OIG Enforcement Summary: July 16, 2022 – July 31, 2022

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The following is a summary of the federal Department of Health and Human Services’ Office of Inspector General (OIG) reports of fraud and abuse enforcement activity across the country.[1]  The enforcement actions reported are based upon federal and individual states’ activity.

The summaries reflect areas of OIG’s and individual states’ current and recent enforcement activity.[2] Knowing where regulators’ attention is focused can help healthcare providers identify areas of focus for compliance and risk assessment activities.  Although not all the enforcement actions may be relevant to any one provider’s healthcare business, there may be some summaries that could be used as examples in compliance program education programs (“What to avoid”), or used in developing a risk management plan.  (Note: An Acronym Key appears at the end of the Report.)

Of Note in this Issue:

  1. Included for dates prior to July 16th are OIG’s CIVIL MONETARY PENALITIES AND AFFIRMATIVE EXCLUSIONS REPORT and some late enforcement notices that were published after July 15th.
  2. New Jersey reports on its settlement with the pharmaceutical manufacturer Mallinckrodt. A number of states and the federal government reported their settlement with Mallinckrodt earlier in the year.
  3. OIG is pursuing recoveries when visit limits are exceeded - OIG recovered against two different providers for billing for visits that exceeded the allowable visit totals in a rolling twelve-month period.
  4. Hospital and Lab CEOs charged with others in connection to allegations of fraudulent telemedicine, cardiovascular and cancer genetic testing and DME schemes. Twenty-one individuals (doctors, laboratory executives, hospital executives and marketers) were charged for their involvement in healthcare kickback and money laundering conspiracies.

July 29, 2022 OIG News Release

Montgomery County Skilled Nursing Facility to Pay More than $819,000 to Resolve False Claims Act Liability Arising from Billing of Rehabilitation Therapy

PA. The Defendant, skilled nursing facility, agreed to settle allegations that the Defendant overbilled Federal healthcare programs (like Medicare) for therapy services provided; billed for services not provided; billed for unreasonable, unnecessary, and sometimes harmful therapy; and allowed a therapy provider to manipulate clinical services to maximize billing. Medicare Part A paid for SNF services at a daily rate based in part on a Resource Utilization Group (RUG) to which the Medicare beneficiary was assigned.  The Defendant allegedly cause the submission of false claims for Ultra High RUG therapy levels despite evidence that the RU level of therapy was not reasonable or necessary for the respective patients.

This matter was initiated by a Qui Tam case.

July 28, 2022 OIG News Release

Care Provider Arrested for Medicaid Fraud Totaling More Than $11,000

FL. The Defendant, personal support services provider, allegedly submitted fraudulent billing claims to Medicaid for hours not worked along with service logs that did not match the hours billed or were absent entirely.

July 26, 2022 OIG News Release

Acting AG Platkin Announces Mallinckrodt to Pay More Than $230 Million to Settle Lawsuit Alleging Underpayment of Medicaid Drug Rebates - As Part of Settlement, NJ to Receive Nearly $2.8 Million in Restitution and Other Recoveries

NJ. The Defendant, Mallinckrodt ARD, LLC, as part of its federal and multi-state Medicaid settlement of fraud allegations for underreporting drug rebates agreed to a financial settlement with NJ. Underpayment of rebates allegedly violated the FCA and the NJ FCA.

The federal and multi-state Medicaid action was initiated through a Qui Tam action.

DJ Drugs & Surgicals Inc. Agrees to Pay $115,000 to Resolve Allegations of Prior Authorization Fraud - Specialty pharmacy altered patient medical records to get claims paid

MA. The Defendant, specialty pharmacy, agreed to resolve allegations that it altered patient medical records and submitted the altered medical records to Medicare in support of prior authorization request. The Defendant agreed that without express authorization from the prescribing physician, it removed certain information in supporting documentation associated with the specific drugs in issue that needed a prior authorization request.

Dental Provider Agrees To Settle Allegations Of Improper Billing Of TennCare

TN. The Defendant, dentist and his affiliated companies, agreed to settle allegations that they knowingly and improperly submitted false claims for dental services to Medicaid when one of the companies falsely identified the Defendant-dentist as the rendering provider when the actual dentist was uncredentialed and therefore ineligible to bill Medicaid. In TN being credentialed as a dental provider is a condition for Medicaid payment.

The case was initiated through a Qui Tam complaint.

