What every risk manager needs to know about fraud and abuse · hdjn.com. A Government Priority . 4 "Healthcare fraud of this kind wastes taxpayer money and weakens the safety net

©2016 Hancock, Daniel, Johnson & Nagle, PC • hdjn.com

What every risk manager needs to know about fraud and abuse

Joseph E.H. “Eric” Atkinson Hancock, Daniel, Johnson & Nagle, PC

November 3, 2016


Disclaimer: This presentation is offered for discussion purposes only and shall not constitute legal advice.

1. Common laws used to address fraud and abuse in healthcare 2. Coordinated investigations between health care oversight agencies 3. Current enforcement efforts and examples 4. Questions and Conclusion

Overview of Today’s Topics

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A Government Priority

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“Health care fraud investigations are considered a high priority within the Complex Financial Crime Program, and each of the FBI’s 56 field offices has personnel assigned specifically to investigate health care fraud matters.”

FBI Statement of Priorities

“[T]he Strike Force has charged over 140 licensed doctors. These are individuals who have breached the public trust and their professional duties of care, selling out their medical licenses for the lure of easy money…” Assistant Attorney General Leslie Caldwell Criminal Division, Department of Justice May 14, 2015



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"Healthcare fraud of this kind wastes taxpayer money and weakens the safety net for our fellow Virginians who truly need assistance," said Attorney General Mark R. Herring. "My nationally-renowned Medicaid Fraud Control Unit and our federal partners will continue to pursue these cases of fraud and abuse wherever we find them." Virginia Attorney General Mark R. Herring June 12, 2015



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“The Strike Force teams use near-real-time data to pinpoint fraud hot spots and aberrant billing as it occurs. This coordinated and data-driven approach to identifying, investigating, and prosecuting fraud has produced record breaking results. Since their inception in March 2007, Strike Force teams have charged more than 2,097 defendants who have collectively billed the Medicare program for more than $6.5 billion.”

Gary Cantrell Deputy Inspector General for Investigations U.S. Department of Health and Human Services March 24, 2015


A Political Issue

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Virginia General Assembly members used Medicaid Fraud reports as a talking point and basis for opposing Medicaid expansion in Virginia:

Sen. Thomas A. Garrett, Jr. – in an op-ed published in three newspapers in April 2014 quoted numbers from the Virginia Attorney General’s annual Medicaid Fraud Control Unit report

• Medicaid loses $38 billion each year to fraud • Virginia alone recovered $200 million in 2013

Del. Kirkland Cox and Del. William J. Howell – February 2014 op-ed

• There is a significant level of waste and fraud, evidenced by the nearly $200 million in Medicaid fraud settlements won by the attorney general’s office last year.


Most commonly used statutes

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• False Claims Act (FCA)- civil liability for any person who knowingly or with reckless disregard presents (or causes to be presented) a false or fraudulent claim for payment or approval

- Claim – request or demand for money or property - Liability for false claims submitted directly to the government or to government intermediaries - claim as a specific representation about the goods or services provided - Failure to disclose noncompliance with statutory, regulatory, or contractual requirements

• Whistleblowers – FCA baked-in incentive for employees to report suspected

fraud: up to 30% of the recovered overpayment amount - Protected from employer retaliation



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• Reverse False Claims and 60-day Rule - Report and refund overpayment within 60 days of identification - 6-month good-faith investigation plus 60 days - 6 year lookback period



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• Civil Monetary Penalties (CMP) - OIG tool to impose civil penalties and assessments against any entity that knowingly presents (or causes to be presented) a claim that the HHS Secretary determines is for a medical or other item or service that the person knows or should know was false or fraudulent

- OIG tool vs. DOJ tool - Different potential penalties • Emergency Medical Treatment and Labor Act (EMTALA) – OIG enforcement

effort to prevent “patient dumping” cases. Depending on bed-size, fines can reach $50,000 per violation. Law requires medical screening and stabilization regardless of insurance status or ability to pay.

