Category Archives: HHS-OIG

Medicare Advantage Organization & Former COO to Pay $32.5 Million

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Tuesday, May 30, 2017

Freedom Health Inc., a Tampa, Florida-based provider of managed care services, and its related corporate entities (collectively “Freedom Health”), agreed to pay $31,695,593 to resolve allegations that they violated the False Claims Act by engaging in illegal schemes to maximize their payment from the government in connection with their Medicare Advantage plans, the Justice Department announced today. In addition, the former Chief Operating Officer (COO) of Freedom Health Siddhartha Pagidipati, has agreed to pay $750,000 to resolve his alleged role in one of these schemes.

“When entering into agreements with managed care providers, the government requests information from those providers to ensure that patients are afforded the appropriate level of care,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “Today’s result sends a clear message to the managed care industry that the United States will hold managed care plan providers responsible when they fail to provide truthful information.”

The government alleged that Freedom Health submitted or caused others to submit unsupported diagnosis codes to CMS, which resulted in inflated reimbursements from 2008 to 2013 in connection with two of their Medicare Advantage plans operating in Florida. It also alleged that Freedom Health made material misrepresentations to CMS regarding the scope and content of its network of providers (physicians, specialists and hospitals) in its application to CMS in 2008 to expand in 2009 into new counties in Florida and in other states. The government’s settlement with Mr. Pagidipati resolves his alleged role in this latter scheme.

“Medicare Advantage plans play an increasingly important role in our nation’s health care market,” said Acting U.S. Attorney Stephen Muldrow. “This settlement underscores our Office’s commitment to civil health care fraud enforcement.”

“Medicare Advantage insurers must play by the rules and provide Medicare with accurate information about their provider networks and their patients’ health,” said Chief Counsel to the Inspector General Gregory Demske of the Department of Health and Human Services Office of Inspector General (HHS-OIG). “OIG will investigate and hold managed care organizations accountable for fraud. Moving forward, the innovative CIA reduces the risks to patients and taxpayers by focusing on compliance issues unique to Medicare Advantage plans.”

The allegations resolved by these settlements were brought in a lawsuit under the qui tam, or whistleblower, provisions of the Federal False Claims Act and the Florida False Claims Act. These statutes permit private parties to sue on behalf of the government for false claims and to receive a share of any recovery. The whistleblower in this action is Darren D. Sewell, who was a former employee of Freedom Health. The whistleblower’s share in this case has not yet been determined.

The corporate entities related to Freedom and which were part of today’s settlements are: Optimum HealthCare Inc., America’s 1st Choice Holdings of Florida LLC, Liberty Acquisition Group LLC, Health Management Services of USA LLC, Global TPA LLC, America’s 1st Choice Holdings of North Carolina LLC, America’s 1st Choice Holdings of South Carolina LLC, America’s 1st Choice Insurance Company of North Carolina Inc. and America’s 1st Choice Health Plans Inc.

Today’s settlements were the result of a coordinated effort by the Civil Division’s Commercial Litigation Branch, The U.S. Attorneys’ Office for the Middle District of Florida, HHS-OIG and the Florida Office of the Attorney General.

The claims resolved by the settlements are allegations only, and there has been no determination of liability. The case is captioned United States ex rel. Sewell v. Freedom Health, Inc., et al., Case No. 8:09-cv-1625 (M.D. Fla.).

People for People (PFP), DOJ-OIG and #GFPFE

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By [email protected]

Changes in enforcement priorities dictate when grant irregularities are referred to enforcement agencies.  This case involving People for People (PFP) provides a good example of that principal.  In reviewing the reports and correspondence, it appears that the matter remained bottled up in DOJ OIG-Audit.  Had it been referred to the investigative agents within the agency you can see how the alleged conduct referenced in the 2013 audit report could have stimulated investigation perhaps with the support of a US Attorney’s Office. Here are the report’s conclusions:

