TOTA Mountain Central
Conference 2014
Sugar Land Marriott Town Square
16090 City Walk - Sugar Land, TX
November 7, 2014 at 4:00 p.m.
Health Care Fraud
Disclaimer
The views expressed by the participants in this program
are not those of the participants’ employers, their clients,
or any other organization. The opinions expressed do not
constitute legal advice, or risk management advice. The
views discussed are for educational purposes only, and
provided only for use during this session.
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Your Speaker
Richard Y. Cheng, OTR, JD
Anderson Kill P.C.
ph. 972-728-8753
rcheng@andersonkill.com
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Presentation Overview
 Healthcare Fraud Statistics
 Investigations
 Potentially Problematic Conduct
 Sanctions
 Civil and Administrative Statutes
 Criminal Statutes
 Stark
 Responding to Government Inquiries
 Protective Measures
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Annual Loss Due to Health
Care Fraud-FY 2013
 Federal government won or negotiated $2.6 billion for
healthcare fraud.
 Medicare Trust Fund received transfers of $2.85 billion, including
over $576 million in Medicaid.
 Over $25.9 billion since program started in 1997.
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2012 Federal Healthcare Statistics
 1013 New Criminal Cases Opened (1910 Defendants)
 2014 Open Criminal Investigations (3535 Defendants)
 80 Cases Filed (843 Defendants)
 718 Convicted
 1083 Civil Investigations Opened
 1079 Pending Civil Cases
 3214 Exclusions (Individuals and Entities)
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Investigations
 Federal Government—CMS, OIG and DOJ
 State Government—Texas Health and Human Commission OIG &
AG.
 Private Insurers and intermediaries
 Whistleblowers/Qui Tam –state and federal. Main reason for
FCA and Stark Law violations.
 State Licensing Boards—may lead to referral to other state
agencies which could result in further investigations.
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Most Common Conduct
 Services not rendered—documentation and time provided.
 Up-coding—non-existing upgrade procedure or beyond what is necessary
 Unbundling—common in clinical laboratory settings
 False medical necessity certification
 Kickbacks/Improper relationships
 Retention of overpayments
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Inducements to Beneficiaries,
Referral Sources and Employees
 Offers of gifts or gratuities to beneficiaries
 Cost-sharing waivers and discounts
 Free Transportation
 Preventative care service
 Gifts to referral sources
 Payments Based on Production/Commissions
 Co-pay waivers
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Billing
 Inadequate resolution of overpayments
 Lack of integrity in computer systems
 Software programs that encourage billing personnel to insert data in fields
suggesting services were rendered
 Knowing misuse of provider ID numbers
 Outpatient services with inpatient stay
 Billing for discharge instead of transfer
 Improper use of modifiers
 Internal coding practices
 Coding without supporting clinical documentation—”Assumption Coding”
 Altering documentation
 Billing for services provided by unqualified or unlicensed personnel
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Quality of Care
 Sufficient Staffing
 Comprehensive Care Plan
 Appropriate Medication
 Safety
 Services rendered
EXAMPLE: In Texas, the AG Medicaid Fraud Control Unit
investigates patient neglect and abuse if the provider is a Medicaid
provider and receiving Medicaid funds.
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Home Health
 Over utilization and under utilization regarding number of visits or length of home
health coverage
 Knowingly billing for inadequate or substandard care
 Billing for unallowable costs of home health coordination
 Unqualified personnel
 False dating of amendments
 Falsified plans of care
 Forged beneficiary signatures
 Discriminatory admission and discharge
 Knowing misuse of provider certification numbers
 Duplication of services
 Knowing or reckless disregard of willing and able caregivers
 Licensing requirements and Medicare Conditions of Participation (CoP)
 Knowing failure to return overpayments
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Skilled Nursing Facilities/Nursing Facilities
 Services not rendered
 Medical necessity
 Double billing
 Unbundling
 False cost reports--Medicare-certified institutional providers are required to submit an
annual cost report to a Medicare Administrative Contractor (MAC).
