Physicians convicted of Medicare/Medicaid Fraud face heavier sentence


A recent case in the Third Circuit, which includes Pennsylvania, New Jersey and Delaware, has increased the sentencing exposure of physicians who have been convicted of Medicare/Medicaid fraud. In United States v. Babaria, 14-2694 (3d Cir. 12-31-14), the Court held that a physician who was the medical director of a diagnostic testing and imaging company abused a position of trust under the Federal Sentencing Guidelines when he illegally paid physicians kickbacks to refer patients to his company and then billed Medicare for the diagnostic services provided, even though the services were medically necessary. The Court reasoned that the defendant’s certification to Medicare of compliance with the anti-kickback statute, when coupled with the his status as a physician, which made of the unlawful kickbacks difficult to detect, justified the increased sentence under abuse of trust provisions of U.S.S.G. 3B.1.3. The Court cited with approval an 11th Circuit case, United States v. Liss, 265 F.3d 1220 (11th Cir. 2001) which held that physicians who are recipients of kickbacks likewise violate a position of trust with respect to Medicare and, accordingly, face a more severe sentence. This is significant because it appears that the Third Circuit would have applied the abuse of trust provision even if the physician had not been the director of the diagnostic company.

Christmas Gifts and Scrouge

December 4, ’14

Small health care providers should be careful being nice to their patients and clients this time of the year! Whether you run a home health care agency, a durable medical equipment company, an ambulance company,  a small pharmacy or have a small medical practice, whatever you do, don’t give a Christmas present to your Medicare/Medicaid patients!!! Scrouge, I mean the U.S. Department of Justice, just might come after you under the False Claims Act for hefty penalties and fines.

The Department of Justice has reported that Rite Aid has agreed to pay $2.99 million for giving gift cards to  Medicare/Medicaid beneficiaries. According to the government, these gift cards constituted an  “improper inducement” to the beneficiaries to give Rite Aid their prescription drug business.  I guess the government thinks our seniors can be bought off on the cheap.

So, if you bill Medicare or Medicaid, play it safe and be a Scrouge this year and don’t give your patients/clients a Christmas present. You don’t want the government to claim that your Christmas stocking “improperly induced” the patient to remain under your care.


OIG’s Work Plan for 2015

The Office of Inspector General (OIG) has published its Work Plan for Fiscal Year 2015 which describes OIG’s investigative priorities for 2015. The small health care provider needs to be familiar with the Work Plan to avoid coming up on OIG’s investigative radar.

With respect to Medicare Parts A, B, & D, OIG’s investigations will focus on:

  • hospital outlier payments;
  • new inpatient admission criteria;
  • billing for replacement of defective medical devices;
  • the extent to which provider-based facilities meet CMS criteria;
  • payment policy for swing-bed services at Critical access hospitals;
  • inpatient claims for mechanical ventilation;
  • overpayment for graduate medical education payments;
  • outpatient dental claims;
  • Part A billings by skilled nursing facilities;
  • Part B billings for services furnished during nursing home stays;
  • implementation of background checks of employees of long-term-care facilities or providers;
  • hospice services in assisted living facilities;
  • hospice general inpatient care;
  • compliance with various aspects of the home health prospective payment system;
  • home health care agencies’s employment of individuals with criminal convictions ;
  • billings by suppliers of power mobility devices,  lower limb prosthetics, nebulizer machines, and diabetes testing supplies (including blood glucose test strips and lancets);
  • payments to ambulatory surgical centers and end-stage renal disease facilities;
  • billings by ambulance services with a focus on medical necessity and level of transport;
  • chiropractic billings for non-covered Part B billings services ;
  • diagnostic radiology and imaging service billings;
  • ophthalmologists and  independent clinical laboratories billings;
  • physical therapists and high use of outpatient PT services;
  • sleep disorder clinics and the high use of sleep-testing procedures;
  • billings and payments for Part B prescription drugs, with a focus on immunosuppressive drug claims with KX modifiers and chemotherapy drugs;
  • enhanced screening of Medicare providers including site visits, fingerprinting and background checks.




Small health care providers are under attack by overzealous prosecutors

Monday, October 13, 2014

Small health care providers are under attack by overzealous prosecutors who use non-health care fraud-related statutes to drastically increase the sentencing exposure of providers who have been indicted for garden-variety Medicare fraud. One such case arose in Philadelphia recently where a podiatrist was charged with billing Medicare for $480,000 worth of services she did not furnish. Had the podiatrist only been charged with health care fraud, she might be looking at two-to-three years’ incarceration under the federal sentencing guidelines which the sentencing judge could reduce to non-incarceration or home confinement depending on the podiatrist’s background.

