False Reporting of A Diagnosis
The reporting of a false diagnosis in order to receive some payment from an insurance company is one of the many schemes that comprises the catch-all term of ‘health care fraud.’
This scheme can take multiple forms, some of which are outlined in detail below. Generally, false reporting of a diagnosis is the use of an increased billing code in order to charge (and receive) a higher amount of money for services.
A medical professional, or another medical employee, will purposefully misstate a patient’s official medical diagnosis on billing forms in order to receive more money from an insurance company than they would otherwise have received if they had stated the true, and usually less serious, diagnosis.
Example of “False Reporting of a Diagnosis”
A doctor may falsely diagnosis a patient with cancer in order to bill the patient’s insurance company for radiation therapy or chemotherapy treatments that are not necessary and will not ever be performed.
What Types of Professionals Can Be Accused of Reporting a False Diagnosis?
Any medical professional who works with and has the ability to medically diagnose patients can be affected by this scheme. These medical professionals can include, but are not limited to:
- Mental health professionals, like psychiatrists and psychologists;
- General practitioners, like internists and pediatricians;
- Nurse Practitioners; or
- Specialists, like gynecologists, cardiologists, oncologists, and nephrologists;
- Physician's Assistants.
In addition, any employee who engages in billing or filing claims medical practice or office would also be able to falsely report a diagnosis on a bill that gets submitted to an insurance company. As a result, they may be the target of an investigation or prosecution under the various regulations comprising health care fraud.
The False Claims Act
Falsely reporting a diagnosis is a violation of United States Law under the False Claims Act, 31 U.S.C, Chap. 37, Subchap. III.
Liability under the False Claims Act, specifically 31 U.S.C. §3729, arises when a defendant, to the detriment to the United States Government,
- knowingly presents, or causes to be presented, a false or fraudulent claim for payment;
- knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim;
- conspires with others to commit a violation of the False Claims Act ;
- knowingly makes, uses, or causes to be made or used, a false record or statement to conceal, avoid, or decrease an obligation to pay money or transmit property to the Federal Government.
Penalties of Violating the False Claims Act
A defendant who is found guilty of a violation of the false claims act may be liable to the U.S. Government for a civil penalty of between a minimum of $5,000 and a maximum of $10,000. They will also owe the Government three times the amount of damages the Government had sustained because of the scheme to defraud. All of the amounts may be adjusted for inflation.
These damages may be reduced to no less than twice the amount of damages for if the defendant fully cooperated with the government throughout the investigation; or the defendant provided the government with the information about the violation prior to there being any prosecution or legal action.
In addition to the action brought against you by the government, if you have been accused of falsely reporting a diagnosis, you may also be subject to civil actions by a private person.
Under 31 U.S.C. §3730, a private citizen may bring an action on behalf of both themselves and the U.S. Government. The government may move to have the case dismissed, may intervene in the case, or may move for extensions of time as is appropriate under U.S. federal civil procedure.
Qui Tam Actions (aka Whistleblower)
If the government does proceed with the action, they take over the primary responsibility for prosecuting the case. The private citizen may continue to be a part of the case, creating a Qui Tam Action. A Qui Tam Action means that the private citizen that is a party and who assists the prosecution will be able to receive all, or part, of any penalty imposed by the court in the case.
Statute of Limitations
The statute of limitations on criminal activity varies by the charges and jurisdiction. It is important to consult with a lawyer with experience in complex healthcare fraud defense. The False Claims Act alone could have a statute of limitations up to ten years.
Real Life Examples of False Reporting of a Diagnosis
Florida-based Medicare Advantage Plan Owners & Primary Care Provider Agree to Pay $22.6 Million to Settle Claims of Falsifying Diagnoses
In November 2010, Dr. Walter Janke, his wife Lalita Janke, and Medical Resources L.L.C. jointly agreed to pay $22.6 million to settle allegations that they caused Medicare to pay out inflated amounts due to the submission of multiple false diagnosis codes.