July 22, 2022 OIG News Release

Man Charged With Multi-Million Dollar Medicare Fraud In Connection With False Claims For Durable Medical Equipment

NY. The Defendant allegedly ran a company “dedicated to illegally buying written orders for” DME and then selling those written orders to DME supply companies, which used those orders to file fraudulent Medicare claims. The Defendant allegedly violated the AKS when he bought and sold written orders, many of which used names and personal health information of Medicare beneficiaries, without the beneficiaries’ authorization or prior knowledge; and contained professional information of doctors and other healthcare providers enrolled in Medicare, as well the purported electronic signatures of the providers which were falsified and created without the authorization or knowledge of the providers.

Two Clinical Labs and Their Owners Agree to Pay $5.7 Million to Resolve False Claims and Kickback Allegations

NJ.

Metric Lab Services, Metric Management Services LLC, Spectrum Diagnostic Labs LLC, and Owners Agree to Pay $5.7 Million to Settle Allegations of False Claims for Unnecessary Genetic Testing

DOJ. The Defendants, clinical laboratories and their owners, agreed to settle allegations that they submitted false claims to Medicare by paying kickbacks in return for genetic testing samples.  The Defendants allegedly used various marketers to solicit genetic testing samples from Medicare beneficiaries, the marketers had physicians fraudulently attest that the genetic testing was medically necessary, and the Defendant-labs would process the tests and receive Medicare payments which were shared with the marketers.  To conceal the kickbacks, the Defendants entered into sham agreements with marketers to provide various consulting, marketing and other services at an hourly rate, but the Defendants paid the marketers a percentage of the revenue, including Medicare reimbursement, in return for the samples.  The marketers generated sham invoices for hourly services that matched the agreed-upon kickback amount.

Medical Device Manufacturer Biotronik Inc. Agrees To Pay $12.95 Million To Settle Allegations of Improper Payments to Physicians

DOJ. The Defendant, a medical device manufacturer, agreed to resolve allegations that it violated the FCA by paying kickbacks to physicians to induce use of Defendant’s implantable cardiac devices (e.g., pacemakers and defibrillators).  The Defendant allegedly used kickbacks to pay certain favored physicians to induce and reward their use of Defendant’s devices.  The Defendant allegedly abused new employee training programs by paying physicians for an excessive number of trainings and, in some cases, for training events that either never occurred or were of little or no value to trainees.  The payments were allegedly made despite concerns raised by the Defendant’s compliance department which warned that salespeople had too much influence in selecting physicians to conduct new employee training and that training payments were being overused. The settlement also resolves allegations that the Defendant violated the AKS when it paid for physicians’ holiday parties, winery tours, lavish meals with no legitimate business purpose and international business class airfare and honoraria in exchange for making brief appearances at international conferences.

July 21, 2022 OIG News Release

21 Charged, Including Hospital and Lab CEOs, in Connection with Multistate Healthcare Kickback Conspiracy - $32 Million Paid to Date in Civil Settlements

TX. 36 Defendants allegedly participated in fraudulent telemedicine, cardiovascular and cancer genetic testing and DME schemes. 21 individuals (doctors, laboratory executives, hospital executives and marketers) were charged for their involvement in healthcare kickback and money laundering conspiracies. Additionally, 33 doctors and healthcare executives agreed to pay over $32 million to resolve FCA allegations for their involvement in the scheme.  The criminal and civil cases allege the Defendants unlawfully enriched themselves by paying and receiving illegal kickbacks in exchange for laboratory referrals.

Physicians were allegedly incentivized to make referrals to critical access hospitals and an affiliated lab in exchange for kickbacks that were disguised as investment returns.  Marketers were incentivized to order, arrange for, or recommend the ordering of services from critical access hospitals and an affiliated lab in violation of the AKS.

Critical access hospitals partnered with a clinical laboratory where the clinical lab’s blood tests were billed by the hospitals as outpatient services with the hospitals charging insurers a much higher rate than the clinical lab could receive.  The hospitals used a network of marketers to operate MSOs that offered investment opportunities to physicians which were really payments for physician referrals.  The clinical lab gained and increased referrals it received through this scheme.