To foreclose the possibility that the podiatrist might not be sent to jail, the prosecutor charged the podiatrist with six-counts of wire fraud, which carries a maximum sentence of 20 years per count— four-times more severe than the counts charging health care fraud where the maximum sentence is just five years per count.

More frightening, by charging the podiatrist with wire fraud, the prosecutor was able to tack on two counts of aggravated identity theft; an offense which calls for a mandatory minimum sentence of two years incarceration consecutive to whatever sentence the podiatrist faces on the wire fraud counts, and up to four years’ mandatory incarceration if the prosecutor asks the judge to run the aggravated identity theft counts consecutively with each other. Because a judge is required to impose a mandatory minimum sentence, the podiatrist faces mandatory jail time regardless of any mitigating circumstances she might present at sentencing. Had the podiatrist only been charged with health care fraud, she would not have faced a mandatory minimum sentence for aggravated identity theft since a defendant cannot be charged with aggravated identity theft in connection with a health care fraud offense.

What did the podiatrist do to warrant such outrageous sentencing exposure? According to the indictment, all the podiatrist did was bill Medicare twice for services she did not furnish to two of her patients using the patients’ Medicare Provider numbers. Without passing judgment on the merits of the case, this garden variety Medicare fraud has turned into a bludgeon the prosecutor undoubtedly will use to force the podiatrist to forgo her right to trial and plead guilty to avoid the prospect of receiving a draconian mandatory sentence —another example of prosecutorial overcharging to force defendants to give up their Fifth and Sixth Amendment rights to due process and a fair trial

If you, the small health care provider, are accused of Medicare or Medicaid fraud, tell the government even the States over-bill for Medicaid services!

Wednesday, October 1, 2014

If you, the small health care provider, are accused of Medicare or Medicaid fraud, tell the government even the States over-bill for Medicaid services!

By way of background, the Medicaid program provides assistance to certain low-income and disabled individuals. The Federal and State governments jointly fund and administer the Medicaid program. The Federal Government pays its share of a State’s Medicaid payments based on Federal medical assistance percentages (FMAP), which varies depending on the State’s relative per capita income.

In September 2014, the Office of Inspector General (OIG) reported that it had audited approximately 5.5 million Massachusetts Medicaid claims, totaling $3.8 billion. Of the 5.5 million claims audited, approximately 2.4 million used the wrong FMAP; an incredible 43%! As a result, Massachusetts will be forced to reimburse the federal government $105 million.

If you get jammed up for Medicare or Medicaid fraud, please call me, 267-253-7933.

The government uses a variety of criminal statutes to prosecute health care fraud and abuse

Friday, September 26, 2014

The government uses a variety of criminal statutes to prosecute health care fraud and abuse in addition to the more traditional ones such as the Anti-Kickback Statute and the Health Care Fraud Statute. The government does this oftentimes in an effort to increase the defendant’s sentencing exposure.

In a September 25, 2014 press release, the U.S. Attorney’s Office reported that the owner of a home health care agency in Texas was sentenced to five years in prison for his role in a conspiracy to structure the withdrawal of over $1.8 million from the company’s bank in violation of 31 U.S.C. 5324. The defendant and his wife, who was the director of nursing at the agency, withdrew just under $10,000 in cash from the bank account on nearly 300 occasions in order to avoid the bank’s mandatory reporting requirements of cash transactions of more than $10,000. The defendant then used the money to to pay recruiters in exchange for referring Medicare patients to the agency and to doctors for authorizing home health services that were not medically necessary or provided. A defendant convicted of illegal structuring faces a sentence of five years’ incarceration and a fine of $250,000 for each structured transaction, both of which can be doubled if the defendant is involved in a pattern of structuring that exceeded $100,000 over a twelve month period of time.

