Healthcare Fraud Lawyer Blog

Mention the phrase “card catalog” to someone over age 30 (or maybe 35?) and they will recall searching for books in the library by leafing through small notecards listing titles, authors, and Dewey Decimal numbers. Mention the phrase to a teen and you’ll probably elicit a blank stare. The card catalog is just one example of a formerly physical record system that has been replaced by electronic records. The shift to electronic records remains a work in progress in the health care field and incentives are being offered to encourage health care organizations to make the move to electronic health records. Sadly it comes as little surprise to the experts at our health care fraud law firm in Northern California that there are those looking to take advantage of the incentives and willing to defraud the government and the health care system for their own financial gain.

CFO Falsely Told Officials Hospital Made Meaningful Use of Electronic Records

A press release carried by KTRE, an ABC affiliate in Texas, announced that a former hospital CFO pled guilty last week to making false statements that officials say were part of a larger health care fraud scheme. While acting as CFO for Shelby Regional Medical Center, Joe White oversaw the hospital’s implementation of an electronic health records system. In this role, White made statements to Medicare attesting that the hospital made meaningful use of electronic records and qualified for certain payments pursuant to Medicare’s Electronic Health Record Incentive Program. According to White’s guilty plea, he knew the hospital did not qualify as a meaningful user at the time he made these statements on November 20, 2012. As a result of White’s false attestations, the Medical Center received $785,655 from Medicare.

Most Americans know someone who has struggled to get needed care approved by his/her health insurance provider. As a result, many feel forced to choose between medical care and other essentials. A survey conducted by a national network of food banks found almost 2/3 of client households faced the unenviable choice between food and medical care costs in the past year. Both private insurance and government programs should help prevent such dilemmas, especially among the elderly, the disabled, and current/former military members. Denial of legitimate claims and the parallel issue of high medical bills are another cost of health care fraud. When individuals and groups bill for unneeded care, they waste limited resources and make honest claims look suspect. This is yet another reason our San Francisco health care fraud law firm is part of the fight against fraud.

Dignity Health Settles False Claims Act Charges

On October 30, the Justice Department announced a settlement involving allegations that a company overcharged government healthcare programs, submitting false and inflated claims and diverting money from genuine needs. Dignity Health is a San Francisco based hospital chain with 39 hospitals in three states. Dignity agreed to pay $37 million to settle False Claims Act allegations initially brought by Kathleen Hawkins, a former employee, who will receive a substantial award in recognition of her role and efforts. The company also entered into a corporate integrity agreement that requires enhanced compliance efforts over the next five years. This includes a requirement that Dignity “retain independent review organizations to review the accuracy of the company’s claims for services furnished to federal health care program beneficiaries.”

Health care whistleblowers are, in our humble opinion, pretty amazing people. They speak out against some of the nation’s biggest and most powerful companies, often taking their concern public after butting heads with company executives. Others see the same wrongs that whistleblowers spot and many are similarly upset, but whistleblowers take the critical next step — raising their concerns in a forum that can lead to change. Sadly, some people degrade whistleblowers, suggesting they are only looking for a payout. Simply stated, our California health care fraud attorney couldn’t disagree more.

From Whistleblower…

One whistleblower who demonstrates the commitment to right shared by most is Jacqueline Nash Bloink, whose story is shared by the Arizona Daily Star. Between 2010 and 2011, Bloink worked as a corporate responsibility coordinator for Carondelet Health Network, a healthcare provider in Southern Arizona. In that role, the certified medical reimbursement specialist noticed billing discrepancies in the files of Medicare, Medicaid, and the Federal Employees Health Benefit Program enrollees. Bloink filed a whistleblower suit pursuant to the False Claims Act (“the Act”) in 2011. The suit accused Carondelet of engaging in fraudulent billing practices, citing insufficient documentation to support inpatient rehab services allegedly performed at two network hospitals between April 2004 and December 2011. The U.S. Attorney’s Office helped investigate the case which settled in August for $35 million, the biggest payout to date for a federal False Claims Act case in Arizona.

Home healthcare, physical therapy and prescription drugs have been some of the more common examples of healthcare services that have been used to defraud Medicare, and, as our blogs have pointed out, many of the most notorious schemes have been emanating from Miami and South Florida, the national epicenter of Medicare fraud. However, San Francisco qui tam lawsuit lawyer Gregory J. Brod would note that healthcare fraud is spread throughout the country as well as focused on a variety of healthcare services. One example of a Medicare fraud scheme from a failing Houston hospital made headlines this week for its ambitious methods of stealing millions from the taxpayers.

