Tag Archives: False Claims Act

Dr. Whistleblower: Reporting $10 million in a Medicare billing fraud scheme, could share in recovery

The Illinois Department of Financial and Professional Responsibility investigates cases that can lead to discipline.

The Illinois Department of Financial and Professional Responsibility investigates cases that can lead to discipline.

Former CEO of a physician-hospital practice venture, Robert Dannenhoffer, MD, filed a lawsuit in federal court alleging his former employer terminated the doctor’s position in retaliation for Dannenhoffer reporting a $10 million Medicare fraud scheme. Dr. Dannenhoffer led investigators to discover a fraudulent payment scheme, by which doctors were being compensated more money in exchange for prescribing certain medical procedures and prescription medications to Medicare patients, regardless of whether they were necessary, according to reports. The lawsuit alleges violations of the False Claims Act and the Stark Act, a federal patient referral law. As a whistleblower under federal law, Dr. Dannenhoffer seeks and may be entitled to the reinstatement of his position, back pay, punitive damages and attorney’s fees.[i]

Medicare Fraud is often reported and exposed by whistleblowers who may share in court awards.

Medicare fraud costs U.S. taxpayers significant money every year when fraudulent reimbursements and overpayments are claimed and paid for treatments never provided to patients, suppliers billing for equipment never obtained and even the use of false information to mislead an individual to joining a Medicare plan. Doctors in physician-hospital practice ventures, like Dr. Dannenhoffer, may be liable for Medicare fraud occurring in their practice, even despite their potential lack of personal knowledge. By reporting the suspected fraudulent behavior as a whistleblower, a physician like Dr. Dannenhoffer not only may avoid liability for fraud, they may recover a percentage of any amounts for which the case settles or for which a judge rules in favor of the government.

Dr. Dannenhoffer is the whistleblower in this Medicare fraud scheme in which over $10 million worth of fraudulent and inflated Medicare payments are identified. The doctor claims that after he filed his federal whistleblower lawsuit, he was fired as CEO of the major healthcare provider where he worked and was blacklisted in the medical community.

The doctor claims his healthcare company violated the False Claims Act and the Stark Act.

False Claims Act violations are not taken lightly. In this case, Halifax Health settled for $85M.

False Claims Act violations are not taken lightly. In this case, Halifax Health settled for $85M.

Federal law codified in the False Claims Act (FCA)[ii] imposes liability on individuals and organizations, often federal contractors, who defraud government programs such as Medicare. The FCA, imposes damages and penalties for any individual who knowingly submits or causes another to submit a false claim to the government, or knowingly makes a false record or statement to obtain a false claim paid by the government. The current amounts of penalties can amount to three times the dollar amount of the claim plus fines of $5,500 – $11,000 per claim.

An individual reporting Medicare fraud may also file an intervening lawsuit on behalf of the government, a qui tam action, and the whistleblower’s identity is kept under seal. The whistleblower may share in the financial settlement or recovery, between 15 and 25 percent of the amount. The law works this way to encourage more individuals to step forward and report Medicare fraud.

The Stark Law[iii] is a section of the Social Security Act and is known as the physician self-referral law. Physicians may not make referrals and receive payment Designated Health Services[iv] payable by Medicare to an individual or group where the physician or their immediate family member are an owner or have an ownership interest. In this case, Dr. Dannenhoffer was not allowed to make referrals to the organized medical service venture in which he was a partner with interest.

Being a whistleblower has its costs, but it is better to discover and report Medicare violations, than to worry about civil and criminal liability for participating or failing to report fraud.

The laws involving fraud are frequently tightening and are stricter in the enforcement of the False Claims Act.

The laws involving fraud are frequently tightening and are stricter in the enforcement of the False Claims Act.

Michael V. Favia and Associates can help physicians who learn or receive notice of Medicare fraud activities. With many local, state and federal agencies working together to investigate and stop health care billing fraud, reporting a violation as a whistleblower may be the only option an individual has when they otherwise could face civil and criminal liability and penalties, including imprisonment. Of course, Favia and his team can also offer physicians a review of their billing procedures and protocols to assess risk and exposure to potential fraud. When your chain is only as strong as its weakest link, it makes sense to regularly examine that chain.

