Physicians snared by growing Medicare fraud strike team

The indictments are the first major actions since the Depts. of Justice and HHS expanded a joint Medicare fraud initiative last month.

By Amy Lynn Sorrel — Posted July 6, 2009

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Just weeks after the government publicized an expansion of a collaborative Medicare anti-fraud enforcement team, federal officials announced their first strike. It's likely to be the first of many to involve heightened scrutiny of physicians, according to legal experts.

As part of an ongoing effort, senior officials from the Depts. of Justice and Health and Human Services on June 24 announced criminal charges against 53 individuals -- including doctors, beneficiaries, and health care company owners and employees -- for allegedly scheming to submit a total of more than $50 million in false Medicare claims in the Detroit area.

The indictments, filed in U.S. District Court for the Eastern District of Michigan, come after a May 20 announcement by the two departments of an expansion of a joint task force-- dubbed the Health Care Fraud Prevention and Enforcement Action Team, or HEAT -- into Detroit and other areas. Programs were already under way in south Florida and Los Angeles. The Medicare Fraud Strike Forces target suspected fraudulent activities by partnering with federal, state and local law enforcement agencies in particular geographic areas suspected as hotbeds of such criminal activity.

So far, most of the fraud targeted has been in the area of infusion therapy and durable medical equipment, but some physicians have been accused of participating in the crimes. The latest indictments -- which name at least four physicians -- centered on infusion therapy, as well as physical and occupational therapy services provided in several clinics.

While the government appears to be focusing on the more egregious cases, these latest efforts indicate enforcement officials plan to cast the net wide, said Brian D. Roark, a Medicare fraud expert and partner with Bass, Berry & Sims in Nashville, Tenn.

"Clearly one of most pressing issues in the health care reform debate is ... reining in unnecessary costs, and at the top of everyone's list of unnecessary costs is fraud of the sort alleged here," he said. "We can see these indictments as further proof [the government] intends to focus on all participants in fraud, whether it's the corporation, the physician or even the patients."

Roark also noted that the cases display the range of prosecutorial tools the government has at its disposal. The indictments -- which involve no admissions of wrongdoing by any defendants -- accuse the various parties of a range of offenses, from conspiracy, to criminal false claims, to violations of federal anti-kickback statutes.

Attorney General Eric H. Holder Jr. said in a statement that the vast majority of doctors, patients and medical companies do the right thing. "To those who work diligently and ethically to provide medical care through the Medicare program, we will work with you to root out the few who corrupt the system and taint the good reputations of health professionals."

A targeted approach

To guide its operations, the government increasingly is relying on Medicare data analysis to detect not just fraudulent billing but also quality lapses, said Andrew L. Hurst, an attorney specializing in false claims litigation and a partner with Reed Smith LLP in Washington, D.C. For example, the June 24 legal actions focused on services that were suspected to be medically unnecessary, or not provided at all.

The added danger to law-abiding physicians, Hurst said, is that unintentional mistakes or legitimate, high-volume services could more often come up on the government's radar.

"The government is sharing resources and knowledge, and now they have enough resources to start looking at things they would never have looked at before," he said. "Meticulous record-keeping is going to be particularly important because this increased scrutiny shows [federal officials] are not just looking at your coding. They are looking deep down into your medical records."

Although the government's prior efforts tended to focus on large entities, the latest indictments involve ancillary services often found in smaller physician practices, noted Los Angeles area health care attorney Wayne J. Miller.

"These investigations are going to start with a computer kicking out weird billing patterns, and it doesn't matter if you are big or small," said Miller, a partner with the Compliance Law Group PLC, which specializes in health care regulatory compliance.

At the same time, the cases signal that smaller, less-sophisticated physician practices might be vulnerable to outside criminal activity if doctors outsource their billing operations, he said. That does not necessarily relieve physicians of liability.

"To say: 'I didn't know what they were doing, I just sign the thing,' is simply not going to be a defense. A doctor has the ultimate responsibility for billing policies and can't just delegate that away," Miller said. He recommended doctors stay involved in any billing and management activities and conduct frequent self-audits to detect questionable practices.

Whistle-blowers -- sometimes physicians -- continue to play a role in the government's overall anti-fraud enforcement strategy, said Marcella Auerbach, a former federal prosecutor. She is now a partner with Nolan & Auerbach PA in Ft. Lauderdale, Fla., a firm specializing in health care whistle-blower actions. Rather than waiting for tipsters, however, the federal strike force teams were formed to initiate investigations proactively.

"There are definitely doctors who know what's going on, and if they don't say anything, they could end up with a [law enforcement] visit like these 50 people," Auerbach said. "But this is a strong message the government wants to deter and prevent future conduct, and we are going to continue to read about these types of cases."

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Turning up the heat

The Depts. of Justice and HHS have adopted a joint, targeted approach to root out health care fraud. Here are some of the results of the government's Medicare Fraud Strike Force efforts as of June 23.

Total alleged fraudulent Medicare billings $634 million
Infusion therapy $308 million
Durable medical equipment $270 million
Physical and occupational therapy $40 million
Pharmacy $16 million
Court-ordered recoveries $265 million
Cases filed 115
Defendants charged 249
Guilty pleas 129
Trial convictions 18

Source: Dept. of Health and Human Services, Dept. of Justice (link)

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