Money will go to State Pension Fund to benefit future retirees.

Financial services firm UBS and three of its former employees reached a $117 million settlement with Office of the Attorney General (OAG) in Michigan. The amount settles UBS’s financial fraud case for allegedly deceiving the public about HealthSouth’s financial condition, Attorney General Mike Cox and Treasurer Robert Kleine announced in April.

In a press release, Cox said the settlement money will go to the Michigan’s pension fund and members of the class action against UBS. Because the Zurich-based firm lied about HealthSouth’s true financial picture to investors, “Retirees and pensioners lost millions of dollars in their hard-earned investments,” Cox added.

UBS is paying an addition of $100 million to HealthSouth’s bondholders. Ernst & Young, HealthSouth’s auditor, will also pay $33.5 million to bondholders. In 2009, the audit company sealed a $109 million settlement with OAG over fraud charges that involved losses to pensioners and investors nationwide.

HealthSouth admitted to bloating its income by more than $2.8 billion after federal agents raided its offices in Birmingham, AL in 2003, and 15 executives pleaded guilty. Despite HealthSouth’s fraudulent activity and gloomy financial state, UBS allegedly gave a positive review of its operations, finances, and future business prospects.

About 600,000 beneficiaries of the State Pension Fund will benefit from the settlement, as the money will be used to fund their retirement. “This settlement sends a very clear message that we will take all necessary steps to recover lost funds and ensure our pensions do not fall victim to fraudulent activity,” Cox noted.

OAG estimated that the State of Michigan Retirement Systems lost an estimated $33 million due to UBS, HealthSouth, and Ernst & Young’s collective alleged fraud.

UBS continues to deny wrongdoing, pointing toward Healthsouth as the true culprit. Kristopher Kagel, a spokesman for the company, said in a statement: “As established in multiple proceedings, HealthSouth’s corrupt insiders repeatedly lied to UBS bankers. This settlement is fully funded by insurance, except for a less than three percent co-insurance payment by UBS.”

FERA could be farther reaching than you know. AUDIO: Prepare for Unseen Liabilities: FCA, FERA and Their Impact on Healthcare.

Fake HIV-related treatments said to bilk Medicare for a total of $82 million.

The FBI, with a little assistance from its friends in the HHS OIG, helped the feds in Miami net three more people who thought they were smarter than Medicare. No one’s smarter than Medicare!

Two residents of Miami-Dade County in Florida have pleaded guilty to one count each of conspiracy to commit health care fraud, the US Attorney Office of Southern District of Florida announced on April 8, 2010.

Efren Mendez and Damian Beltran admitted to billing Medicare about $21 million for HIV+ treatments that were either incomplete or never happened. “From October 2003 through November 2004, Research Center submitted $21,043,982 in Medicare claims, almost all of which were for treatment of HIV+ patients. Based on these claims, Medicare paid Research Center $10,944,088. However, Research Center personnel generally administered smaller doses of the medications than Research Center purported in its claims, or no treatment at all,” according to the press release.

Each defendant faces a maximum sentence of 10 years imprisonment.

Mendez, who was the vice-president of Research Center, claimed that he and the clinic’s president decided what claims to submit to Medicare, knowing that the treatment would not be provided. He further admitted arranging to pay cash kickbacks to Medicare beneficiaries to attend Research Center as purported patients.

Beltran, a medical assistant at Research Center, admitted preparing false documentation on the treatments that were supposed to have been provided to patients, but in fact were not.

U.S. Attorney for the Southern District of Florida Jeffrey H. Sloman praised the FBI and the OIG for their joint efforts in the investigation.

Meanwhile, another Miami-Dade County resident, Ihosvany Marquez, pleaded guilty to charges of conspiracy to commit Medicare fraud, conspiracy to commit money laundering, and aggravated identity theft.

