Staggering Examples of Home Health Providers Hit with Multi-Million-Dollar Penalties and Prison Sentences
Want to know which health care providers the DOJ and OIG will target for fraud investigations in the future?
Follow the money.
Home health services, including house calls and other mobile health services, are on the rise. They currently account for billions of dollars in Medicare spending every year.
Accordingly, the federal Medicare Fraud Strike Force has set its sights on mobile health providers as likely culprits in false claims and kickback investigations. Below, we consider several recent cases that highlight the very high stakes involved in mobile health care provider fraud and the qui tam litigation that often triggers federal intervention.
A Mobile Health Company and a Nursing Home Strike a Deal… and Pay a Big Price.
In 2013, Kan-Di-Ki, LLC, a Burbank company that provided mobile laboratory, radiology, and other home health services (primarily inside skilled nursing facilities) reportedly agreed to pay $17.5 million in response to allegations that it submitted false claims to Medicare and Medi-Cal (the California state-level equivalent of Medicare).
The company, which did business under the name Diagnostic Laboratories and Radiology, would allegedly charge the skilled nursing facilities at a below-cost rate for their Medicare Part A business.
In exchange, the facility would provide Medicare Part B and Medi-Cal business back to Kan-Di-Ki, according to a statement from the DOJ.
Two of Kan-Di-Ki’s former employees took notice of the arrangement and filed a qui tam lawsuit under the whistleblower provisions of the federal False Claims Act (as well as California’s version of that statute).
In the end result, the defendants agreed to pay:
- $12.95 million in settlement to the United States government
- $4.55 million in settlement to the California government
For their part, the whistleblowers collectively got to keep $3,755,500 of the United States’ recovery. In addition to that staggering sum, the whistleblowers were also expected to keep a substantial portion of the State of California’s $4.55 million recovery.
The case illustrates how arrangements between health care services that might seem like straightforward business strategy, such as providing discounts to patients or frequent business partners, can be construed as illegal kickbacks under state and federal law.
It also highlights how enticing the qui tam provision in the False Claims Act can be to those who know your business best. If you are a mobile health care provider, your employees could make millions of dollars by turning you in for fraud. And there are innumerable law firms in this country who are ready to help them do just that. Indeed, health care whistleblowing has become an economy all its own.
Whistleblower Lawsuits Point to Fraud in Medicare Advantage Programs
Medicare Advantage home visits account for billions of dollars of federal spending each year. But a highly publicized report by the Center for Public Integrity in 2014 suggested that the government might be overpaying by tens of billions of dollars each year, as mobile health care providers allegedly exaggerate patients’ conditions or bill for services they don’t actually provide.
In 2015, NPR detailed a series of recently unsealed whistleblower allegations against mobile health care companies accused of defrauding Medicare:
- A qui tam lawsuit filed in Dallas by a medical billing coder against her former employer, CenseoHealth – a Dallas-based firm that contracted thousands of doctors to make house calls for the purpose of evaluating patients’ health on behalf of Medicare Advantage. In her complaint, the coder claimed that dozens of major Medicare Advantage plans had received excessive Medicare payments as a result of the doctors exaggerating the severity of the patients’ health conditions. (CenseoHealth remains one of the largest mobile health care providers in the country.)
- A whistleblower lawsuit in which a former compliance officer accused Mobile Medical Examination Services Inc. (a Santa Ana, California-based home health company doing business as MedXM) of diagnosing “false and fraudulent” medical conditions. This was so that various Medicare Advantage plans could overcharge the federal government – allegedly to the tune of $1 billion in fraudulent Medicare bills.
- Numerous other lawsuits, some still under seal at the time of the report, citing Medicare Advantage payments as an incentive for mobile health care provider fraud.
Dallas-Area Doctor Convicted as the “Poster Boy” for Mobile Health Care Provider Fraud
Dr. Jacques Roy of Rockwall, TX, was convicted earlier this year in what the Dallas News described as “the nation’s largest home health care fraud case involving a single doctor.”
In its complaint against Roy, the U.S. Attorney’s office said that he and his companions recruited homeless people and even “fake patients” – offering them food stamps, groceries, and cold hard cash – in order to generate bogus claims for payment to Medicare.
In all, Roy is accused of soliciting roughly 11,000 Medicare beneficiaries as part of the scheme.
The jury was quick to render a verdict. They deliberated less than two days, and ultimately put Roy face to face with the prospect of spending more than 80 years in prison. He’s already lost his medical license.
Alongside him, the jury also convicted three other mobile health care providers on fraud charges. Their sentencing is still to come.
But Dr. Roy’s defense team painted a very different picture.
By all accounts, Dr. Roy visited a large number of patients – up to 14 a day, usually in low-income communities where access to medical care remains a real challenge. And by the government’s own admission, it was Roy’s large number of patients that put him on their radar. In fact, according to the government, he submitted more Medicare claims for home health services than any other provider in the nation.
Of course, it is not a crime to see a large number of patients, nor is it inherently fraudulent to pursue an unusual business strategy.
While the government ultimately offered additional kinds of evidence in Roy’s case that lead to his conviction, an important takeaway for other mobile health care providers in the country is this: any unusual activity in the home visit health care industry is enough to attract the attention of federal investigators. And once they’re paying attention, they can and will use any evidence they find against you. (Case in point: during a raid on Roy’s house, investigators found a book about hiding assets and made it a major point in their case against him.)
Talk to an Experienced Mobile Lab Fraud Defense Attorney Today
If you or your organization has been accused of Medicare fraud or any other form of health care fraud, you should take immediate and urgent steps to protect your medical license, your reputation, your finances, and your future. They are all at stake, and you should expect the government to be absolutely ruthless in its efforts to convict you and ruin your finances.
Oberheiden, P.C. is a national reach health care fraud defense firm with significant amount of experience in mobile health care provider fraud. In the overwhelming majority of our cases, we’ve been able to keep our clients in practice and out of prison. We want to do the same for you. Please give us a call and talk to our team about your situation right away.
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This information has been prepared for informational purposes only and does not constitute legal advice. This information may constitute attorney advertising in some jurisdictions. Reading of this information does not create an attorney-client relationship. Prior results cannot guarantee a similar future outcome in your case. Oberheiden, P.C. is a Texas firm with headquarters in Dallas. Mr. Oberheiden limits his practice to federal law.