Sacramento Area Home Health Care and Hospice Agencies Owner Sentenced to 18 Months in Prison for Conspiring to Defraud Medicare

CA. Defendant owned and controlled, with her husband, home health care and hospice agencies, and the two certified to Medicare that they would not pay kickbacks in exchange for Medicare beneficiary referrals to their agencies. Despite the certifications the Defendant paid and directed others to pay kickbacks to multiple individuals for referrals, including employees of health care facilities, and employees’ spouses.

Ashland City Physician Charged In Federal Health Care Fraud Conspiracy - Indictment Alleges More Than $41 Million in Fraudulent Medicare Claims

TN. Defendant, physician in an alleged telemedicine conspiracy, allegedly worked for telemedicine companies that arranged for physicians to prescribe a variety of DME, topical creams, and Cancer Genomic testing for Medicare beneficiaries. He and his co-conspirators allegedly paid and received kickbacks and bribes in exchange for signed doctors’ orders and prescriptions, which were submitted to Medicare for services and treatments that were not medically necessary and not eligible for reimbursement. The Defendant allegedly signed doctors’ orders electronically without having established a required patient/doctor relationship, and issued orders and prescriptions based on only a brief telephonic conversation, or often with no conversation at all and without seeing or physically examining the patient, and without considering medical necessity for the treatment prescribed.  The Defendant was allegedly paid by telemedicine companies a “per visit” fee which constituted illegal kickbacks and bribes.

July 20, 2022 OIG News Release

Inform Diagnostics Agrees to Pay $16 Million to Resolve False Claims Act Allegations of Medically Unnecessary Tests

MA. Defendant, clinical laboratory provides anatomic pathology services to physician practices, admitted that it routinely and automatically conducted additional tests on biopsy specimens prior to a pathologist’s review and without an individualized determination that the additional tests were medically necessary. The Federal government contended this practice resulted in performance of many tests that were medically unnecessary that were submitted to Federal healthcare programs for payments as false claims.

The matter was initiated by a Quit Tam case.

Physician Assistant Is Indicted For Role In $10 Million Medicare Fraud Scheme

NC. Defendant, physician assistant, allegedly worked as an independent contractor for a physician staffing and telemedicine company. During that time, he allegedly signed fraudulent prescriptions for medically unnecessary genetic testing, specifically cancer genomic and pharmacogenetic testing for Medicare beneficiaries. The Defendant allegedly never met, saw or treated these beneficiaries, and had only brief telephone conversations with them, or no interactions with beneficiaries whatever.  The indictment alleges that the Defendant falsified medical records in connection with the prescriptions to conceal  that he was not the treating physician and that he did not conduct medical evaluations or examinations, and that he falsely certified that the tests were medically necessary.  Contrary to his claims, the indictment alleges the Defendant had neither pre-existing provider-patient treatment relationships with, nor plans to pursue further care for the Medicare beneficiaries.   It is alleged that the telemedicine company and its clients provided the Defendant with pre-populated prescription forms and related records for patients who were pre-selected for genetic testing, which the Defendant electronically signed and returned.

July 19, 2022 OIG News Release

Attorney General Alan Wilson announces North Carolina man arrested on Medicaid fraud charges in South Carolina

SC. Defendant, owner and operator of Clearscreen LLC, allegedly obtained more than $10,000 with intent to cheat and defraud the SC Medicaid program. The Defendant also allegedly took part in creating and submitting fraudulent documents and claims to SC Medicaid for mental health services not rendered to numerous Medicaid beneficiaries.

July 18, 2022 OIG News Release

Eric Baumann, MD and Eric Baumann, MD, PC Agreed to Pay $224,000 for Allegedly Violating the Civil Monetary Penalties Law by Submitting Claims for Services that Exceeded the Number of Sessions Allowed

AZ. Defendants, physician and his PC, entered into a settlement agreement with OIG to resolve allegations that the Defendants submitted claims to Medicaid for facet joint injections and denervations that exceeded the allowable number of sessions in a rolling 12-month period.

CIVIL MONETARY PENALITIES AND AFFIRMATIVE EXCLUSIONS REPORT

California Pain Specialist Agrees to Settle Alleged Receipt of Kickbacks from Pharmaceutical Companies Purdue Pharma and Depomed

CA. Defendant, pain specialist, agreed to settle allegations that he prescribed specific medications manufactured by Purdue and Depomed Inc. in exchange for payments for speaking and consulting work, which payments violate the AKS. As such the associated claims to Federal healthcare programs are rendered false.

