conspirator.
Regardless of the level of loyalty you believe you have from those who are aware of your actions, or the incentive they have to stay quiet, it is generally only a matter of time before those in on an illegal secret crack under pressure.
Whistleblower protections and plea deals in exchange for information are set up in awareness of this fact, in order to shorten the time it takes for the eventual disclosure to occur.
What Are the Types of Workplace Investigations?
Workplace Investigations
- External Investigation. An external investigation generally involves a voluntary compliance audit with your accountant and a Medicare or Medicaid Representative in an informal capacity at your office.
- Internal Investigation. An internal investigation could involve your appearance at a subpoenaed audit with IRS, FBI and OIG compliance officers in attendance reviewing your financial records.
Whether you or your practice is considering an internal or an external investigation, you would be wise to retain competent health care counsel and a certified CPA to assist during this difficult and time consuming process.
What Are The Effects of an Audit or Investigation?
In serious cases, a healthcare audit can cost a medical professional to incur hundreds of thousands of dollars in costs. It can result in the suspension of a medical provider’s services by effectively terminating the medical professional’s right to obtain access to third-party insurance providers. Audits can lead to civil and or criminal prosecutions and to the indictment of well established medical professionals.
What Should You Do If You Are Audited or Investigated for Health Care Fraud?
All medical professionals who are under investigation or being audited should:
- Consult or retain counsel;
- Have counsel present at all questioning;
- Avoid incriminating statements;
- Protect your confidential information including patient files and computerized records and medical bill claims;
- Properly handle community perception as ethical and compassionate physicians;
- Comply with existing legal health care requirements as mandated by federal law; and
- Prepare a defense.
Where Should Medical Professionals Go To Seek Legal Assistance?
Our Health Law Group is dedicated to answering any questions our clients may have regarding criminal health care fraud litigation, federal regulatory compliance, government investigations, and health care audits in the United States.
Medical professionals that are under investigation or who have already been formally charged should contact the Health Law Group immediately.
If you have any questions, we invite you to contact our Health Law Group today for a free consultation.
What Are Some Recent Health Care Fraud Cases In The News?
- National Health Care Fraud Scheme Affects over 41 Federal Districts and over 120 Physicians Costing the Government 1.3 Billion Dollars in False Billings
On July 13, 2017, the Department of Justice launched an extremely large health care investigation and prosecution that resulted in 412 health care professionals being charged with 1.3 billion in false billings to Medicaid and Medicare and Tri-Care (a health care insurance company for members of the armed services). Most of the cases targeted physicians for submitting false medical claims relating to prescription drug fraud.
In the Southern District of Florida, several doctors participated in a scheme to provide false medical claims for alleged drug treatment services for medical services that were either overstated or not provided.
Owners and operators of drug treatment centers were offered kickbacks for referring addicted patients gift cards and free airline travel. The physicians in tandem with others submitted 141 billion in false billings for mental health services and pharmacy fraud.
In the Eastern District of Michigan, six physicians were charged with unlawfully prescribing controlled substances to patients for drug testing, facet joint injections, and for other services that were not medically necessary. CMS providers were charged 164 million by way of false claims.
- Eastern District of New York Files Health Care Fraud Charges Against Three Doctors, Three Therapists and Medical Company Owner for False Claims Exceeding 125 Million to Medicaid and Medicare Providers
In the Eastern District of New York, federal charges were filed by the United States Attorney’s Office against three doctors, a chiropractor and there licensed physical and occupational therapists for fraudulently billing Medicaid and Medicare programs over 125 million dollars. The charges were filed in Brooklyn Federal Court in July of 2017.
Investigations by the OIG, FBI, Office of Homeland Security, US Immigration and Customs Department, NY City Police Department, New York Attorney General’s Office, and others charged a Queens Cardiologist. Dr. Bhambhani with submitting over 3.7 million dollars in claims to Medicare Part B and for submitting over 7.4 million dollars in false claims to Medicare Part A.
Dr. Bhambhani was also charged under the Anti-Kickback statute for soliciting referrals from other doctors by paying for patient referrals. Another licensed physician specializing in rehabilitation medicine was also charged under the federal false claims act for fraudulent submitting 27 million worth for claims to Medicaid and Medicare for medically unnecessary physical therapy services.
The Owner of a medical diagnostic facility was also charged with health care fraud, false claims, and conspiracy for billing 13 million dollars to health care programs for services that were not medically necessary. All of the defendants were arrested and arraigned on July 12, 2017, by US magistrate judge Robert Levy at the Brooklyn Federal Courthouse.
What Are Some Recent Health Care Fraud Cases In The News?
- New York Physician Sentenced Submitting False Claims and Auto Fraud
In New York, a federal case illustrated the link between a New York doctor and an auto accident insurance scheme. In U.S. v. Gabinskaya, a licensed doctor claimed to be the owner of a Brooklyn Medical Clinic. In fact, two other non-physicians were really the financial owners of the clinic, and the physician only served as the fraudulent straw owner of the clinic.
