It’s no secret that healthcare fraud is at the top of the list of hot legal issues, and we see plenty of activity to fight it.
Ileana Hernandez of Manatt, Phelps & Phillips Law Firm, and a member of the firm’s healthcare litigation practice, discusses trends she sees in healthcare fraud prosecutions.
Q: What are some of the trends you see in healthcare fraud prosecutions? I’m especially interested to hear about what’s happening at the federal level.
Hernandez: We’re continuing to see a lot of activity and interest among prosecutors to bring cases involving false claims, kickbacks, and other violations under the False Claims Act (FCA).
These cases usually involve allegations of fraud surrounding the provision of health care to beneficiaries under federal programs such as Medicare and Medicaid or, in some instances, to veterans or members of the armed services. Although we’re seeing a lot of activity and interest among prosecutors to bring these kinds of cases, I think it’s important to keep in mind that not all healthcare fraud cases involve prosecutions under the FCA. We’re also seeing a significant number of investigations and prosecutions brought by other agencies, such as the Office of Inspector General (OIG), involving health care providers who violate the Anti-Kickback Statute (AKS) or who defraud Medicare and Medicaid in other ways, such as through false or inflated claims.
Q: What kind of involvement does the U.S. Department of Justice have in these matters? Are they generally taking the lead on any large-scale investigations and prosecutions?
Hernandez: Generally speaking, the United States Attorneys’ Offices around the country have designated resources that they allocate to healthcare fraud. The Department of Justice, including the United States Attorneys’ Offices and the Criminal Division, also has several specialized units that handle these matters; for example, we have one here in Los Angeles called Strike Force which prosecutes complex criminal cases involving racketeering and public corruption.
Q: What’s the difference between a False Claims Act case and an Anti-Kickback Statute case?
Hernandez: Well, there are really two main differences. These cases involve different statutes with different jurisdictional elements. As you know, the FCA is a federal statute that prohibits false claims for payment submitted to the government–under both the FCA and its qui tam (whistleblower) provisions, and an individual can bring a case on behalf of the government and share in any recovery.
The AKS prohibits offering or paying an illegal kickback for referral of federal health care business. Because it is a felony offense to offer or receive “remuneration” to induce referrals, this is a particularly attractive way for federal prosecutors to go after healthcare fraud.
Q: Are there any particular cases that have stood out in terms of being “the biggest” or “most interesting”?
Hernandez: There are many great examples, but one of the most significant involved what was alleged to be a large-scale home health care scheme set up in several states. The scheme was uncovered after the OIG received a tip from an anonymous source. The scheme involved three physicians who owned home health agencies and six co-conspirators, including two doctors, two medical directors, and two marketers.
The defendants allegedly engaged in a scheme to defraud Medicare by soliciting patients for medically unnecessary home health care services. The defendants’ marketers were accused of paying kickbacks to an M.D in Phoenix, Arizona, to induce him to refer beneficiaries for medically unnecessary home health services that would be billed to Medicare or Medicaid.
Analysis of the referrals revealed that while most of the patients lived in either Ohio or California, 69 percent had never been seen by the physicians who owned the home health agencies.
The scheme resulted in more than $28 million of fraudulent claims to Medicare and Medicaid. In addition, the scheme resulted in more than $20 million in total scheme proceeds. All defendants pled guilty under seal or were convicted following trial, except for one physician who died before charges were filed.