Health Care Fraud Blog

Alex Carrazana was a Medical Assistant. He is currently serving 72 months in prison for Medicare Fraud. He was for a time employed by a clinic called Midway Medical. At that clinic his job was to help with the infusion of drugs to HIV patients for therapy for a condition called thrombocytopenia, a bleeding disorder. He was not an owner, operator or licensed health care professional. Nearly everyone connected to the alleged conspiracy and probably even the government would concede he was not a major participant in the crimes (by way of disclosure, we represented other parties in this matter).

According to the government and the plea proffers of the co-defendants who were physicians, physicians assistant and owner of Midway, the clinic billed Medicare for approximately $8,000,000 in false claims. The claims were for infusion of a drug, RhoGAM, which in many instances was not provided. It was somewhat fortunate the drug wasn’t provided because the blood tests, detailing the need for the infusion therapy, had false data because the blood of the patients was altered by a person hired by the owner to mix the blood to generate false results.

There were apparently some facts that indicated Mr. Carrazana was aware fraud was going on and at a certain point he quit, according to his lawyer because he discovered what was going on and wanted out. Rather than pleading guilty with a plea agreement as most of the co-defendants did, he plead openly to the court because he and his lawyer disagreed with the facts the prosecutors would have required him to agree to as well as several sentencing guidelines adjustments; and he would have given up his right to an appeal.

By pleading guilty without a plea agreement, he and his lawyer could challenge at sentencing and on appeal everything from the amount of loss alleged down to his role in the clinic and the conspiracy. They did exactly this, and it did not turn out well - he unfortunately received a higher sentence than some of the other co-defendants. He appealed and the United States District Court for the 11th Circuit rejected all of his arguments and upheld his sentence. (To read the opinion, click: here).

The court found that leaving a conspiracy is not enough to cut off responsibility for the acts of co-conspirators after he left, therefore he was responsible for the full $8 million dollars in fraud. In addition, even though Mr. Carrazana did nothing sophisticated himself to aid in the commission of the crime and may have been unaware of the blood mixing, the court held that he should have known that his co-defendants would do something by sophisticated means, so he was also responsible for their acts in that sense.

To read more, click: here.

When it comes to chronic pain, the current DEA war on pain management leads to a question: How much authority should the DEA have over the treatment of patients? According to the Association of American Physicians and Surgeons, “If you’re thinking about getting into pain management using opioids as appropriate: DON’T. Forget what you learned in medical school – drug agents [from the DEA] now set medical standards.” For more on this click: here.

Chronic pain, pain that lasts longer than 24 hours, affects approximately 25 percent of the U.S. population, that is 76 million people, according to the National Centers For Health Statisitics. Of those that reported chronic pain, 43% reported that pain has persisted longer than a year. More than 26 million people report having persistent back pain. Ouch! (To read more on this, click: here).

The treatment options, depending on the cause of the pain involve invasive measures such as surgery and injections, however such results can be short lived. Also, physicians who practice interventional pain find it difficult to get privileges to perform services at hospitals and have very high malpractice insurance premiums. Chiropractic adjustment and physical therapy are less invasive and less expensive, but for chronic pain are also considered by many patients to be of limited use.

What is left is treatment through combinations of other therapies and prescription drugs. The problem for physicians is that pain medications are being prescribed to help a person get through their day, not to solve the underlying medical issue that causes the pain. Therefore, the analysis is very subjective, a combination of the condition causing the pain, the patient’s history of previous treatment, and the amount of prescription drugs that currently work to ease that patient’s suffering. The challenge to the physician prescribing drugs designed to treat chronic pain, opioids, is to discern how much should be prescribed and when and if a patient should be cut off due to potential abuse.

Here is where the war on drugs encounters the reality of medical practice and pain management. As the advice of the AAPS makes clear, doctors are advised to and many doctors stay away from treating pain with narcotics because they are at risk of prosecution or discipline for doing so even when it is a necessary and valid treatment. Accordingly, there is a narrower and narrower pool of physicians willing to treat pain and do so largely in pain management practices. The result is that such physicians prescribe much more pain medications than ordinary physicians, because those are the only patients they see, those physicians will also likely be more liberal in the prescribing of those medications simply because they are so used to seeing chronic pain.

In comes law enforcement, curiously timing high profile raids on pain clinics smack dab in the middle of the Florida legislative session which ends in several weeks while two competing pain management bills are debated. (To read the proposed legislation, click here and here). Reporters, as they do with every law enforcement crime du jour, breathlessly report about how dangerous and prolific “pill mills” are, never once addressing any reason for the need or treatment of pain. Law enforcement describes how oxycontin pills sold to patients in Florida for $5 end up being sold in Kentucky for $20 on the street, without examining whether those people paying those premiums are merely drug addicts, or patients who cannot get pain treatment in Kentucky due to fearful physicians there.

