Tag: Fraud & Abuse

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Health Law Highlights

Let’s Make a Deal with DOJ: The Impact of the DOJ’s New Whistleblower Reward Program on Corporate Compliance

Summary of article from Husch Blackwell, by Christina Moore, Madison Rector:

The DOJ announced a new whistleblower rewards program aimed at incentivizing reports of corporate or financial misconduct. This program, allowing individuals to report violations of any federal law, particularly criminal abuses of the U.S. financial system, fills gaps not covered by existing whistleblower initiatives like the False Claims Act (FCA) or the IRS Whistleblower Program. Under the new program, whistleblowers do not need to file a lawsuit or hire an attorney, making it easier for them to report wrongdoings. This initiative could increase pressure on companies to maintain high ethical standards and prevent misconduct. To mitigate risks, compliance officers should foster a culture of openness and communication, ensuring that employees are aware of internal reporting procedures and feel safe using them.

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Health Law Highlights

False Claims Act Settlements to Know from Q1 2024

Summary of article from Bass, Berry & Sims PLC, by Theresa Androff, Molly Ruberg:

The first quarter of 2024 saw significant False Claims Act (FCA) and civil healthcare fraud settlements in the healthcare industry, despite a recent downward trend. These settlements, worth millions of dollars, were related to alleged kickbacks, medically unnecessary services and equipment, pharmaceutical issues, and Controlled Substances Act violations. Key settlements included New York York-Presbyterian/Brooklyn Methodist Hospital’s $17.3 million for alleged kickbacks, Lincare’s $25.5 million for false claims related to medical equipment, and Endo Health Solutions’ $475.6 million for its opioid marketing schemes. There were also significant settlements related to voluntary self-disclosures, such as Moffitt’s $19.5 million for false claims related to research studies. Additionally, eBay Inc. settled for $59 million, marking the first Controlled Substances Act settlement with an e-commerce company.

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Health Law Highlights

DOJ Releases 2024 COVID-19 Fraud Enforcement Task Force Report

Summary of article from Morrison Foerster, by Adam Braverman, Kate Driscoll, Kamran Jamil, Brian Kidd, Nathaniel Mendell:

The U.S. Department of Justice (DOJ) has released a comprehensive report on the COVID-19 Fraud Enforcement Task Force, calling for an extension of the statute of limitations for pandemic fraud-related offenses and increased funding for investigations and prosecutions. Since May 2021, the Task Force has charged over 3,500 defendants, recovered more than $1.4 billion in government funds, and filed over 400 civil suits. The report highlights cases involving False Claims Act liability, primarily related to the Small Business Administration’s Paycheck Protection Program (PPP), Economic Injury Disaster Loans (EIDL), and COVID-19 testing claims. The DOJ is seeking to establish a permanent interagency body to combat government benefits fraud. The report also calls for legislation to extend time limits for charging pandemic-related fraud cases and further resource fraud investigations.

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Around the Web

Clinic Owner Sent to Prison for Orchestrating $15M Medicare Fraud and Kickback Scheme

Gwendolyn Gibbs, the owner of the Houston-based Daybreak Rehabilitation Center, has been sentenced to 84 months in federal prison and ordered to pay $8.68 million in restitution to Medicare for conspiracy to commit healthcare fraud. Gibbs fraudulently billed Medicare for unnecessary mental health services provided to vulnerable adults with intellectual disabilities. From 2007 to 2016, she submitted fraudulent claims for partial hospitalization program (PHP) services, falsified medical records, and paid kickbacks for patient referrals. Charles Guidry Jr., a manager at Daybreak and Gibbs’ ex-husband, was previously sentenced to 70 months imprisonment for his involvement. Gibbs will remain in custody until her transfer to a U.S. Bureau of Prisons facility. Source: Press Release.

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Health Law Highlights

Houston Clinic Owner Sentenced for Healthcare Fraud Scheme

Summary of article from mytexasdaily.com:

Gwendolyn Gibbs, the 72-year-old owner of a Houston-based mental health clinic, has been sentenced to seven years in federal prison for a healthcare fraud scheme. Gibbs pleaded guilty to conspiracy to commit healthcare fraud in December 2021 and was ordered to pay over $8.6 million in restitution to Medicare. The court found that Gibbs had fraudulently billed Medicare for services provided to adults with intellectual disabilities who did not require mental health services, from 2007 to 2016. She admitted to falsifying medical records and paying kickbacks for patient referrals. The case was investigated by multiple agencies, including the FBI and the Department of Health and Human Services.