Chicago health law, litigation and professional licensing attorney, Michael V. Favia and the associate attorneys of Michael V. Favia and Associates, P.C. represent individual physicians and health care organizations in the Chicago area with a variety of legal matters. With offices conveniently located in the Chicago Loop, Northwest side and suburban meeting locations, you can schedule a discrete meeting with an attorney at your convenience and discretion. For more about Michael V. Favia & Associates, please visit www.favialawfirm.com and feel free to “Like” the firm on Facebook and “Follow” the firm on Twitter. You can also review endorsements and recommendations for Michael V. Favia on his Avvo.com profile and on LinkedIn.

[i] Beckers Hospital Review, Ex-CEO claims retaliation for blowing the whistle on $10M in false Medicare charges, by Ayla Ellison, Jan. 27, 2016.

[ii] The False Claims Act 31 U.S.C. §§ 3729–3733

[iii] The Stark Act 42 U.S.C. § 1395nn

[iv] Designated Health Services under the Stark Law

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Physicians must be careful when offering to waive co-pays or deductibles as a professional courtesy

Criminal prosecutions and private insurance fraud actions are possible outcomes of violating the professional courtesy prohibition.

Criminal prosecutions and private insurance fraud actions are possible outcomes of violating the professional courtesy prohibition.

The law is not new but it is always good to be reminded that enforcement of healthcare rules and regulations is a focus of the federal government and its aggressive approach to ensuring everything is billed correctly for any services paid in part or in full with federal funds and what is paid by insurance. According to the Department of Health and Human Services (HHS), Office of Inspector General (OIG), “It is unlawful to routinely waive co-payments, deductibles, coinsurances or other patient responsibility payments.[i]” If however, there is no insurance or Medicare claim connected with healthcare service, and the doctor is not receiving any federal or insurance reimbursement the doctor is free to offer reduced or unpaid services at their discretion.

Professional courtesy in the healthcare profession is a common practice.

Professional courtesy is an age-old tradition and common practice among physicians and their families. It has been common for Doctor A to visit Doctor B who either reduces or does not charge for healthcare services for Doctor A and his family members. If there is a portion of services Doctor B can get paid for by Medicare or insurance, of course Doctor B would submit for reimbursement. Professional courtesies are also common in the other learned professions including law.

Is there a disparate impact on the economy or society if Doctor B waives the co-pay or deductible for Doctor A? The argument can be that if healthcare services are essentially free, assuming a professional courtesy arrangement exists, the beneficiary of that deal will use healthcare services without limitation, and the more frequent visits will burden Medicare or insurance.

Criminal prosecutions and private insurance fraud actions are possible outcomes of violating the professional courtesy prohibition.

The good news is that there are not many reported instances of physician indictments for violations of the federal fraud or abuse laws such as the Anti-Kickback Statute or the False Claims Act. Meanwhile, private insurers may be more likely to pursue private claims against physicians who do not extend the same discounts or waivers to the insurer as they do the beneficiary of a professional courtesy in billing.

The co-pay waivers may be treated as Medicare overcharges. If Medicare agrees to pay 80 percent of the cost of a service and the patient pays 20 percent, and the charge is $1,000 then the Medicare portion is $800. When the co-pay is waived, Medicare is actually paying 100 percent of the service, even if the 80 percent based on the listed cost of service is being billed to Medicare. There are legal and proper methods for offering waivers of co-pays and deductibles based on patient hardships. If the physician allows a legally permitted hardship waiver, it is important to make an accurate record of the instance to back up the propriety of the transaction if necessary.

Diligence and auditing billing procedures and policies is an important aspect of healthcare practice.

Michael V. Favia & Associates has represented healthcare providers in matters involving Medicare and insurance claims and medical billing and procedures, generally. Michael V. Favia recommends healthcare providers routinely review and audit their business and billing practices to make sure they are compliant with laws and regulations, which are often updated.

Michael V. Favia & Associates’ offices are conveniently located in the Chicago Loop, Northwest side and suburban meeting locations, you can schedule a discrete meeting with an attorney at your convenience and discretion. For more about Michael V. Favia & Associates’ professional licensing work, please visit www.IL-Licensing.com and feel free to “Like” the firm on Facebook and “Follow” the firm on Twitter.

