Tag: False Claims Act

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Health Law Highlights

Wave of the Future: Are AI and Data Mining the Next Generation of “Professional Whistleblowers”?

Summary of article from Arnall Golden Gregory LLP, by Kara Gordon Silverman:

The integration of AI and data mining in False Claims Act (FCA) litigation presents both opportunities and challenges, enabling whistleblowers to analyze vast datasets and detect potential fraud without insider knowledge. However, these technologies must navigate legal hurdles such as the public disclosure bar and the requirement for specificity in allegations as per Rule 9(b) of the Federal Rules of Civil Procedure. Despite these challenges, professional whistleblowers, exemplified by entities like Integra Med Analytics, continue to leverage AI-driven data to bring FCA cases, sometimes securing significant settlements. This trend necessitates vigilant defense strategies to scrutinize the standing and validity of such claims. The ongoing evolution underscores the need for balancing technological advancements with legal safeguards to ensure fair and substantiated whistleblowing.

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Health Law Highlights

Federal District Court Finds Private-Insurer Relator Can Proceed with False Claims Action

Summary of article from The FCA Insider, by Michael Podberesky, Brett Barnett, Stephen Tagert:

The U.S. District Court for the District of New Jersey allowed Allstate Insurance Company to proceed with its whistleblower action against Phoenix Toxicology and Lab Services, LLC, alleging the submission of false claims for unnecessary urine drug tests to federal programs. This case highlights a trend of non-traditional whistleblowers, such as private insurers and litigation-funding groups, increasingly bringing False Claims Act actions. The ruling underscores the importance for healthcare providers to be vigilant about potential fraud detection by both insiders and external parties. This decision also illustrates the growing role of the Department of Justice in addressing fraudulent activities related to the opioid epidemic and federal healthcare programs.

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Health Law Highlights

Texas Company Connected to Alleged Scheme That Billed Medicare $3 Billion for Urinary Catheters

Summary of article from CBS Texas, by Brian New:

A Texas-based company, Konaniah Medical Supplies, is implicated in a suspected Medicare fraud scheme involving billing for urinary catheters that beneficiaries never ordered or received. The company, along with its associated entity G&I Ortho Supply in New York and eight other medical supply companies, collectively billed Medicare over $3 billion for catheters, causing a nearly 2,000% increase in Medicare billings for this product. The Centers for Medicare & Medicaid Services (CMS) have identified a concerning increase in urinary catheter billings and suspended payments to the implicated suppliers, but it remains unclear how much of the alleged fraudulent billings were paid out. U.S. Senator Mike Braun has called for a full federal audit of Medicare, and proposed a bill to use artificial intelligence for detecting potential billing irregularities. The investigation into the alleged fraud is ongoing.

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Ask the Health Lawyer

Stark Law-Based FCA Lawsuits Multiply: Relators Targeting Physician Compensation

Summary of article from Davis Wright Tremaine, by Robert G. Homchick, Adam D. Romney, Gavin Keene:

Several health systems, including Community Health Network Inc., University of Pittsburgh Medical Center, Erlanger Health System, and Steward Health Care System, have recently faced Stark Law-based False Claims Act (FCA) lawsuits. These lawsuits primarily focus on allegations of above fair market value compensation to physicians for referrals. The cases underscore the increased scrutiny of physician compensation practices and potential severe consequences of Stark Law violations. The trend suggests that health systems should reassess their risk levels arising from physician compensation practices. To mitigate risks, healthcare organizations should ensure fair and transparent compensation arrangements, implement effective compliance programs, take whistleblower claims seriously, and seek legal guidance to navigate Stark Law complexities.

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Alert

Local Physician and Practice Agree to Pay Over $2 Million to Settle False Claims Act Allegations

Press Release from U.S. Attorney’s Office, Eastern District of Michigan:

I don’t normally report on False Claims Act (FCA) matters from other states, but this one serves as a cautionary tale on “incident to” billing.

Under Medicare rules, covered services provided by non-physician practitioners (NPPs), like physician assistants, nurse practitioners, clinical nurse specialists, etc., are reimbursed at a reduced rate of 85 percent of the fee schedule amount.

The “incident-to” billing rules provide an exception, allowing 100 percent reimbursement for NPP services that meet the requirements detailed in the Medicare Benefit Policy Manual, Chapter 15, Section 60 (Services and Supplies Furnished Incident To a Physician’s/NPP’s Professional Service).

Among other requirements, to bill a NPPs services as “incident to” the physician’s initial evaluation, the physician must provide direct supervision. Without direct supervision, the NPPs services must be billed under the NPPs provider number at the reduced rate.

Direct supervision in the office setting does not mean that the physician must be present in the same room, but the physician must be present in the office suite and immediately available to provide assistance and direction throughout the time the aide is performing services.

Direct supervision in the home health setting, requires the physician to be physically present in the home to oversee the care.

In this reported FCA settlement, the NPP’s home health services were being billed “incident to” the physician’s services, but the physician was not physicially present in the home. Thus, the physican and his practice falsely claimed an extra 15% reimbursement on all those services.

The physician and his practice paid $2,003,800.91 to resolve the FCA allegations.

The moral of the story … know the rules about billing, and if you don’t, hire someone who does.

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Health Law Highlights

Pandemic Fraud Suits Have Yielded Over $100 Million, Report Says

From Bloomberg Law, by Daniel Seiden:

The Covid-19 Fraud Enforcement Task Force has reported that over $100 million has been reclaimed by the US government through False Claims Act (FCA) cases related to pandemic fraud. These funds have been recovered from more than 400 settlements and judgments, including cases of Paycheck Protection Program fraud, Economic Injury Disaster Loan fraud, health-care fraud, and agricultural program fraud. The report indicates a steady rise in new whistleblower actions under the FCA alleging pandemic relief fraud from 2020 to 2023. In 2023 alone, the Department of Justice (DOJ) recovered a record $2.68 billion from 543 FCA settlements and judgments.