“PFP did not fully comply with the grant requirements we tested. We found material weaknesses in PFP’s internal controls, expenditures, drawdowns, FFRs, progress reports, budget, and program performance resulting in the questioned costs totaling $893,445. These weaknesses resulted in PFP providing multiple sets of accounting records during the audit, even though the grants had ended. We found that PFP charged $420,729 to the grant for personnel and fringe benefit costs that were unallowable. We found that PFP charged direct costs of $34,834 to the grant for unallowable expenditures, and $9,631 to the grant that could not be adequately supported. PFP also charged indirect costs of $232,754 to the grant for unallowable expenditures. PFP drew down $195,497 in grant funds in excess of the accounting records. We found PFP could not support the amounts drawn down or reported on the Federal Financial Reports. PFP could also not provide a correct account of grant charges per grant budget category to ensure proper budget management. Additionally, we found that PFP did not have procedures in place to ensure the timely submission of Federal Financial Reports and progress reports, nor did it ensure that progress reports provided supported information. We also determined that PFP did not meet the goals and objectives of the grants.”   

The Grantee here received grant payments from the government for $893,445 based on unallowable and unsupported grant expenditures.  This would have been seen by agents as a major problem. The “multiple sets of accounting records” (whether or not ultimately defensible) would have attracted attention.   Agents might have seen another red flag and opportunity in what seems to be a reference in the audit report to a redacted executive who abruptly exited the grantee.  A quick interview of this exited executive or some interviews around the subject of the exit would be seen as possibly carrying a beneficial reward risk ratio.   We can’t know for sure, but the file doesn’t seem to indicate that agents were copied on the correspondence or reports so they may not have known about it.   

Under many enforcement regimes the conclusions above might have caused an immediate referral  from audit to investigative agents within the OIG and likely to a US Attorney’s Office.  Instead, People for People was permitted to implement what looks like an informal corporate integrity agreement drafted by the government while it was permitted to pay back one half million dollars over a period of years.  As someone who represents grantees I understand how honest, ethical and well-intentioned grantees can find themselves in situations comparable to this one,  but investigative agents within enforcement agencies are rarely persuaded by benign explanations for otherwise suspicious conduct.  I also can see how this result may have been extraordinarily evolved while it maximized public welfare benefits.  It is just I know from first hand experience that agents and prosecutors rarely seem to be motivated by such notions.  

It would be interesting to understand the factors that were considered within DOJ-OIG that dictated that this matter to remain “in house” within an audit component rather than being referred to the US Attorney’s Office or USDOJ Criminal Division.  While patience and forgiveness are wonderful traits we don’t often see those traits exhibited as strongly as they seem to have been exhibited here and matters like these when reviewed by new leadership could contribute to a view that there was somewhat lax enforcement of grant spending in recent years.

Update: DOJ OIG Audit of People for People, Inc., Results in Repayments Totaling More Than $554,000 Department of Justice (DOJ) Inspector General Michael E. Horowitz announced today that People for People, Inc., of Philadelphia, PA, has made cash repayments of more than $554,000 to the DOJ as a result of a DOJ Office of the Inspector General (OIG) grant audit. The OIG’s audit report, which we released in 2013, assessed People for People’s management of two grants from the DOJ Office of Justice Programs (OJP). These grants were intended to fund mentoring programs for children of prisoners. We concluded that People for People had not complied with various grant requirements, and we identified $893,445 in unallowable and unsupported grant expenditures. The report included 13 recommendations to improve People for People’s grant management and address these questioned costs. Since the audit, People for People has worked closely with OJP to implement all of our recommendations for management improvements and provided us with additional documentation sufficient to address approximately $339,000 of the questioned costs. The more than $554,000 in cash repayments announced today were made to address the balance of the questioned costs, which primarily related to expenses for which accounting records were insufficient, salary payments that were unallowable, and payments for rent, telephone bills, and other indirect costs that had not been approved by OJP. The OIG’s August 2013 report is available on the OIG’s website at the following link: https://www.oig.justice.gov/reports/2013/g7013007r.pdf.

 

United States Settles Kickback Allegations with Georgia Hospital

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The Department of Justice announced today that the United States has settled a False Claims Act lawsuit with Health Management Associates (HMA) and Clearview Regional Medical Center for $595,155.  The lawsuit filed in the Middle District of Georgia alleged that from 2008 to 2009 the hospital paid kickbacks to an obstetric clinic that served primarily undocumented Hispanic women, in return for referral of those patients for labor and delivery at the hospital.  The hospital then billed the Medicaid program in Georgia for the services provided to the referred patients.  Clearview, located in Monroe, Georgia, was named Walton Regional Medical Center and was owned by hospital operator HMA during the time period relevant to the lawsuit.  Clearview is now owned by Community Health Systems (CHS), which purchased HMA in January 2014.

