MI Hospital System Pays $84.5M to Resolve Healthcare Fraud Claims

August 14, 2018 - A regional hospital system in the Detroit, Michigan area agreed to pay the federal government over $84 million to resolve allegations that the system violated the Anti-Kickback Statute and the physician-self referral law.

The federal government accused William Beaumont Hospital of engaging in improper relationships with eight referring physicians, which lead to the submission of false claims to major public healthcare programs, the Department of Justice recently reported.

“Offering financial incentives to physicians in return for patient referrals undermines the integrity of our healthcare system,” stated Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division.  “Patients deserve the unfettered, independent judgment of their healthcare professionals.”

A whistleblower who alerted law enforcement authorities of the illegal actions alleged that the hospital system provided compensation “substantially in excess of fair market value” to certain referring physicians. The hospital system also offered the physicians free or under fair market value office spaces.

William Beaumont Hospital leaders used the kickback arrangements to induce and secure the referrals of patients, the Justice Department stated.

READ MORE: How Providers Can Detect, Prevent Healthcare Fraud and Abuse

The compensation and referral arrangements described by the whistleblower violate the Anti-Kickback Statute and physician self-referral law. The federal laws prohibit healthcare organizations from offering, paying, soliciting, or receiving remunerations to induce patient or service referrals covered by federal healthcare programs.

The physician-self referral law, or Stark law, specifically forbids healthcare organizations from billing Medicare for services referred by a physician with whom the organization as an improper financial relationship.

The potential Anti-Kickback Statute and physician-self referral law violations possibly led to false claims being submitted to Medicare, Medicaid, and TRICARE programs, the Justice Department added. William Beaumont Hospital allegedly billed the federally-funded healthcare programs for services stemming from improper referrals, which violates the False Claims Act.

Additionally, the settlement resolves claims that the hospital system potentially misrepresented a CT radiology center as a an outpatient department in claims to Medicare, Medicaid, and TRICARE programs.

To settle all allegations, William Beaumont Hospital will pay $82.74 million to the federal government and $1.76 million to the State of Michigan.

READ MORE: DoJ Memo Limiting Guidance Use to Impact Healthcare Fraud Cases

The hospital system will also enter a five-year Corporate Integrity Agreement with the HHS Office of the Inspector General (OIG). The agreement will include an arrangements review that must be conducted by an independent review organization.

Physician receives 18 months in prison for $30M healthcare fraud scheme

A New York-based doctor will spend 18 months in prison for his involvement in a Medicare and Medicaid fraud scheme, according to a recent Justice Department announcement.

Physician Mustak Y. Vaid posed as the owner of a medical clinic in Brooklyn, New York, when in fact the true owner was businessman Aleksandr Burman. The State of New York requires medical professionals to own and operate medical clinics.

Burman owned and operated six medical clinics in the area between 2007 and 2013. He hired physicians like Vaid to falsely pose as the nominal owners of each of his clinics.

As one of those nominal owners, Vaid signed fraudulent documents that falsely testified to Medicare, Medicaid, banks, and other entities that he was the only owner of Ocean Side Medical of Brooklyn, PC.

READ MORE: Exploring the Fundamentals of Medical Billing and Coding

Additionally, Vaid and the other doctors posing as medical clinic owners aided in the preparation of false records to support fraudulent reimbursement claims submitted to Medicare and Medicaid. Vaid signed off on medical charts that supported patient examinations that never took place and he approved prescription requests and referrals for medically unnecessary or non-existent services and supplies, the Justice Department explained.

In total, the healthcare fraud scheme defrauded Medicare and the State of New York of $30 million.

The Justice Department stated that VAID is the seventh defendant, and first doctor, in this healthcare fraud case who has been sentenced after pleading guilty. Burman, the true owner of the clinics, received ten years in prison in May 2017, while Burman’s former wife, business partner, clinic office management, and other partners received between one to three years in prison.

Four other providers allegedly involved in the healthcare fraud scheme are either awaiting sentencing or their trials.

“The Medicare and Medicaid programs are designed to provide essential medical care to the elderly and the needy, not to enrich corrupt doctors and other fraudsters. The real victims of Mustak Vaid and his co-conspirators are US taxpayers and needy patients with legitimate medical needs,” US Attorney for the Southern District of New York Geoffrey S. Berman stated.

“Today’s sentence sends a strong message that those who cheat Medicare and Medicaid, including physicians and other healthcare providers who abuse their positions of trust, will be held accountable and will face serious penalties,” he continued.

Prime Healthcare Services, CEO pay $65M to settle False Claims Act allegations

One of the largest hospital systems in the nation agreed to settle healthcare fraud claims that allege 14 of its 45 acute care hospitals knowingly submitted false claims to Medicare, the Justice Department reported.

California-based Prime Healthcare Services, Inc., Primary Healthcare Foundation, Inc., and Prime Healthcare Management, Inc. (collectively known as Prime), as well as Prime’s founder and CEO, will pay a total of $65 million to the federal government.

The multi-million-dollar settlement will resolve allegations that Prime devised a “corporate-drive scheme” to boost Medicare inpatient admissions from 2006 to 2013, the Justice Department reported.

The patients targeted as part of this scheme originally sought services in the emergency department at the accused hospitals. The federal government alleged that the inpatient admission for many of the Medicare beneficiaries was not medically necessary because their conditions or symptoms could have been managed in a less costly outpatient or observation care setting.

Additionally, the settlement resolves the claim that Prime hospitals upcoded Medicare claims from 2006 to 2014. The hospitals reportedly falsified information on patient diagnoses, including complications and comorbidities, to maximize Medicare reimbursement.

On top of the $65 million settlement, Prime signed a Corporate Integrity Agreement with HHS OIG. The agreement mandates that the healthcare organization perform “significant compliance efforts” over the next five years and retain an independent review organization to assess the accuracy of Medicare claims.

“This settlement reflects our ongoing commitment to ensure that healthcare providers appropriately bill Medicare,” stated Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “Charging the government for higher cost inpatient services that patients do not need, and for higher-paying diagnoses than the patients have, wastes the country’s valuable healthcare resources.”