Chief compliance officers face an overwhelming level of risk in the healthcare sector. I do not mean to belittle the risks of corruption, AML, sanctions and other risks typically associated with global companies. Healthcare companies face an extraordinary mix of risks, including fraud, data security, bribery/anti-kickback, and Stark Law violations.
The False Claims Act statute is a prosecutor’s dream, and organizations and individuals face extraordinary pressures to plead guilty and/or settle civil claims for fear of exclusion from federal healthcare programs. Prosecutors have a sledge hammer set of tools that typically force companies and individuals to settle any enforcement action.
Add to the mix an increase in prosecution resources to root out fraud and other misconduct, as well as a well-established whistleblower law, qui tam actions, and the government holds a winning hand in almost every case.
The government’s record in prosecuting healthcare fraud is impressive. Prosecutors focus on healthcare providers – hospitals, doctors, skilled nursing facilities, hospice care – as well as durable medical equipment providers given the high rate of fraud committed in these industries. The government has expanded its attention to include pharmacies and medical lab services.
Some examples of government prosecutions are worth noting:
An Alabama pharmacist plead guilty to obstructing a Medicare investigation by submitting false information, that is, billing codes for tablets and capsules rather than the applicable compounding codes in order to earn a higher reimbursement rate. The defendant agreed to pay a fine of $2.5 million.
A New Jersey doctor plead guilty to a Travel Act violation for taking bribes in exchange for referring patients to a specific laboratory service for blood tests. The lab paid the doctor with checks listed as “consulting fees,” which were a sham intended to conceal the bribes. This prosecution was part of a large ongoing investigation which has resulted in 41 guilty please, 27 of them from doctors, involving over $100 million in payments to the laboratory service from Medicare and private insurers.
A Newark, New Jersey hospital paid $450,000 for billing Medicare and Medicaid for unnecessary cardiac services. Between 2009 and 2015, the hospital submitted claims for percutaneous coronary interventions, catheterizations and stents that were not medically necessary. The allegations were initiated by a whistleblower that filed a qui tam action against the hospital.
Two owners of a home healthcare agency were sentenced in the District of Columbia to 10 years and 7 years imprisonment, respectively, for conducting an $80 million Medicaid fraud scheme. The defendants illegally secured approval as a Medicaid provider, and billed Medicaid for personal home healthcare services that were not fully provided to Medicaid beneficiaries. In particular, they submitted false time sheets, patient files and employment files.
A Florida doctor was sentenced for 46 months’ imprisonment for defrauding the Medicare Advantage program. The doctor defrauded Medicare by diagnosing 387 Medicare Advantage beneficiaries with a rare chronic inflammatory disease of the spine, and earned himself $2.1 million in excess capitation fees. Almost all of the patients diagnosed by the doctor did not suffer from this disease.
A Vice President of an x-ray company was sentenced to 4 years in prison for illegally interpreting x-ray results and producing fraudulent reports using the names of actual physicians who had never seen the x-rays. The official produced nearly 70 percent of the x-ray interpretations and reports, pretending to be a licensed physician or radiologist. If a patient requested additional information, the senior official would refer the matter to an actual physician and not inform the physician of the false initial report. The owner of the x-ray company was sentenced to ten years imprisonment.