Whistleblower Qui Tam Lawyer Blog
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According to the Centers for Medicare and Medicaid Services, as of February 2016, there were over 56,000,000 beneficiaries enrolled in the original Medicare and Medicare Advantage plans.  Given the number of patients, just imagine how many Medicare claims are submitted every day.  It’s no wonder the Medicare system is a target for fraud.  With the volume of legitimate Medicare claims that are submitted, surely the government won’t notice a few thousand fraudulent ones thrown in to the mix, right?  With help from whistleblowers, those fraudsters can be stopped and taxpayer dollars can be recovered.  The False Claims Act permits whistleblowers to bring qui tam actions for fraud committed against the government.  Qui tam whistleblowers may be entitled to a percentage of the government’s recovery.

If you are employed in the healthcare field – a doctor, dentist, nurse, therapist, medical biller, receptionist, aide, technician, patient advocate, etc. – would you know Medicare fraud if you saw it?  Some Medicare fraud schemes are easy to spot– billing for patients that don’t exist using stolen Medicare numbers; billing Medicare for durable medical equipment that was never provided to the patient – others are not so obvious.  Here are some other examples of Medicare fraud that aren’t always so easy to identify.

  • Billing separately for items that should be bundled and submitted under a single billing code;
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On Tuesday, April 19, the Supreme Court heard oral argument in Universal Health Services v. United States and Massachusetts ex rel. Julio Escobar and Carmen Correa, a case testing the “implied certification” theory used in many False Claims Act cases.

“Implied certification” is a tricky concept developed by the federal courts under the False Claims Act (FCA).  It stems from what is known as a “false certification.”  A false certification is a request for payment from the government by a defendant, who submits a document expressly certifying compliance with a contract, regulation, or statute, but who in fact did not comply.  An “implied certification” involves a claim for payment where a defendant did not expressly certify compliance, but the act of submitting the claim “implies” compliance with specific terms or regulations.  For instance, submitting a claim for payment to Medicare has been deemed an implied certification of compliance with the Anti-Kickback Statute and the Stark Law.

The federal courts have disagreed both over whether an “implied certification” can constitute a “false claim” under the FCA, as well as what rules or statutes must be violated.  For instance, some courts of appeals have focused on the materiality of the defendant’s conduct and whether the government would have paid the defendant’s claim, had it known that it was violating a specific contract or statute.  Other courts have found that the defendant must violate a specific statute or contract term upon which payment is conditioned.  In other words, for a defendant to be liable for not doing X, Y, or Z, the contract must state explicitly that the defendant will not be paid if he does not do X, Y, or Z.

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McCabe Rabin, P.A. announces the settlement of a qui tam case against Florida Pain Medicine Associates, Inc. and its owners Dr. Bart Gatz, Dr. Alexis Renta and Dr. Albert Rodriguez.  Florida Pain Medicine Associates, Inc. is a pain clinic located in Palm Beach County, Florida.

Our law firm, along with co-counsel Bruce Reinhart of McDonald Hopkins, P.A., represented Rosa Gomez, a former pain clinic employee who worked as a receptionist and billing clerk.  In 2013, Ms. Gomez approached McCabe Rabin, P.A. because she believed her employers were defrauding government healthcare programs by performing medically unnecessary procedures.

Under federal law, the Medicare program only pays for services that are “medically necessary.”  A healthcare provider commits fraud by billing the government for unnecessary procedures.

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State and local governments receive millions in federal dollars each year.  I was asked recently whether a state or local government committing fraud through a false claim or certification could be held liable under the False Claims Act.  In other words, can you sue a state or local government under the False Claims Act?

In some ways, the answer to this question is easy, as the U.S. Supreme Court has provided basic guidance.  The False Claims Act applies, by its own terms, to a “person.”  In Vermont Agency of Natural Resources v. U.S. ex rel. Stevens, 529 U.S. 765 (2000), the Court concluded that a state government was not a “person,” and as a result, could not be held liable for submitting false claims.  By contrast, in Cook County, Illinois v. U.S. ex rel. Chandler, 538 U.S. 119 (2003), the Court decided that a municipal government was, in fact, a “person” and could be held liable.  While the results of these two cases may seem strange, it rests on an esoteric meaning of the word “person.”  Without belaboring this point, at its most basic level, a “person” does not include a “sovereign” – like a state – but does include a “corporation,” and local governments are generally considered “municipal corporations.”  (If this piques your interest for any reason, I encourage you to read the cases for an enlightening discussion of how “person” can be defined.)

That does not settle the issue completely, however.  Courts have concluded that an entity that is an “arm of the state” is also shielded from liability under the False Claims Act.  It is not always clear whether an entity is an arm of the state or an arm of the local government.  Several federal courts have applied a test to determine whether an agency is subject to the FCA.  The factors correspond to the test used for “sovereign immunity” purposes, i.e., immunity of a state from being sued in federal court.  (This is another esoteric subject that derives from the Eleventh Amendment to the constitution and is not pertinent here.)

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The federal government buys or “procures” billions of dollars’ worth of products and services each year – everything from oranges to office supplies, trucks to telephones, bridges to building equipment, automotive repair to aircraft carriers, and computer support to cleaning supplies.  As one of the largest buyers of goods and services in the world, the federal government is susceptible to fraud by companies looking to cheat taxpayers.  This is called procurement fraud.

In order to do businesses with the federal government, companies submit bids on various contracts to provide a specific good or service to a government agency – such as a contract to provide desks to the Department of Education, or a contract to build an air strip for the Department of Defense.