“This resolution illustrates our commitment to ensuring that health care providers who pay kickbacks in return for patient referrals are held accountable,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division.  “Schemes such as this one corrupt the health care system and take advantage of vulnerable patients.”

“The Medicaid program is a vital part of the government’s efforts to make sure that everyone has access to health care,” said U.S. Attorney Georgia Michael J. Moore of the Middle District of Georgia.  “Instead of providing health care services to expectant mothers in its area and receiving payment for those services from Medicaid, the hospital participated in a scheme to pay kickbacks in exchange for having pregnant women from outside its market funneled to its facility with the goal of increasing the amount of Medicaid money the hospital could claim.”

The United States’ complaint alleges that HMA’s Walton Regional Medical Center paid kickbacks to Hispanic Medical Management doing business as Clinica de la Mama (Clinica) and related entities, in return for Clinica’s agreement to send pregnant women to Walton Regional for deliveries paid for by Medicaid, in violation of the federal Anti-Kickback Statute.  The kickbacks were disguised as payments for a variety of services allegedly provided by Clinica.

The Anti-Kickback Statute prohibits offering, paying, soliciting or receiving remuneration to induce referrals of items or services covered by Medicare, Medicaid and other federally funded programs.  The Anti-Kickback Statute is intended to ensure that a physician’s medical judgment is not compromised by improper financial incentives and is instead based on the best interests of the patient.

“Hospitals that pay kickbacks to clinics for referrals of undocumented pregnant patients are taking advantage of both these vulnerable women and the taxpayer-funded Medicaid program,” said Special Agent in Charge Derrick L. Jackson of the U.S. Department of Health and Human Services, Office of Inspector General’s (HHS-OIG) Atlanta Regional Office.  “Our agency is dedicated to investigating such corrosive kickback schemes, which undermine the public’s trust in medical institutions and the financial health of government health care programs.”

“The FBI is proud of the role it played in bringing forward today’s settlement, said Special Agent in Charge J. Britt Johnson of the FBI Atlanta Field Office.  “The FBI will continue to provide significant investigative assets and resources to ensure that the integrity of federally funded health care programs such as Medicaid are protected from providers who would abuse them.”

As part of the settlement, HMA and Clearview will pay the State of Georgia an additional $396,770 to settle Georgia’s claims under the Georgia False Medicaid Claims Act.  The Medicaid program is a jointly funded federal-state program that provides health care to the poor and disabled.  Although undocumented aliens are not eligible for regular Medicaid coverage, the Medicaid program provides coverage for emergency conditions, including childbirth, for undocumented aliens.

The lawsuit was filed under the qui tam, or whistleblower, provisions of the False Claims Act.  The Act permits private parties to sue on behalf of the government for false claims for government funds and to receive a share of any recovery.  The False Claims Act also permits the government to intervene in such lawsuits, as it did in this case against Walton Regional, as well as several other defendants, including Clinica de la Mama and four hospitals owned by Tenet Healthcare Corporation.  The litigation against the non-settling defendants is ongoing.  The relator, Ralph D. Williams, the chief financial officer of Walton Regional from April 2009 to October 2009, will receive $119,031 from the United States’ portion of the settlement.

This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services.  The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation.  One of the most powerful tools in this effort is the False Claims Act.  Since January 2009, the Justice Department has recovered a total of more than $24 billion through False Claims Act cases, with more than $15.3 billion of that amount recovered in cases involving fraud against federal health care programs.

This matter was investigated by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Offices for the Middle and Northern Districts of Georgia, HHS-OIG, FBI and the Office of the Attorney General for the State of Georgia.

The case is captioned United States ex rel. Williams v. Health Mgmt. Assocs. Inc., et al., No. 3:09-CV-130 (M.D. Ga.).

The claims resolved by this settlement are allegations only and there has been no determination of liability.

