Health Care Fraud and Abuse in the Middle District of Florida in 2016 - a Year in Review

Health Care   |   White Collar Crime & Government Investigations   |   February 22, 2017
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The United States Attorney’s Office (USAO) for the Middle District of Florida (USAO-MDFL) prosecuted several civil health care fraud matters in 2016 and issued related press releases. A review of the USAO-MDFL’s criminal and civil health care fraud matters, as detailed in 24 of its 2016 press releases, helps predict where the USAO-MDFL will focus its health care enforcement efforts this year and beyond. This article organizes the USAO-MDFL’s 2016 health care fraud matters by category and topic and offers pointers for health care providers within the USAO-MDFL’s jurisdiction and elsewhere as we move into 2017.


The USA0-MDFL has various tools to combat health care fraud, and used many of them in 2016. They include: (1) federal criminal prosecutions with prison, fines, and asset forfeiture; (2) False Claims Act civil actions that result in civil settlements but which can also lead to criminal investigations and related criminal prosecutions; (3) debarment, which keeps health care providers from providing health care services under various federal health care benefit programs; (4) pure asset forfeiture; (5) search warrants; (6) seizure warrants for bank accounts that hold funds derived from the alleged health care fraud; and, (7) suspension authority in the Affordable Care Act, which excludes health care providers from participating in the Medicare reimbursement program.

Companies and Individuals Targeted

In 2016, the USAO-MDFL brought criminal and civil cases against both companies and individuals. It focused on durable medical equipment providers; pharmacies; hospitals; home health care providers; medical clinics that billed for radiology, audiology, cardiology, and neurology services; a radiation oncology provider; unlicensed chiropractic clinics; infusion clinics; telemarketing call centers; urgent medical care clinics; prescription compounding pharmacies; physicians groups; skilled nursing facilities; a cancer treatment clinic; an orthopedic medical group; and a pharmaceutical company. 

It also took action against individual cardiologists, pain management physicians, general practice physicians, neurologists, home health care owners, a medical director, health care clinic physicians, persons who allegedly served as sham medical directors conducting quality reviews of patient charts, chiropractors, registered nurses, licensed pharmacists, physician’s assistants, business owners, infusion clinic owners, individuals no longer on Social Security Disability or who became ineligible and continued to receive such disability payments, urgent care medical doctors, licensed osteopathic doctors, an owner of a skilled nursing facility, and others.

While it appears the USAO-MDFL did not single out a lawyer for attention in 2016, it has in the recent past. The USAO-MDFL’s scrutiny of individuals is consistent with the U.S. Department of Justice’s September 9, 2015 Yates Memo, which emphasized that justice must be meted out to both the corporation involved in the fraud and abuse and the “individuals who perpetrated the wrongdoing.”

The USAO-MDFL does not focus on particular health care practices, specialties, or industries, but rather on the underlying facts uncovered in investigations to determine if health care fraud and abuse exists. This is why such a broad range of businesses and individuals are involved in the matters noted in the USAO-MDFL’s’s 2016 press releases.

Federal Health Care Programs Involved 

in 2016, as in past years, the USAO-MDFL prosecuted health care fraud and abuse matters that impacted Medicare, Medicaid, TRICARE (the U.S. military health care program), and the Federal Employees Health Benefits Program. 

The USAO-MDFL does not focus on a particular health care benefit program. The health care matters mentioned in the 2016 USAO-MDFL press releases were distributed among the major federal health care programs.

Federal Statutes Allegedly Violated 

Numerous statutes are used to prosecute individuals and companies for health care fraud. False statements submitted to the government for Medicare payments may be prosecuted under the false statement statute, the false claims statute, or the mail fraud statute. For kickbacks, the government may also proceed under 18 Title 42 U.S.C. Section 1320a-7b(b), which outlaws any payment for a referral of a Medicare patient. Finally, 18 U.S.C Section 1347 makes it a crime to engage in a scheme to defraud any health care benefit program. These are just some of the federal statutes in the USAO-MDFL’s toolbox.

While the USAO-MDFL must prove the elements of any statutes beyond a reasonable doubt, it is rarely difficult to do so in “fraud at the outset” cases (where fraud is planned at the outset). It is more challenging in the “optimization” type matter, which seeks to discern bad or criminal intent from billing practices or other business methods that may or may not withstand scrutiny.

Numerous Federal Investigators Handled the 2016 Matters

Many federal agencies have the authority to investigate health care fraud matters. Those that did so in 2016 included the FBI, Health and Human Services Office of the Inspector General (HHS-OIG), Defense Criminal Investigative Services, Veterans Affairs Office, Office of Personnel Management, Florida’s Department of Financial Services Division, the Internal Revenue Service, and the Social Security Office of the Inspector General.

The USAO-MDFL Team Approach 

In past years, the USAO-MDFL organized into teams to bring civil and criminal prosecutions. These teams include Health Care Fraud Prevention and Enforcement, Medicare Fraud Task Force, and the National Health Care Fraud Initiative.

How the USAO-MDFL Detected Alleged Health Care Fraud 

Detection methods included: voluntary disclosure by the company engaged in the alleged fraud; former employees (False Claim Act “relators”) who reported the fraud to the USAO- MDFL; tipsters; and outlier analysis by Medicare (the “proactive review of claims data” that revealed the provider “was a statistical outlier in terms of billing for” the services for which they billed Medicare). 