Every contract is specific as to exactly what product or service is to be provided, and what types of things are billable to the government.   When a company uses improper means to win a contract or doesn’t perform according to the contract terms, it may be committing procurement fraud.  Some common examples of procurement fraud are:

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The Stark Law is a provision of the Social Security Act that prohibits physicians from making certain kinds of referrals for health services.  Specifically, it bars a physician from referring a patient to another Medicare or Medicaid provider for “designated health services,” if the physician or a family member has a financial relationship with that provider.  A classic example of a Stark Law violation would be a physician who also owns part of an X-ray center.  The physician cannot refer Medicare patients to that X-ray center, if the radiology services are going to be billed to Medicare.  The physician’s decision to refer the patient for additional services could be motivated in part by a desire to make more money, not the patient’s best interests.

The “financial relationship” can be either an ownership interest or a compensation arrangement, and it can be either direct or indirect.  A direct ownership interest would be much like the example above, where the physician owns shares in a corporation providing radiology services.  Likewise, a direct compensation arrangement would involve circumstances where, for instance, the physician (or her spouse) provides consulting services to the X-ray center in exchange for money.  Indirect ownership usually involves ownership in a parent company that owns another entity providing health services; these ownership structures can be quite confusing at first blush.  Likewise, indirect compensation arrangements can be quite complicated, as physicians will often go to great lengths to conceal their Stark Law violations.

Essentially, in simplest terms, the Stark Law aims to reduce conflicts of interest in referrals.  Importantly, the Stark Law is what we attorneys call a “strict liability” statute, meaning that it does not require proof that the physician intended to benefit from the referral.  So long as the physician makes a barred referral, he has violated the statute.

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Just like other types of Medicare fraud, hospice fraud is growing.  Hospice is a program that provides care and support for terminally ill patients and their caregivers. According to the U.S. Department of Health and Human Services (DHHS), in 2013, 1.3 million Medicare beneficiaries received hospice care.  Because Medicare pays generous hospice benefits for family support services, necessary medical services, medications and durable medical equipment, the system is ripe for fraud by unscrupulous individuals and companies.  Fraudsters target these vulnerable individuals because it is difficult for a grieving family to even review their loved ones’ Medicare statements, much less identify fraud.

Medicare hospice benefits are available to Medicare Part A beneficiaries who have been certified by a doctor to be terminally ill with a life expectancy of six months or less (if the illness runs its normal course) and the patient has agreed to accept medical services only for pain relief and symptom control (also known as palliative care) and to stop treatments intended to cure the illness.

In 2015, the daily base rate paid by Medicare to hospice providers varied from $159.34 to $708.77 depending on the level and location of services (home care or in-patient care).  Hospice care can include doctor and nursing services; prescription medications for pain and symptom relief; physical and occupational therapy; dietary counseling; grief and loss counseling for family members; and medical equipment, such as wheelchairs and walkers.

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Targeting unsuspecting Medicare beneficiaries has become big business for scammers. Once a scammer gets a hold of a Medicare number, they will bill Medicare for services and equipment that was never provided, or bill for supplies sent to the beneficiary that were neither needed nor wanted. Don’t let yourself fall prey to one of these fraudulent Medicare schemes:

“Christian” Medical Equipment Suppliers

Be wary of individuals selling durable medical equipment (DME) who advertise or speak at your church.  The scammers may claim to be Christians who are just trying to help their fellow congregants by offering DME such as diabetic supplies, walkers, power mobility devices, CPAP devices, and nebulizers at low or no cost to the senior.  These companies may be trying to get your Medicare number, so they can send you supplies that you don’t want or need.

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While we often spend a lot of time on this blog talking about healthcare fraud, given that Florida is ground zero for Medicare fraudsters, everyone should be aware of another growing area, education fraud.  Education has become big business, and where there’s money to be made, the fraudsters are surely close behind.

One area that seems to get for-profit universities in trouble is recruitment-based pay.  Under the federal Higher Education Act (HEA), a university cannot tie compensation for recruiters to the number of students they enroll, and universities must certify compliance with this law in order to qualify for federal grants and financial aid programs.  The point of the law is to prevent greedy educational institutions from recruiting unqualified students (and setting them up for failure) for the sole purpose of bilking grant money out of the government.

Late last year, the Justice Department settled a $95 million False Claims Act case against a for-profit education company that was certifying compliance with the HEA, though it was unlawfully recruiting students using high-pressure sales tactics and by paying employees solely on the basis of the number of students they enrolled.  In another case from last year involving the same company, the New York Attorney General accused the company of misleading students about accreditation and job placement rates.  Accreditation is also a prerequisite to participating in student aid programs.

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The national Medicaid program is a social healthcare program for families and individuals with low income and limited resources.  It is jointly funded by the federal government and the states and is the largest source of funding for health services for low-income Americans.

Under the Medicaid program, states are required to provide dental benefits to children, but each individual state may choose whether to provide dental benefits to adults.  While federal and state Medicaid funding often is strapped, there is a growing trend of dentists who manipulate the Medicaid system with false claims in order to increase their income.

For example, in a recent case in Missouri, a group of dentists prescribed to children an orthodontic device, known as Ortho-Tain, that is designed to straighten teeth without braces and is not covered by Medicaid. The dentists, however, falsely certified to Medicaid that each prescribed appliance was a speech-aid prosthesis, which would be covered by Medicaid.  The dentists billed Medicaid $695 per appliance (the maximum allowed) over a 5 year period.