Former President of Riverside General Hospital Sentenced to 45 Years in Prison in $158 Million Medicare Fraud Scheme

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The former president of a Houston hospital, his son and a co-conspirator were sentenced today to 45 years, 20 years and 12 years in prison, respectively, for their roles in a $158 million Medicare fraud scheme.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Kenneth Magidson of the Southern District of Texas, Special Agent in Charge Perrye K. Turner of the FBI’s Houston Field Office, Special Agent in Charge Lucy R. Cruz of the Internal Revenue Service Criminal Investigation’s (IRS-CI) Houston Field Office, the Texas Attorney General’s Medicaid Fraud Control Unit (MFCU), Special Agent in Charge Mike Fields of the U.S. Department of Health & Human Services-Office of the Inspector General (HHS-OIG) Dallas Regional Office, Special Agent in Charge Joseph J. Del Favero of the Railroad Retirement Board-Office of Inspector General (RRB-OIG) and Inspector General Patrick E. McFarland of the Office of Personnel Management-Office of Inspector General (OPM-OIG) made the announcement.

“The former President of Houston’s Riverside hospital, his son and their co-conspirators saw mentally ill, elderly and disabled Medicare beneficiaries as commodities to be turned into profit centers – not as vulnerable individuals in need of health care,” said Assistant Attorney General Caldwell.  “Rather than providing needed medical care to a historically underserved community, the defendants ran a longstanding hospital into the ground through their greed and fraud.  According to the evidence presented at trial, the defendants had patients sit around the facility watching movies while they received no treatment.  Meanwhile, the defendants billed Medicare more than $158 million for care that was never provided.  This brazen fraud cannot and will not be tolerated.”

Earnest Gibson III, 70, the former president of Riverside General Hospital, Earnest Gibson IV, 37, the operator of Devotions Care Solutions, a satellite psychiatric facility of Riverside General Hospital, and Regina Askew, 50, the owner of Safe and Sound group home, were sentenced by U.S. District Judge Lee H. Rosenthal of the Southern District of Texas.  In addition to the significant terms of imprisonment, Earnest Gibson III was ordered to pay restitution in the amount of $46,753,180, Earnest Gibson IV was ordered to pay restitution in the amount of $7,518,480, and Regina Askew was ordered to pay restitution in the amount of $46,255,893.

Following a five-week jury trial, on Oct. 20, 2014, Earnest Gibson III, Earnest Gibson IV and Regina Askew each were convicted of conspiracy to commit health care fraud, conspiracy to pay and receive kickbacks, as well as related counts of paying or receiving illegal kickbacks.  Earnest Gibson III and Earnest Gibson IV also were convicted of conspiracy to commit money laundering.  Co-defendant Robert Crane, a patient recruiter, also was convicted of conspiracy to pay and receive kickbacks, and is scheduled to be sentenced on Dec. 9, 2015.

According to evidence presented at trial, from 2005 until June 2012, the defendants and others engaged in a scheme to defraud Medicare by submitting to Medicare, through Riverside and its satellite locations, approximately $158 million in false and fraudulent claims for partial hospitalization program (PHP) services.  A PHP is a form of intensive outpatient treatment for severe mental illness.

Specifically, evidence at trial demonstrated that the Medicare beneficiaries for whom the hospital billed Medicare did not qualify for or need PHP services.  Moreover, the evidence showed that Medicare beneficiaries rarely saw a psychiatrist and did not receive intensive psychiatric treatment.  In fact, some of the beneficiaries were suffering from Alzheimer’s and could not actively participate in the treatment for which Medicare was billed.

Evidence presented at trial also showed that Earnest Gibson III paid kickbacks to patient recruiters and to owners and operators of group care homes, including Regina Askew, in exchange for which those individuals delivered ineligible Medicare beneficiaries to the hospital’s PHPs.  Earnest Gibson IV also paid patient recruiters, including Robert Crane and others, to deliver ineligible Medicare beneficiaries to the specific PHP operated by Earnest Gibson IV.

To date, six other individuals either have pleaded guilty based on their involvement in the scheme.  Mohammad Khan, an assistant administrator at Riverside, who managed many of the hospital’s PHPs, pleaded guilty to conspiracy to commit health care fraud, conspiracy to defraud the United States and to pay illegal kickbacks, and five counts of paying illegal kickbacks; on May 21, 2015, Mohammad Khan was sentenced by U.S. District Judge Sim Lake of the Southern District of Texas to 40 years in prison for his role in the scheme.  William Bullock, an operator of a Riverside satellite location, as well as Leslie Clark, Robert Ferguson, Waddie McDuffie and Sharonda Holmes, who were involved in paying or receiving kickbacks, also have pleaded guilty to participating in the scheme and await sentencing.

