No one running an ambulance company ever planned to go to prison for doing his or her job. But that is a real possibility if the government knocks on the door, and the owner or manager is dishonest in his or her response to the inquiry. CMS contractors are increasing the number of audits they are performing of ambulance companies. Similarly, HHS-OIG and the Department of Justice are increasing the number of ambulance companies that they are investigating. How the owners and managers of ambulance companies react to these inquiries can have far-ranging consequences for those individuals and their companies. Take for instance the owners and managers of now defunct Alpha Ambulance (“Alpha”) from Los Angeles County. Faced with a CMS contractor audit and a lack of strong documentation for prior submissions, company personnel admitted in their plea agreements that they altered records and patient files in response to an audit, and at least one person provided materially false statements to federal agents during an interview. The result: convictions and lengthy prison sentences after being indicted for conspiracy to commit health care fraud, as well as conspiracy to obstruct an audit and making a materially false statement to a federal agent. There are proper, legitimate ways to address documentation problems when being audited. These defendants failed to understand the importance of being both honest and transparent with the CMS contractor auditors. They are personally paying the price for their errors with the pain and shame of having to spend years in federal prison.
According to court documents, Alpha specialized in the provision of non-emergency ambulance transportation services to Medicare beneficiaries, primarily dialysis patients. According to the charges, knowing that the beneficiaries’ medical conditions did not necessitate non-emergency ambulance transportation services, the owners of Alpha, Alex Kapri and Aleksey Muratov, conspired with Alpha General Manager Wesley Kingsbury and Training and Education Supervisor Danielle Medina to submit false claims to Medicare. As seen in other health care fraud cases, the Indictment alleged that co-conspirators instructed employees to document a justification for each transport even if one did not exist and to avoid certain words that would trigger non-payment. However, what the company leadership did next possibly transformed what could have been an expensive but non-criminal civil False Claims Act enforcement matter into a criminal case resulting in harsh sentences.
In March 2012, CMS contractor Safeguard Services notified Alpha that Alpha would be subject to a Medicare audit and requested production of 60 patient files and related documentation. This is certainly a relatively routine event in the EMS industry. Alpha employees collected the requisite patient files, and Kingsbury and Medina conducted an internal review. Unfortunately the documentation was not ideal. To deal with the documentation problems, Kapri, Muratov, Kingsbury, and Medina altered records and instructed others to alter the files to justify the transports. According to evidence adduced at trial, Alpha created a secret room with a light tracing table and a paper shredder where Alpha employees created false run tickets and destroyed original records. Of course, this type of conduct is what converted what could have remained a civil case into a criminal case.
Then, in April 2012, federal agents contacted Kingsbury regarding Alpha’s response to the CMS contractor audit. Kingsbury then disclosed to Kapri and Muratov the names of the agents and the questions the agents asked. The following day, HHS-OIG and FBI special agents questioned Kingsbury regarding his conversation with Kapri and Muratov. Kingsbury lied. He denied that he disclosed the names and questions of the agents to Kapri and Muratov.
In September 2012, a federal grand jury charged Kapri, Muratov, Kingsbury, and Medina with conspiracy to commit healthcare fraud, health care fraud, and conspiracy to obstruct a federal audit. Kingsbury was also charged with making a materially false statement to law enforcement officers.
In October 2013, Kapri, Muratov, and Medina pleaded guilty to conspiracy to commit healthcare fraud and received sentences of 75 months, 108 months, and 30 months, respectively. Kingsbury maintained his innocence through two trials but ultimately pleaded guilty to conspiracy to commit Medicare fraud, conspiracy to obstruct a Medicare audit, and making materially false statements to law enforcement officers. He was sentenced to 78 months.
According to the FBI’s press release regarding this case, the FBI and HHS-OIG investigated this case together with the Medicare Fraud Strike Force. The Medicare Fraud Strike Force is part of the HHS and DOJ’s joint Health Care Fraud Prevention and Enforcement Action Team (HEAT) created in May 2007. During 2014, HEAT Strike Force efforts resulted in the filing of charges against 228 individuals or entities, 232 criminal actions, and $441 million in fines or recoveries.
In sum, the leaders of Alpha Ambulance erred in how they reacted to the audit and the follow up from the audit. If they had been transparent about their documentation problems, they likely would have had to pay monies to the government to address the problem, but might have avoided criminal prosecution. The early involvement of counsel can help company leadership comply with legal obligations and avoid mistakes and obstructive conduct. In addition, suggested steps in response to an audit request may include:
- Gather responsive records;
- Assess if there are problems or gaps in the responsive records;
- If no problems or gaps, produce the records;
- If problems or gaps, consult with legal counsel to discuss lawful options;
- If there are significant problems, legal counsel will likely take over all communications with the auditors;
- Understand that the responsive records will nonetheless likely still need to be produced by the company, regardless of the involvement of counsel;
- Any communication with the auditors needs to be truthful and forthright;
- No records can be altered, amended, back-dated, thrown out, or purged;
- If a person is approached by a federal agent, politely decline the interview, contact legal counsel, and then determine with counsel’s advice if a later scheduled interview would be helpful or not; and
- Remember that anyone approached for an interview by a federal agent has a Fifth Amendment right not to answer questions.