The DEA, using only the vaguest of regulations, declares that physicians treating pain are criminals, dispensing excessive amounts of medications. The DEA does so without legislating, regulating or providing any guidance on the limitations of such dispensing. For example, if the DEA believes no patient should receive more than a certain amount of oxycontin in a prescription, create and publicly debate such a measure.

There is certainly much that can be debated in the treatment of pain and the prescribing of narcotics, but it is rarely debated, often with the words “pill mill” substituting for actual analysis of a much larger and complex issue. Tragically, many of those issues find their way into criminal courts, with jurors instead of health care officials, debating the medical validity of prescription medication dispensing.

According to an article in the South Florida Sun-Sentinel, at least 45 pain clinics opened in Broward and Palm Beach counties in the past year, while state law makers and state and local law enforcement agencies stepped-up their efforts to put an end to the operation suspected “pill mills.”

In August 2008, 66 pain clinics were open for business in Broward and Palm Beach counties combined. The Sun-Sentinel article reports that according to data available from the Florida Department of Health, the number centers issuing narcotic pain medications currently is more than the times what it was in August 2008 - with 122 in Broward to 122 and in Palm Beach County to 108.

Pain clinics “are proliferating despite our efforts," Broward Sheriff Al Lamberti said last week, after state and federal agents executed search warrants at three pain clinics owned or controlled by Christopher and Jeffrey George in Palm Beach County. The Georges' homes were also searched.

No arrests have been made yet, however, a federal law law suit has been filed in U.S. District Court in West Palm Beach. According to the law suit, three of the Georges’ clinics collected $14 million last year and dispensed more than 2.1 million pills. [To read the law suit, click: here.] Additionally, five doctors who worked at the clinics have had their DEA numbers to prescribe pain medications suspended. The doctors can either voluntarily agree to the suspension or can challenge the suspension before a DEA Administrative Law Judge at a hearing scheduled for May.

Independent sources close to the investigation indicate that patient files were properly documented, regular MRI's were required and prescriptions that issued were 100% medically necessary. From time to time, patients who were suspected of phony symptom ology were discovered, refused treatment and escorted off the premises. If you or someone you know has ever suffered from debilitating pain, then no one has to tell you that life can be pure hell without taking pain medication just to get through the day and attempting to perform even the simplest of tasks. The real tragedy in the "gung-ho, rah, rah" attitude of law enforcement targeting pain clinics, is that the overwhelming majority of patients have well-documented injuries requiring pain medication for treatment. These legitimate pain sufferers are the forgotten "victims" who unfortunately wind up as unintended by-product caught in the overreaching net of law enforcement, much like innocent dolphins caught in the nets of profit-driven commercial fisherman.

Palm Beach County and several cities in both counties have temporarily banned new pain clincs, reported by the HCFB here and here. "Palm Beach County is ahead of us [in law enforcement efforts aimed at detecting criminal activities at pain clinics]. We're [Broward County is] trying to play catch up now," Lamberti said. "On the street, [there are] too many targets, not enough deputies. We're really trying to be hard on it because it causes crime in the community. We think they know we are serious."

To read the Sun-Sentinel article, click here.

Florida and a number of states attempting to outlaw so called ambulance chasing in personal injury cases have employed several methods to limit access to records of patients. First, statutes prohibit access to police accident reports for 60-days. Second, statutes as well as professional rules regulating the professional conduct of lawyers and health care license holders prohibit the direct solicitation of patients for services.

Nevertheless, there have been some novel ways developed to get around those laws, including every once in a while someone starting a “newspaper” to use a media exception to the rule regarding access to accident reports. With restrictions on direct access to accident information, a black market for patient information has developed as well as intricate referral networks, including everyone involved in accidents, from tow truck drivers and auto body employees, to ambulance service employees, to hospital employees.

All these involve payments of one type or another, generally in cash, for access to that information and people who employ themselves gathering that information. In a recent case, a Miami man was indicted for a second time for bribing employees, first of an ambulance company, and then hospital employees to get patient information for personal injury attorneys.

To read more, click: here.

In the 1990’s there was a system in place that seemed reasonable at the time. The government hired private companies to audit hospital cost reports on the government’s behalf and to add additional incentive, those companies, generally large insurance companies, would receive bonuses based upon funds recovered. This lead to a sort of system where there were "gotcha" games between the auditors and providers, the providers would try and maximize their reimbursement knowing that the auditors would be specifically looking for places to cut.

