The Department of Justice (DOJ) is aggressively pursuing false claims actions against all forms of medical practices, who the DOJ believes have improperly billed Medicare, not provided proper physician supervision and billed services to Medicare that were not medically necessary. On January 4, 2013, the United States Department of Justice intervened for purposes of effectuating the settlement of a qui tam action (filed under the federal False Claims Acti or “FCA”) against EMH Regional Medical Center (EMH), a non-profit community hospital system located in Lorain, Ohio; North Ohio Heart Center, Inc. (NOHC), an independent physician group in Northern Ohio that practiced at EMH; and two physicians.ii The suit was originally filed in 2006 by Kenny Loughner, a former manager of EMH’s catheterization and electrophysiology laboratory. The complaint alleged that between 2001 and 2006, EMH and NOHC performed unnecessary cardiac procedures to Medicare patients. Specifically, the United States alleged that EMH and NOHC over-prescribed angioplasty procedures, and improperly “unbundled” angioplasty and angiogram services, leading to the routine scheduling of “serial” angioplasties.iii The medical providers were also accused of performing angioplasty and stent services on individuals whose blood vessels were not sufficiently occluded to require such procedures.iv

EMH and NOHC agreed to pay the United States approximately $4.4 million to settle the allegations that they submitted false claims to Medicare.v As a result of the settlement, the whistleblower, Mr. Loughner, will receive approximately $660,000 of the government’s recovery.  

The word is out that the DOJ intends to focus its attention on hospital systems and other medical providers like physician practice groups, and the industry will be surprised by the number of whistleblower suits presently filed and awaiting a decision by the DOJ to intervene. Moreover, the industry is no longer looking at threats from low-level employees who are only aware of what they see in their small part of the company. As the EMH complaint reflects, managers - persons with a broader picture of the scope of wrongdoing and access to emails and other kinds of incriminating evidence - are more than willing to cooperate and are incentivized to make such claims.vi

Most FCA actions are settled before the complaint is unsealed. And in many instances, the settlement is for twice the amount of the overpayment. However, by statute, the government is entitled to recover treble damages plus a civil penalty of from $5,500 to $11,000 for each false claim submittedvii — an amount that could easily bankrupt a business.  

Over the last four years, the United States has recovered over $13 billion dollars from fraudulent billing in Medicare.viii Because all stakeholders in the coming debate are going to be looking for ways to save money, more and more pressure will be placed on the DOJ to employ all the tools at its disposal, from civil actions under the False Claims Act to criminal prosecutions, in order to put an end to what the government believes is endemic fraud within the medical industry.