Health Law Attorney Blog

Until October 2009, physicians could lawfully act as service providers to hospitals by furnishing their services "under arrangements" where a physician or group of physicians would provide services, equipment and supplies to a hospital's patients by contracting with the hospital to provide the services. Urologists, for instance, regularly furnished lithotripsy services under arrangements. The relationship was permissible under Stark because the hospital would bill for the services, deeming the hospital the entity furnishing the designated health services ("DHS"), not the physicians. However, in October 2009, new Stark regulations made these relationships impermissible as the regulations declared entities providing under arrangement services (e.g., the urologists) were furnishing DHS.

After the regulations were issued, but before they became effective, the Council for Urological Interests ("Council") filed suit in the US District Court for the District of Columbia, challenging the new regulations. Generally, the Social Security Act provides for judicial review of reimbursement decisions only after administrative remedies have been exhausted. The Supreme Court held in Shalala v. Illinois Council on Long Term Care, Inc. ("Illinois Council") that an exception to this requirement existed where application of the general rule "would not lead to a channeling of review through the agency, but would mean no review at all." The District Court, relying on Illinois Council, held that Council's claims must be channeled through the agency's administrative procedures prior to seeking judicial review. Despite Council's contention that physician groups are not afforded administrative review (as administrative review was limited to "providers" only), the District Court dismissed Council's complaint for lack of subject matter jurisdiction, holding that the hospitals (i.e. providers) could challenge the regulation through the administrative process.

On December 23, 2011, the US Court of Appeals for the District of Columbia Circuit overturned the District Court's decision holding that the channeling requirement under Illinois Council was not a requirement of complete preclusion of judicial review. "Particularly considering the Supreme Court's characterization of section 405(h) [of the Act] as 'a channeling requirement, not a foreclosure provision' we see no 'clear and convincing evidence' in the statute's language or structure indicating that Congress deliberately intended to completely bar non-providers from seeking review of regulations that target them directly" (internal citations omitted).

This ruling is a victory for physicians and physician groups in that the DC Appeals Court has recognized the administrative and judicial limitations imposed upon them to represent their interests and has rectified this bar.

Continue reading "DC Appeals Court Permits Physicians to Challenge Stark Law Regulations" »

According to a press release, the Department of Health and Human Services ("HHS") announced that it will be awarding $9 million from the Centers for Medicare and Medicaid Services ("CMS") to Senior Medicare Patrol ("SMP") programs across the country tasked at fighting Medicare fraud. SMP is operated by the Administration on Aging in close partnership with CMS and the HHS Office of Inspector General. The new grants will allow for increased awareness for Medicare beneficiaries about how to prevent, detect and report healthcare fraud.

According to the press release:

The SMP volunteers work in their communities to educate Medicare beneficiaries, family members, and caregivers about the importance of reviewing their Medicare notices, and Medicaid claims if dually-eligible, to identify errors and potentially fraudulent activity. Program volunteers also encourage seniors to make inquiries to the SMP Program when such issues are identified, so that the project may ensure appropriate resolution or referral.

Therefore, providers must continue to emphasize compliance within their practices and also have strong communications with patients to avoid misunderstandings by patients as scrutiny has spread beyond just government officials. The government is investing in patients to help them in the fight against Medicare fraud.

Continue reading "Providers and Suppliers Beware: Medicare Patients Now Looking for Fraud, Too" »

Premier Home Care, a Durable Medical Equipment company operating in Indiana and Kentucky, agreed to pay a $578,820 settlement with the United States Department of Justice and the State of Indiana in a Whistleblower action alleging violations of the False Claims Act.

In 2008, a former employee filed suit against Premier under seal alleging that the company was not using licensed respiratory therapists to set up patients with CPAP and BiPAP. Indiana law is broad enough to include CPAP set-up's in the definition of "respiratory care." Only persons licensed as respiratory therapists in the state of Indiana are permitted to perform respiratory care services under Indiana law.

A joint investigation by the Office of the Inspector General of the US Department of Health and Human Services, the Department of Justice and the Indiana Attorney General's office ensued. The complaint alleged that Premier violated the False Claims Act by certifying to Medicare that it was in compliance with Indiana's respiratory therapy law when it used unlicensed personnel to set-up CPAP and BiPAP.

The False Claims Act allows for civil recoveries of up to three times the amount of actual damages, and allows whistleblowers to collect up to 25% of the award. Premier agreed to settle its suit for $578,820 to the United States and $21,180 to the State of Indiana, an amount representing more than twice the estimated damages to the Medicare and Medicaid programs.