- OIG tool utilizing same enforcement team as noted above - Increase in enforcement actions and settlements



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• Health Care Fraud Statute- Criminal liability to knowingly execute or attempt to execute a scheme or artifice

- To defraud any health care benefit program (public or private) - To obtain money from a health care benefit program by false pretenses - Fraud – 10 years - Fraud with serious bodily injury – 20 years - Fraud with death – Life imprisonment • False Statements in Health Care Records – federal law penalizing anyone

who knowingly and willfully making any material false statement, writing, or entry in a document in connection with the delivery or payment of health care benefits, items or services

- 5 years



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• Alteration of Records – (Obstruction statute) Criminal liability for knowingly altering, destroying, mutilating, concealing, covering up, falsifying, or making a false entry with the intent to impede, obstruct, or influence the investigation or proper administration of any matter within the jurisdiction of a department or agency of the United States

- Altering records in response to an audit - Altering records with knowledge of government investigation • Anti-kickback Statute – prohibits offering, paying, soliciting or receiving any

remuneration in return for: - referral of federal health program patients; - purchasing, leasing, ordering, recommending, or arranging for purchase or lease of an item or service for which a federal health program may provide reimbursement - kickbacks, bribes, rebates, cash or in kind, direct or indirect - statute applies to anyone (not just doctors)



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• Stark Law - If a physician (or an immediate family member of such physician) has a financial relationship with an entity . . . then the physician may not make a referral to the entity for the furnishing of designated health services (DHS) for which payment otherwise may be made under Medicare.

- The DHS entity is also prohibited from submitting claims for a prohibited referral. - Referral is broadly interpreted - DHS includes inpatient and outpatient hospital services (amongst others)



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• Virginia anti-health care fraud laws - Medicaid fraud (criminal) – false statement of material fact in any application for payment under medical assistance or for use in determining rights to payment, or unlawfully retaining payment - Medicaid fraud (civil) – liable for repayment of any excess benefits or payments received, plus interest on the amount of the excess benefits or payments at the rate of 1.5 percent each month for the period from the date upon which payment was made to the date upon which repayment is made to the Commonwealth AG may seek an order assessing civil penalties in an amount not to exceed three times the amount of such excess benefits or payments. - Virginia Fraud Against Taxpayers Act – Virginia equivalent of the False Claims Act - Virginia Medicaid Anti-kickback statute


Coordinated Investigations

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• Medicaid Fraud Control Unit (MFCU) - The Virginia MFCU works regularly with federal, state and local law enforcement agencies to combat fraud, protect our most vulnerable citizens and to save taxpayer dollars. Since 1982, the MFCU has recovered more than $1.8 billion in criminal and civil recoveries including affirmative civil enforcement cases (ordered and collected reimbursements, fines and restitutions).

• Medicare Fraud Strike Force - Strike Force teams bring together the efforts of

the Office of Inspector General, the Department of Justice, Offices of the United States Attorneys, the Federal Bureau of Investigation, local law enforcement, and others. These teams have a proven record of success in analyzing data and investigative intelligence to quickly identify fraud and bring prosecutions.


Coordinated Investigations

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• DMAS Program Integrity Division and Managed Care partners - During FY 2015, DMAS program integrity efforts proactively prevented $141 million and retroactively discovered over $27 million in improper payments. DMAS’ managed care partners recovered or prevented an additional $12.1 million in improper payments. In addition, PID made efforts to expand fraud identification and prosecution, making 140 referrals of potential provider fraud. DMAS staff also worked with the Office of the Attorney General’s Medicaid Fraud Control Unit (MFCU) to achieve fraud convictions of 45 providers. August 2015 Program Integrity Annual Report


Other enforcement agencies

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• Office of Inspector General (OIG) – U.S. Department of Health and Human Services - enforcement of CMP and EMTALA penalties

- cases initiated through the Consolidated Data Analysis Center • Defense Criminal Investigative Service (DCIS) – partners with OIG and DOJ

for TRICARE fraud investigations

• Internal Revenue Service – Criminal Investigative Division (IRS – CID) – partners with other investigative agencies any often pursues tax and money laundering violations that accompany fraudulent reimbursement


Parallel Proceedings

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• Virginia Attorney General’s Health Care Fraud Section has a criminal

and civil component • Civil – Virginia Fraud Against Taxpayers Act • Criminal – Health care fraud and state equivalent

• United States Attorney’s Office criminal and civil divisions

• Civil – False Claims Act • Criminal – Health Care Fraud, False Statement, Alteration of

Records • Be aware that if you are responding to one investigation the chances

are high that the other components are aware of the case


Investigative Tools

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• State subpoena authority: Va. Code Ann. §32.1-320 (B)(2) – There are

many misconceptions regarding the scope the authority provided. The authority granted is far more expansive than providers realize

• Audit and Inspection authority: Va. Code Ann. §32.1-320 (B)(1) – Authorizes a warrantless search of a provider’s office/business to inspect and copy records. The statute does not require investigators to provide notice beforehand


Investigative Tools

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• Health care or HIPAA subpoena: 18 U.S.C. §3486 – investigative subpoena that does not carry grand jury secrecy restrictions

• Civil Investigative Demands, pursuant to the False Claims Act, 31 U.S.C. §3733 – another evidence gathering technique indicative of an active investigation