Making matters worse, the auditors tended to ignore “errors” that benefited the providers because those errors didn’t benefit the government contractors. So too, the providers, in analyzing and contesting the audits through the appeals process would only report “errors” that benefited the providers. This system eventually led to the prosecution of a number of hospital executives as well as one of the largest whistleblower cases ever. (Click here to read more about John W. Schilling and the case against HCA/Columbia) The government ended that incentive program in part because of the gaming of the system it produced.

Well, it is back again. The government has contractors, called recovery audit contractors, or RACs that receive between 9-12% of overpayment funds they recover on behalf of the government on Medicare audits. In just three years, they have reportedly collected over $1 billion dollars. The only problem, except that the last time it produced somewhat unseemly results, is that these contractors are required to report to law enforcement instances of criminal fraud as opposed to billing errors or overpayment.

To date, only two cases have been referred to for criminal prosecution. The motive, you might suspect, is financial. The RACs don’t get any money for cases referred for criminal prosecution, only for their own recoveries. This suggests that the RACs are erring on the side of overpayment as opposed to fraud, which still benefits the government as well as the RAC and the provider; no harm, no foul. However, the implicit or explicit threat of criminal referral may be an interesting bargaining tool to make these recoveries. Another interesting twist is that the RACs can go back and audit the same providers over and over again, collecting on overpayments (not fraud) no matter how many times the provider makes the same errors.

To read more, click here.

Whatever you do, don't harass the Medicare fraud investigators. A kind of simple rule, if you are committing a crime (no one I represent does that), don’t go out of your way to send harassing emails and phone calls to investigators, including death threats; it tends to incentivise them a bit to arrest you.

To read what happened to one defendant who couldn't get out of his own way, click here.

The City of Delray Beach, Florida, is considering requiring pain management patients to give their fingerprints so those fingerprints can be used to immediately electronically check against a database to make sure the patient is not doctor shopping. That sounds great, but there is currently no electronic patient fingerprint network or database anywhere and for Delray Beach to create and maintain one itself it would cost more than they likely have budgeted for much of the services the city provides.

To read more, click here.

One bill pending before the Florida legislature proposes requiring that all physicians issuing a prescription for Schedule II and III controlled substances use a “multi-state electronic prescribing network” to verify whether a patient is doctor shopping. Unfortunately, no such network exists for controlled substances. In addition, the statute does not provide any way to fund it except for grants from unknown sources. For more, click here.

U.S. Senator Tom Coburn of Oklahoma, who is also a medical doctor, is proposing that the United States root out Medicare Fraud through the use of undercover patients. Actually this is not new a new idea, government agents have in the past used undercover activities for precisely this purpose; recently, undercover agents posing as patients have been used extensively for investigations of pain management clinics.

Part of the problem is that often the undercover agent has to come up with a malady that would be the pretense of the visit. Generally, undercover agents posing as patients generate a false identity as well as a false medical history; sometimes going as far as to use test results, x-rays or the like from other, real patients. Sometimes, for example with pain clinics, the condition could be somewhat subjective; “My back hurts.” Such investigations can have good, bad and sometimes even funny results. In one undercover investigation, a Medicaid fraud agent, posing as a patient going to physician’s offices where it was alleged patients were paid, learned that one of the physicians he went to see diagnosed him with, among other things, erectile dysfunction. On the not so funny side, one department of insurance agent investigating chiropractors posed as a patient and wound up receiving an adjustment that injured his back.

In the Medicare arena, since the program is for persons over 65, the challenge would be to use retired or near retired agents and then address the same quandary; do you falsify conditions or symptoms? This can be more difficult to do with an older agent/patient; some conditions or diagnoses that might lend to potential fraudulent activity by physicians such as cancer and cardiac conditions are difficult to fake. Although scenarios can always be found to avoid a circumstance where a patient will receive certain treatments or injections, sometimes the outcomes are hard to determine.

To read more, click here.

Arnesto Segredo, of Miami was sentenced to 70 months in prison for of conspiring to divert the prescription drugs Serostim and Nutropin AQ. Both drugs are human growth hormones (HGH).

The scheme involved Segredo using first and unlicensed company and then a Florida licensed wholesale company to buy and then resell the drugs that were originally purchased by co-conspirators in California from AIDS patients who were prescribed the drugs which were paid for by the California Medicaid program. The use of HGH by AIDS patients is used to prevent what is called “wasting” or the deterioration of muscle. The drugs are also used on the illegal market, by body builders to bulk up muscle mass.