The factual proffer submitted in the court describes how Marquez, along with co-defendant Michel De Jesus Huarte and others, operated and controlled eight purported medical clinics in Miami-Dade and Orange counties (Zigma Medical Care, Inc, Tender Loving Care Medical Center, Inc, Professional Medical Health, Inc, Metro Med Care, Inc, San Diego Medical & Rehab Center, Inc, Eulogia’s Diagnostic Medical Center, Inc, Stirling Medical & Rehab, and Stop Injury Medical Center, Inc). The clinics submitted about $61 million in false claims to Medicare for infusion therapy, injection therapy, and other expensive medical treatments for cancer, HIV, AIDS, chronic pain, and varicose veins.

“To conceal their involvement in the scheme, Marquez and his conspirators recruited nominee or ‘straw’ owners for each company, and paid them large sums of cash to sign the corporate records, bank records, and other business documents before fleeing the country to avoid arrest. One such nominee owner, Madelin Machado of Zigma Medical, was indicted in the Southern District of Florida in January 2008, and remains a fugitive today,” a press release by the Southern District of Florida’s Attorney’s Office.

Huarte pled guilty in November 2009 to a related Medicare fraud scheme, and was sentenced in January 2010 to 22 years’ imprisonment.

Click here to learn how to avoid trouble if the feds show up at your health care facility.

Three-quarters of investigations in 2009 involved shams; OIG reveals investigation secrets.

While many of us would prefer to quickly forget 2009—the HHS OIG had a pretty good year. The OIG walked away with $4 billion in its hands at the end of FY2009—the money coming from settlements and court-ordered fines, penalties, and restitution. Seventy-five percent of the haul involved health care fraud—according to recent testimony by an OIG official.

In March 2010, Timothy Menke, deputy inspector general for investigations at HHS OIG, testified before Congress to update the federal government on its mission against fraud, waste, and abuse. The testimony also included a statistical overview of OIG’s performance in the past year, highlights of which are:

1. 671 criminal actions, 515 of which involved health care fraud;
2. over 362 civil actions, 355 of which involved health care fraud;
3. almost $500 million in receivables through recommended disallowances; and
4. over 2,500 expelled providers from federal health care programs.

He added that about 80 percent of OIG’s resources go to promoting the effectiveness of the Medicare and Medicaid’s programs and running after fraudsters. The agency has nearly 400 professional criminal investigators.

The OIG, along with CMS, and the DOJ constitute the Health Care Fraud Prevention & Enforcement Action Team (HEAT), which the Obama administration established in May 2009. The task force collaborates on spotting fraud trends and reinforcing the law accordingly.

Methods to the madness

There are five foolproof ways to carry out an investigation successfully, according to a special agent of OIG in Miami. First and foremost, agents analyze and evaluate claims data so they can identify questionable billing patterns. In an online report by Wolters Kluwer Law & Business, he described other methods that agents follow, including:

• Obtaining Medicare enrollment applications, which identify the registered owners, their financial information, and the authorized medical billing representatives;
• Identifying the medical biller who electronically submitted patient information to a Medicare claims contractor for processing and reimbursement (investigators interview the medical biller to determine her or his level of complicity, and identify who provided the billing information);
• Identifying and obtaining bank information, including the true owner of the fraudulent provider’s bank account; and
• Identifying the true owner of the clinic or durable medical equipment company, and attempting to interview him/her in furtherance of the investigation.

Find out more about how to avoid inappropriate PT and OT referrals in acute care settings.

You might be too young to get benefits, but you’re never too old to commit Medicare fraud: That’s the latest message in the constant string of fraud indictments filed by federal investigators.

A 61-year-old Texas doctor faces two fraud cases on charges of engaging in organized crime in connection with the illegal distribution of painkillers, and conspiring with others to reimburse Medicare and Medicaid about $30 million in nonexistent physical therapy services.

Christina Clardy was indicted last year for her alleged participation in the physical therapy scam against Umawa Oke Imo, owner of City Nursing Services of Texas Inc on Bissonnet. The company billed Medicare and Medicaid some $45 million worth of services—and got paid $30M—despite not employing a single licensed physical therapist or physical therapy assistant, according to a report by the Houston Chronicle.

