Fraud by Hospitals, Laboratories, Doctors & Other Healthcare Providers
Morgan Verkamp has handled numerous cases of fraud involving healthcare entities like hospitals and laboratories, or healthcare professionals like doctors, nurses, and medical technicians. These are the entities and people trusted most by patients during vulnerable, scary, and often distressing times in their lives, and they are supposed to be committed first and foremost to patient health and safety. So, when healthcare providers put their own financial interests in front of a patient’s best interests, the resulting fraud is not only a gross abuse of the system, but can have literal life-or-death consequences.
Whistleblowers are often the first line of defense in protecting patients from fraud, and many of our clients are nurses or physicians who are compelled to take great personal risks to alert the government to the misconduct they have witnessed. Hospital billing and coding experts, practice managers at physician practice groups, or any other healthcare insiders are ideally situated to discover and report conduct like kickbacks, billing fraud (like upcoding or unbundling), performance of unnecessary medical procedures, and submission of false cost reports. Insiders are also the first to know when a company has devised a new and creative way to defraud the government. But being an insider is not a requirement, and we have succeeded on cases brought by competitors. Contact us so we can help you figure out if you have a healthcare fraud case to bring forward.
Morgan Verkamp’s lawyers are experts in handling False Claims Act cases related to healthcare kickbacks. Our cases have returned hundreds of millions of dollars in settlement of kickback allegations alone.
Kickbacks, which are the payment of a bribe to induce one person or entity to act favorably to another, are certainly not unique to the healthcare field. But the potential consequences of a healthcare provider acting with improperly influenced judgment are so dire that Congress has enacted two powerful statutes that punish the payment of remuneration to a provider to induce referrals: the Anti-Kickback Statute and the Stark Law.
Healthcare kickbacks can take the form of a simple cash-for-referrals scheme or may be a complex arrangement with pass-through entities and disguised forms of remuneration. But, in any form, the prohibition is simple: It is illegal for a healthcare provider to pay for referrals of Medicare or Medicaid patients. It is also illegal for a doctor to refer these patients to an entity in which she has an ownership interest or one that has paid her or provided anything else of value (like free rent, for example). If a physician has a relationship with an entity that violates the Anti-Kickback Statute or Stark Law, then every referral made by the physician to the entity is a false claim and actionable under the False Claims Act.
Telemedicine is the practice of substituting an in-patient visit with a virtual one (either by video or telephone) for evaluation, diagnosis or management of a medical condition. Telemedicine is not a new concept, but, prior to Spring 2020, Medicare only paid a telehealth benefit in limited circumstances. However, when the Covid-19 pandemic was declared a public health emergency in early 2020, Medicare modified its telehealth policies in an effort to encourage more patients to stay home rather than travel into a doctor’s office. One of those changes allowed healthcare providers to bill and receive payment using the same codes that they would have used if the service had been delivered in-person.
Telemedicine was ripe for fraud even before Medicare expanded its benefits in 2020. For example, fraud schemes involving telemedicine include the selling of prescription data to pharmacies, soliciting Medicare beneficiaries to participate in genetic tests without physician oversight or actual medical necessity, kickbacks paid to healthcare providers in exchange for prescriptions or referrals, and prescribing medically unnecessary treatment or durable medical equipment.
Given the Medicare telemedicine benefit expansion in the 2020 Covid-19-related CARES Act, fraud related to telemedicine services is likely to expand in the coming years. Healthcare providers, office staff, administrators, and patients should all be aware of potential fraudulent schemes like billing for services not provided, upcoding, billing for services that are not medically necessary, or billing for services rendered by unqualified health professionals.
Upcoding, one of the more common fraudulent healthcare schemes, occurs when medical providers manipulate or falsify the bill they send to the government for treating a patient. Doctors, clinics, and hospitals bill Medicare and Medicaid using numeric codes, each of which represents a particular type and level of service. “Upcoding” happens when a healthcare provider bills for a medical service using a code that applies to a different, usually more complex, service that is reimbursed for more money.
For example, say a physician is entitled to bill Medicare for an office visit for an uncomplicated patient using a code that pays a flat rate of $50 per patient. If a patient has a disease or condition that makes his treatment more complicated, the doctor may be able to use another code to indicate the increased level of medical care provided to that patient, and the doctor could then receive a payment of $100 for that patient’s office visit. If a doctor routinely bills Medicare for the code that reimburses at the higher rate regardless of the patient’s condition, then the improperly inflated claims have been upcoded. Every upcoded claim is a false claim that is actionable under the False Claims Act.
Similar to upcoding, “unbundling” is fraud in the way a bill is submitted to the government. Medicare and Medicaid often “bundle” together certain codes for procedures that are commonly performed together – like when several different tests are run on one blood sample, or when a doctor stitches up an incision after a surgery. Medicare and Medicaid get a discount on the procedures when everything is done together. Unbundling occurs when a provider bills Medicare and Medicaid as though each procedure was done separately, so the total amount paid by the government far exceeds the “bundled” rate.
Unnecessary Medical Procedures
One of the basic tenets of government healthcare is that a medical treatment, procedure, or test must be “medically necessary” for the government to pay for it. There are two kinds of unnecessary medical procedures commonly seen in False Claims Act cases.
Sometimes a provider will order tests or perform procedures that are not necessary for a patient’s specific condition or are outside the generally-accepted standard of care. If, for example, a cardiologist orders the highest-level EKG for every Medicare patient who walks in the door regardless of a patient’s condition, that cardiologist may be routinely prescribing medically unnecessary procedures.
In other cases, a provider properly prescribes a medically necessary test or procedure, but the testing facility or laboratory performs expensive additional tests that go beyond what was ordered or what the patient consented to, and the cost of those tests is billed to the government. Although the testing may have been medically necessary if properly ordered, it is not necessary when the lab performs the testing on its own. This type of scheme is known as “reflex testing.”
False Cost Reports
Hospitals and various other providers are required to submit Annual Cost Reports to Medicare. The Centers for Medicare and Medicaid Services (commonly referred to as “CMS”) uses these reports to determine how much the government owes the hospital for the prior year, or sometimes how much the hospital owes the government. The cost report is considered the final claim to the government relating to items and services provided during the year. Cost reports can include building expenses, diagnostic equipment purchases, other capital improvements, payments to doctors, payments for supplies, and almost any other kind of financial transaction incurred by a hospital. When hospitals misallocate or fabricate cost items on a cost report, it can result in excessive reimbursement from Medicare. In other words, a hospital would be paid more taxpayer money than it should have because the hospital said it costs more to run the facility than it actually does. Because Medicare uses cost reports to determine hospital payments for future years, a fraudulent cost report has a continuing impact on Medicare payments.
Morgan Verkamp’s Representative Cases:
The Morgan Verkamp team has litigated many cases involving fraud by hospitals, laboratories, and other healthcare providers – cases that we filed and cases that other law firms brought us in to litigate after the government decided not to intervene. We have successfully resolved dozens of cases where our clients alleged healthcare fraud.
Click the links below to read about some of our notable hospital and healthcare provider settlements or click here to contact us to evaluate your case.
- U.S. ex rel. Gale v. Omnicare, Inc.
- U.S. ex rel. Beaujon v. Hebrew Homes Health Network, Inc.
- U.S. ex rel. Daughtery v. Bostwick Laboratories
- U.S. ex rel. Pogue v. Diabetes Treatment Centers of America
- U.S. ex rel. Emanuele v. UPMC Hamot
- U.S. ex rel. IIRT, LLC v. Sightline Health / ION
- U.S. ex rel. Luke v. HealthSouth