Most significantly, Dr. Gabinskaya submitted false claims for services when she did not treat or supervise any of the therapy for the patients at the Brooklyn Medical Clinic.
In reality, Dr. Gabinksaya only recruited other doctors to work at other medical service professional corporations and did not participate in the operations of the Brooklyn Medical Clinic.
Nevertheless, this physician lied under oath at a sworn deposition and falsely stated that she worked at the clinic for 3 hours per day two to three times per week.
In addition, Gabinskaya paid other doctors to start other professional corporations for auto accident cases to elevate the number of medical claims that were submitted to Medicaid and Medicare.
After sentencing Dr. Gabinskaya to one year and one day in jail, the appellate court upheld her district court sentence in finding that she intentionally conspired to engage in an auto accident fraud scheme with other physicians and staff members in scheming to set up other professional corporations for the sole purpose of submitting false claims.
- Albany Physician Indicted on 40 Felony Counts of Health care Fraud
Finally, in United States v. Singh, the court indicted and sentenced an Albany county doctor to 46 months’ incarceration for violating federal program fraud and prescription drug fraud statutes. Dr. Singh ran a pain management practice from the basement of the Albany Memorial Hospital.
Between 1996 and 1999, Singh authorized nurses to bill patients through 3rd party providers. In his practice, only nurses treated the patients and prescribed pain medication without having any doctors present during the procedures.
The nurses saw 15 patients per day and submitted “super-bills” or improperly coded bills for federal reimbursement.
In addition, Singh gave his nurses the unfettered authority to sign triplicates of prescription forms without his written authorization on any of the medical prescriptions. The prescriptions were for Schedule II controlled substances.
An investigation revealed that Dr. Singh was never present at the Albany Hospital to oversee any of the pain management procedures but was operating on other patients in Saratoga and Port Chester, New York.
The court indicted Singh on 40 felony counts of health care fraud and sentenced him to 46 months of incarceration in tandem with ordering restitution in the amount of $227,127.82. In fact, Singh’s fraudulent “high complexity” visits for pain patients ran the government a total loss of $442,223.29 over a period of 4 years. Dr. Singh ultimately was ordered to forfeit his medical license as were the other doctors in the prior cases.
Singh’s case is most compelling as the government issued a search warrant that authorized the removal of his computers and medical records from both his Albany medical practice and Loudonville home.
His 4th amendment challenges to the warrant were denied as probable cause was found to uphold the search based upon the admission of a nurse and other of Singh’s co-workers.
- Anesthesiologist Convicted of Health Care Fraud and Mail Fraud
In United States v. Umawa Oke Imo, an anesthesiologist, was convicted of 2 counts of health care fraud and mail fraud for signing off on forms for physical therapy at a physical therapy clinic in Houston, Texas.
The physician falsely stated that he treated 380 patients daily and that each patient received three hours of physical therapy.
In fact, the doctor did not have the authority to bill Medicaid for the patients as he was not properly licensed to supervise the physical therapy patients and was not available to supervise the therapy.
The court, therefore, sentenced the physician to 135 months’ imprisonment followed by three years of supervised release and was ordered to pay $15,626.084.01 back to the Medicare provider. The district courts sentence was affirmed on appeal.
- Optometrist Indicted for Submitting False Claims to Medicare
In U.S. v. Mermelstein, an optometrist submitted fraudulent claims to Medicare and medical health care benefits. He submitted false medical claims for services that were not provided or medically necessary. Dr. Mermelstein was indicted for making false statements relative to medications that he used in his practice from 2000 to 2005.
The court upheld indictments for health care fraud and federal program fraud and sentenced Mermelstein to 10 years’ imprisonment.
They held that his injection of pivotal plugs into patient’s eyes created the potential for the injury thus enhancing the nature of federal sentencing under 13 U.S.C. 1347.
The court also found that the physician’s willful destruction of medical records served as a further basis for enhanced punishment pursuant to 18 U.S.C. 1579.
What Can You Do to Avoid Health Care Fraud Charges?
In order to avoid being charged for health care fraud, medical practitioners should be extremely vigilant in retaining informed staff who are fully compliant in the use of updated computer technology and medical billing practices.
Health care professional should secure compliance auditors or certified public accountants to maintain accurate medical records. Proper record keeping methods should be followed to ensure that these records are never willfully destroyed, or altered.
All psychiatrists, neurologists, cardiologists, optometrists, and other licensed physicians should use the utmost care in properly billing only for reasonably necessary medical services and procedures in compliance with federal health care laws.
All hospitals, healthcare organizations, and individual physicians should, therefore, retain experienced healthcare counsel to properly advise them how to avoid the potentially catastrophic consequences of a serious health care law violation.
Contacting a health care fraud attorney may save you and your company from
unnecessary litigation, costly fines, compliance violations, and criminal charges.