You can access the Department of Justice's Press Release story at: http://www.justice.gov/usao/ins/press_releases/Pressrelease11/Premier.20111019.pdf.

Continue reading "CPAP Supplier Agrees to Pay $578,820 for Failure to Use Licensed Respiratory Therapists for PAP Set-Up's" »

In an indictment unsealed on October 12, Matthew Kolodesh (a/k/a "Matvei Kolodech") was charged with a laundry list of crimes, including 1 count of conspiracy to commit healthcare fraud, 21 counts of healthcare fraud, 2 counts of mail fraud and 11 counts of money laundering of monetary instruments over $10,000. Kolodesh set up, controlled and operated Home Care Hospice, Inc. wherein he allegedly "authorized the submission of claims to Medicare totaling approximately $14.3 million, which claims defendant Kolodesh and A.P. knew were false and fraudulent." "A.P." is the name given in the indictment to Kolodesh's business partner.

The government alleges, in part, that in committing healthcare fraud Kolodesh paid for referrals, paid for certifications of hospice eligibility, authorized fabrication of patient records and supporting documentation, created phony schedules of continuous care visits to patients who were not qualified for continuous care or were never provided continuous care, falsified records submitted in connection with a Medicare audit and siphoned funds from Home Care Hospice that were "fraudulently obtained Medicare payments" to unjustly enrich himself and his family.

According to the Department of Justice press release, "if convicted of all charges, Kolodesh faces a statutory maximum sentence of 370 years in prison. The government will also seek restitution to Medicare in the amount of $14.3 million and proceeds from the money laundering."

Continue reading "Hospice Provider Charged with Defrauding Medicare for More Than $14 Million" »

In a press release issued September 27, 2011, the United States Department of Justice, the Department of Health and Human Services, and the FBI announced that two Miami-area residents pled guilty for their roles in a $25 million home health Medicare fraud scheme. Both defendants pled guilty to conspiracy to commit health care fraud, which carries a maximum prison sentence of 10 years.

Maritza Vidal and Richard Diaz admitted their participation in a scheme to bill Medicare for expensive physical therapy and home health care services that were prescribed by doctors but were medically unnecessary and never provided. According to court documents, Vidal and Diaz worked for ABC Home Health Inc. or Florida Home Health Providers Inc., two related Miami home health care agencies, which purported to provide home health and therapy services to Medicare beneficiaries, but allegedly existed only to defraud Medicare.

Vidal and Diaz both admitted to recruiting Medicare beneficiaries who would allow ABC and Florida Home Health to bill Medicare for home health care and therapy services that were medically unnecessary and/or never provided. The defendants also solicited and received kickbacks and bribes from the owners and operators of the home health agencies in return for allowing the companies to bill on behalf of the recruited patients.

Vidal also admitted that she and other co-defendant nurses falsified patient files for Medicare beneficiaries by describing non-existent symptoms such as tremors, impaired vision, weak grip and inability to walk without assistance in an attempt to make it appear that the patients qualified for home health benefits.

Vidal and Diaz were originally charged in a February 2011 indictment, which included numerous other defendants. Including Vidal and Diaz, seventeen people have pled guilty for their roles in the fraud scheme.

This case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force. Since their inception in March 2007, Strike Force operations in nine locations have charged more than 1,140 individuals who collectively have falsely billed the Medicare program for more than $2.9 billion.

These recently announced guilty pleas bear out the advice that we have been delivering to clients, namely that the health care enforcement landscape is evolving and thus it is even more imperative to ensure that providers take pro-active steps to mitigate the likelihood that they will become subjects of the government's more robust initiatives to prevent health care fraud

Continue reading "Medicare Fraud Indictment Results in More Guilty Pleas in $25 Million Health Care Fraud Scheme" »

The Department of Health and Human Services ("HHS") Office of Inspector General ("OIG") has issued its monthly Recovery Act Oversight report for July 2011. The report revealed what many already know: audits and investigations are have increased considerably since 2009, the year the American Recovery and Reinvestment Act of 2009 ("Recovery Act") was signed into law.

Comparing data from July of 2009, 2010 and 2011, it is clear that the number of active OIG investigations has been rising dramatically, with almost twice as many active investigations in July 2011 than in July 2010. We can also see an overall increase in the number of audits, inspections, evaluations and reviews in process since 2009. Even though the numbers of audits, inspections, evaluations and reviews experienced a slight dip in July 2011 versus July 2010, the overall trend has been, and will likely continue to be, an upward growth.