According to the Houston Chronicle, the former president of the financially shaky Riverside Hospital, his son and two other persons affiliated with the facility were convicted in federal court Monday for their scheme to fleece $158 million from Medicare. Prosecutors in the case said that Riverside Hospital’s psychiatric care was a “sham,” and that the four people convicted – former hospital CEO Earnest Gibson III, his son Earnest Gibson IV, Regina Askew and Robert Crane – soaked taxpayers for services that were not rendered.

“For over six years, the Gibsons and their co-conspirators stuck taxpayers with millions in hospital bills, purportedly for intensive psychiatric treatment,” said Assistant U.S. Attorney General Leslie Caldwell. “But the treatment was a sham – some patients just watched television all day, others had dementia and couldn’t understand the therapy they supposedly received, and other patients never even went to the hospital at all.”

The convictions stemmed from an FBI probe that lasted from 2005 to 2012 and resulted in an indictment in 2012 against Gibson III and 10 others, including doctors, marketers and other persons affiliated with Riverside Hospital. Several of the 10 charged pleaded guilty, including assistant administrator Mohammed Khan, who admitted to conspiring to commit healthcare fraud.

Prosecutors stated that Gibson III paid kickbacks to recruiters and owners and operators of group care homes in return for delivering supposed patients to Riverside’s facilities. As far as the others who were convicted, Gibson IV operated a satellite patient care facility and Askew recruited patients and audited documents; both were convicted of conspiring to commit healthcare fraud and pay as well as receive kickbacks. In addition, Crane, who was a recruiter and shuttle driver, was convicted of conspiracy to commit money laundering.

Riverside Hospital has been financially beleaguered since the unsealing of the indictment in late 2012, which prompted the federal government to cut off funding to its facilities. As part of a bid to remain in business, Riverside surrendered its substance abuse treatment license in August and limited itself to detoxification services, no longer providing drug abuse and psychiatric treatment.
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Medicare fraud and brazenness seem to be pairing up with troubling frequency these days, as individuals determined to illegally enrich themselves at the taxpayers’ expense are coming up with increasingly blatant schemes. We learn about these fraudulent endeavors when the fraudsters are caught stealing, but unfortunately, as we have discussed in our blogs, many of the schemes have gone unpunished. But San Francisco qui tam lawsuit attorney Gregory J. Brod would point to one scheme in particular in Detroit that was recently uncovered and prosecuted for being one of the more brazen cases of Medicare fraud.

According to the FBI’s Detroit Division, a case was unsealed in U.S. District Court in the Eastern District of Michigan on October 8 to which Usman Butt pleaded guilty for his role in a $22 million conspiracy to defraud Medicare. The plea of Butt, a former owner and manager of two metro Detroit home health care agencies, followed that of his former business partner and co-conspirator, Muhammad Aamir, who had already pleaded guilty on August 20.

In the plea documents, Butt admitted to conspiring with others to bill Medicare for home health services that were not actually provided, nor were medically necessary and that were procured through the payment of illegal kickbacks. Through the scheme, which ran from 2008 through January 2013, false claims were submitted to Medicare that resulted in the program paying out approximately $12,607,262. Butt specifically admitted that the nursing care services provided by his companies, Prestige Home Health Services in Troy, Mich., and Royal Home Health Care Inc, of Clawson and Troy, Mich., were neither medically necessary nor even needed.

What made the Butt scheme particularly brazen was the fact that he also admitted to having helped a co-conspirator to file a false corporate tax return for Prestige in which the illegal kickbacks were deducted as “business expenses.” That ploy saved Prestige at least $321,485 in taxes that were due for 2009.

Sentencing for Butt has been scheduled for Jan. 13, 2015. His case, investigated by the FBI, Health and Human Services Office of the Inspector General and IRS, represents another success story for the federal government’s Medicare Strike Force, which, since its inception in 2007, has charged nearly 2,000 defendants with more than $6 billion in collective fraud against Medicare.

While the case against Butt and other successful cases that the Medicare Fraud Strike Force has pursued have been encouraging developments in the fight against Medicare fraud, conservative estimates of the value of schemes that may slip by the government’s watch every year have been pegged at $100 billion per year, and more generous estimates place the total much higher at upward of $300 billion every year.
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Best Price Fraud, like many other types of health care fraud, is at once complex and quite simple. At heart, Best Price Fraud is about drug manufacturers lying to the government in order to increase profits. Likewise, the claims filed against the perpetrators are about the truth. Whistleblowers come to our Northern California health care fraud law firm because they believe in uncovering the truth. In doing so, they can help return money to programs that desperately need every dollar.