Clardy was one of the supervising physicians at City Nursing Services, along with Dr. Thaddeus Hume, who was also named in a previous indictment.

“She is disappointed that they have brought her into this now,” says Clardy’s lawyer Chris Downey. “We cannot comment further because we’re just getting a look at the indictment.”

According to federal investigators, Imo, a Richmond-based Nigerian native, paid recruits $100 to $150 to sign blank forms for therapy sessions that were never performed. They also discovered that Imo owns a lavish 25-room home in Nigeria, as well as several luxury vehicles.

With her alleged participation in the scam, the US Attorney has charged Clardy with conspiracy to commit health care fraud, health care fraud and mail fraud. Downey maintains that his client looks forward to proving her innocence.

Pre-signed illegal prescriptions

Clardy also worked at Uptown Medical Clinic in Humble and at Texas Medicine Direct (formerly known as S&G Clinic). Following an arson investigation at Uptown Clinic, the authorities grew suspicious of the clinic’s operations because it had no medical equipment and operated on a cash-only basis.

Clardy allegedly prescribed and dispensed more than 2.5 million tablets of Vicodin, Xanax and Soma last year alone, the Houston Chronicle writes. The investigators found in the clinic “thousands of prescription pads that had been pre-signed by the doctor,” says the article.

The doctor ranks as the ninth biggest prescriber of pain pills in Texas.

Click here to learn how to avoid trouble if the feds show up at your health care facility.

3 precautions every provider should take when presenting finanicials.

The feds continue to hassle Johnson & Johnson and Omnicare for their financial relationship, and now they’ve got a PowerPoint presentation to add to their contention that J&J violated the False Claims Act when it attempted to influence the prescribing of J&J drugs.

The case contains some important lessons for providers and facilities, so read on to find out why the PowerPoint was sketchy and what you can do to avoid making the feds think you’ve got bad intentions.

A little over a year ago, Omnicare settled a False Claims Act case with the feds and a handful of states for $98 million, after it was alleged that the nursing home giant took kickbacks from J&J. Then, on Jan. 15, 2010, the DOJ announced it was suing J&J again under the FCA, this time for paying kickbacks to Omnicare to induce the nursing home pharmacy company to purchase and recommend J&J drugs, including anti-psychotic Risperdal, for use in nursing homes.

The J&J PowerPoint presentation, which is about as close to a smoking gun as you can get, addresses another drug, Levaquin, and shows two sets of data for comparison: Levaquin profitability with and without the Omnicare contract. Gross margins under the contract are estimated at $8.1 million, and without it, at $3.4 million.

That all sounds pretty above board, so where did J&J go wrong? “The PowerPoint and other documents that DOJ has reviewed indicate that J&J executives or managers were using terms like ‘market share success rebates’ or other euphemisms for paying what is alleged to be kickbacks,” explains Wayne Miller, a lawyer and compliance expert with the Compliance Law Group.

While J&J argues that the money was paid for information and educational services, the DOJ alleges there is little evidence that any such information or services were actually supplied, Miller says. The feds will use the PowerPoint presentation to show that the intent behind these payments was to gain market share.

The case will likely turn on the issue of J&J’s intentions. “Note that one could say that the PowerPoint document is not a complete ‘smoking gun’ because it doesn’t expressly say that the payments are intended as kickbacks,” Miller points out. “However, the DOJ may use it to support a contention that at least one purpose of the payments were to induce use of the drugs.” Under current federal case law, only one purpose of the payments can be to induce illegal referrals, and that’s enough to trigger liability under fraud and abuse laws.

What can facilities and providers take away from this case?