The case was investigated by the FBI, IRS-CI, Texas MFCU, HHS-OIG, RRB-OIG and OPM-OIG.  The case was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office of the Southern District of Texas.  The case is being prosecuted by Assistant Chiefs Laura M.K. Cordova and Jennifer L. Saulino and Trial Attorney Ashlee C. McFarlane of the Criminal Division’s Fraud Section.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged nearly 2,100 defendants who collectively have billed the Medicare program for more than $6.5 billion.  In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

To learn more about the Health Care Fraud Prevention and Enforcement Team (HEAT), go to: www.stopmedicarefraud.gov.

New Orleans Jury Convicts Two Doctors, a Nurse and an Office Manager for Roles in $50 Million Fraud Scheme

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Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Kenneth A. Polite of the Eastern District of Louisiana, Special Agent in Charge Michael J. Anderson of the FBI’s New Orleans Field Office, Special Agent in Charge Mike Fields of the Department of Health and Human Services’ Office of the Inspector General (HHS-OIG) Dallas Regional Office and Louisiana Attorney General James D. “Buddy” Caldwell made the announcement.

Barbara Smith, M.D., 66, of Metairie, Louisiana; Roy Berkowitz, M.D., 69, of Slidell, Louisiana; Beverly Breaux, 67, of New Orleans; and Joe Ann Murthil, 57, of New Orleans, were convicted on all counts after a five-day jury trial before Chief U.S. District Court Judge Sarah S. Vance of the Eastern District of Louisiana.

Evidence introduced at trial showed that the defendants and others carried out a home health care fraud scheme in and around New Orleans through multiple companies over the course of more than 10 years.  Smith and Berkowitz falsely claimed that thousands of Medicare recipients were homebound and required nursing or therapy services to be provided in their homes.  Breaux was a registered nurse who falsely certified that these patients were homebound, and falsely claimed to have treated patients that she had not seen.  Murthil was an office manager and biller at one home health company who assisted with the payment of illegal kickbacks to patient recruiters.  Murthil also submitted false claims to Medicare stating that patients were homebound when some of these patients had jobs, had not received services or did not want services.  From 2007 through 2014, the companies in this scheme submitted more than $56 million in claims to Medicare, the vast majority of which were fraudulent.  Medicare paid approximately $50.7 million on these claims.

Sentencing for the defendants is scheduled for Aug. 26, 2015.  In total, 13 defendants have been charged for their roles in this scheme.  Nine other defendants previously pleaded guilty.

This case was investigated by the FBI, HHS-OIG and the Louisiana Attorney General’s Medicaid Fraud Control Unit, and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office of the Eastern District of Louisiana.  This case was prosecuted by Trial Attorneys William Kanellis and Antonio Pozos and Assistant Chief Ben Curtis of the Criminal Division’s Fraud Section.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged nearly 2,100 defendants who have collectively billed the Medicare program for more than $6.5 billion.  In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

Medtronic to Pay $4.41 Million in USDOJ-CIV Case

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The Justice Department announced today that Medtronic plc and affiliated Medtronic companies, Medtronic Inc., Medtronic USA Inc., and Medtronic Sofamor Danek USA Inc., have agreed to pay $4.41 million to the United States to resolve allegations that they violated the False Claims Act by making false statements to the U.S. Department of Veterans Affairs (VA) and the U.S. Department of Defense (DoD) regarding the country of origin of certain Medtronic products sold to the United States.

“Today’s settlement demonstrates our commitment to ensure that our service members and our veterans receive medical products that are manufactured in the United States and other countries that trade fairly with us,” said Acting Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division.  “The Justice Department will take action to hold medical device companies to the terms of their government contracts.”

“Domestic manufacture is a required component of many military and Veterans Administration contracts,” said U.S. Attorney Andrew M. Luger of the District of Minnesota.  “Congress has mandated that the United States use its purchasing power to buy goods made in the United States or in designated countries.  We take that mandate seriously and will not hesitate to take appropriate legal action to ensure compliance.”