The Medicaid Drug Reimbursement Process & The “Best Price”

Understanding best price fraud on a more detailed level requires understanding a bit about how Medicaid deals with pharmaceuticals. If a pharmaceutical company wants to supply drugs to Medicaid patients, they are required to pay a rebate to the states. Manufacturers submit a Quarterly Report that includes data on each individual drug including the Average Manufacturer Price (“AMP”) and the “Best Price.” The Best Price is the lowest price at which the manufacturer sells the drug to any outpatient purchaser nationwide. It takes into account volume discounts, cash discounts, rebates, and any free goods offered with that drug. Best Price excludes a few explicitly laid forth prices such as the amount charged to the Veterans Administration and the Indian Health Service. Using the AMP and Best Price information, the Centers for Medicaid and Medicare Service will tell the manufacturer what rebate the state is owed.

Americans spend nearly $1,000 per person on pharmaceuticals each year. According to PBS, this is nearly 40% more than is spent per person in Canada, the next highest spender. To explain the discrepancy, PBS notes that Americans take more drugs than any other county and the high costs of medications, especially new drugs that often debut in the U.S. Notably, many other nations essentially regulate medication costs. We would add another factor contributing to high pharmaceutical costs in the U.S.– health care fraud. In this post, our California pharmaceutical fraud law firm looks at two forms of alleged Medicare/Medicaid fraud. Along with other cases of drugstore health care fraud, these schemes create costs and endanger the health of the American consumer.

Walgreens 2008: Switching Between Pill Types For Profit

In 2008, Walgreen Co. paid $35 million to settle allegations of prescription drug fraud claims. As detailed in a Department of Justice (“DOJ”) press release, the settlement addressed reimbursement requests for three specific prescription drugs that Walgreens filed with the Medicaid systems in 42 states and Puerto Rico. It was similar to previous settlements with CVS Caremark and Omnicare. The Walgreens case was initiated by a pharmacist who was slated to receive nearly $5 million via the federal and state whistleblower statutes. In settling the claims, Walgreens did not admit any liability.

When the owner of a Miami home healthcare agency was arrested this week in connection with an $8 million Medicare fraud scheme, attention was refocused on how home healthcare services have proven to be a fertile field for fraudulent schemes. And San Francisco qui tam lawsuit lawyer Gregory J. Brod would also point out that the news serves as a reminder that South Florida is a major hotbed for healthcare fraud.

According to the FBI Miami Division, an indictment that was returned on September 25 and unsealed on Tuesday charged Orelvis Olivera of Miami with conspiracy to commit healthcare and wire fraud, conspiracy to pay and receive kickbacks and paying and receiving kickbacks in connection with a federal healthcare benefit program.

The indictment accuses Olivera’s Acclaim Home Health, a Miami-based home healthcare agency, of purportedly providing home healthcare and physical therapy services to Medicare enrollees. Olivera allegedly paid kickbacks to patient recruiters in return for the recruiters’ referral of Medicare beneficiaries to his home healthcare agency. Olivera also allegedly solicited and received kickbacks in return for referring Medicare beneficiaries to other Miami-area home healthcare agencies.

As a result of the aforementioned alleged actions, from May 2008 to June 2014, Acclaim Home Health billed Medicare approximately $8 million for bogus claims and, in turn, Medicare paid Acclaim Home Health approximately $7.3 million for those claims.

As a measure of how serious a problem Medicare fraud is in the United States, the Medicare Fraud Strike Force, which was established in March 2007, has charged nearly 2,000 defendants who have collectively billed Medicare for more than $6 billion, but no one is certain how much fraud goes undetected. Conservative estimates have placed the hit to the taxpayers at $100 billion per year while more generous estimates peg the loss at closer to $300 billion every year.

Whatever the total amount of losses due to fraud really is, there is no doubt that South Florida could be dubbed “fraud central” in the United States without any exaggeration. Indeed, according to the Miami New Times, FSF prosecutors charged 1,480 defendants with $4.8 billion in fraud from 2007 through the spring of 2013 and more than half of those indictments originated from the unit in Miami. The depth and creativity of the schemes is so impressive that Special Agent in Charge Christopher Dennis calls Miami “the crown jewel of Medicare fraud,” and that “a lot of the schemes are typically started here (Miami) – and farmed out to other parts of the country.”

Home healthcare fraud schemes have been a particular problem in the Miami area, so much so that the state of Florida now requires health workers who conduct home visits to call in from the patient’s telephone during every appointment, thus allowing voice recognition technology to match the healthcare worker’s voice pattern against the one stored electronically, a procedure that has made a dent on billing for schemes in which no visit actually takes place.
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