Plenty of activity in the health care false claims arena


While some things slow down as the holidays approach, the government’s activity in false claims cases does not seem to be one of them. Recently, we have seen a number of cases involving significant settlements and jury verdicts related to health care fraud and false claims. A few noteworthy cases are highlighted below. As you review the cases, consider whether your organization has vulnerability in the areas where these health care providers fell short.

Skilled nursing facility “failure of care” case settles for $5.3 million

On October 24, 2016, the United States Attorney’s Office for the Northern District of Texas announced a settlement with Daybreak Partners, LLC (Daybreak) involving allegations that it billed Medicare and Medicaid for materially substandard and/or worthless care. The specific allegations were that Daybreak:

  • Failed to follow appropriate fall protocols for several residents;
  • Failed to follow appropriate pressure ulcer and infection control protocols for several residents;
  • Failed to properly administer medications to several residents to avoid medication errors; (d) failed to follow doctors’ orders for several residents;
  • Failed to provide appropriate mental health treatment to several residents;
  • Failed to answer several residents’ call lights promptly;
  • Failed to institute appropriate infection control measures for several residents;
  • Failed to provide a habitable living environment, adequate equipment and needed capital expenditures; and
  • Failed to investigate and report serious incidents to appropriate authorities on several occasions.

To avoid exclusion from participating in federal health care programs, Daybreak agreed to a five-year corporate integrity agreement (CIA) with the Office of Inspector General (OIG) as part of the case’s settlement. Under the terms of the CIA, Daybreak has to appoint an independent monitor that will allow the OIG to oversee the quality of care being provided in Daybreak’s skilled nursing facilities.

Our take: While these allegations may seem more along the lines of quality issues rather than fraud, the government takes the position that some care is so substandard, so worthless, that it amounts to no care at all. When a provider bills the Medicare or Medicaid program for services that the government deems worthless, the government views it as the equivalent of billing for services not rendered. For both quality assurance and billing compliance reasons, it is important to pay attention to the results of surveys, patient complaints and other sources of data about the quality of care being rendered in your facility.  Those data points can be used by the government as evidence of poor care, as evidence that your facility knew that the care it was providing was poor and as evidence to substantiate an allegation of false claims.

New York hematology-oncology medical practice admits liability for submitting false claims to Medicare and Medicaid, pays $5.31 million civil settlement

On October 21, 2016, the United States Attorney’s Office for the Southern District of New York announced a $5.31 million settlement with Hudson Valley Associates, R.L.L.P. (Hudson Valley) to resolve claims brought under the False Claims Act. The suit alleged that Hudson Valley routinely waived copayments without lawful basis and fraudulently billed Medicare for these copayments, and that it systematically submitted false claims for services that it did not provide and/or were not permitted under the Medicare and Medicaid program rules. The case was initially filed on behalf of the United States by a whistleblower who worked as a coder for Hudson Valley. The government intervened and then announced settlement of the case with Hudson Valley.  The settlement with Hudson Valley was not a typical settlement, as Hudson Valley actually admitted, acknowledged and accepted responsibility for engaging in the conduct alleged by the whistleblower and the government; whereas, most civil false claims settlements do not include an admission of liability. Hudson Valley specifically admitted to having engaged in the following illegal conduct from 2010-2015:

  • Routinely waiving Medicare beneficiaries’ copayments without an individualized documented determination of financial hardship or exhaustion of reasonable collection efforts;
  • Billing Medicare for the waived copayments, resulting in higher reimbursement amounts from Medicare than Hudson Valley was entitled to;
  • Overbilling Medicare and Medicaid for evaluation and management (E/M)  services codes, in addition to billing for routine procedures (such as chemotherapy, injections or venipunctures) on the same date, even though Hudson Valley had not documented that it provided any significant, separately identifiable evaluation and management services to the beneficiaries; and
  • Billing Medicare and Medicaid for evaluation and management services codes without documenting in the medical record that those services were medically necessary and/or that those services were actually performed.

In addition to the $5.31 million settlement amount, Hudson Valley also entered into a five-year CIA with the OIG.

Our take: Routine waivers of copayments are prohibited under federal law, both as possible kickbacks and as possible inducements to Medicare/Medicaid beneficiaries to influence their choice of provider.  Your organization should have a policy/procedure for when it is permissible to waive a patient’s copayment, and your organization’s compliance auditing and monitoring function should periodically confirm that office staff are acting in accordance with your organization’s policy. Your auditing and monitoring activities should also include periodic review of billing of E/M codes, both to ensure that the correct level of service was billed and to ensure that the E/M service was separately billable. 

Case involving medically unnecessary cardiac procedures settles for almost $1 million

On October 28, 2012, the United States Attorney’s Office for the Eastern District of Pennsylvania announced that it had reached a settlement with Albert Einstein Healthcare Network And Einstein Practice Plan (Einstein) related to billing for services performed by a cardiologist that were not medically necessary or lacked sufficient documentation. Einstein voluntarily disclosed the billing issues to the government and agreed to pay $968,418.60 to settle the matter.

