Lack of Medical Necessity

January 12, 2016

Kentucky-based healthcare provider Kindred Healthcare, Inc. and its two RehabCare Group subsidiaries agreed to pay $125 million to resolve allegations of violating the False Claims Act by knowingly causing skilled nursing facilities to submit false claims to Medicare for rehabilitation therapy services that were not reasonable, necessary and skilled, or that never occurred at all.  According to the government, RehabCare’s policy has been to achieve the highest Medicare reimbursement level regardless of the clinical needs of its patients, resulting in the provision of unreasonable and unnecessary services to Medicare patients, and its skilled nursing facility customers submitting inflated bills to Medicare covering those services.  The allegations originated in a whistleblower lawsuit filed by Janet Halpin, a RehabCare physical therapist and former rehabilitation manager, and Shawn Fahey, a RehabCare occupational therapist, under the qui tamprovisions of the False Claims Act.  They will receive a whistleblower award of nearly $24 million from the government proceeds of the settlement.  Whistleblower Insider

January 8, 2016

Dr. David G. Bostwick, owner of Virginia-based pathology lab Bostwick Laboratories Inc., agreed to pay up to $3.75 million to resolve charges of violating the False Claims Act for billing Medicare and Medicaid for medically unnecessary cancer detection tests and offering incentives to physicians to obtain Medicare and Medicaid business.  Specifically, Dr. Bostwick allegedly directed Bostwick Laboratories to bill Medicare and Medicaid for expensive cancer detection tests known as Fluorescent In Situ Hybridization (FISH) tests, as well as other tests, that were not medically necessary and were performed without the treating physicians’ consent or order.  FISH tests are used to detect bladder cancer.  Bostwick also allegedly offered various discounts and billing arrangements to treating physicians to induce them to refer business in violation of the Anti-Kickback Statute.  On Aug. 28, 2014, Bostwick Laboratories previously agreed to pay over $6.5 million to resolve the allegations in this lawsuit.  The allegations were originally raised in a whistleblower lawsuit brought by Michael Daugherty, who works in the industry, under the qui tam provisions of the False Claims Act.  Daugherty will receive a whistleblower award of over $2.5 million from the government’s settlements.  DOJ

January 8, 2016

Damian Mayol, the president of Miami-based transportation company Transportation Services Providers Inc., was convicted for his role in a health care fraud scheme involving three mental health centers based in Miami that resulted in the submission of approximately $70 million in false and fraudulent claims to Medicare.  According to evidence presented at trial, Mayol used his company to coordinate the payment of illegal health care kickbacks to recruiters, who in return referred patients to three now-defunct clinics in the Miami area:  R&S Community Mental Health Inc., St. Theresa Community Mental Health Center Inc. and New Day Community Mental Health Center LLC.  On behalf of the recruited beneficiaries, the centers billed Medicare for costly partial hospitalization program services that were not medically necessary or not provided to patients.  DOJ

January 4, 2016

Hovik Simitian, the former owner and operator of three medical clinics located in Los Angeles — Columbia Medical Group Inc., Life Care Medical Clinic and Safe Health Medical Clinic — was sentenced to 78 months in prison for his role in submitting more than $4.5 million in fraudulent claims to Medicare.  Simitian admitted paying illegal cash kickbacks to patient recruiters who brought Medicare beneficiaries to the clinics and for billing Medicare for lab tests and other services that were not medically necessary or actually provided, which he supported with false documentation.  DOJ

December 23, 2015

Aria Health Systems, Inc. agreed to pay more than $3 million to settle two False Claims Act matters which Aria self-disclosed.  Aria agreed to pay $564,700 to resolve claims that a cardiologist performed unnecessary invasive procedures at their Torresdale Campus between October 2012 and April 2013.  Aria also agreed to pay $2.5 million to resolve claims of compensation to physicians that were in excess of fair market value and in violation of the Stark Act. DOJ (EDPA)

December 18, 2015

Ohio cardiologist Dr. Harold Persaud, with hospital privileges at Fairview Hospital, St. John’s Medical Center and Southwest General Hospital, was sentenced to 20 years in prison for performing unnecessary catheterizations, tests, stent insertions and causing unnecessary coronary artery bypass surgeries as part of a scheme to overbill Medicare and other insurers by $29 million.  DOJ

December 18, 2015

21st Century Oncology, a Florida-based provider of integrated cancer care services, agreed to pay $19.75 million to resolve allegations it violated the False Claims Act by billing federal health care programs for laboratory tests that were not medically necessary.  The tests involved were fluorescence in situ hybridization (or “FISH”) tests which are laboratory tests performed on urine that can detect genetic abnormalities associated with bladder cancer.  The government alleged that 21st Century submitted claims for unnecessary FISH tests that were ordered by four of its urologists, Dr. Meir Daller, Dr. Steven Paletsky, Dr. David Spellberg and Dr. Robert Scappa.  The government further alleged the company encouraged these physicians to order unnecessary FISH tests by offering bonuses that were based in part on the number of tests referred to 21st Century’s laboratory.  The allegations first arose in a whistleblower lawsuit filed by a former 21st Century medical assistant under the qui tam provisions of the False Claims Act.  The whistleblower will receive a whistleblower award of $3.2 million from the proceeds of the government’s recovery.  DOJ

December 18, 2015

Iowa Hospice, LLC agreed to pay roughly $1.1 million to settle charges it violated the False Claims Act by submitting false bills to Medicare for hospice services. The Medicare hospice benefit is only available to patients who elect palliative care for a terminal illness and who have a life expectancy of six months or less.  The government alleged that Iowa Hospice knowingly submitted false claims to the government for payment of these services for patients that did not have such a medical prognosis.  DOJ (N.D. OH)

December 16, 2015

Amer Ehsan, the owner and operator of Detroit-area home health care agency Advance Home Health Care Services Inc., was sentenced to 80 months in prison for conspiring with physicians, physical therapists and patient recruiters to bill Medicare for unnecessary home health care and therapy services and paying kickbacks to physicians for referrals.  Ehsan also admitted that he owned and controlled Michigan Rehab and Management Services LLC, which he used to sell information about Medicare beneficiaries and corresponding fictitious patient files to other Detroit-area home health care agencies.  DOJ

November 24, 2015

The former CFO of Long Beach, California-based Pacific Hospital, two orthopedic surgeons and two others have been charged in long-running health care fraud schemes that illegally referred thousands of patients for spinal surgeries and generated nearly $600 million in fraudulent billings.  The wide-ranging kickback scheme, which involved dozens of surgeons, orthopedic specialists, chiropractors, marketers and other medical professionals, involved improper referrals to Pacific Hospital and Hawaiian Hospital.  The most recent targets of the government’s investigation, all of whom have agreed to plead guilty, include: former Pacific Hospital CFO James L. Canedo; orthopedic surgeons Philip Sobol and Mitchell Cohen; chiropractor Alan Ivar; and health care marketer Paul Richard Randall, previously affiliated with Pacific Hospital and Tri-City Regional Medical Center in Hawaiian Gardens.  Under the terms of their plea agreements, Sobol faces a federal prison term of up to 10 years; Canedo, Ivar and Randall face up to five years in prison; and Cohen faces up to three years in prison.  All of them will be required to pay restitution to the victims of the scheme, which in Canedo’s case will be at least $20 million.  Whistleblower Insider