 Standard of care
 Kickbacks
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Sanctions
 Administrative
 Civil—corporate integrity agreement (CIA) and on-going monitoring
 Monetary hold/suspension of payments
 License renewal
 Exclusions
 Criminal—money and prison time
 Forfeitures—seize assets, accounts and property
 State Board—license suspension/revocation
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Exclusion/Suspension of
Payments/Revocation of Enrollment
 Mandatory Exclusion--OIG is required by law to exclude from participation in
all Federal health care programs
 Permissive Exclusion--OIG has discretion to exclude individuals and entities
on a number of grounds, including misdemeanor convictions related to health
care fraud other than Medicare or a State health program, fraud in a program
(other than a health care program) funded by any Federal, State or local
government agency
 Suspension—”credible allegation of fraud” (state and federal)
 Revocation of Enrollment—home health if fail to maintain or produce
documents
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False Claims Act (31 USC § 3729)
 Knowingly presents, or causes to be presented, a false or fraudulent claim for
payment or approval
 Knowingly make, uses, or causes to be made, a false record or statement material to a
false or fraudulent claim
 Has possession, custody, or control of property or money used, or to be used, by the
Government and knowingly delivers, or causes to be delivered, less property than all
of that money or property
 Knowingly makes, uses, or causes to be made or used, a false record or statement
material to an obligation to pay or transmit money or property to the Government, or
knowingly conceals or knowingly and improperly avoids or decreases an obligation to
pay or transmit money or property to the Government
 Conspires to do the above acts
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Whistleblower/Qui Tam Actions
(31 USC § 3730)
 Private parties can bring actions in the name of the United States
 Recover 15%-30%, attorneys fees and costs
 Main source of investigations for healthcare fraud
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Civil Monetary Penalty Laws
(42 USC § 1320-7a)
 Knowingly (or should know) presenting a claim for services or items not
provided
 Knowingly (or should know) presenting a claim for services or items that are
not medically necessary
 Knowingly (or should know) being an office/entity, holding ownership/
control or managing employees of a CMS excluded entity
 Knowingly (or should know) presenting a claim that violates Medicare
assignment requirement, Medicaid rules or Medicare participation.
 Arranging or contracting with an individual or entity that the person knows
or should know is excluded
 Offering remuneration to Medicare or state health beneficiary that is likely to
influence the beneficiary
 Violating the federal or any state based Anti-kickback statutes
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Health Care Fraud (18 USC § 1347)
 To knowingly and willfully execute or attempt to execute, a
scheme –
 To defraud any health care benefit program, or
 To obtain, by means of false or fraudulent, or pretenses,
representations, or promises, any of the money or property
owned by, or under the custody or control of, any health care
benefit program
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Criminal False Claims Act (18 USC § 287)
 A defendant presented a claim against the US or any agency or
department of the US
 The claim was false, fictitious or fraudulent, AND
 The defendant knew the claim was false, fictitious or fraudulent.
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False Statements (18 USC § 1001)
 A statement,
 That is false,
 Material,
 Made knowingly and willfully, AND
 In a matter within the jurisdiction of a department
or agency of the US
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Anti-Kickback Statute (42 USC § 1320-7b)
 Knowing and willful conduct involving the solicitation, receipt, offer or
payment of any kind of remuneration in return for referring, directly or
indirectly, an individual or for recommending or arranging the purchase, lease
or ordering of an item or service that may be wholly or partially paid for by
any federal health care program.
 Person need not have actual knowledge of this section or specific intent to
violate this section.
 Texas Anti-solicitation Statute—broader and goes beyond government
healthcare programs and includes private insurance payer sources.
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Penalties for Violating
Anti-Kickback Statute
 Criminal Statute
 Felony
 Not more than 5 years, not more than $25,000 cash, or both per
violation
 Civil Sanctions
 Exclusion for Medicare/Medicaid
 Civil Monetary Penalty (“CMP”) of up to $50,000 plus damages of up
to 3x the amount of the kickback.
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Intent
Pre-PPACA—an individual must have actual knowledge
of, and the specific intent to, violate the AKS.
Post-PPACA—a person need NOT have actual
knowledge of the AKS or have a specific intent to
commit an AKS violation; still requires knowing and
willful intent.
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Texas Patient Solicitation Act (“TPSA”)
 Person knowingly offers to pay or agrees to accept,
directly or indirectly, overtly or covertly any
remuneration in case or in kind to or from another for
securing or soliciting a patient or patronage for or
from a person licensed, certified, or registered by a
state health care regulatory agency.
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Potential Kickback Violations
 Routine waivers of co-pays or deductibles (aka cost-share waivers).
 Joint ventures with Medicare/Medicaid pay
 Hospital arrangements—credentialing, medical directors, recruitment
and retention
 Prescription Drug Marketing—inducement by manufacturer (e.g.
frequent flier program or research grant)
 Lab discounts—additional work done, direct benefits or discount on
composite rate.
 Home health, skilled nursing facilities/nursing facilities, hospices and
ambulances.
 Office rental
 Gifts to Medicare/Medicaid Beneficiaries
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Texas Criminal Statutes
 Medicaid Fraud—Texas Penal Code § 35A.01 and 35A.02
 Theft—Texas Penal Code § 31.03
 Securing Execution of document by deception—Texas Penal
Code § 32.4
 Any other applicable statute
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Stark Self-Referral Prohibitions
42 USC § 1395nn—Elements
 The existence of a “financial relationship” between a physician or
immediate family member
 A referral by that physician (or a group practice referral if the physician
controls referrals by the group practice)
 To an entity providing designated health services (DHS), AND
 The absence of an applicable exception
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Stark—Key Definitions
 Financial Interest—includes both direct and indirect ownership and
investment interest and compensation arrangements
 Ownership or investment interest—may be through equity, debt, or other
means, and includes an interest in an equity that holds an ownership or
investment interest in any entity that furnishes DHS
 Compensation Arrangement—is any arrangement involving remuneration, as
defined in the regulations, whether direct or indirect, between a physician (or
a member of a physician’s immediate family) and an entity.
