Articles Posted in Medicare Fraud

handcuffs-1156821-mThe U.S. Department of Health and Human Services (HHS) recently released its Medicaid Fraud Control Units Fiscal Year 2015 Annual Report (the “Report”).  The Report’s findings highlight 1,553 convictions, 731 civil settlements, and $744 million in criminal and civil recoveries relating to Medicaid fraud and abuse. Fraud and Abuse financial recoveries remain a top priority for the Federal Government and hence a primary objective of Federal law enforcement.  Our Georgia business and healthcare law firm follows developments in the world of healthcare law, including fraud and abuse issues.


The Social Security Act (SSA) mandates that, absent certain circumstances, each State operate a Medicaid Fraud Control Unit (MFCU). The District of Columbia and forty-nine States currently maintain MFCUs.   MFCUs are one of many Federal law enforcement tools in its fraud and abuse arsenal.  The statutory mission of MFCUs is to investigate and prosecute Medicaid fraud by health care providers and patient abuse and neglect.  HHS’ Office of Inspector General (OIG) certifies, provides oversight of, and assesses performance relative to Federal compliance standards of all MFCUs.  The States are responsible for operation of MFCUs and receive reimbursement for a percentage of their costs from the Federal Government, pursuant to the SSA.  MFCUs are currently reimbursed for 90% of their costs for the first three years of their operation and 75% thereafter.

Each MFCU employs staff that comprise investigator(s), auditor(s) and attorney(s) to review referrals of potential fraud and abuse involving Medicaid and to make decisions regarding potential civil and/or criminal prosecution.  The Report essentially provides the latest annual update on the success of MFCUs in prosecuting Medicaid fraud matters.

A Few Findings of the Report

The Report’s findings include:

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gavel-952313-mOn August 1, 2016, the United States Department of Justice (DOJ), through the United States Attorney’s Office, Northern District of New York issued a press release regarding the DOJ’s resolution of fraud allegations against St. Joseph’s Hospital Health Center (St. Joseph’s).  No determination of fraud by a Court has been determined nor have the allegations of fraud been proven. Our Georgia healthcare law firm follows legal developments with regard to healthcare reimbursement and fraud and abuse.

The Federal Government’s allegations against St. Joseph concern the state’s Medicaid program.  The DOJ alleged that St. Joseph’s staff was not qualified to provide certain mental health services for which Medicaid reimbursement was sought and obtained.  St. Joseph provided the services in question under its program known as the Comprehensive Psychiatric Emergency Program (CPEP). The CPEP maintained a mobile unit that would serve patients in particular counties who could not, or would not, access mental health crisis intervention services available in the emergency room. New York law has regulations with which CPEPs must comply. Those State regulations delineate the proper composition of professional staff who must be involved with the applicable intervention services when such services are provided somewhere other than in the emergency room.  Reimbursement for such services is expressly conditioned upon compliance with the New York regulations that govern proper staffing.

The DOJ alleged that St. Joseph violated the New York False Claims Act by submitting payment to Medicaid for “mobile-crisis outreach services” by individuals who did not meet New York’s CPEP qualifications to provide such services. The alleged violation of the New York False Claims Act was premised on the submission of claims for payment without disclosing that St. Joseph’s staff (allegedly) failed to meet the qualification requirements under State law for the particular services provided. St. Joseph’s agreed to pay $3.2 million to conclude the matter.

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law-education-series-3-68918-mIn a Senate Finance Committee Majority Staff Report (the Senate Report) entitled, “Why Stark, Why Now?”, the Committee’s Chairman, Senator Orrin Hatch, argues that changes are needed to Stark Law.

Georgia Stark Law and Physician Self-Referral Attorneys

The Senate Report is, at a minimum, a strong indicator that calls for change in the law are heard and efforts are underway to evaluate improvements to the law.

A Brief History of Stark Law

Stark Law is Federal physician self-referral law premised upon the notion that physicians are prone to order (i.e., “refer”) more medical items and services if they stand to benefit financially from doing so.  For example, where a physician has an ownership interest in a lab to which he refers patients, he will incentivized to send more patients to the lab for lab work.

Thus in 1989 Representative Fortney “Pete” Stark (D-CA), of whom the statute was named, proposed the law to address two perceived adverse consequences of financial incentives for physician self-referrals of medical items and services reimbursed by a Federal healthcare program: (1) overbilling of Federal healthcare programs; and (2) the provision of medical services that do not benefit a patient.   Stark Law, Section 1877 of the Social Security Act, codified at 42 U.S.C. § 1395nn, as originally passed, was a fairly straightforward and narrow prohibition that precluded a physician from referring patients or specimens to clinical labs, including physician office labs, where labs paid for by fed programs (Medicare, Medicaid, or CHAMPUS) if the physician (or immediate family member) had a “financial relationship” with the lab.  Indeed, Pete Stark declared in sponsoring the law that the intent was to create a “bright line” standard that would benefit physicians and protect Federal healthcare programs.  But the law did not remain simple and expanded from the straightforward lab referral context to apply to a list of services and items known as “Designated Health Services,” identified by CMS billing codes.