 

[i] 67 Fed. Reg. 72,896 (Dec. 9, 2002)

A case of kickbacks and destruction of records in the healthcare industry

False Claims Act violations are not taken lightly. In this case, Halifax Health settled for $85M.

False Claims Act violations are not taken lightly. In this case, Halifax Health settled for $85M.

The case involving Halifax Health, based in Daytona Beach, Florida, highlights a few legal issues and concerns that cause significant problems for many. The two main issues in this case involved physician kickbacks and the destruction of billing records of alleged Medicare fraud. This past May the federal magistrate judge ordered sanctions to punish Halifax Health for destroying patient files[i]. It was alleged, on the Medicare fraud side of this controversy, that the hospital was billing Medicare for short admissions of patients that were not medically necessary. We visited this issue in a past article about Medicare fraud and whistleblowers who help bring to light the bad acts of a few. For more information, read our article: False Claims Act lawsuits and the whistleblowers who share in recoveries.

Destroying evidence in a civil or criminal case can trigger cascading difficulties for litigants.

In this case involving Halifax Health, the court split the matter into two separate issues, the evidence destruction claims on one side, and the alleged illegal physician kickback contracts on the other.

The U.S. Code sets forth the federal law on destruction of evidence: “Whoever knowingly alters, destroys, mutilates, conceals, covers up, falsifies, or makes a false entry in any record, document, or tangible object with the intent to impede, obstruct, or influence the investigation or proper administration of any matter within the jurisdiction of any department or agency of the United States or any case filed under title 11, or in relation to or contemplation of any such matter or case, shall be fined under this title, imprisoned not more than 20 years, or both.[ii]

In addition to criminal liability for destruction of evidence, the judge may penalize the offending party during the trial by the use of sanctions. In this case, the judge ordered Halifax Health to pay the attorneys fees for the whistleblower who brought the bad deeds to light. According to reports, the attorneys fees exceed $100,000. The judge called the destruction of records “reprehensible.[iii]

False Claims Act violations are not taken lightly. In this case, Halifax Health settled for $85M.

A U.S. Attorney, A. Lee Bentley, said in a news release, “This settlement illustrates our firm commitment to pursue healthcare fraud…Medical service providers should be motivated, first and foremost, by what is best for their patients, not their pocketbooks.[iv]

The bad deeds leading to FCA violations included an alleged agreement to pay physicians more than the fair value of wages, and bonuses, that improperly included the value of prescription drugs and medical tests ordered by the six involved oncologists, that were then billed to Medicare when they were not allegedly medically necessary. This type of billing fraud often involves many instances of smaller takings, which add up to big money over time.

If you or someone you know has knowledge of the types of bad acts involved in this case, our law firm can help a whistleblower so they do not have to let the cat out of the bag alone.

ABOUT THE FIRM: The Law Firm of Michael V. Favia & Associates is a successful General Civil Practice dedicated to providing personalized service and high quality representation for clients. With offices conveniently located in the Chicago Loop, Northwest side and suburban meeting locations, you can schedule a discrete meeting with an attorney at your convenience and discretion. Feel free to “Like” the firm on Facebook and “Follow” the firm on Twitter and you will be kept in the loop about upcoming events and news in the firm’s practice areas including personal injury, medical malpractice, worker’s compensation, complex civil litigation and professional regulation and licensing.

[i] Becker’s Hospital Review, Judge Issues Sanctions Against Halifax for Destroying Files, by Ayla Ellison, May 29, 2014.

[ii] 18 U.S. Code §1519, Destruction, alteration, or falsification of records in Federal investigations and bankruptcy.

[iii] See Becker’s article in HNi above.

[iv] Becker’s Hospital Review, Halifax Settled FCA Allegations for $85M, Announces DOJ, by Ayla Ellison, Mar. 17, 2014.

Medicare fraud and kickbacks: Chicago psychologist loses his medical license indefinitely

Dr. Reinstein prescribed an alarming amount of clozapine to Illinois patients for kickbacks.

Dr. Reinstein prescribed an alarming amount of clozapine to Illinois patients for kickbacks.