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Stark—Designated Health Services (DHS)
 Clinical lab services
 OT, PT, and outpatient SLP services
 Radiology and certain other imaging services
 Radiation therapy services and supplies
 DME and supplies
 Parenteral and enteral nutrients, equipment and supplies
 Prosthetic, orthotics and prosthetic devices and supplies
 Home Health Services
 Outpatient Prescription Drugs
 Inpatient and outpatient hospital services
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Statutory Exceptions
 Discounts
 Employee-Employee
 Group Purchasing
 Waivers of Part B Coinsurance
 Managed Care Plans
 Pharmacy Waivers/Part D Cost-sharing
 Federally Qualified Health Centers (“FQHCs”) and Medicare Advantage
Organization
 FQHCs and Donor
 E-prescribing—must meet standards adopted by the Secretary of
DHHS
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Regulatory Safe Harbors
 Investment Interests
 Space rental
 Equipment rental
 Personal services and management contracts
 Sale of practice
 Referral services
 Warranties
 Discounts
 Employees
 Investments in group practices
 Many more….
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Patient Protection and Affordable Care
Act—Self Reporting re Stark Violations
 § 6409 of ACA –requirement to establish a protocol for the
disclosure of actual or potential violations of Stark.
Secretary/CMS is authorized to reduce amounts due and owing
for all violations.
 Some risks involved with self reporting and exceptions.
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Obstruction of Justice
 Do not destroy documents
 Do not withhold documents
 Do not alter documents
 Do not tell employees not to talk to the government
 Do not tell employees what to say
 Do not lie or misrepresent anything
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Document Hold
 Memo
 Inform everyone there is an audit or investigation
 No paper or electronic data (emails) should be altered or deleted
 Nothing transferred
 Automatic deletion policy—suspend
 Certification from employees
 Personal computers/phones
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Proactive Measures
 Compliance program
 Ethics policies
 Internal reporting policies and incentives
 Compliance officer/consultant
 Training on coding, charting and billing
 Internal audits
 P & P for handling investigations
 Physician monitoring
 Supplier monitoring
 Legal reviews
 Document discussions with the government
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Recent Cases
 Alliance Healthcare—plea entered on 2/21/13; husband and wife sentenced to 37
months for roles in $1.3 health care fraud conspiracy. Ordered to pay restitution of
$853,702.
 Thaw/Kincaid—plea entered 7/20/13; owners of hyberbaric oxygen therapy
companies pled guilty to conspiracy to commit health care fraud. Pled to 5 years in
prison, $250k fine or twice pecuniary gain/loss to victim, restitution. Sentencing
11/13/13.
 Cyparian Akamnonu—plea entered 9/5/13; sentenced to 10 years in prison and
ordered to pay $25M in restitution. Co-defendants had trial 1/13/14. Case involved
recruiting beneficiaries to receive home health care services for which they did not
qualify.
 Euless Healthcare Corp.—defendants convicted of conspiracy to commit health care
fraud. One defendant, Comfort Gates, was sentenced on 11/4/13 to 72 months in
prison and ordered to pay restitution of $830K.
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Thank You!
Richard Y. Cheng is a shareholder at Anderson Kill, based in the Dallas, TX office. He focuses his
practice in the healthcare and hospitality industries, with particular concentration in the long-term
care and rehabilitation industries, serving skilled nursing facilities, assisted living facilities, home
health agencies, hospices and rehabilitation providers. He counsels clients with respect to corporate
transactions, healthcare insurance recovery, and regulatory and compliance matters.
Richard won the 2011 Dallas Business Journal Best Corporate Counsel Rising Star award, was
recognized twice as a finalist for the D CEO Magazine/ACC best corporate counsel award, awarded
the National Diversity Council Legal Diversity Champion Award in 2012, received the 2011 and 2012
TOTA Distinguished Service awards and recognized by Texas Tech HSC for the 2010 Distinguished
Alumni Award.
Prior to his legal career, Richard worked as a licensed occupational therapist in Dallas, Texas. He has
served as an adjunct faculty at Saint Catherine University, Nova Southeastern University, has
presented at multiple conferences and lobbied in Washington D.C. through the AOTA. Richard has
published extensively on legal matters concerning the occupational therapy industry and healthcare.
He was the former author of "Legal Line," a column in ADVANCE for OT and authored a legal chapter
(Legal Dimension in Occupational Therapy) in the textbook "OT Manager, 5th Edition."
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