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us-capitol-building-2-431642-mThe U.S. Department of Health & Human Services (HHS), Office of Inspector General (OIG) recently issued its Semiannual Report to Congress regarding the OIG’s success in detecting and obtaining recoveries as a result of fraud, waste and abuse in Federal healthcare programs.  Our Atlanta and Augusta, Georgia based business and healthcare law firm follows healthcare industry developments with regard to compliance, fraud and abuse.

The OIG uses technology and forensic audit expertise to identify new types of healthcare fraud and take enforcement steps to curb fraud and obtain recoveries for the Federal government.  The OIG’s Semiannual Report covers the OIG efforts and results during the first six months of fiscal year 2016.  According to the Semiannual Report:

  • the OIG anticipates recoveries of more than $2.77 billion, comprising about $555 million in “audit receivables,” $2.22 billion in “investigative receivables.”
  • the OIG reported 428 criminal actions against individuals or entities engaged in crimes relating to Federal healthcare programs
  • the OIG reported 383 civil actions filed in U.S. District Court for civil monetary penalties (CMP) matters, unjust enrichment claims, and administrative recoveries based on provider self-disclosures
  • exclusions of 1,662 individuals and entities from participation in Federal healthcare programs

The Semiannual Report provides numerous specific case examples of the OIG’s accomplishments in combatting healthcare fraud and abuse so far this year, noted in the report as “Highlights of Our Accomplishments,” including the following:

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Vitreo Retinal Consultants of the Palm Beaches, P.A. (VRC) sued the U.S. Department of Health and Human Resources (HHS) to recover payments it made to Medicare, having previously refunded the payments to Medicare based on Medicare’s notice of overpayment. The Eleventh Circuit affirmed the decision of the U.S. District Court, which upheld the administrative decision supporting Medicare’s overpayment notice.  The ophthalmologist/owner of the VRC was indicted and charged with 46 counts of healthcare fraud, according to a Department of Justice press release.

Georgia Medicare Reimbursement Attorneys

VRC treated Medicare patients who suffered from age-related macular degeneration (AMD) and similar retinal diseases with intravitreal injections of Lucentis, a Medicare Part B drug approved by the FDA.   There was no dispute in the case that the drug was medically reasonable and necessary for treatment of AMD.  However, the FDA labeling instructed that the full contents of the 2.0-mg vial be injected into a syringe for purposes of injecting a single 0.5-mg dose of Lucentis into the patient’s eye once a month.  The label clearly stated that “[e]ach vial should only be used for the treatment of a single eye.”  VRC did not follow the labeling instructions; rather, it treated up to three patients from a single vile.

Based on applicable Medicare reimbursement rates, if administered as per the FDA label, a physician would inject 0.5 mg into the patient’s eye, dispose of 1.5 mg, and receive reimbursement in the amount of approximately $2,025, the average total cost of the vial.  VRC would bill Medicare $2,025 for every 0.5-mg dose it administered, however, and be reimbursed $2,025 for every dose.  Since VRC would get up to three doses from a single vial, it was reimbursed up to $6,075 per vial, about three times the allowed reimbursement.

Medicare’s contractor issued a preliminary overpayment determination of $8.9 million.  Reconsideration was denied and the overpayment determination was upheld by and administrative law judge and the Medicare Appeals Council. VRC filed suit, and the US District Court deferred to the agency decision.

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889854_freedom_2The U.S. Centers for Medicare & Medicaid Services (CMS) recently finalized a final rule to effectuate the federal government’s ability under the Affordable Care Act (ACA) to recover self-identified overpayments, applicable to Medicare Parts A and B.  CMS’ implementing overpayment rule is the latest sword in the government’s formidable arsenal to combat fraud and abuse with regard to healthcare reimbursement under federal programs.  Physicians and other healthcare businesses and suppliers should take heed, as they will be subject to considerable potential financial liability and professional risks for noncompliance with the new overpayment rules.  Our Atlanta/Augusta business and healthcare law firm follows developments in healthcare fraud and abuse laws.

New Teeth for ACA Fraud and Abuse Provisions

Section 6402 of the ACA requires physicians, healthcare providers and suppliers, managed care plans, and other groups to self-report and refund to the government any Medicare or Medicaid overpayments by the latter of 60 days from the date the overpayment is identified or the date any corresponding cost report is due. The failure to do so subjects the offending party to civil monetary penalties and exclusion from all federal healthcare reimbursement programs.  Additionally, according to the new overpayment rules, the retained overpayment is an “obligation” under the False Claims Act (FCA), subjecting the violator to all the financial consequences that attend FCA liability.  The new rule is part of CMS’ final regulations to implement the ACA’s requirements with regard to overpayments as concerns Medicare Part A and B.