Our take: A health care organization’s compliance program should include routine annual auditing of employed physicians’ claims, including comparison to the physicians’ peers. The government is looking at this data, and so should you. Any outliers as far as productivity or quality of documentation supporting services should prompt further review to ensure that the services being provided are medically necessary and appropriate.

Skilled nursing facility chain to pay record-breaking $145 million settlement related to rehabilitation therapy services

On October 24, 2016, the United States Attorney’s Office for the Southern District of Florida announced The Department of Justice’s largest settlement with a skilled nursing facility chain — the $145 million settlement with Life Care Centers of America Inc. (Life Care) and its owner, Forrest L. Preston, to resolve allegations that Life Care violated the False Claims Act by knowingly causing skilled nursing facilities to submit false claims to Medicare and TRICARE for rehabilitation therapy services that were not reasonable, necessary or skilled. According to the government, Life Care:

  • Instituted corporate-wide policies and practices designed to place as many beneficiaries in the Ultra High reimbursement level regardless of the clinical needs of the patients, resulting in the provision of unreasonable and unnecessary therapy to many beneficiaries; 
  • Sought to keep patients longer than was necessary in order to continue billing for rehabilitation therapy, even after the treating therapists felt that therapy should be discontinued; and
  • Carefully tracked the minutes of therapy provided to each patient and number of days in therapy to ensure that as many patients as possible were at the highest level of reimbursement for the longest possible period.

The settlement also resolved allegations brought by the government against Mr. Preston, the sole shareholder of Life Care, that he was unjustly enriched by Life Care’s fraudulent scheme. In addition to the $145 million settlement amount, Life Care also entered into a five-year CIA with the OIG that requires an independent review organization to annually assess the medical necessity and appropriateness of therapy services billed to Medicare. This case was originally filed on behalf of the United States by two whistleblowers who were former employees of Life Care. The whistleblowers will share the $29 million whistleblower reward.

Our take: This is the latest, and largest, in a series of settlements that the United States has announced with skilled nursing facilities and therapy providers involving medically unnecessary therapy services, billing for therapy services not rendered and other schemes to improperly increase the amount of reimbursement received for SNF patients. SNFs would be well-served to do their own internal review of their therapy services, RUG levels and their contracts with outsourced therapy companies. Be sure that your organization doesn’t incentivize overutilization of therapy services or delayed discharges or it could be the subject of the next government settlement and press release.

Two recent home health cases highlight kickback concerns in home health industry

Best Choice Home Health Care Agency Inc. agrees to pay $1.8 million to resolve kickback allegations

On October 25, 2016, the United States Attorney’s Office for the District of Kansas announced a $1.8 million settlement with Best Choice Home Health Care Agency (Best Choice).  According to the settlement, Best Choice improperly submitted claims to Medicaid for home and community-based healthcare services that resulted from a kickback arrangement between Best Choice and Christopher Thomas, who transported patients from their homes to healthcare facilities in Kansas City. According to the government, under the alleged kickback arrangement, Mr. Thomas was paid $58,000 in kickbacks for new patients referred to Best Choice based on a formula which rewarded Mr. Thomas for each hour of service that Best Choice billed to Medicaid.

Jury convicts Texas home health agency owner in $13 million Medicare fraud scheme

On November 11, 2016, the Department of Justice announced that a federal jury in the Southern District of Texas convicted a Houston-based home health agency owner for her role in a $13 million Medicare fraud scheme and money laundering. The co-owner of Fiango Home Healthcare Inc. (Fiango), Marie Nebo, was convicted of one count of conspiracy to commit health care fraud, three counts of health care fraud, one count of conspiracy to pay and receive health care kickbacks, one count of payment and receipt of health care kickbacks, one count of conspiracy to launder monetary instruments and one count of making false statements. Fiango’s  co-owner and Nebo’s husband, Ebong Tilong had pled guilty to one count of conspiracy to commit health care fraud, three counts of healthcare fraud, one count of conspiracy to pay and receive healthcare kickbacks, three counts of payment and receipt of healthcare kickbacks and one count of conspiracy to launder monetary instruments. According to the evidence at Nebo’s trial and information in Tilong’s plea agreement, the couple and their company, Fiango, defrauded Medicare by submitting over $13 million in false and fraudulent claims for home health services to Medicare. They also paid kickbacks to:

  • Physicians in exchange for authorizing medically unnecessary home health services for Medicare beneficiaries;
  • Patient recruiters for referring Medicare beneficiaries for home health services; and
  • Medicare beneficiaries for allowing Fiango to bill Medicare using their Medicare information for home health services that were not medically necessary or not provided. 

The evidence also showed that the couple falsified medical records to make it appear as though the Medicare beneficiaries qualified for and received home health services.

Our take: The conduct at issue in these two cases is so obviously bad that it is sometimes hard to believe that we are still seeing cases like this. But we continue to see cases where providers are paying for referrals, whether they are paying physicians to falsely certify eligibility for a service, paying patient recruiters to direct patients to their facility, or providing things of value (i.e., remuneration) to referring physicians in exchange for the physicians’ referrals to or other business generated for the healthcare provider. The law is clear: you cannot pay, directly or indirectly, for referrals.   

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