• Grand Jury subpoena – very few limits on the kinds of documents that may be requested, however, there are secrecy rules and limits on the ability to share information obtained via these subpoenas

• Search Warrants – require a probable cause determination and create the most significant disruption to an ongoing medical practice


Investigative Tools

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• Most effective investigative tool is still basic interviewing techniques –

patients, family members, former staff, and the unsuspecting provider

• Referral/cross-referral between state and local agencies

• Audits and Licensing Inspections, including older audits that will be used to show knowledge, intent, absence of mistake


One final enforcement tool

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•Title 18, United States Code, Section 1028A

•Aggravated Identity Theft statute provides:

• “Whoever, during and in relation to any felony violation enumerated in subsection (c), knowingly transfers, possesses, or uses, without lawful authority, a means of identification of another person shall, in addition to the punishment provided for such felony, be sentenced to a term of imprisonment of two years.”


Aggravated Identity Theft

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Elements of the offense: (1) Knowingly transferred, possessed, or used, (2) without lawful authority, (3) a means of identification of another person, (4) during and in relation to a predicate felony offense. “Theft” is not a in the text of the statute and is not an element of the offense.



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United States v. Mohamed Abdelshafi Defendant argued at trial and on appeal: 1. He didn’t steal anyone’s identity;

2. Va. Premier gave him the recipient’s identifiers, i.e., he had lawfully

obtained and possessed them;

3. He did not misrepresent anyone’s identity – “excessive use” does not fall within the statute’s gambit

4. Every single instance of health care fraud could result in an aggravated ID theft penalty



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United States v. Mohamed Abdelshafi (cont.) Nothing in the plain language of the statute requires that the means of identification at issue “must have been stolen” The defendant came into lawful possession, initially, of Medicaid patients’ identifying information and had “lawful authority” to use that information for proper billing purposes, but… He did not have “lawful authority” to use that information to submit fraudulent billing claims



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United States v. Mohamed Abdelshafi (cont.) “Without lawful authority” is broad and unambiguous While the defendant had authority to possess Medicaid identification numbers, he had no authority to use them unlawfully so as to perpetuate a fraud The court’s conclusion “is not altered by Abdelshafi’s representation that ‘every single incident of health care fraud by a provider would also constitute aggravated identity theft’ if his conduct is deemed to violate the statute”



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United States v. Mohamed Abdelshafi (cont.) After all, the use of another person’s means of identification makes a fraudulent claim for payment much harder to detect and, therefore, more likely to succeed. It also often casts undue suspicion on the individuals whose identifying information is misused and infringes their interest in keeping personal information private and secure. These factors provide ample justification for the increased punishment of those who use another’s identifying information in fraudulent billing for medical services.


Current Enforcement Trends

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• Nationwide trends - 638 new qui tam actions filed - $1.9 billion in recoveries through FCA healthcare-related enforcement - Rise in the number of attorneys that specialize in these cases - Declined cased being pursued by private counsel - Yates memo – focus on individual liability (C-suite execs) • Virginia statistics - 378 open fraud investigations - 6 open abuse or neglect investigations - 52 indicted for fraud (2 for abuse or neglect) - 52 fraud convictions (7 abuse or neglect, including carry-over cases) - 21 Civil fraud settlements


Current Enforcement Trends

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• 2016 EMTALA cases: - Regional One Health (ROH) $45,000 settlement resolving allegations that

ROH violated EMTALA by failing to provide adequate medical screening examination and stabilizing treatment and inappropriately transferred to another hospital

- complaints of sudden pain in the right lower quadrant of his abdomen - despite the fact that ROH was aware of the patient's abnormal lactic acid levels and perforated viscus, ROH failed to fully evaluate the severity and cause of the patient's emergency condition and failed to provide the patient stabilizing treatment for sepsis - transferred the patient to another hospital, even though ROH was capable of providing the highest level of care to the patient - inappropriate because the patient was not informed of the risks of transfer, the benefits of transfer did not outweigh the risks, and the transfer unnecessarily cause a delay in the patient's care - patient died due to septic shock and respiratory failure within a week of his transfer by ROH


EMTALA Cases

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- Palestine Regional Medical Center (PRMC) $45,000 settlement - patient, who had a kidney transplant and was on dialysis, was waiting in the parking lot of a local dialysis center when she experienced significant shortness of breath - transported by ambulance to PRMC's emergency department, where she was diagnosed with acute pulmonary edema and discharged to receive dialysis on an outpatient basis - patient arrived at the dialysis center where dialysis was started promptly, but the patient's condition deteriorated and she was taken back to PRMC's emergency department where she was pronounced dead - OIG's investigation concluded that PRMC failed to provide needed stabilizing treatment and an appropriate transfer when the patient presented to the emergency department the first time