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Alert

Oklahoma Chiropractic Clinic, Owner, and Referring Physicians Pay $465,000 to Settle Federal False Claims Act and Kickback Allegations

From United States Department of Justice:

Chiropractic Associates and Dr. Scott Kirkpatrick paid $365,000 to settle allegations of wrongfully paying physicians to induce referrals of durable medical equipment (DME), leading to the submission of false claims to the Medicare program. Dr. Cash Biddle and Dr. Chad Keeney each paid $50,000 to settle allegations that they received remuneration from Chiropractic Associates and/or Dr. Kirkpatrick to induce referrals of Medicare DME orders.

From October 2017 to July 2021, Chiropractic Associates and Dr. Kirkpatrick allegedly violated the Anti-Kickback Statute (AKS) and/or the Physician Self-Referral Law (Stark Law) by paying referring providers to induce referrals of Medicare DME orders. It is also alleged that Dr. Biddle and Dr. Keeney received such remuneration during certain periods.

The AKS and Stark Law aim to ensure that physicians’ medical judgments are not influenced by improper financial incentives and are based on patients’ best interests. Violations of these laws result in claims under the False Claims Act. To settle these allegations, Chiropractic Associates and Dr. Kirkpatrick paid $365,000, and Dr. Biddle and Dr. Keeney each paid $50,000 to the U.S.

In reaching this settlement, Chiropractic Associates, Dr. Kirkpatrick, Dr. Biddle, and Dr. Keeney did not admit liability, and the government did not make any concessions about the legitimacy of the claims. The agreements allow the parties to avoid the delay, expense, and uncertainty associated with litigation.

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Health Law Highlights

The Knowledge Requirement in a Case Alleging False Claims Act Violations

From PharmacyToday, by David B. Brushwood, BSPharm, JD:

This matter involved a pharmacy corporation accused of violating the FCA due to falsification of prior authorization (PA) forms by a Clinical Pharmacy Manager (CPM). The CPM allegedly completed these forms with false information, leading to coverage of Medicaid patients who did not meet criteria for payment. This resulted in a substantial increase in the pharmacy’s revenue from just over $1.5 million to over $5 million in 15 months.

The pharmacy corporation moved to dismiss its case, arguing that it was unaware of the CPM’s illegal actions.

The court denied the motion, noting that the FCA holds liable any person who knowingly presents or causes to be presented a false or fraudulent claim for payment. “Knowingly” is defined as having “actual knowledge”, “deliberate ignorance”, or “reckless disregard of the truth or falsity.”

The court reasoned that the corporation was aware of the significant increase in revenue, which was discussed between the CPM and her supervisor. Furthermore, the corporation’s bonus program, which incentivized higher sales, could have potentially encouraged the increase in revenue by any means necessary.

The takeaway is that pharmacy supervisors should be vigilant about any unexpected increase in pharmacy revenues and should confirm a legitimate explanation to prevent liability for knowingly allowing fraudulent activity. Any unlawful request must be reported to a supervisor, and rules must be adhered to for the benefit of the patients.

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Alert

Houston Dental Clinic Operator Convicted in $6M Pediatric Fraud Scheme

From Press Release, United States Attorney’s Office, Southern District of Texas:

  • Rene Gaviola, operator of Floss Family Dental Care clinic in Houston, admitted to submitting fraudulent claims to Medicaid for pediatric dental services that were not provided.
  • Gaviola confessed to employing unlicensed individuals to practice dentistry on Medicaid-insured children and operating the clinic without any licensed dentists, billing Medicaid as if licensed professionals provided the services.
  • He further admitted to paying kickbacks to marketers and caregivers of Medicaid-insured children for bringing them to Floss, and to laundering Medicaid funds from the clinic’s business account to his personal account in transactions exceeding $100,000.
  • From 2019 to 2021, Floss billed Medicaid nearly $6.9 million for pediatric dental services, of which Medicaid paid approximately $4.9 million.
  • Gaviola pleaded guilty and awaits sentencing on April 16, facing potential penalties including up to 10 years for conspiracy to commit health care fraud, payment of kickbacks, and money laundering, as well as potential fines in the hundreds of thousands.
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Alert

Physician’s Assistant Convicted at Trial of Amniotic Fluid Scam

From Press Release, United States Attorney’s Office, Northern District of Texas:

  • A 36-year-old physician’s assistant at a Fort Worth pain management clinic has been convicted of conspiracy to commit health care fraud and 12 counts of healthcare fraud.
  • The PA submitted claims to Medicare for injections of unapproved amniotic fluid for pain management.
  • Although some amniotic products are FDA-approved for wound care, they are not approved for pain management, making the injections medically unnecessary and non-reimbursable by Medicare.
  • He used an amniotic product called “Cell Genuity,” which was not covered by Medicare for either wound care or pain management. He initially asked patients to pay out of pocket for the injections, but many refused due to the high cost and questionable efficacy.
  • The PA identified another product, “Fluid Flow,” that he believed could be reimbursed by Medicare. Instead of purchasing this more expensive product, he continued to use Cell Genuity but billed Medicare under Fluid Flow’s unique code. This resulted in significant profits for the clinic and himself.
  • The PA now faces up to 240 years in federal prison – 20 years per count.