• “Payments involving phama companies continue to be scrutinized,” says Miller, “and the review is going beyond physicians to other professionals or companies who can influence prescribing.”
• “Compensation between referring parties must always be for bona fide, valuable information and services that are not a guise for rebates or kickbacks,” he says. “The information and services need to be clearly described, and evidence of the work done maintained.”
• “Review pro forma or other financial information that is going to be disseminated in connection with a potential deal with a referring party to make sure that it is not misconstrued as evidence of wrongful intent,” Miller concludes.

Here’s one example of how to stay above board on intent: If you intend to pay for a service or data, make sure your financial information includes an estimated value of the service or data through comparables or appraisal, as well as evidence that the compensation you’re paying is fair market value, he says. “And keep in mind that on the other hand, pro formas that focus on how the recipient’s referrals may improve the bottom line could be problematic, too.”

Wayne Miller is presenting a webinar on April 15, 2010: Stark and Fraud and Abuse Changes Under Health Reform.”

Medicaid compliance differs from Medicare compliance in 3 key ways.

Given that both the feds and the states are ramping up their efforts in the area of Medicaid fraud enforcement, it’s time for your practice to revamp its compliance plan to include both federal and state-specific Medicaid policies & procedures.

Last week, we analyzed the reasons behind regulators’ renewed interest in Medicaid fraud. In a recent audio conference called “Medicaid Fraud Enforcement Is on the Rise,” Robert Markette Jr., a partner with Gilliland & Markette LLP, also discussed the ramifications of as well as how to go about preparing for a new era of compliance in the 2010s.

This enhanced enforcement activity can lead to serious problems for providers who see Medicaid patients, he noted: overpayment recovery, false claims act litigation, civil monetary penalties, criminal investigations and prosecutions, and jail time, fines and exclusion from the program are all possible outcomes.

“Even being the subject of an investigation can be a problem,” Markette said. Patient relations can suffer if word gets around that you’re being investigated. And for non-profits, forget it: “It’s hard to get people to donate money if they think you’re bilking the government for money,” he pointed out. “Even if you’re doing everything right, it’s burdensome to convince the government of that.”

The solution? Avoid being investigated in first place by updating your compliance program to take into account both Medicare and Medicaid – and all the changes that have taken place recently, said Markette.

There are several sources of Medicaid compliance guidance available. Of course there are a range of compliance guidelines offered by CMS for different types of providers and organizations. Those are built from the 7 steps in the U.S. Sentencing Commission’s Sentencing Guidelines for Organizational Defendants, which are not health care industry-specific. Then there are industry-specific compliance practices available from organizations like the Health Care Compliance Association.

What you may not be as familiar with, added Markette, is the trend in state-level guidance now appearing in states like New York, which is in the process of publishing its own Medicaid compliance guidelines for providers. “If you’re in New York, these are additional expectations above the U.S. sentencing guidelines” and CMS guidance, he said. “You will see more and more states going down this road,” especially if New York’s newly created Office of the Medicaid Inspector General is successful in recouping money lost to fraud. States watch efforts like this in their sister states, and so New York will be an important test case.

It’s important to note that because states are designing their own Medicaid guidelines, they can and often do diverge from CMS’s Medicare guidance. So you can’t just add “Medicaid” to your Medicare compliance program and be done, Markette warned.

For example, in New York’s proposed guidelines, there are 8 instead of the typical 7 elements of an effective compliance program, which are: written policies & procedures; designation of a compliance officer and committee; effective training and education; lines of communication and reporting; auditing and monitoring; enforcement; and responding to and reporting offenses. New York adds an eighth requirement of a policy for non-retaliation.

Markette noted at least several areas of your Medicare and Medicaid compliance programs that will need to be different:

• written policies & procedures (due to the differences among states and additions like New York’s);
• auditing and monitoring (because the states are often interested in different issues than the feds); and
• training and education (because different payers have different requirements, and thus create different risk areas).

If one policy can’t address both Medicare and Medicaid, he said, then draft a different policy for each. For instance, both programs reimburse for home health benefits. But state and federal definitions of “homebound” differ. In Indiana, where Markette’s firm is located, the definition is more flexible, which means more services can be reimbursed under this benefit. But don’t use the state definition to assess Medicare beneficiaries, he warned. You don’t want CMS coming after you to recoup funds that you improperly claimed for the narrower federal benefit.