EMTALA Cases

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- Floyd Medical Center (FMC) $50,000 settlement - failed to evaluate and treat a mentally ill patient who was transferred from another hospital to FMC for involuntary inpatient psychiatric care - patient was aggressive and combative upon his arrival to FMC's emergency department. Three security personnel, including an off-duty police officer working for FMC, attempted to restrain the patient while a nurse went to retrieve medication to calm him down. - Situation escalated and security officers (included off-duty police officer) wrestled the patient to the ground and handcuffed him, causing injury to the patient - When the nurse returned, the security personnel informed her that the patient's behavior was beyond what FMC could safely control - Without psychiatric evaluation or appropriate medical treatment, the emergency department physician medically cleared the patient and he was taken to jail - Despite having an on-call psychiatrist and capabilities to treat the patient, was not evaluated or treated by a mental health professional


Excluded individuals

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- Advocate Health and Hospitals Corporation (Advocate) $317,660.89 settlement

- the excluded individuals, both registered nurses, provided items and services to Advocate patients that were billed to Federal health care programs - Affinity Medical Center $111,969.11 settlement - the hospital employed an individual who was excluded from participating in any Federal health care programs and then billed Federal health care programs for items and services provided by the excluded individual.

**Note: The excluded individual was identified through a data analysis project initiated by the OIG's Office of Evaluation and Inspections.


CMP Liability

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- University of California San Francisco Health - $1,443,016 settlement - claims for “new patient” evaluation and management outpatient clinic visits - patients were “established patients” and should have used lower-paying HCPCS codes - Courtesy Transport Services - $362,188 settlement - “emergency” transportation to skilled nursing facilities and patient residences - should have been billed at the lower non-emergency rate - Data Analysis Center referrals


Individual Civil Liability

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- Ralph J. Cox, former CEO of Toumey Healthcare system - $1,000,000 settlement and exclusion for four years - Violation of statute prohibiting hospitals from billing Medicare for certain services (including inpatient and outpatient hospital care) that have been referred by physicians with whom the hospital has an improper financial relationship - law generally requires that any payments that a hospital makes to a referring physician be at fair market value for the physician’s actual services, and not take into account the volume or value of the physician’s referrals to the hospital - caused Tuomey to enter into contracts with 19 specialist physicians that required the physicians to refer their outpatient procedures to Tuomey and, in exchange, paid them compensation that far exceeded fair market value and included part of the money Tuomey received from Medicare for the referred procedures


Criminal Case Examples

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United States v. Hackett and Monroe Joseph T. Hackett: "Apostolic Overseer covering 30 churches, leaders and businesses in both the United States and in Africa, specifically in Nairobi, Kenya and Uganda.“

Lori T. Monroe – business partner and “Patient Recruiter” - Creed Xtreme Marketing Concepts, recruited and referred clients to Hackett's company

Netted $545,410 for patient recruitment over an eight-month period

Indicted – health care fraud (18 U.S.C. § 1347); paying illegal kickbacks (42 U.S.C. § 1320a-7b); $1,570,041 fraudulent gain



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United States v. Erin Gwinn

Clinical coordinator for mental health company Medicaid required prior-authorization for service to begin (or to extend service) Quick hit – search warrant and side-by-side comparison of prior-authorization documentation "[Medicaid recipient] has also destroyed his toys and his siblings toys as evident to him putting his action figure in the microwave and stabbing his siblings toy with a knife."



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United States v. Ronald Poulin Poulin, a board-certified internist, owned and operated a solo hematology/oncology practice in which he treated patients for blood diseases and cancers. The government initiated an investigation after receiving a complaint about Poulin's billing practices. During the course of this investigation, agents served administrative subpoenas on Poulin's practice directing Poulin to produce certain patient records. After receiving information that Poulin was directing employees to make changes to the subpoenaed records, agents responded by executing a search warrant on the practice.