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US-SUP-CTThis week the United States Department of Justice (DOJ), through the United States Attorney for the Southern District of New York, Richard S. Hartunian, announced a settlement with Medical Reimbursement Systems, Inc. (MRI) of DOJ’s allegations that MRI submitted false claims to the Federal TRICARE Program in violation of the Federal False Claims Act (FCA). According to the DOJ investigation, MRI falsely presented claims to TRICARE as “HPSA” claims. MRI paid $500,000 to resolve the issue with DOJ.

Healthcare Law and Medical Billing

TRICARE is a Federal health care program for about 9.5 million beneficiaries that include active duty service members, National Guard and Reserve members, retirees, as well as the families of such. “HPSA” stands for Health Professional Shortage Areas, which (like sister Medically Underserved Areas known as “MUAs”) are designations based upon Federal standards applied by the United States Health and Human Services (HRSA).

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gavel-952313-mDaniel Suarez, 24, was sentenced earlier this month to nine years in prison following his guilty plea to healthcare fraud and abuse charges. According to the Miami Herald, Suarez, a pharmacy technician, was involved in a family ring of Medicare fraud that involved submitting false claims to Medicare for prescription drugs. Medicare has been a victim of extensive fraud and abuse over the years, resulting in a greatly enhanced regulatory environment that, unfortunately, burdens all healthcare providers, honest and dishonest.

Georgia Business and Healthcare Law Firm

The Medicare Program is funded by federal dollars and provides benefits and services for free (or low cost) to about 40 million elderly, blind or disabled, known as Medicare “beneficiaries.” Medicare has several different programs referred to as “parts.” The Medicare Part D Program subsidizes the cost of prescription drugs needed by Medicare beneficiaries. Beneficiaries enroll in Medicare drug plans, operated by private entities known as “sponsors” (insurers), which pay pharmacies for the beneficiary’s drugs and are, in turn, reimbursed by the Medicare Program.

Creative schemes to bilk the Medicare Program have been rampant. Healthcare fraud and abuse continue to cost the federal taxpayer staggering sums of money and, for that and other important reasons, remain a top priority of federal law enforcement. The federal government, through the United States Department of Health & Human Services/Office of Inspector General (OIG) and other federal law enforcement agencies, utilizes numerous methods to identify, combat and prosecute healthcare fraud. According to the OIG, as of September 20, 2015, $1.8 billion has been recovered by the federal government in healthcare fraud and abuse actions.

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1330873_courthouseThis litigation involves claims of unfair competition and tortious interference under nine different states’ laws, where the claims are based, in part, upon alleged violations of the federal Anti-Kickback Statute (AKS), 42 U.S.C. § 1320a-7b(b), and Stark law (“Stark”), 42 U.S.C. § 1395nn(a).  Our Georgia business and healthcare law firm follows legal developments in the world of healthcare.

This particular dispute is between Ameritox Ltd and Millenium Laboratories, Inc.   These laboratories are competitors in the drug-screening/testing marketplace. Each sells to physician practices and other healthcare providers products and services that facilitate analysis of patient drug use, including point-of-care (POCT) cups. POCT cups are used by physician practices to collect and store urine samples. Additionally, POCT cups contain chemically activated strips that indicate the presence of particular drugs in the patient’s system. POCT cups thereby facilitate “qualitative testing,” informative of patients’ drug use. Such information is very limited, however; it does not, for example, reveal the precise quantity of a drug in the patient’s system. To obtain more meaningful information about the patient, a doctor must send the POCT cup to a clinical laboratory, for “confirmatory testing.” These two laboratories compete for that business.

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hammer-to-fall-673264-mPhysicians and other healthcare providers and businesses who seek to stay in the center of the court and avoid fraud allegations often inquire of our Georgia business and healthcare law firm about the applicability of STARK (civil statute) or the Federal Anti-kickback (criminal) statute to particular circumstances or transactions. While those laws have great importance and severe penalties for violations, another federal law often warrants review to ensure business is conducted in a legally compliant manner. Many physicians and healthcare businesses have not heard of the “Civil Monetary Penalties” law (CMP), found at 42 U.S.C. § 1320a-7a.

Under the CMP law, the United States Office of Inspector General (OIG) may impose civil monetary penalties upon persons, organizations or entities who knowingly present (or cause to be presented) to a state or federal government certain types of false claims. Such penalties can be severe, ranging from $2,000 to $50,000. Further, the law gives the OIG the ability to treble damages.

So, what triggers CMP?

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