Chicago area psychologist, Michael Reinstein, recently lost his medical license following the Illinois Department of Financial and Professional Regulation (“IDFPR”) suspended his license for a minimum of  three years before Reinstein would be allowed to apply for reinstatement. When complaints of professional misconduct come to the attention of IDFPR, the licensing authority for many Illinois professionals, the IDFPR may cooperate with other state agencies to prevent further harm to Illinois residents. In this case, there was a determination that the doctor received, “Illegal direct and indirect remuneration” from the maker of generic clozapine. Further, reports indicate he did not consider alternative treatments and disregarded their well-being in the name of profit, according to a recent news report.[i]

Generally, the generic drug clozapine is used in the management of antipsychotic disorders, like schizophrenia, when nothing else works. According to a reputable website on pharmaceuticals, this because the drug carries a “concern for the side effect of agranulocytosis [reduction in white blood cell count], clozapine should be reserved for patients who have failed to respond to other standard medications or who are at risk for recurring suicidal behavior.[ii]

The Chicago Tribune published a 2009 story about Dr. Reinstein, highlighting the alarming amount of the antipsychotic clozapine prescribed to his patients. In 2007, he prescribed more clozapine to Illinois Medicaid program patients than, “all doctors in the Medicaid programs of Texas, Florida and North Carolina combined.[iii]

Dr. Reinstein was investigated by the U.S. Department of Justice who accused him of fraud. The U.S. District Court for the Northern District of Illinois stated in a press release that the doctor, “received illegal kickbacks from pharmaceutical companies and submitted at least 140,000 false claims to Medicare and Medicaid for antipsychotic medications he prescribed for thousands of mentally ill patients in area nursing homes.[iv]

Medicare fraud is prosecuted under the False Claims Act.

The lawsuit against Dr. Reinstein, the largest civil case alleging prescription medication fraud, is the largest ever brought in Chicago against an individual. The U.S. Attorney’s press release reports that the doctor kept an office in the Uptown neighborhood on Chicago’s north side, where there is a large population of mentally ill nursing home residents. The predatory nature of prescribing strong medications that people might not need, especially when they might lack the capacity to understand and get a second opinion, is in part what is so shocking to people who find out such bad acts were happening so close to home.

The False Claims Act helps expose and prosecute those who make bogus claims for payment through government programs. To encourage people to speak up when they see something wrong, the whistleblowers are rewarded in a percentage of the amount recovered in a successful lawsuit. To learn more about whistleblower protection and the False Claims Act, under which Dr. Reinstein is held accountable, read our article, False Claims Act lawsuits and the whistleblowers who share in recoveries.

The IDFPR, in efforts to protect Illinois residents from wrongdoing professionals, takes action in an effort to protect people against future harms by the individual. You can review the August 8, 2014, IDFPR Order, finding and recommending that Dr. Reinstein’s Physician and Surgeon License be indefinitely suspended for a minimum period of three years. The doctor may wish to apply for reinstatement, but under other recent news we will share in a follow-up article, it is becoming harder to get a professional license reinstated after this type of discipline by the IDFPR.

If you believe you are aware of Medicaid and Medicare fraud, Attorney Michael V. Favia can help.

Michael V. Favia is a health law and litigation attorney whose practice includes IDFPR litigation. Favia is experienced in complex litigation involving government contract and similar types of fraud. Favia’s extensive health care law and litigation career allows him and a skilled group of associate colleagues the benefit of experience in representing clients with qui tam claims for violations of the False Claim Act. Michael V. Favia & Associates are available to help and meet for client consultations with offices conveniently located in the Chicago Loop, Northwest side and suburbs so you can schedule a discrete meeting with an attorney at your convenience and discretion. For more about Michael V. Favia & Associates’ professional licensing work, please visit www.IL-Licensing.com and feel free to “Like” the firm on Facebook and “Follow” the firm on Twitter.

[i] ProPublica, Illinois Suspends Medical License of Leading Prescriber of Antipsychotic Drugs, by Charles Ornstein, Aug. 11, 2014.

[ii] MedicineNet website, clozapine.

[iii] ProPublica, In Chicago’s Nursing Homes, a Psychiatrist Delivers High-Risk Meds, Cut-Rate Care, by Christina Jewett, ProPublica, and Sam Roe, Chicago Tribune, Nov. 10, 2009.