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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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Around the Web

Patient Inducements: Law and Limits

From Holland & Hart, by Kim Stanger:

Although often well-intentioned, offering free or discounted items or services to patients (e.g., gifts, rewards, writing off copays, free screening exams, free supplies, etc.) may violate federal and state laws governing improper inducements, especially if the patient is a federal program beneficiary. The government is concerned that offering or rewarding such inducements to patients may result in overutilization, biased decisions concerning care, and increased costs to the Medicare, Medicaid, or other government programs. Penalties for illegal inducements may include administrative, civil, and criminal penalties; repayment to government programs; and exclusion from federal programs. Increasingly, private payors are also challenging such inducements. It is imperative that healthcare providers and their staff understand the applicable laws and limits.

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Health Law Highlights

Ten Physicians and Local Execs Indicted in Pharmacy Kickback Scheme

From D Magazine, by Will Maddox:

A pharmaceutical kickback scheme in the Northern District of Texas has led to the indictment of 14 people, including several podiatrists, local businessmen, and executives at Next Health, a healthcare holding company. The scheme involved physicians receiving bribes and kickbacks from pharmacies for referring prescriptions to be filled at those pharmacies, with payments being proportional to the number of prescriptions received.

The scheme, which began in 2014, was concealed through complex business arrangements and involved multiple entities. Payments were funneled through management service organizations (MSOs) and a company called Med Left, which was used to conceal and funnel bribes from the pharmacies to the physicians.

The kickbacks were often disguised as legitimate returns on investments in the pharmacies. Physicians would purchase a percentage of the pharmacy for a nominal fee and were required to refer prescriptions to the pharmacy for ownership. The profits from these prescriptions were then shared with the prescribing doctors.

The owners of Next Health, Andrew Hillman and Semyon Narosov, previously pleaded guilty to charges connected with the scheme in 2018 and were sentenced to several years in prison. Ten physicians, including podiatrists, orthopedic surgeons, and a gastroenterologist, have been indicted for referring prescriptions to Next Health’s pharmacies and receiving kickbacks.

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Health Law Highlights

The Risk of Criminal Charges in Hospice Fraud Cases

From Hospice News, by Holly Vossel:

Hospice providers face significant regulatory risks related to False Claims Act (FCA) violations, with potential criminal charges in instances of suspected fraud, waste and abuse. While most FCA cases don’t result in criminal charges, the resolution process can be complex and challenging for providers.

The burden of proof in most civil hospice fraud cases is relatively low, making it easier for the government to establish evidence of wrongdoing. However, the burden of proof in federal criminal fraud investigations is higher, requiring evidence of intent to defraud and willfulness.

Fraud cases can result in severe penalties for hospice owners, including prison sentences, heavy fines, revocation of Medicare certification, and being barred from the industry. An example is the case of Dr. Shiva Akula, former owner of Canon Healthcare, who was convicted for FCA violations totaling nearly $47 million.

Regulatory oversight of the hospice industry has increased due to concerns about fraud, waste, and abuse. This has been driven by the proliferation of new hospices and fraudulent billing practices. The Centers for Medicare & Medicaid Services (CMS) has implemented a “36-month” rule forbidding any change in majority ownership during the 36 months after initial Medicare enrollment.

The hospice industry is experiencing a surge in audit activity, with providers focusing more on documentation to prove patient eligibility and medical necessity of services. While increased audits do not necessarily indicate fraud, a high prevalence of billing errors can signal potential wrongdoing to regulators.

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Health Law Highlights

New AI Technique Significantly Boosts Medicare Fraud Detection

From Medical Xpress, by Florida Atlantic University:

  • Medicare is frequently targeted by fraudulent insurance claims, with the estimated annual fraud amounting to over $100 billion. Traditional methods of detecting fraud, which involve manual inspection of claims by a limited number of auditors, are often insufficient due to the volume and complexity of the data.
  • A study conducted by the College of Engineering and Computer Science at Florida Atlantic University explored the use of big data and machine learning models to detect Medicare fraud. However, handling imbalanced big data and high dimensionality, where the number of features is extremely high, presents significant challenges.
  • The researchers tested two big Medicare datasets, Part B and Part D, using a method called Random Undersampling (RUS) and a novel ensemble supervised feature selection technique. RUS works by randomly removing samples from the majority class until a specific balance between the minority and majority classes is achieved.
  • The results showed that the combined use of RUS and supervised feature selection outperformed models that used all available features and data. The best performance was achieved by performing feature selection, then applying RUS. This approach led to data reduction, more explainable models, and significantly better performance.
  • The study’s findings could have substantial implications for Medicare fraud detection, offering computational advantages and enhancing the effectiveness of fraud detection systems. If properly applied, these methods could significantly reduce costs related to fraud and improve the standard of health care service.