April 24: Week That Was in Healthcare Fraud and Malpractice
By - Here is a general roundup of the past week’s developments in healthcare fraud and malpractice, as reported by the Department of Justice and the Office of Inspector General. The crimes reported below result in multiple millions of dollars in healthcare fraud and the possibility of extensive prison time.
TX hospital violates False Claims Act, pays $21.7M
Citizens Medical Center, a county-owned hospital in Victoria, Texas, will pay $21.7 million to end a lawsuit for violating the False Claims Act and engaging in improper financial relationships with referring physicians, announced the Department of Justice.
The methods in which Citizens Medical Center compensated a group of physicians failed to fulfill federal healthcare regulations. Citizens Medical Center additionally allotted cardiologists compensation in excess of fair market value of their services and paid bonuses to emergency room physicians in violation of the Stark Statute which restricts the financial relationships hospitals may have with physicians involving patient referrals.
“The Department of Justice has longstanding concerns about improper financial relationships between health care providers and their referral sources, because those relationships can alter a physician’s judgment about the patient’s true health care needs and drive up health care costs for everybody,” says Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division.
Citizens Medical Center will pay three doctors’ attorneys $1.8 million within 10 days.
GA dermatology lab violates False Claims Act, pays $3.2M
Violation of the False Claims Act was an unfortunate trend this week within the healthcare industry, as evident via a second example of its violation. Family Dermatology P.C. and its affiliates are involved in a hefty settlement for violating the False Claims Act and the Stark Statute for engaging in improper financial relationships with employed physicians.
Dermatologists employed at an in-house pathology lab, Nelson Dermatopathology, improperly billed Medicare for dermatopathology analyses performed on specimens sent to a lab via employed physicians.
The expansion of the business at large was funded via funds garnered from illegal referrals and inflated Medicare payments.
“Physician self-referrals that violate the Stark Statute undermine medical decision making, jeopardize patient care and cost the taxpayers money,” says Attorney A. Lee Bentley III of the Middle District of Florida. Bentley adds, “Patients need to have confidence that the advice they receive from their physicians is based on sound medical practice, not illegal financial relationships between providers. We will continue to investigate and pursue these types of violations in our district.”
ManorCare provides medically unnecessary therapy
Further continuing this week’s theme of violation of the False Claims Act, HCR ManorCare, one of the nation’s largest healthcare providers, with about 281 skilled nursing facilities across 30 states, faces three False Claims Act lawsuits.
ManorCare, owned by the Carlyle Group, allegedly knowingly and regularly submitted false claims to Medicare and Tricare for rehabilitation therapy services deemed medically unreasonable and medically unnecessary, according to reports from the Department of Justice.
ManorCare may have wrongly coerced administrators and rehabilitation therapists to match financial goals that were not reasonable. If there is truth to such actions, this likely meant Medicare and Tricare patients received medically unreasonable and medically unnecessary services. The unrealistic billing goals were possibly designed to increase revenue substantially while ignoring patients’ clinical needs. Managers and therapists may have feared termination if they failed to comply with such measures, reports state. Additionally, ManorCare possibly increased its Medicare payments by keeping patients in its facilities when it was medically unreasonable to do so and patients should have been free to leave.
“We strive for a system whereby health care providers provide reasonable and necessary services without overbilling Medicare for unreasonable and unnecessary services” says Attorney Dana J. Boente of the Eastern District of Virginia. “We will continue our robust investigations of the companies operating in this important sector of our economy.”