July 15, 2022 OIG News Release

Quincy Woman Pleads Guilty, Sentenced to Prison for Fraudulent Billing Scheme for Behavioral Health Services Not Provided - Owner of Fortitude Counseling Ordered to Pay Restitution, Barred from Providing Services for or Billing MassHealth

MA. Defendant, owner of a behavioral health clinic, pled guilty for allegedly billing for substance use disorder and/or mental health services she did not perform either because she was incarcerated or out of the country; billing for services not rendered by licensed or supervised employees; and billing for services under the name and number of providers who no longer worked for her clinic and who did not provide the services. She allegedly received payment from private insurers for services not rendered. The Defendant was also arraigned on additional charges in connection with billing Medicare for false claims for services not rendered.

Twin Falls Provider Sentenced for Fraud and Obstruction of a Medicaid Fraud Investigation

ID. Defendant pled guilty in April for allegedly billing Medicaid for services she did not provide. It was determined that the services were provided while the Defendant was out of state on several occasions and billed for services to a family member in ID at the same time.

July 14, 2022 OIG News Release

Laurus Labs Agreed to Pay $50,000 for Allegedly Violating the Civil Monetary Penalties Law by Failing to Submit Timely Pricing Data

NJ. Defendant entered into a settlement agreement with OIG to resolve allegations that it failed to submit timely certified monthly and quarterly Average Manufacture’s Price (AMP) data to CMS for certain months and quarters in 2021. The Medicaid Rebate Program requires the reports.

CIVIL MONETARY PENALITIES AND AFFIRMATIVE EXCLUSIONS REPORT

Saud Siddiqui, MD and Columbus Spine Specialists Agreed to Pay $219,000 for Allegedly Violating the Civil Monetary Penalties Law by Submitting Claims for Non-Covered Services

OH. Defendants, physician and his LLC, entered into a settlement agreement with OIG to resolve allegations that Defendants submitted claims for monitored anesthesia care in conjunction with intraarticular facet joint injections or medial branch blocks where such monitored anesthesia care was routinely billed, which is not covered by Medicare Part B.

CIVIL MONETARY PENALITIES AND AFFIRMATIVE EXCLUSIONS REPORT

July 7, 2022 OIG News Release

Richmond County Ambulance Agreed to Pay $1.5 Million for Allegedly Violating the Civil Monetary Penalties Law by Submitting Claims for Services Covered by the SNF Consolidated Billing Payment

NY. Defendant, ambulance firm, entered into a settlement agreement with OIG to resolve allegations that Defendant submitted claims to Medicare Part B for ambulance transportation to and from SNFs where such transportation was already covered by the SNF consolidated billing payment under Medicare Part A.

CIVIL MONETARY PENALITIES AND AFFIRMATIVE EXCLUSIONS REPORT

July 6, 2022 OIG News Release

Bruce M Hertz, MD Agreed to Pay $61,000 for Allegedly Violating the Civil Monetary Penalties Law by Receiving Remuneration in Exchange for Ordering Durable Medical Equipment

IL. Defendant, physician, entered into a settlement agreement with OIG to resolve allegations that Defendant received remuneration from a telemedicine company in form of monetary payments related to purported telemedicine and diagnostic consultations. The Defendant allegedly solicited and received the remuneration in exchange for ordering DME that was paid for by Medicare.

CIVIL MONETARY PENALITIES AND AFFIRMATIVE EXCLUSIONS REPORT

July 5, 2022 OIG News Release

Michael Dalton Hanowell, MD, Hanowell Spine Clinic, and Hanowell Pain Management Agreed to Pay $409,000 for Allegedly Violating the Civil Monetary Penalties Law by Submitting Claims for Services that Exceeded the Number of Sessions Allowed

GA. Defendants, physician and his LLC, entered into a settlement agreement with OIG to resolve allegations that Defendant submitted claims to Medicare for facet joint injections and denervations that exceeded the allowable number of sessions in a rolling 12-month period.

CIVIL MONETARY PENALITIES AND AFFIRMATIVE EXCLUSIONS REPORT

[1] Not included in the summaries are prosecutions related solely to drug diversion and inappropriate prescriptions, patient fiscal or physical abuse, or non-healthcare related matters. The summaries also do not include enforcement announcements of arrests with no report of an indictment or civil complaint.

[2] The summaries should be considered to reflect allegations and not necessarily be considered to be statements of fact.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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