Doctors and Health Care Providers under Unreasonable Threat of Prosecution for Health Care Fraud

The federal government continues to beat the drum of health care fraud with public announcements of robust and record breaking law enforcement roundups and arrests of doctors and other health care professionals.


Press releases from the Attorney General’s Office, Office of Inspector General and other law enforcement agencies tout the excellent law enforcement work from fraud task forces with initials like MSF and Heat for bringing down corrupt health care providers.


Regrettable Mistakes-or-a Clear Failure by Law Enforcement


The undeniable and dirty little secret of these high profile “roundups” is that they often include innocent health care providers who had no intent of defrauding the government or the health care system.


Cases against many health care professionals have been dropped, dismissed or lost after defense lawyers pointed out flimsy evidence, flawed experts and lying witnesses, but not before tremendous damage was done to professional reputations, businesses and personal finances.  Courts have been forced to opine that these cases were the result of regrettable mistakes or that the government failed to do its homework.


More Press Releases…$712 Million

The alleged fraud was the largest ever in Medicare history—a criminal enterprise that netted 243 arrests and involved a scheme that siphoned $712 million out of the Medicare program. Most likely, the arrests this past June by the Medicare Strike Force (MSF) did little to quell the overwhelming public suspicion that the federal government is plague by waste and fraud, according to a HuffPost/YouGov poll taken two years ago, a suspicion that has cranked up aggressive law enforcement techniques in identifying and prosecuting health-care fraud.


The Medicare Strike Force has a recent aggressive history of massive roundups designed and executed for maximum public relations; a law enforcement tactic every experienced defense lawyer assumes will ensnare innocent professionals who were operating in good faith.


$260 Million, $223 Million


Just last year a MSF team charged 90 individuals with false billing the Medicare program for approximately $260 million. That scheme involved 27 medical professionals, including 15 doctors. The year before a MSF team charged seven individuals, including two physicians and three health clinics, in connection with a scheme to false bill Medicare for approximately $223 million.


Unfortunately, Texas health care officials were prominently indicted in two of these three massive schemes.


In the $712 million scheme, 22 individuals from Houston and McAllen were indicted for alleged false billing to Medicare of over $38 million. Another seven individuals in Dallas were indicted in connection with suspected home health care schemes. In the Dallas case, six house call companies submitted $43 million in alleged false billings under the name of one physician.


In the $260 million scheme, eleven Harris County individuals, including five Houston-area physicians, were indicted for conspiracy to bill Medicare for unnecessary health services. The indictment alleges that the physicians were paid by two co-conspirators to sign off on home health care services that were either not necessary or ever provided.


Extraordinary Figures


Speaking about the $712 million scheme, U.S. Attorney General Loretta Lynch told a press conference: “These are extraordinary figures. They (defendants) billed for equipment that wasn’t provided, for care that wasn’t needed, and for services that weren’t rendered.”  Whether these allegations are supported by more than hot air and puffery we will only find out in the months to come.


Allegations Doc Used Addicts to Perpetrate Fraud


One Michigan physician in the $712 million case reportedly “prescribed unnecessary narcotics in exchange for patients’ identification information, which was used to generate false billings. Patients then became deeply addicted to the prescription narcotics and were bound to the scheme as long as they wanted to keep their access to the drugs.”


Medicare Estimates 10% Lost in Fraud


While these schemes are disturbing by their sheer magnitude, they only represent a fraction of the total estimated Medicare fraud. The Medicare program has a budget that exceeds $500 billion, of which an estimated 10 percent of it is lost to fraud. That’s a staggering $50 billion, if the numbers are to be believed.


Fraud Hot-Spots in Texas


Two of the nine Medicare fraud “hot spots” are in Texas: Houston (4) and Dallas (8).


The Medicare Strike Force was launched in 2007. Individuals arrested and convicted in MSF cases can expect to be treated more harshly than in other health care fraud cases. Sentencing in MSF cases exceeded by 20 percent the sentences imposed in regular health care fraud cases.


Home Health Care, Durable Medical Equipment, False Billing, Unnecessary Testing


Federal Healthcare Fraud Lawyer Houston

The kind of health care frauds and associated conspiracies targeted by the MSF include, but are not necessarily limited to:


  • Claims made for durable medical equipment (DME) supplies, such as power wheelchairs and orthotics;
  • “Compound” medications for use with DME supplies, such as inhalers and nebulizers;
  • HIV infusion clinics;
  • Enteral nutrition and feeding supplies;
  • False billing practices;
  • Fraudulent home health agencies;
  • Independent diagnostic testing facilities; and
  • Physical and occupational therapy clinics.