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United States v. Amir Bajoghli • Bajoghli, a dermatologist, owned and operated the Skin & Laser

Surgery Center

• Indicted for health care fraud, aggravated identify theft, and obstruction of justice

• Charged with intentionally misdiagnosing patients with skin cancer and performing unnecessary Mohs micrographic surgery

• Also charged with allowing unlicensed medical assistants to perform wound closures and falsely certifying that he personally performed or supervised serves that were rendered by his NP or PA when he was not at the office



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United States v. Amir Bajoghli (cont.) Not guilty after jury trial in United States District Court in Alexandria, Virginia

Informant worked in Bajoghli’s office and wore a wire, but was also stealing money and prescriptions from the practice

Expert witness agreed with Bajoghli’s diagnosis in 15 of 17 cases

One government expert offered opinion on photographs of biopsy slides without realizing that they were taken upside-down



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United States v. McLean

Maryland interventional cardiologist – cardiac catheterization and coronary stent placement Medical center investigated after QC review showed placement in artery w/o significant blockage – additional review showed 13 other cases U.S. Attorney subpoenaed 117 patient files – charged w/ health care fraud- defrauding Medicare, Medicaid, private insurers by submitting claims for unnecessary procedures and overstating the level of stenosis present and presented lifestyle evidence ($1.7m condo) Convicted and sentenced to 8+ years 2.03 stents per pt. vs. 1.15 by peers; 15-30% error rate (stenosis/medical necessity) vs. 12% nationwide Overstated levels of stenosis + document destruction


• Mehmoud Patel – Chief cardiologist at LSU Medical Center,

convicted of health care fraud for unnecessary coronary stent procedures

• John Mitchell – Alabama cardiologist, health care fraud and false statements for unnecessary coronary stents

• Harold Persaud – Ohio cardiologist – unnecessary stress tests, echocardiograms, and electrocardiograms

Blending fraud and med mal Recent uptick in medically unnecessary procedure cases

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Abuse and Neglect - Criminal Case Examples

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Commonwealth v. Netsanet Beshah

LPN at Potomac Center, skilled nursing facility in Arlington, VA, responsible for making MAR entries, documenting turning and repositioning, providing incontinence care, etc. Joint MFCU and FBI investigation – covert video surveillance Aug-Sept 2008. Beshah documented treatment that video evidence showed she did not perform. (At least 50 false entries). Charged with Forgery (Va. Code Ann. § 18.2-172) for false statements made on medical records. Forgery = felony; Falsifying patient records = misdemeanor.


Abuse and Neglect - Criminal Case Examples

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Commonwealth v. Theresa Dalton

Rescue squad found victim – laid in bed without moving for so long that parts of her skin were attached to her mattress. Maggots growing in numerous sores that covered her body.

Smell of rotting flesh was so strong that one paramedic became physically ill.

Not guilty of Abuse or Neglect of and Incapacitated Adult. Judge believed that patient’s refusal, combined with falsification of PCA records, was enough to find that she had not violated the law.


Switch from Abuse to Fraud

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Mixed results prosecuting cases as Abuse or Neglect of an Incapacitated Adult The statute is cumbersome; tendency to not second-guess care givers Prince William home health – RN not guilty; PCA guilty Martinsville home health – RN not guilty Arlington nursing home – “Abuse/Neglect” not guilty; “Forgery” guilty – Commonwealth v. Natsenet Beshah, 60 Va. App. 151 (2012) Cases were righteous; the approach was wrong



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False Statements relating to health care matters Health care fraud (10 year max penalty)– enhanced penalty: If the violation results in serious bodily injury … such person shall be fined under this title or imprisoned not more than 20 years, or both; and if the violation results in death, such person shall be fined under this title, or imprisoned for any term of years or for life, or both. Still attack the injury or suffering – but approach the investigation and prosecution from a different perspective Recent results



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A nurse at a former Scott County nursing home pleaded guilty Tuesday in federal court in Abingdon to charges stemming from the falsification of medical treatment records for an elderly patient. The nursing director of a now-closed Scott County nursing home was indicted recently by a federal grand jury on eight felonies stemming from allegations of wrongdoing at the facility. Owner, Regional Vice President, Administrator, and business office executive indicted for commiting a multi-component fraud scheme that included defrauding Medicare and Virginia Medicaid by, among things, causing the facility to operate without sufficient certified nursing assistants and supplies, and in violation of Federal nursing facility requirements.


Conclusion

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1. Common laws used to address fraud and abuse in healthcare 2. Coordinated investigations between health care oversight agencies 3. Current enforcement efforts and examples 4. Questions and Conclusion

www.hdjn.com | (866) 967-9604 ©2016 Hancock, Daniel, Johnson & Nagle, PC

Joseph E.H. “Eric” Atkinson [email protected]

Questions/Discussion

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What every risk manager needs to know about fraud and abuse · hdjn.com. A Government Priority . 4 "Healthcare fraud of this kind wastes taxpayer money and weakens the safety net

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What every risk manager needs to know about fraud and abuse · hdjn.com. A Government Priority . 4 "Healthcare fraud of this kind wastes taxpayer money and weakens the safety net