The key, he reiterated, is to be prepared. “Medicaid fraud enforcement is increasing. As it increases, it becomes more and more important for providers to be proactive in their Medicaid compliance efforts,” Markette said. “The time to act is now, not later, if you want to be prepared for the coming wave of enforcement activity.”

AUDIO TRAINING EVENT: Prepare for Medicaid Integrity Contractors.

76K for “vacation pay?” Where can we get a gig like that?

Recent fraud busts are threatening home care providers with a bad reputation. In Memphis, an owner of a 30-year-old home health agency was sentenced to 18 months in prison for filing a false cost report.

Rosetta Perkins-Brown, owner of Elder Care Home Health Services Inc., falsely claimed $22,000 for professional fees, $146,000 for owner’s compensation, $98,000 for sick pay, and $76,000 for vacation pay, according to Tennessee U.S. Attorney Lawrence J. Laurenzi.

The accountant, too: Elder Care’s CPA, Larry Vernell Bullock, also pled guilty to Medicare fraud and was sentenced to 12 months in prison earlier this year, Laurenzi says in a release. Bullock assisted Perkins-Brown in filing the false claims, prosecutors say.

Meanwhile: In Los Angeles, the feds charged 20 durable medical equipment company owners and marketers with Medicare fraud in seven separate cases.

The DME owners and marketers billed tens of millions of dollars for wheelchairs, orthotics, and other supplies that were never furnished or that were medically unnecessary, according to a release from Acting U.S. Attorney George S. Cardona. One of the cases involved a suspect recruiting people to act as straw owners of four different supply companies.

The indictments and arrests were due to L.A.’s Medicare Fraud Strike Force, Cardona says. Recent articles by the Associated Press and in mainstream newspapers have pointed a finger at Medicare fraud, particularly the HHA fraud in the Miami area.

© Home Care Week.

Modifier misuse, POS coding errors might be partly responsible for one physician’s legal troubles.

A New Jersey practice allegedly overbilled Medicare by almost $5 million by fraudulently reporting lymphedema procedures to its carrier. Although the practice billed for surgery that the physician personally performed, investigators charged that unsupervised physical therapists, licensed practical nurses, and massage therapists were performing physical therapy services on the patients rather than surgeries.

The attorneys allege that the physician certified that the services were medically necessary, and used inappropriate modifiers and CPT codes to report multiple procedures within a short time period, according to a July 14 press release from the N.J. Office of the Attorney General.

AUDIO: Your guide to coding & billing ethics, compliance. With attorney Wayne Miller.

Texas Medical Center

Lesson Learned: Health care providers in medical centers harbor fraudsters in their midst —and increased federal scrutiny.

If you’re a health care provider near a university medical center or big city hospital system, get ready to take some summer HEAT. CMS’s and the Department of Justice’s “Health Care Fraud Prevention and Enforcement Action Team is looking for big money in false claims that come out of urban areas like Houston, Miami, Detroit and Los Angeles, reports The Houston Chronicle.

In one week, six health care scams in urban areas made headlines, and together, the cases represent $285 million in false billings. “This is an astounding amount,” said Houston’s FBI spokeswoman Pat Villafranca. The $285 million is more than four times the amount stolen during robberies of U.S. banks during all of 2008, she added, according to the Chronicle.

HEAT is taking aim at areas with the highest number of billing anomalies, because there’s more money saved when they stop a scam. “The Texas Medical Center may attract individuals intent on committing fraud who think they might more easily ‘blend in’ among the legitimate practices,” FBI officials said, according to the Chronicle.

The 3 scams uncovered in Houston: a pill mill that submitted false Medicare claims, a PT clinic that paid patients to sign blank Medicare forms, and a psychologist who billed for services he never performed on 67 patients … More from The Houston Chronicle.