The Jankes owned both Medical Resources L.L.C and a Medicare Advantage Organization (MAO). Those companies were then utilized to falsely increase the severity of their beneficiaries’ diagnoses to obtain higher payouts from the government-funded insurance program, Medicaid.
An MAO is a privately owned company that is paid by the government to cover Medicare benefits for those who qualify. MAO’s receive more money for the services they provide to those members that have been diagnosed with serious and/ or chronic medical conditions compared to those members that are generally healthy. That is because they submit claims to the federally-funded insurers for more expensive treatments, such as cancer treatments, rather than the sorts of claims they might file for healthy patients.
As a result of this scheme the Jankes were able to defraud Medicare out of close to $20 million dollars.
For more information and the full Department of Justice (DOJ) press release, click this link or copy and paste the URL below.
Manhattan U.S. Attorney Files Healthcare Fraud Lawsuit Against Computer Sciences Corp. And the City of New York For Orchestrating A Multimillion-Dollar Medicaid Billing Fraud Scheme
In October 2014, the then United States Attorney General for the Southern District of New York, Preet Bharara, filed charges against both Computer Sciences Corp. (CSC) and the City of New York for their alleged involvement in a medical billing fraud scheme.
CSC and the City allegedly used computer programs to automatically alter billing codes when the bills were to be submitted to Medicaid. These computer programs would replace billing codes that were less likely to be accepted, and paid for, by Medicaid with a new, general code that was statistically more likely to be accepted, and thus paid out, by Medicaid.
Due to its focus on Medicaid, this practice would have disproportionately affected lower-income and homeless populations throughout the City. The schemes were meant to circumvent Medicaid’s requirement that medical providers exhaust all private insurance claims before filing claims with the Medicaid system. The programs would instead submit the claims to Medicaid directly, before private insurances could make a decision on the claims.
As a result of this alleged scheme, Bharara stated that the City was able to defraud Medicaid of millions of dollars.
For more information and the full DOJ press release, click this link or copy and paste the URL below
Enzo Biochem, Inc. And Enzo Clinical Laboratories Pay $3.5 Million to Resolve Civil Fraud Allegations
In September 2014, Enzo Biochem, Inc. and Enzo Clinical Laboratories settled charges that they had violated the False Claims Act by agreeing to pay $3.5 million to resolve the investigation.
The investigation was looking into claims that Enzo was wrongfully putting wrong diagnosis codes into claims forms that were then submitted to Medicare and Medicaid in order to receive higher payouts.
As a result, enough evidence was collected to show that Enzo was falsifying information in order to secure reimbursements. The investigation began when a Qui Tam complaint was filed by Realtor O and U 2011 Partnership LLP. The United States Government took over the suit and the $3.5 million settlement resulted.
For more information and the full DOJ press release, click this link or copy and paste the URL below:
Defenses to Claims of False Reporting of a Diagnosis
Working at the Direction of Medical Professional
If an employee in a medical office is directed by a medical professional or superior to enter a billing code for a diagnosis that is incorrect, then they cannot be held liable for the violation of the False Claims Act.
They cannot be shown to have the requisite intent to defraud the insurer under the law. However, the person in charge of that employee would be liable for the false reporting of a diagnosis if they caused them to enter the false billing code.
A critical element that the state must demonstrate in order for you to be found guilty of a False Claims Act violation is knowledge of the false information that is given.
Therefore, if you made a mistake as to what code needed to be entered or you accidentally hit the wrong key while filling out billing forms, you would not have the required intent to make a false claim under the law.
If you have made a mistake as to a billing code, you should notify the appropriate people, including your immediate superiors, as soon as you realize you have made the error.
If you have been accused of, or are under investigation for, false reporting of a diagnosis contact an experienced health care attorney as soon as possible.
An attorney can provide you with advice from the start of an investigation, up through trial. They will help develop a legal strategy for you, and ensure that your rights and interests are protected throughout each stage of the proceedings.
You work hard to help your patients when they are in medical need, let an attorney help you when you are in legal need.