This data should be, yet another, reminder that providers and suppliers have been, and will continue to be, the focus of government scrutiny.

Continue reading "July 2011 OIG Recovery Act Oversight Monthly Report" »

On September 1, 2011, the Department of Justice, the Department of Health and Human Services (HHS), the FBI and the HHS Office of Inspector General (HHS-OIG) jointly announced that eighteen individuals have been charged in the Eastern District of Michigan for their participation in a series of separate Medicare fraud schemes involving home health and psychotherapy services.

According to the court documents, the schemes allegedly involved a total of more than $28 million in fraudulent claims submitted to Medicare for services that were medically unnecessary and/or never provided.

Fourteen individuals are charged in one indictment with conspiracy to commit health care fraud for their roles in a $14 million scheme to defraud Medicare by submitting fraudulent claims for home health care services. The defendants include three physicians, four clinic owners and managers, two clinic employees, one nurse, and four physical therapists and physical therapy assistants. As alleged, the conspiracy was operated out of multiple home health agencies located in Livonia.

In a separate complaint, a physician and two other individuals are charged with health care fraud and the submission of false claims in connection with an approximately $11.5 million scheme to defraud the Medicare program. The scheme allegedly involved false billings for individual and group psychotherapy services at two clinics located in Detroit. According to court documents, the defendants billed Medicare for services that were medically unnecessary and/or never provided.

In another indictment, the owner of a medical clinic located in Southfield was charged with conspiracy to commit health care fraud, health care fraud and identity theft for a scheme allegedly involving $2.9 million in fraudulent billings to Medicare. The clinic owner is alleged to have used the identities of Medicare providers and beneficiaries to bill for psychotherapy services that were medically unnecessary and never performed.

Including these charges, Medicare Fraud Strike Force operations in Detroit have charged a total of 138 individuals in cases involving approximately $148 million in fraudulent billings to Medicare.

These newly announced indictments bear out the advice that we have been delivering to clients, namely that the health care enforcement landscape is evolving and thus it is even more imperative to ensure that providers take pro-active steps to mitigate the likelihood that they will become subjects of the government's more robust initiatives to prevent health care fraud.

Continue reading "Metro Detroit Continues to be a Focus of Health Care Fraud Prosecutions" »

Statistics recently released by the Transactional Records Access Clearinghouse (TRAC), a Syracuse University Research organization, show a marked increase in federal health care fraud prosecutions. The statistics show 903 federal prosecutions for health care fraud through the first eight months of 2011, compared to 731 such prosecutions for all of 2010.

In addition to the increase in prosecutions, the federal government has also seen an increase in convictions for such fraud. Through the end of August, there have been 24 convictions, compared with 23 such convictions for all of 2010.

The increases in prosecutions and convictions come on the heels of the federal government's increased enforcement efforts. In February, the government added to health care fraud teams, which, in turn, has led to an elevated level of regulatory enforcement activity. These statistics bear out the advice that we have been delivering to clients, namely that the health care enforcement landscape is evolving and thus it is even more imperative to ensure that providers take pro-active steps to mitigate the likelihood that they will become subjects of the government's more robust initiatives to prevent health care fraud.

Continue reading "Health Care Fraud Prosecutions Continue to Rise" »

In its over-300-page complaint filed on 8/19/2011, GEICO General Insurance Company, et. al (hereinafter referred to as "GEICO") asserts that the 32 defendants named in this case--13 physicians, 18 entities, and 1 entity owner-- ("Defendants") defrauded GEICO in an amount in excess of $12.1 million under New York's No-Fault Insurance law. GEICO also seeks to recover $36 million in treble damages for "services that the Defendants never rendered, or were not entitled to bill for or that they knew or should have known were not medically necessary or were so improperly performed as to be useless."

GEICO alleges that the Defendants submitted claims for nerve conduction velocity tests that were not performed and for which results were fabricated. Nerve conduction tests assist in determining whether a patient has sustained nerve damage. GEICO claims that the Defendants falsified the test results by copying results from other patients. In its opening paragraphs, GEICO asserts

The Defendants have exploited and abused the No-fault system and have engaged in some of the most abusive practices in the history of the New York No-fault system. The Defendants have submitted fraudulent claims. In claim after claim after claim they have falsified test results. They have billed for fictitious services that were never rendered as billed and in many cases their services have been incompetent and rendered without regard to the welfare of the patients. Indeed, in many cases the practices of the Defendants could have endangered the welfare of their patients.

