Health Care Fraud Blog

The AP does an interesting story on the influence of organized crime on Medicare Fraud, including some violence associated with the schemes. Former drug dealers and mobsters are getting more involved in the fraud due to the lower criminal penalties and larger amounts of money available than drug dealing, loan sharking or other organized crime activities. I recall one case in which a former drug trafficker explained why he moved to Medicare Fraud, “I got older, didn’t want to run around so much and no one shoots at you.”

For more, click here.

This past Sunday night, 60 Minutes ran an excellent exposé on the $60 billion Medicare Fraud crime wave sweeping the country. 60 Minutes correspondent Steve Kroft spent some time in Miami this past August with FBI Special Agent Brian Waterman getting an overview of how Medicare fraud is perpetrated by DME scammers.

South Florida is the epicenter of Medicare fraud, so there was plenty to report. DOJ prosecutor and Healthcare Fraud Strike Force leader, Kirk Ogrosky was also interviewed and said Medicare fraud is "way bigger than the drug business in Miami now." Waterman and Ogrosky agreed that the criminals perpetrating Medicare fraud are more sophisticated than before.

"They've figured out that rather than stealing $100,000 or $200,000, they can steal $100 million. We have seen cases in the last six, eight months that involve a couple of guys that if they weren't stealing from Medicare might be stealing your car," Ogrosky explained.

"You know, we were the king of the drugs in the '80s. We're king of healthcare fraud in the '90s and the 2000's," Waterman added, speaking about South Florida.

To read the transcript of the 60 Minutes segment click here.

To watch, click here.

Dr. Jeffrey Freidlander of Lakeland , Florida was charged in the Middle District of Florida with trafficking in controlled substances including oxycontin, morphine and hydrocodone. The indictment alleges that the physician pre-signed prescriptions and allowed his staff of non-physicians to issue a large number of prescriptions for controlled substances. However, latest Indictment also alleges health care fraud for a number of purported types of false claims to Medicare including submitting claims for physical therapy procedures done by massage therapists.

In addition, the physician and several of his staff are charged with submitting claims for anesthetic procedures required to be performed by a physician called facet joint injections when in actuality unsupervised staff were performing much less expensive and complex trigger point injections.

The Medicare fraud allegations are the result of a superseding indictment (click here and here), that is, new charges added to the original indictable offenses. This apparently arises from the cooperation of one of the staff who had entered into a plea agreement with the government. Although the Medicare related allegations, if proven, would constitute fraud; it is generally not the types of fraud often pursued criminally by the federal government unless the dollar amounts are substantially high. It certainly appears that the fraud is the dog wagging the tail of the drug trafficking allegations. It would be interesting if that is also the route pursued in other investigations related to the dispensing of pain medications although most practices that specialize in pain management do not also provide other types of services reimbursable under Medicare.

For more click here.

The health care fraud bill past last year by the Florida Legislature had a number of “get tough” provisions; including an extended list of disqualifying offenses for licensure, including some misdemeanors or other minor offenses. The law includes that a drug or fraud conviction within the last 15 years would disqualify some professionals from licensure.

This article talks about the fact that the statute will likely result in the denial of the renewal of licenses for a number of professionals for minor indiscretions in their distant past. Often when you see numbers in statutes, such as the 15 year figure here, you might believe the number is tied to some study, policy or criteria; but often the number is just pulled out of thin air. Here, for example, those professionals aren’t trustworthy enough to engage in a profession for conduct fifteen years prior. However, in court proceedings, a conviction, actually the completion of a sentence, greater than 10 years old is generally inadmissible to impeach a person and is considered too remote to have application to the person’s credibility. So to work a distant conviction would be relevant, but to testify under oath, not.

The 15 year provision seems somewhat harsh and really it doesn’t make any sense. Most careers for health care professions requiring advanced degrees start after college and graduate school, so people are generally in their twenties before they actually start their profession. However, if you were arrested for having marijuana at 18, you could not apply to the state of Florida to be a pharmacist until you were at least 33. It seems that if you are giving a time limitation at all, 15 years seems somewhat arbitrary. Perhaps there should have just been a ban, the result is the same.

For more, click here.

As a follow up to last week’s posting on pain management enforcement, we indicated that investigations concerning abuse in pain management focus on the treatment as opposed to a fraudulent claim.

