One of the reasons compliance officers and health care attorneys read fraud settlements is to identify issues the government is focused on.  The cases the government decides to pursue are very indicative of the areas of fraud enforcement they feel are important.  These are not the only issues that should be considered, but government enforcement actions certainly tell us what types of arrangements the government considers important. 

The misfortune of the defendants involved in these cases hold a potential learning experience for everyone else.  Others have an opportunity to focus on their own operations to identify whether they are at risk in any of the areas involved in these cases. 

An ancillary lesson these settlements hold is that each was initially raised by a whistleblower.  The False Claims Act gives whistleblowers a portion of the settlement in cases where the government decides to intervene.  This in effect creates a universe of potential claimants that can include almost anyone with original knowledge of the alleged practice.  Common whistleblowers include former or disgruntled employees.  It really does not matter if the employee is or was the worst employee in the world, they can still bring an action as a whistleblower.  Not only are they protected by a host of laws, they can also profit greatly if the claim is eventually decided in their favor.  A couple of the whistleblowers in the settlements described below walked away with multimillion dollar settlements.

With this in mind, here are a few recent settlements announced by the Department of Justice:

Overprescribing Opioids Without Demonstrated Medical Justification.

A settlement was recently announced by the Department of Justice that symbolizes another use of fraud enforcement by the government to combat the opioid epidemic.  Providers need to take notice of these enforcement actions as they indicate opioid related issues as significant compliance risk areas.

The government alleged that a chiropractor billed Medicare and a state Medicaid program improperly for painkillers, including opioids.  The case involved four managed pain clinics, all of which were closed through the course of the case.  The settlement also required a nurse practitioner to pay $32,000 and surrender her Drug Enforcement Administration (DEA) registration to settle allegations that she violated the Controlled Substances Act.

The Department of Justice issued a press release announcing the settlement that directly comments on the opioid issues involved in the case, leaving no ambiguity about what the government is up to.  The quotations are not part of the normal “canned” statements that are normally included in these settlements.  Every indication is that the opioid related language might be adopted as standard form as the government focuses in on these cases.

“More Americans are dying because of drugs today than ever before—a trend that is being driven by opioids,” said Attorney General Jeff Sessions.  “If we’re going to end this unprecedented drug crisis, which is claiming the lives of 64,000 Americans each year, doctors must stop overprescribing opioids and law enforcement must aggressively pursue those medical professionals who act in their own financial interests, at the expense of their patients’ best interests.”

The government alleged that the defendants prescribed painkillers and caused pharmacy claims to be submitted where there was no legitimate medical purpose for the prescriptions.  Additionally, the government alleged that the clinics up-coded and billed Medicare for office visits that were not reimbursable at the levels sought.  In a demonstration of the commitment the government has in this area, the clinics were also accused of billing for nurse practitioner services that were provided without the required collaboration arrangement in place.

The case was initially brought forward by a former office manager turned whistleblower who is set to earn $246,500 under the settlement.

Administrative Service Agreements without Legitimately Performed Services

A hospital in Pennsylvania and a regional physician cardiology practice have agreed to pay the government $20,750,000 to settle a False Claims Act lawsuit that was originally brought forward by a whistleblower.  The government alleged that the defendants had knowingly submitted claims for patient referrals from twelve physicians who were paid for administrative services.  The government alleged that the service agreements had no legitimate purposes and were merely put in place to compensate the physicians for their referrals.  The government focused in on whether the administrative services were legitimate or required.  The government alleged that some of the services were never performed or were duplicative of services performed by others.

This case focuses on the need to ensure legitimate services are performed under medical director and other administrative service agreements.  The specific services required to be performed must be defined and monitored for performance.  Physicians should regularly report the time they spend performing specific services that are required under the agreement.  Payments made for insufficiently documented services or for services that are not legitimately required will raise issues of potential fraud. 

Lease Agreements that are Disguised Referral Payments.

Two northern California urologists have agreed to pay $1.085 million to resolve a False Claims Act charge relating to image guided radiation therapy, commonly used to treat patients with prostate cancer.  The government had alleged that the doctors submitted claims for services that were referred and billed in violation of the Stark Law and the Anti-Kickback Statute. 

The government claimed that the doctors improperly billed for services they referred to their separately owned radiation oncology center.  The doctors were also accused of soliciting urologists to enter into lease agreements with the oncology center that enabled the urologists to profit from their referrals of image guided radiation therapy. 

Radiation Therapy Referral Kickback Arrangements with Investors.

A national operator of radiation therapy centers has agreed to settle a False Claims Act action alleging it submitted claims that violated the Anti‑Kickback Statute by payment of $11.5 million and entering into a 5-year Corporate Integrity Agreement with the Office of Inspector General.  The arrangement involved payments to investors who were allegedly targeted because of their referral potential to the therapy centers.  The challenged arrangement involved a series of leasing companies that accepted investments from referring physicians.  The investment interests resulted in the payment of investment returns that the government considered to be remuneration for referrals in violation of the Anti-Kickback Statute.  The whistleblower who originally raised the issue will receive up to $1.725 million.

This case involves a garden variety claim of a kickback by investment interest.  The typical investment case involves targeting potential investors who are in a professional position to make referrals to the company in which they are asked to invest.  The referral source has a financial incentive to increase referrals.  This might be an excellent financial investment scenario, but the problem is that the investment return might well be an illegal kickback; which is potentially a federal felony.

Unnecessary Breast Cancer Testing

A company will pay around $2 million to settle allegations of making false claims to Medicare for Breast Cancer Index (BCI) tests that were alleged to be not reasonable and necessary for the diagnosis and treatment of breast cancer.

The government accused the company of knowingly promoting and performing BCI testing for breast cancer patients who had not been in remission for five years and who had not been taking tamoxifen.  The government alleged that performing BCI testing under these circumstances was not reasonable and necessary based on published clinical trial data and clinical practice guidelines.

This case highlights the need to ensure there is clinical support for providing and billing for services.  In this case, the government took the position that patients who did not meet certain criteria would not benefit from the BCI testing.

Unnecessary Inpatient Admissions.

An $18 million settlement was agreed to by a hospital chain after allegations that claims were submitted to Medicare for patients who were admitted to an inpatient facility when they allegedly could have been treated on a less costly outpatient basis.  The government alleged that the hospital system billed Medicare for short-stay, inpatient procedures that should have been billed on a less costly outpatient basis.  The government also accused the hospital system of inflating reports to Medicare regarding the number of hours of outpatient observation care that was provided.

This is a fairly typical case where the allegation involved billing for services that were of a higher level than required by the patient.  In effect, the excess services are deemed to be medically unnecessary.  In this case, the services involved inpatient admissions the government alleged could have been taken care of in a less costly outpatient setting.

A former employee was the whistleblower in the case and walks away with over $3.25 million from the settlement.

Source: Blue Ink Blog