Among its many allegations, GEICO also claims that the Defendants engaged in improper referrals to entities they controlled and/or in exchange for financial consideration and payments.

Notably, some of the Defendants in this case are also named defendants in a similar fraud action filed by Allstate (8/19/2009) in which Allstate seeks to recover more than $1,780,000.00 in damages for fraudulent billing of medical services under the NY No-Fault law. As of the date of this post, this case is still pending.

The HEALTH LAW ATTORNEY BLOG has written on countless instances in which healthcare providers and suppliers have become the target of criminal investigations and convictions; however, this suit, as well as the Allstate suit, are evidence that insurance companies have begun to take matters into their own hands.

Continue reading "GEICO Alleges $12.1 Million in Insurance Fraud, Seeks $36 Million in Damages" »

In a press release issued by the US Department of Justice of the Eastern District of Pennsylvania, a 498-count indictment--240 counts of which involved healthcare fraud--charged 53 defendants, including a physician and pharmacist, in a multi-million dollar drug conspiracy. The press release states that William Stukes--a drug trafficker of Philadelphia--and his alleged drug trafficking organization recruited large numbers of phony patients, taking them to Dr. Norman Werther's office for bogus medical examinations. In exchange for prescriptions for oxycodone-based drugs, the patients paid Dr. Werther $150. Stukes would arrange to have the patients driven to various pharmacies to fill the prescriptions, including Northeast Pharmacy where pharmacist Ihsanullah "Sean" Maaf filled the prescriptions. After the prescriptions were filled, they were turned over to Stukes or his drivers wherein the drug dealers would resell the narcotics. "It is estimated that between September 2009 and July 2011, the Stukes drug trafficking organization earned more than $5 million through these illegal prescriptions and that the defendants unlawfully acquired and distributed over 200,000 pills containing oxycodone."

"The crimes of conspiracy, distribution of controlled substance, possession with intent to distribute, and money laundering each carry a maximum possible sentence of 20 years in prison; health care fraud and aggravated structuring each carry a maximum sentence of 10 years in prison; structuring financial transactions carries a maximum possible sentence of five years in prison. Each defendant also faces possible fines, periods of supervised release, and special assessments."

Continue reading "Philadelphia Takedown: 498-Count Indictment; 240 Counts of Healthcare Fraud; 53 Defendants" »

On July 21, 2011, the Office of Inspector General (OIG) of the Department of Health & Human Services (HHS) announced that Administrative Law Judge (ALJ) Steven T. Kessel upheld OIG's exclusion of Michael D. Dinkel from participation in all Federal health care programs under section 1128(b)(7) of the Social Security Act for a period of 8 years.

Dinkel is the owner and President of Drew Medical, Inc., a diagnostic imaging services provider located in Orlando, Florida, which provides outpatient radiology services. Based upon evidence presented at an administrative hearing, ALJ Kessel found that Dinkel and Drew Medical submitted false claims to the Medicare and Medicaid programs for services relating to a radiological procedure known as venography. In fact, Drew Medical had not performed any such services.

ALJ Kessel held Dinkel personally responsible for ensuring that Drew Medical claimed reimbursement appropriately and that his failure to do so "constituted reckless indifference to the propriety of the claims he caused to be presented." ALJ Kessel emphasized that point finding Dinkel had a duty "to understand Medicare and Medicaid billing requirements and to apply them scrupulously to the claims that he caused to be presented."

ALJ Kessel found that over a more than 2-year period, Dinkel caused the submission of nearly 9,500 false claims seeking more than $1.6 million in reimbursement.

The United States Department of Justice previously entered into a civil False Claims Act settlement with Dinkel, Drew Medical, and Central Florida Radiology, Inc., for $1,147,564. Prior to the civil settlement, OIG notified Dinkel that OIG intended to exclude him under section 1128(b)(7) of the Social Security Act, which provides OIG the power to exclude individuals and entities from Federal health care programs for presenting or causing to be presented claims for items or services that the individual or entity knows or should know were not provided as claimed, or are otherwise false or fraudulent.

Continue reading "Law Judge Upholds HHS OIG's Exclusion of Owner of Orlando, Florida Diagnostic Imaging Services Company" »

On July 6, 2011, Dr. Leonard Langman, a neurologist who owned and operated a Brooklyn, N.Y. medical clinic, pled guilty to one count of health care fraud for his role in a scheme to defraud Medicare, the U.S. Department of Labor, Office of Workers' Compensation Programs (OWCP), the New York State Workers' Compensation Board (NYS-WCB), the New York State Insurance Fund (SIF) and various private health insurance carriers.