Mr. Segredo wad convicted by a federal jury after going to trial. Going to trial was a pretty brave act given that the prosecutor’s opening statement to the jury likely contained some form of the following: Desperate, poor, dying people sold away the drugs that helped keep them alive so Mr. Segredo could make a profit; oh, and by the way, Medi-Cal paid for those life saving drugs so Mr. Segredo’s lucre also came at the expense of the hard-working taxpayers of California and the United States.

To read more, click: here.

If a provider discovers that it may have submitted false claims to Medicare or Medicaid, either through errors or through the malfeasance of an employee, the provider is obligated to pay the program back the funds wrongfully obtained. Medicare has a self disclosure protocol that allows providers to report false or erroneous claims but the terms of the protocol does not guarantee that by so doing anyone will avoid triple times damages under the False Claims Act or criminal prosecution.

When a provider self reports, its owners and employees can hope to avoid false claims or criminal liability based upon the benefit of telling Medicare before the false claim is otherwise discovered; whether through a whistleblower or the Program itself. However, often the problem can be large enough to cause serious financial distress to the provider or put other seemingly non responsible employees or owners at risk of criminal prosecution. Once reported, providers generally lose control of what happens; the money is not owed by only the criminal, but also the apparently innocent provider itself. The overpayment cannot be paid back at the provider’s schedule and the provider cannot control who the government decides to hold liable for the fraudulent acts.

Many times when reporting the crimes, others, innocent of the crime, also face scrutiny and the criticism “how could you have not known about this” is directed at the leaders of the organization. Some providers facing these circumstances, based upon a lack of certainty of the outcome, are tempted to end the problem, not report it, and hope that no one figures it out, fearing their own disclosure could be ruinous. This, of course, is the wrong decision, if discovered, the failure to disclose certainly tends to make everyone involved both in the activity and the decision to cover it up look guilty of a crime.

Take the case of the Eye Specialty Group of Memphis . They discovered that a physician employee was diluting the drugs used on patients so he could steal the excess drugs to sell for a profit. However, the provider unknowingly submitted claims to Medicare based upon the doctor’s services as if the doctor had been providing the accurate dose, causing the submission of false claims to Medicare. The provider had purchased all of the medicine it billed for, but the crooked doctor was stealing and reselling the excess medication. So the provider reported the doctor to the authorities and the result was a bill from Medicare for hundreds of thousands of dollars, potential lawsuits by patients, and a lot of really bad publicity.

To read more, click: here.

In an intriguing development in the war on pain, Palm Beach County, Florida, passed an ordinance designed to prevent new pain clinics from opening up and are intending to pass ordinances to curb the practices of existing pain clinics. This is a somewhat unusual development and may form the basis for legal challenges. The county commissioners, with some harsh words for pain clinics, are apparently attempting to regulate the medical profession through zoning regulations.

To read more, click: here.

According to a Department of Justice press release, Miami-Dade County resident Dulce Briceño was sentenced on February 4th to 63 months in prison for her role in a $2.3 million Medicare fraud scheme.

Miami based U.S. District Judge Ursula Ungaro also ordered Briceño to pay $1.8 million in restitution. Originally, Briceño was indicted in the Eastern District of Michigan, but after her arrest in Miami, she consented to have her case transferred to the Southern District of Florida for her plea and sentencing.

Briceño pleaded guilty on Oct. 9, 2009, at which time she admitted that in approximately September 2006, she agreed with the owners of X-Press Center to manage the clinic on a day-to-day basis in exchange for a percentage of the profits the clinic generated. Briceño also admitted that during the time the clinic was open, the clinic routinely billed the Medicare program for services that were medically unnecessary or were never provided. Briceño admitted that she and her co-conspirators at the clinic had purchased only a small fraction of the medications that the clinic billed the Medicare program for providing.

Briceño admitted that Medicare beneficiaries were not referred to X-Press Center by their primary care physicians, or for any other legitimate medical purpose, but rather were recruited to come to the clinic through the payment of kickbacks. In exchange for those kickbacks, Briceño admitted that the Medicare beneficiaries would visit the clinic and sign documents indicating that they had received the services billed to Medicare. Kickbacks paid to Medicare beneficiaries at the clinic, according to plea documents, came in the form of cash and prescriptions for narcotic drugs.

Briceño also admitted that between approximately September 2006 and March 2007, she and her co-conspirators at X-Press Center caused the submission of approximately $2.3 million in false and fraudulent claims to the Medicare program for services purportedly provided at X-Press Center. Medicare paid approximately $1.8 million on those claims.