According to the settlement agreement, between 2007 and 2014, Medtronic sold to the VA and DoD products it certified would be made in the United States or other designated countries.  The Trade Agreements Act of 1979 (TAA) generally requires companies selling products to the United States to manufacture them in the United States or in another designated country.  The United States alleged that Medtronic sold to the United States products manufactured in China and Malaysia, which are prohibited countries under the TAA.

The specific Medtronic products at issue included anchoring sleeves sold with cardiac leads and used to secure the leads to patients, certain instruments and devices used in spine surgeries, and a handheld patient assistant used with a wireless cardiac device.  The agreement covers the period from Jan. 1, 2007, to Dec. 31, 2013, and for one device (the handheld patient assistant), the period from Jan. 1, 2014, to Sept. 30, 2014.

The settlement resolves allegations originally brought in a lawsuit filed by three whistleblowers under the qui tam provisions of the False Claims Act, which allow private parties to bring suit on behalf of the government and share in any recovery. The relators will receive a total of $749,700 of the recovered funds.

This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services.  The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation.  One of the most powerful tools in this effort is the False Claims Act.  Since January 2009, the Justice Department has recovered a total of more than $23.9 billion through False Claims Act cases, with more than $15.2 billion of that amount recovered in cases involving fraud against federal health care programs.

The case was handled by the U.S. Attorney’s Office of the District of Minnesota with assistance from the Civil Division, DoD, Defense Logistics Agency and Defense Criminal Investigative Service and the VA’s Office of General Counsel.

The underlying case is United States of America ex rel. Samuel Adam Cox, III, Meayna Phanthavong, and Sonia Adams v. Medtronic, Inc., Medtronic USA, Inc., and Medtronic Sofamor Danek USA, Inc., Civil No. 12-cv-2562 (PAM/JSM).

The claims resolved by the settlement are allegations only; there has been no determination of liability.

Florida Home Health Care Company Agrees to Pay $1.1 Million to Resolve False Claims Act Allegations

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Recovery Home Care Inc., Recovery Home Care Services Inc. (collectively Recovery Home Care) and National Home Care Holdings LLC have agreed to pay $1.1 million to resolve allegations that the Recovery Home Care entities violated the False Claims Act by improperly paying doctors for referrals of home health care services provided to Medicare patients, the Department of Justice announced today.  The Recovery Home Care entities provide home health care services to Medicare beneficiaries and were purchased by National Home Care Holdings LLC in 2012, after the conduct addressed by the settlement occurred.

“Health care providers that attempt to profit by providing illegal inducements will be held accountable,” said Acting Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division.  “We will continue to advocate for the appropriate use of Medicare funds and the proper care of our senior citizens.”

From 2009 through 2012, Recovery Home Care, headquartered in West Palm Beach, Florida, allegedly paid dozens of physicians thousands of dollars per month to perform patient chart reviews.  According to the government’s lawsuit, the physicians were over-compensated for any actual work they performed and, in reality, payments to the physicians were used to induce them to refer their patients to Recovery Home Care, in violation of the Anti-Kickback Statute and the Stark Law.

“Inducements of this kind are designed to improperly influence a physician’s independent medical judgment,” said U.S. Attorney A. Lee Bentley III of the Middle District of Florida.  “This lawsuit and today’s settlement attests to our office’s on-going commitment to safeguard federal health care program beneficiaries from the effects of such illegal conduct.”

The Anti-Kickback Statute and the Stark Law are intended to ensure that a physician’s medical judgment is not compromised by improper financial incentives.  The Anti-Kickback Statute prohibits offering, paying, soliciting or receiving remuneration to induce referrals of items or services covered by federal health care programs, including Medicare.  The Stark Law forbids a home health care provider from billing Medicare for certain services referred by physicians who have a financial relationship with the entity.

The settlement partially resolves allegations made in a lawsuit filed in federal court in Tampa, Florida, by Gregory Simony, a former employee of Recovery Home Care.  The lawsuit was filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private individuals to sue on behalf of the government for false claims and to share in any recovery.  The act also allows the government to intervene and take over the action, as it did in part in this case.  Simony will receive $198,000 of the recovered funds.  The government continues to litigate this case against Recovery Home Care’s previous owner, Mark Conklin.