According to court documents, from January 2006 to December 2009, Dr. Langman caused false and fraudulent claims to be submitted for services that were not provided; misrepresented the services he provided by billing for a level of service higher than that which he performed; double-billed different health care benefit programs for the same service provided to the same beneficiary; and billed for services purportedly performed when he was out of the country.

Dr. Langman is now facing a maximum sentence of 10 years in prison.

This case was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division's Fraud Section and the U.S. Attorney's Office for the Eastern District of New York. Since the HEAT Strike Force's inception in March 2007, operations in nine locations have charged more than 1,000 defendants who collectively have falsely billed the Medicare program for more than $2.3 billion. The action against Dr. Langman evidences that HEAT enforcement shows no signs of relenting.

To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT) or government investigations and litigation, please contact Robert S. Iwrey, Esq. at (248) 996-8510 or (212) 734-0128 or visit the HLP website.

On June 29, 2011, the 6th Circuit Court of Appeals upheld a lower court's ruling on the health reform law's requirement that nearly all Americans buy insurance. The three-judge panel, including two Republican nominees, ruled 2-1 in favor of the mandate. The original suit was brought by the Thomas More Law Center, which argued that Congress has no legal right to impose the mandate.

Judge Boyce F. Martin Jr. wrote for the majority stating that the "minimum coverage provision is a valid exercise of legislative power by Congress under the Commerce Clause." The court ruled that the mandate regulates economic activity with a substantial effect on interstate commerce, and thus is legal. The court also agreed with the federal government that Congress had reason to think that allowing people to go uninsured would allow for "free riders" to take advantage of the system - and other taxpayers.

The 6th Circuit is one of three appeals panels that heard oral arguments in suits over the mandate this spring and is the first to issue a ruling. Two more rulings are expected this summer by the 4th Circuit, which heard two cases brought by the Commonwealth of Virginia and Liberty University, and the 11th Circuit, which heard a high-profile case brought by 26 governors and attorneys general.

The most likely next step for the group is to petition the Supreme Court to overturn the 6th Circuit's decision. The speed in which the 6th Circuit issued its ruling could ensure that the Supreme Court will have the opportunity to take up one of the health reform cases in the fall. If this happens, the high court's ruling on the constitutionality of the law could come as early as next summer.

Opponents of the health reform law now need one of the other circuits to strike down the law, which would result in split circuit decisions and increase pressure for the Supreme Court to take on the issue.

For more information about health care reform or the ever-evolving healthcare landscape, please contact The Health Law Partners at (248) 996-8510 or (212) 734-0128, or visit the HLP website.

A Florida radiology clinic, Midtown Imaging LLC, and its former owners--Midtown Imaging PA and PBC Medical Imaging--have agreed to pay $3 million to settle allegations that Midtown Imaging LLC submitted false claims to Medicare between 2000 and 2008. The allegations arose from Midtown Imaging LLC's lease and professional services agreements with referral sources that were in violation of the Anti-Kickback Statute (AKS) and Stark Law (Stark), according to a Department of Justice press release. The whistleblowers, Dr. Teresa M. Cortinas and Dr. Walter E. Wojcicki, will receive $600,000.

Since January 2009, the Justice Department has recovered over $7.3 billion in False Claims Act cases.

Continue reading "False Claims Act Allegations Resulted in Florida Radiology Clinic and Others to Pay $3 Million Settlement" »

Gentiva Health Services, Inc. (Gentiva)--one of the largest providers of home health services in the world--has settled with the government for $12.5 million. The settlement came after allegations that it fraudulently billed Medicare for non-Medicare-covered costs. According to the Department of Justice Press Release, "[a]n investigation established that, through its annual submission of cost reports to Medicare for the years 1998 through 2000. Gentiva improperly billed Medicare for salaries and other costs of employees performing sales functions that were designed to increase patient utilization." Gentiva denied the allegations.

This is, yet another, instance of the government persisting in its efforts to root out healthcare fraud. Because of the government's mission, its press releases have been filled with indictments, settlements and convictions of healthcare providers and suppliers, many of whom experience imprisonment and/or paying the government sums well into the millions.

Continue reading "Gentiva Health Services, Inc. Settles with Government for $12.5 Million" »