In a September 24, 2014 press release, the U.S. Attorney’s Office reported that a medical doctor in East Islip, New York plead guilty to the illegal distribution of oxycodone for issuing a prescription to a patient the doctor knew was using illegal narcotics and abusing pain killers, in violation of 21 U.S.C. 841. Under the Federal Sentencing Guidelines, the penalty for distributing actual oxycodone is the equivalent of a defendant distributing 670% more of heroin

Pharmaceutical manufacturers … may run afoul of the Anti-Kickback statute

Friday, September 19, 2014

Pharmaceutical manufacturers who offer copayment coupons to insured patients to reduce or eliminate the cost of their out-of-pocket copayments for specific brand-name drugs may run afoul of the Anti-Kickback statute, says the OIG in a September 2014 Special Advisory Bulletin.

The anti-kickback statute makes it a criminal offense to knowingly and willfully offer, pay, solicit or receive any remuneration to induce or reward the referral or generation of business reimbursable by any Federal Health care program. Thus, if copayment coupons are used by Medicare Part D beneficiaries to defray the cost of their drug purchases, the anti-kickback statute is implicated since the copayment coupon has the effect of inducing the beneficiary to purchase the drug to which the coupon applies.

The pharmaceutical industry already places warnings on its copayment coupons that they may not be used by beneficiaries of Federal health care programs. Nonetheless, this new Special Advisory Bulletin makes it plain that OIG does not believe that these warning go far enough. OIG found that there are insufficient mechanisms in place in the processing of claims to ensure that the coupons are not used by Part D beneficiaries because the “coupons are not transparent in the pharmacy claims transaction system to entities other than manufacturers, which impedes Part D plans and others from identifying and monitoring the use of coupons for drugs paid for by Part D.” Thus, pharmaceutical manufacturers will have to come up with a way to make copayment coupons universally identifiable in pharmacy claims transactions to stay compliant with the anti-kickback statute.

OIG has published an on-line pamphlet called “A Roadmap for New Physicians, Avoiding Medicare and Medicaid Fraud and Abuse.”

Thursday, September 18, 2014

OIG has published an on-line pamphlet called “A Roadmap for New Physicians, Avoiding Medicare and Medicaid Fraud and Abuse.” In it, the OIG provides physicians with an overview of the five primary health care fraud and abuse laws: (1) False Claims Act; (2) Anti-Kickback Statute; (3) Physician Self-Referral (“Stark”) Law; (4) Exclusion Statute; and (5) Civil Monetary Penalties Law. The aim of the pamphlet is to help physicians avoid running afoul of the law in connection with their relationships with (1) Payers, such as Medicare and Medicaid; (2) Fellow Providers, including physicians, hospitals, nursing homes and other providers; and (3) Vendors, including the Pharmaceutical and Medical Device Industries. The pamphlet is only 31 pages in length and provides the reader with examples of what conduct not to engage in and, equally importantly, the mindset of OIG as it continues to ramp up its investigations of health care fraud allegations.

OIG is stepping up audits of small health care providers who bill Medicare.

Tuesday, September 16, 2014

OIG is stepping up audits of small health care providers who bill Medicare. For example, OIG just completed an audit of a physical therapy provider in Illinois who submitted 4,298 claims to Medicare for reimbursement in 2011 that totaled $645,966. Of the 4,298 claims, OIG audited just 100 of them and concluded that 99 out of the 100 sampled did not comply with various Medicare standards. As a result, OIG is demanding that the physical therapy provider reimburse Medicare $634,837! To avoid being forced to reimburse Medicare or Medicaid for claims received, the small physical therapy provider is reminded to follow the standards contained in the Medicare Benefit Policy Manual, chapter 15, § 230.

OIG is cracking down on fraud and abuse involving HIV drugs

Tuesday, September 16, 2014

OIG is cracking down on fraud and abuse involving HIV drugs which can cost Medicare up to $1,700/month for a single beneficiary. In an August 6, 2014 Podcast, OIG described two schemes involving HIV drugs. In one scheme, people exchanged HIV drug prescriptions for cash or other drugs. Then, a colluding pharmacy would bill the patient’s insurance company, sometimes Medicare or Medicaid, for the HIV drugs without actually filling the prescription. The fraudulent pharmacy also bills for the prescribed refills without actually dispensing the drugs.

In the second scheme, the pharmacy dispenses the HIV drugs to the patient who then sells them to a runner who, in turn, takes the drugs to a fraudulent pharmacy or fraudulent drug wholesaler. The fraudulent pharmacy or wholesaler then either ships the HIV drugs out of the country or sells them to uninsured people in the U.S. In some instances, corrupt pharmacies buy the HIV drugs on the black market and re-package and dispense the drugs to unsuspecting HIV patients.