There is no crime of practicing bad medicine; physicians in these cases are charged under narcotics laws for trafficking using the same laws as are used for drug dealers. Under federal law, that a physician issued a prescription for a legitimate medical purpose is only a defense to a charge of narcotics trafficking and not an exclusion under the statute. In many senses, every time a physician issues a prescription or dispenses a controlled substance, the physician is making a judgment that subjects him or her to potential criminal liability.

The question generally asked by investigators is whether the physician has given up his role as a physician and turned into a narcotics trafficker. In pain management, the propriety of issuing a prescription and the medical judgment is what is called into question. Often when health care providers are investigated or arrested for fraud or abuse, not much is heard from actual patients.

Interestingly, the reaction to search warrants being issued at your doctor’s office can vary, it appears the physician at the heart of the investigation, Dr. Sam Jahani, does have some supporters and detractors among his patients. The Denver Post; Channel KJCT8 and NBC 11 News posted some of those reactions below. The NBC11 article features a patient who says the physicians caused her and her husband to be drug addicts, the others feature some positive reactions by patients.

Pain Management, among other forms of drug related treatment, has been receiving substantial scrutiny lately. Unlike some other fraud or abuse investigations predicated upon whether services were provided or claims were fraudulent, the primary focus is the treatment, why the physician is issuing particular prescription(s). In prescribing medications, are physicians treating patients or are they merely feeding client drug habits for a price?

The DEA has been aggressive in investigating and prosecuting some physicians for over prescribing medications. However, on the legislative side, federal law has lagged because the issue relates the practice of medicine itself, which is a state issue, not federal. The Ryan Haight Act, to outlaw most internet pharmacy operations, is a notable exception. The statute specifically prohibits a physician from issuing a prescription for a controlled substance where the internet is involved unless there has been at least a physical examination of that patient. Many states have tightened up statutes related to certain types of treatment: pain, weight loss, drug abuse treatment among others.

In conducting their investigations the authorities are relying more and more on numbers as an indicator of guilt, that is the amount of drugs prescribed and ordered. This year, Florida joined a number of other states in passing legislation to track controlled substance prescriptions by all providers in the state. The purpose is investigative, to focus in on physicians and patients, to prevent over prescribing of medications, prevent doctor shopping and to shut down purported “pill mills.”

In addition, the DEA, uses its own system, ARCOS (Automation of Reports and Consolidated Orders System), to track commercial purchases of controlled substances by distributors and providers. Providers and wholesalers who purchase large quantities of particular controlled substances, such as Oxycontin, can generally expect to receive some level of scrutiny from the DEA based upon the ARCOS reports. In many cases this can lead to a form of blacklisting, wherein wholesalers, after being questioned or warned about a particular provider, refuse to sell that provider out of fear for their own licenses.

While there is a substantial focus on Florida , Broward County alone was indicated to have 180 pain management clinics in a recent Sun Sentinel article, prompting the legislation and a visit from the National Drug Czar. However, the law enforcement efforts are cropping up all over on the state and federal level. Interestingly, days after a speech by the National Drug Czar in Colorado , raids were conducted by Federal officials on the offices of several doctors, both of whom have had other problems.

For more, click here.

MIAMI, FL (October 12, 2009) Today the editorial board of the Miami Herald weighed in on the national health care reform debate by pointing out that the current health care system - Medicaid and Medicare - has insufficient front-end mechanisms in place to detect fraud, waste and abuse and by calling for stiffer sentences saying, “unless penalties for fraudsters who steal millions of dollars are toughened so that the prison sentence is more than a legal slap, they'll keep scamming.”

The Herald offered up some eye opening statistics. Since 2005, federal prosecutors in South Florida have charged more than 900 Medicare offenders in cases totaling more than $2 billion in fraudulent claims. Across the U.S., taxpayers are hit with $60 billion in healthcare fraud each year.

In an effort to shape national healthcare policy, the editorial urged called on the President to press for more investigators to catch abuses when claims are first filed -- not down the road when government investigators and auditors eventually detect that millions have been erroneously paid out to crooks, some of whom have flown the coop.

According to The Herald, “health care reform bills [must] include more accountability, but unless there's sufficient money to enforce the rules and nab the scammers it won't get done right.” To read the editorial, click here.

MIAMI, FL (September 29, 2009) Defendant Daniel Martinez, of Davie, Florida, was sentenced for his participation in a $20 million health care fraud and money laundering scheme. U.S. District Judge Paul C. Huck sentenced Martinez to a total of a 150 months' imprisonment followed by an additional 18 months of home confinement. For more: Click here.