This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services.  The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation.  One of the most powerful tools in this effort is the False Claims Act.  Since January 2009, the Justice Department has recovered a total of more than $23.8 billion through False Claims Act cases, with more than $15.2 billion of that amount recovered in cases involving fraud against federal health care programs.

The settlement was the result of a coordinated effort by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the Middle District of Florida and HHS-OIG.

The case is captioned United States ex rel. Simony v. Recovery Home Care, et al., Case No. 8-12-cv-2495-T-36TBM (M.D. Fla.).  The claims resolved by the settlement are allegations only and there has been no determination of liability.

Seventh Circuit affirms that physician referral includes certification.

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In U.S. v. Patel, the U.S. Court of Appeals for the Seventh Circuit upheld a Chicago doctor’s criminal conviction under the Anti-Kickback Statute for accepting payments from a home health agency finding that a referral includes not just a recommendation to visit a specific business but also a certification allowing that visit to be billed to the federal government.

“A narrow definition of the term would defeat the central purposes of the [statute],” the circuit panel wrote.

The appellant physician had provided his patients a wide variety of agencies to choose from and only accepted inducements from one home health care agency.  Still , the Circuit Court ruled that that conduct was still improper because it implied a quid pro quo every time Patel filled out the forms necessary for the home health care agency to receive reimbursements from the government.

“Patel argues that he … played no role in his patients’ initial selection of Grand (the health care agency) or their decision to continue using Grand,” the court said. “True, but Patel chose whether his patients could go to Grand at all, which we think is just as important.”

The panel noted that federal Stark Law, which restricts physician self-referrals, defines the term to cover “certifying or recertifying” the need for care.  Rejecting the loophole offered by the appellant physician in his appeal, the Circuit Court recognized that “the possibility of a kickback for each recertification incentivizes the physician to keep recertifying, even if further treatment is unnecessary or if treatment by a different provider would be in the patient’s best interest….”

Doctor Admits Taking Bribes In Test-Referral Scheme With NJ Clinical Lab

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NEWARK, N.J. – A Middlesex County doctor with practices in Jersey City, New Jersey, today admitted accepting bribes in exchange for test referrals as part of a long-running and elaborate scheme operated by Biodiagnostic Laboratory Services LLC (BLS), of Parsippany, New Jersey, its president and numerous associates, U.S. Attorney Paul J. Fishman announced.

Anthony DelPiano, 53, of Monmouth Junction, New Jersey, pleaded guilty before U.S. District Judge Stanley R. Chesler in Newark federal court to an information charging him with one count of accepting bribes.

Including DelPiano, 35 people – 24 of them doctors – have pleaded guilty in connection with the bribery scheme, which its organizers have admitted involved millions of dollars in bribes and resulted in more than $100 million in payments to BLS from Medicare and various private insurance companies. The investigation has to date recovered more than $10.5 million through forfeiture.

According to documents filed in this and related cases and statements made in court:

DelPiano admitted he accepted bribes in return for referring patient blood specimens to BLS and was paid approximately $2,300 per month. DelPiano’s referrals generated at least $1,752,603.24 in lab business for BLS.

On April 9, 2013, federal agents arrested David Nicoll, 40, of Mountain Lakes, New Jersey, Scott Nicoll, 33, of Wayne, New Jersey, a senior BLS employee and David Nicoll’s brother, and Craig Nordman, 35, of Whippany, New Jersey, a BLS employee and the CEO of Advantech Sales LLC – one of several entities used by BLS to make illegal payments. They were charged by federal complaint with the bribery conspiracy, along with the BLS company and Frank Santangelo, 44, of Boonton, New Jersey. In June 2013, David and Scott Nicoll, Nordman and four other associates of BLS pleaded guilty to charges related to their involvement. Santangelo, a doctor, pleaded guilty in August 2013 to charges relating to his role in the scheme

The bribery count to which DelPiano pleaded guilty carries a maximum potential penalty of five years in prison and a $250,000 fine. Sentencing is scheduled for May 12, 2015. As part of his guilty plea, DelPiano must forfeit $204,475, representing the total bribe monies received from BLS.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Acting Special Agent in Charge Eric Welling; U.S. Department of Health and Human Services, Office of Inspector General, under the direction of Special Agent in Charge Scott J. Lampert; IRS– Criminal Investigation, under the direction of Acting Special Agent in Charge Jonathan D. Larsen; and inspectors of the U.S. Postal Inspection Service, under the direction of Inspector in Charge Maria L. Kelokates, with the ongoing investigation leading to today’s guilty plea.