Financial Rewards for Relators/Tipsters  

Former employees who reported alleged fraud included a medical doctor, a physicist, and a former medical assistant. Their rewards ranged from $37,500 to $29 million. Of the 24 health care fraud matters for which the USAO-MDFL issued 2016 press releases, it appears that about five relators were involved. A relator is simply someone who brings a lawsuit against a defendant in the government’s name.

How Cases Were Resolved

Resolution methods included criminal jury trial, civil settlement, guilty pleas, voluntary exclusion from federal health care programs, and corporate integrity agreements.

Health Care Fraud Theories

Fraud cases were based on:

  • products not provided;
  • services not rendered;
  • procedures not medically necessary;
  • bonuses for physicians who ordered unnecessary tests;
  • unlicensed chiropractic clinic services;
  • false billings;
  • kickbacks to patients by waiving the 20 percent Medicare copayment without regard to the patient’s financial hardship;
  • excessive and medically unnecessary and inadequately documented peripheral artery interventional services;
  • medications represented to contain pharmaceutical ingredients that did not;
  • bonuses paid to a urologist for referring laboratory tests to a lab;
  • providing a Medicare provider number to a chiropractor who billed Medicare for services rendered;
  • payments to Medicare patients to see physicians who prescribed expensive medications;
  • prescriptions that were “tainted” under the anti-kickback statute because the physician who prescribed them had an alleged ownership interest in the pharmacy that filled them;
  • billing Medicare and TRICARE for rehabilitation therapy services that were not reasonable, necessary, or skilled;
  • administration of misbranded drugs to patients and billing Medicare for them as if they were FDA-approved; and,
  • certain suspect billing practices that when reviewed together indicate an intent to bill for medically unnecessary services.

False Claims Act Cases that Became Federal Criminal Cases

It appears from USAO-MDFL press releases that about five of the matters that started as federal False Claims Act civil cases developed into federal criminal cases. At least one developed after the U.S. Department of Justice (DOJ) evaluated the provider’s claim data and concluded the provider was a statistical “outlier.” In that case, the USAO-MDFL press release noted that “New and expanded uses of data analytics to identify suspicious billing patterns … are providing law enforcement with powerful investigative tools ….” Other cases appear to have started as criminal cases without regard to the False Claims Act.

Pointers for USAO-MDFL Health Care Providers

The 24 health care matters mentioned in 2016 USAO-MDFL press releases are of the usual two types. The first type is health care fraud planned from the outset as a fraud. More than half of the 24 matters reviewed appear to involve allegations of such “fraud at the outset.” They include providing medically unnecessary services, and Stark law violations. The government may be unable to prove “fraud at the outset” type cases, but with its powerful tools, as long as enough witnesses come forward, and they often do, albeit slowly, it’s often easy to prove the fraud with the available documents submitted to Medicare, TRICARE, or another federal health care program.

The second type of health care fraud matter is the more difficult to spot and prosecute business type. In these cases, the health care provider enacts a policy or business practice that ultimately proves unsound and problematic. For example, in the orthopedic surgery practice case the USAO-MDFL recently settled, seven alleged suspect billing practices were involved, all of which appeared to optimize Medicare billings. It’s one thing to have one questionable billing practice, but it’s another entirely to have seven such practices scrutinized by the MDFL. These become clues. The more clues the USAO-MDFL discovers, the more easily it can make a case, demand a settlement, and impose other conditions.

A few of the 24 matters reviewed could be described as “send a message prosecutions,” or national initiatives that result in many simultaneously-filed charges against the same type of alleged violators around the country. The USAO-MDFL and others that enforce the federal statutes realize they can’t prosecute all violators, but they can prosecute many and make a lot of noise about it in an effort to deter others from the committing the same violations. These initiatives sometimes stem from published HHS-OIG and DOJ initiatives and priorities.

Claims data submitted to Medicare or its contractor can show if the provider is an outlier, which may prompt an official inquiry by the agencies mentioned above. It’s wise to be careful with any “systematic effort to increase … Medicare and TRICARE billings.” Given that individualized health care dominates our health care system, making patients’ clinical needs paramount, systematic efforts don’t fit well.

Intent is critical in health care fraud as it is in most white collar criminal prosecutions. The USAO-MDFL looks for evidence of bad intent in its health care fraud matters. And it often finds it in emails, text messages, voicemail messages, memos, diaries, notes to self, cheat sheets, and also in the provider’s billing practices. It’s one thing to inappropriately code and bill for claims “incident” to physician supervision when no physician was present, but when that is combined with a variety of other suspect billing practices, it’s easier for the USAO-MDFL to ask hard questions and judge intent.

Compliance programs, which pay for themselves, must be implemented and followed — though they are ineffective in “fraud at the outset” matters. 

The USAO-MDFL’s health care fraud and abuse investigations create risk for individuals and companies. It’s best to confront the risk when it’s detected rather than engage in denial or rationalization. Health care executives must make difficult decisions — e.g., whether to self-report, fight the subpoena, or cooperate. Each decision must contemplate the particular facts uncovered in a defense lawyer’s investigation and inquiry into the allegations.

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