As a result of these noted areas of increased fraud, the federal government is expanding criminal investigations and demanding more criminal liability in the nation’s health care program. This was evidenced in 2009 when the Department of Health and Human Services (DHHS) and Department of Justice (DOJ) joined together to create the Health Care Fraud Prevention and Enforcement Action Team (HEAT). HEAT effectively made Medicare fraud a Cabinet level priority. Rather than supplant the Medicare Strike Force, HEAT coordinates its efforts with the MSF.


Heath Care Providers Feel HEAT


For example, HEAT coordinated the $712 million takedown by the MSF team. HEAT   did the same thing in 2011 with a MSF takedown of a $530 million false billing scheme. The addition of HEAT in the government law enforcement arsenal has been responsible for a 75 percent increase in individuals being charged with health care fraud.


Finding Fraud Where There Is No Criminal Intent


The problem inherent in these kinds of task forces is that they tend to criminalize what is nothing more than mistakes or civil regulatory violations. In his 2014 informative pieceHealth Care Fraud: What’s Intent Got to Do With It,” John G. Martin, a New York attorney who specializes in health care fraud matters, offered this observation about health care fraud prosecutions:


“The concept of fraud and fraudulent intent seems simple enough to apply, at least on the surface. But something about placing the words ‘health care’ in front of these terms tempts federal prosecutors to broaden the definitions, and to seek to include within their reach conduct which, although admittedly wrong on some level, is already addressed through regulatory prohibition and punishment, and to substitute prison sentences for fines and debarments historically used to sanction such conduct. Using a wrong billing code, failing to police management and billing practices of others, or suggesting to doctors that they legally prescribe certain medications, have resulted in jail sentences.”


Innocent Doctors and Health Care Professionals Exposed to False Allegations


Innocent physicians and other health care professionals can get caught up in these federal strike force investigations because there are so many complex and conflicting statutes, regulations and agency opinions that govern health care programs. It is often difficult to determine the correct manner to bill for certain services without consulting with a team of regulatory lawyers.  As the Fourth Circuit Court of Appeals noted more than two decades ago:


“There can be no doubt but that the statutes and provisions in question, involving the financing Medicare and Medicaid, are among the most completely impenetrable texts within human experience. Indeed, one approaches them at the level of specificity herein demanded with dread, for not only are they dense reading of the most tortuous kind, but Congress also revisits the area frequently, generously cutting and pruning in the process and making any solid grasp of the matters addressed merely a passing phase.”


Heath care Regulations Too Complex, Obtuse


In the ensuing two decades, health care laws and administrative regulations have become even more obtuse. It is little wonder that more acts of regulatory noncompliance result in criminal charges, especially when “extraordinary” numbers are involved. Federal prosecutors understand that courts are uniformly reluctant to find that the government has failed to prove its case or elicit sufficient evidence to support certain jury instructions allowing findings of criminal conduct. They also understand that juries find it hard to understand how a 712 million dollar billing problem could possibly be a mistake.


Criminal Prosecutions Threaten Health Care System


It is these federal prosecutors, not budget-cutting politicians, who may ultimately bring about the demise of the federal health care system. John Martin explains:


“The theory of criminal liability—that once you sign the Medicare application you commit health care fraud if you ever violate a Medicare regulation—is stunning in its breath. If widely accepted, it has the potential to subject every Medicare provider to at least the threat of criminal prosecution for minor regulatory violations. As Medicare reimbursement rates continue to drop, and fewer and fewer providers are willing to participate in a program that pays less than private insurance and requires hours, more bureaucratic headaches to get claims paid, an expansion of criminal liability for Medicare noncompliance may be the tipping point at which the already existing shortage of Medicare doctors becomes an actual crisis.”


Punishment for Health Care Fraud Harsh


Section 1347, Title 18, United States Code, is the federal health care fraud statute. The penalty for violating it is a steep fine, in some cases as high as three times the amount submitted to Medicare, and term of imprisonment not exceeding ten years, unless serious bodily injury results which increases the term of imprisonment to not more than twenty years. If a violation of death results from a violation of this subsection, the imprisonment range increases from any number of years or for life.


Virtually every U.S. Attorney’s Office has a Health Care Fraud Section that prosecutes these offenses. Federal prosecutors work closely with HEAT and MSF teams to relentlessly pursue doctors, other health care professionals, home health care services, ambulance companies, medical equipment suppliers and physical therapy clinics they suspect have cheated Medicare or Medicaid programs.


Law Enforcement Techniques Seek Prison and Bankruptcy


Federal prosecutors not only push for severe prison sentences upon a conviction for health care fraud but they also work closely with prosecutors in Asset Forfeiture Sections to reclaim assets they believe were proceeds of the health care fraud. For example, in the Fiscal year 2013, the Federal government won or negotiated over $2.6 billion in health care fraud judgments and settlements.


If you believe you are under investigation for health care fraud, or you have already been arrested, it is in your best interest to contact an experienced criminal defense attorney today.