[iv] U.S. Department of Justice, United States Attorney for the Northern District of Illinois, Chicago Psychiatrist Allegedly Submitted At Least 190,000 False Claims to Medicare and Medicaid; Lawsuit Alleges Kickbacks to Prescribe Antipsychotic Medication for Nursing Home Patients, Nov. 15, 2012.

False Claims Act lawsuits and the whistleblowers who share in recoveries

2013 was a strong year for the U.S. Department of Justice, recovering $3.8 billion in fraud cases.

2013 was a strong year for the U.S. Department of Justice, recovering $3.8 billion in fraud cases.

The False Claims Act[i] is the federal law used to prosecute those who make fraudulent claims for payment through government programs. The majority of false claims are made by government contractors engaged in work connected with government spending programs such as health care and military programs. Also referred to as the “Lincoln Law” the False Claims Act is known for its whistleblower provisions. A private citizen may file lawsuits on behalf of the government when the person or entity improperly receives or avoids making payment to the government. An example is knowingly submitting false claims for payment. Submitting false records to back up a bogus claim is another typical violation of the Act.

Whistleblowers are rewarded by a percentage of the amount recovered in a successful lawsuit.

“Qui tam[ii]” laws allow citizens to sue on behalf of governments and be paid a percentage of the recovery, often in the range of 15 to 25%. There was a case in Illinois involving Medicaid processing fraud. The downstate town of Energy, Illinois was in the national news when a doctor plead guilty for various charges in connection with his three clinics. Click/tap here to read the FBI press release, “Doctor from Energy, Illinois Pleads Guilty to Charges of Obstruction of Justice, Tampering with a Witness, and Illegal Dispensation of Methadone Doctor’s Three Corporations Plead to Charges of Conspiracy and Healthcare Fraud.” In 1989, the Whistleblower Protection Act[iii] became law and offered protection to private individuals who report misconduct. The whistleblower is safe from retaliatory action by the accused person(s) and organization(s). With this protection and the qui tam laws, the people who report wrongdoing are rewarded for their effort in saving American taxpayers from fraud.

2013 was a strong year for the U.S. Department of Justice, recovering $3.8 billion in fraud cases.

Plaintiff’s attorneys representing qui tam litigants filed civil lawsuits resulting in judgments to recover the $3.8 billion, the largest amount on record, second only to the 2012 recoveries totaling close to $5 billion. ““It has been another banner year for civil fraud recoveries, but more importantly, it has been a great year for the taxpayer and for the millions of Americans, state agencies and organizations that benefit from government programs and contracts,” said Assistant Attorney General Delery.[iv]” If you consider the rewards to whistleblowers, at a conservative rate of 20%, would total $760 million in shared recoveries. The DOJ press release states that the government’s success in prosecuting False Claim Act cases is a strong deterrent to anyone who might consider misappropriating public funds.

Would you blow the whistle if you discovered you had personal knowledge of frauds being perpetrated on the U.S. government? Fraudulent claims activity might not be immediately apparent. Sometimes things just do not seem right. What if you file a lawsuit and you are wrong? Whistleblower protections are not conditioned upon a successful lawsuit and if an investigation turns up no wrongdoing, the whistleblower who acted in good faith will be protected against retaliation. If you or someone you know believes frauds are being committed then it is best to contact a lawyer who is experienced in False Claims Act cases and who will be able to advise and represent the whistleblower client.

Michael V. Favia is experienced in complex litigation involving government contract and similar types of fraud. Mr. Favia’s extensive health care law and litigation career allows him and a skilled group of associate colleagues the benefit of experience in representing clients with qui tam claims for violations of the False Claim Act. Michael V. Favia & Associates are available to help and meet for client consultations with offices conveniently located in the Chicago Loop, Northwest side and suburbs so you can schedule a discrete meeting with an attorney at your convenience and discretion. For more about Michael V. Favia & Associates’ professional licensing work, please visit www.favialawfirm.com and feel free to “Like” the firm on Facebook and “Follow” the firm on Twitter.


[i] U.S. Department of Justice publication: The False Claims Act: A Primer

[ii] Law.com legal dictionary: qui tam action.

[iii] CRS Report for Congress: The Whistleblower Protection Act: An Overview. Mar. 12, 2007.

[iv] U.S. Department of Justice: Justice Department Recovers $3.8 Billion from False Claims Act Cases in Fiscal Year 2013. Press release, Dec. 20, 2013.