The government is represented by Assistant U.S. Attorney Joseph N. Minish, Senior Litigation Counsel Andrew Leven, and Jacob T. Elberg, Chief of the U.S. Attorney’s Office Health Care and Government Fraud Unit in Newark, as well as Assistant U.S. Attorney Barbara Ward of the office’s Asset Forfeiture and Money Laundering Unit.

U.S. Attorney Paul J. Fishman reorganized the health care fraud practice at the New Jersey U.S. Attorney’s Office shortly after taking office, including creating a stand-alone Health Care and Government Fraud Unit to handle both criminal and civil investigations and prosecutions of health care fraud offenses. Since 2010, the office has recovered more than $635 million in health care fraud and government fraud settlements, judgments, fines, restitution and forfeiture under the False Claims Act, the Food, Drug and Cosmetic Act and other statutes.

15-046

Doctor Indicted On Charges He Illegally Distributed Drugs (EDPA)

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PHILADELPHIA – Dr. Jeffrey Bado, 59, of Philadelphia, PA, was charged today by indictment with illegally distributing pain medications from his Philadelphia and Bryn Mawr medical offices, announced United States Attorney Zane David Memeger.  Bado is charged with two counts of maintaining a drug-involved premises, 200 counts of illegally distributing oxycodone, a Schedule II controlled substance, outside the usual course of professional practice and for no legitimate medical purpose, as well as 33 counts of health care fraud and four counts of making false statements to federal agents.

 

According to the indictment, Bado, a doctor of Osteopathic Medicine, gave prescriptions for large numbers of oxycodone pills to “patients” who paid in cash for an “office visit” during which the “patient” would receive at most a cursory physical examination and little other medical care or treatment.  During their first visit to Bado’s practice, new patients would still get prescriptions for large amounts of oxycodone even though they provided little or no recent medical records to verify their claim of pain, or provided medical records that were not consistent with their claims of pain.

 

The indictment alleges that Bado’s prescribing mirrored the needs of drug addicts and drug traffickers.  Bado would allegedly comply with patient requests for pills with specific concentrations of oxycodone, and Bado would allegedly switch patients to pills with a higher street value even though there was no medical justification for the switch.  Bado allegedly continued to prescribe high amounts of oxycodone even when he knew that his patients were addicted to oxycodone, were using illegal drugs, or were not even taking the oxycodone pills as prescribed.

 

The indictment further alleges that Bado committed health care insurance fraud by billing Medicare and private insurers for patient visits that occurred in February 2010, when Bado was out of the office and traveling in Haiti.  Bado allegedly directed residents, nurses and other staff to see patients while he was away, and allegedly directed that they provide the patients with prescriptions that Bado had already filled out and signed.  Before departing for his trip, Bado allegedly made notations in and signed medical charts to make it appear as though he had seen the patients when in fact he was away in Haiti during their appointments.  Bado then allegedly had his office staff submit fraudulent claims to these patients’ health care insurers for the cost of the patients’ office visit as if Bado had seen these patients.  It is alleged that Bado subsequently made several materially false statements to federal agents regarding the arrangements he made before leaving for Haiti, including falsely claiming that he had not filled out in advance out any medical records for the patient appointments that occurred while he was in Haiti.

 

If convicted of all charges, Bado faces an estimated sentencing guideline range of at least 24 years in prison with a maximum sentence of 20 years in prison for each count of oxycodone distribution and maintaining a drug premises counts, 10 years in prison for each count of health care fraud, and five years in prison for each count of making false statement counts.  He also faces substantial fines and criminal forfeiture.

 

The case was investigated by the Federal Bureau of Investigation, the Department of Health and Human Services Office of the Inspector General, the Haverford Township Police Department and the Philadelphia Police Department.  It is being prosecuted by Assistant U.S. Attorneys Nancy Beam Winter and Andrew J. Schell.

An Indictment is an accusation.  A defendant is presumed innocent unless and until proven guilty.