The following is a summary of the federal Department of Health and Human Services' Office of Inspector General (OIG) reports of fraud and abuse enforcement activity across the country. The enforcement actions reported are based upon federal and individual states' activity.
The summaries reflect areas of OIG's and individual states' current and recent enforcement activity. Knowing where regulators' attention is focused can help healthcare providers identify areas of focus for compliance and risk assessment activities. Although not all the enforcement actions may be relevant to any one provider's healthcare business, there may be some summaries that could be used as examples in compliance program education ("What to avoid"), or used in developing a risk management plan. (Note: An Acronym Key appears at the end of the Report.)
Of Note in this Issue:
- New York's Attorney General announced a settlement with a NY not-for-profit provider of services to people with developmental disabilities that fraudulently reported executive salaries and contractor fees on Medicaid cost reports when services related to Medicaid were not provided. The provider agrees to dissolution after it transfers its clients to other Medicaid providers and submits its final claims on or before 6/30/2023 (8/31).
- Another state announced its settlement with Mallinckrodt related to Mallinckrodt's failure to pass along drug rebates to Medicaid programs (8/17).
- In a related failure to pass along discounts, Washington State announced a settlement with a managed care plan that failed to pass along PBM discounts to its Medicaid program (8/24).
- OIG is prosecuting Paycheck Protection Program (PPP) abuses (8/19). Conducting audits of COVID funds distributions is part of OIG's oversight responsibilities.
- A California County and other providers connected with the County reached a settlement with the Federal government on allegations of FMV irregularities. Two Defendants agreed to enter into a Corporate Integrity Agreement (CIA). One Defendant refused to enter into a CIA and, in response, OIG retains the ability to exclude that provider from federal healthcare programs (8/18).
- Although three enforcement actions were reported to include agreements to enter into CIAs, not all the CIAs have been posted on OIG's website.
August 31, 2022 OIG News Release
Attorney General James Secures $850,000 from Disability Services Not-for-Profit That Defrauded Medicaid – Maranatha Human Services Cheated Medicaid By Illegally Paying CEO and Family Members for Work That Was Not Medicaid Eligible
NY. The Defendant, a not-for-profit developmental disabilities service provider, entered into a settlement agreement to resolve allegations that the Defendant submitted false cost reports that claimed reimbursement for amounts spent on salaries and contractor fees which were not for the provision of Medicaid services, were for excessive amounts, and were paid for little or no work performed. In addition to the repayment, the Defendant agreed to transfer its Medicaid business to other providers and by June 30, 2023 no longer submit new claims for state-funded healthcare programs. Additionally, it must submit a petition to dissolve within 60 days of submission of its final claim to federal and state healthcare programs. This matter was initiated through a Qui Tam action. The Defendant's CEO previously settled allegations related to his salary and work on non-Medicaid business. He has been barred from working or volunteering for any entity that receives Medicaid funding and he is permanently barred from serving as an officer, director or trustee of any NY not-for-profit corporation and in any capacity that permits him discretion over charitable assets.
Attorney General Mark Vargo announces settlement of Medicaid kick-back suit
SD. See related article on 8/23 on Essilor Laboratories of America, Inc. This announced SD's settlement with Essilor.
Global Healthcare Company to Pay $6.3 Million to Resolve False Claims Act Allegations
NJ. The Defendant, Novo Nordisck, Inc., allegedly violated the Trade Agreements Act which restricts the procurement of goods under certain government contracts for purchase from specific designated countries, by submitting false claims for payment for medical devices that were manufactured in non-designated countries.
California Man Sentenced to Federal Prison for Role in Health Care Kickback Conspiracy
TX. The Defendant conspired with others to pay and receive illegal kickbacks in exchange for the referral of, arranging for, and recommending healthcare business, specifically pharmacogenetic (PGx) tests. Those tests identify genetic variations that affect how patients metabolize certain drugs. The PGx tests were referred to clinical laboratories in CA.
13 Novus Healthcare Fraud Defendants Sentenced to Combined 84 Years in Prison
TX. The Defendants were sentenced for their participation in alleged fraud by a hospice agency that submitted materially false claims for hospice services, provided kickbacks, and violated HIPAA to recruit beneficiaries. Allegations also included that employees of the hospice dispensed Schedule II controlled substances without the guidance of medical professionals and moved patients to a new hospice company in order to avoid a Medicare suspension; the hospice's medical directors often signed off on patient care plans without properly reviewing patient files and falsely certifying they completed in-person examinations when they had not; admissions and discharges from the hospice were made without any physician involvement; and kickbacks were paid to physicians disguised as medical director salaries to induce referrals. Additional allegations involve the hospice enrolling first-time hospice patients through an agreement with Express Medical that provided access to potential patient confidential medical information and the hospice referred lab tests and home health visits to Express Medical.
August 30, 2022 OIG News Release
Florida Lab Owner Charged in $53 Million Health Care Fraud and Kickback Scheme Related to Genetic Cancer Screening Tests
NJ. The Defendant, a FL owner of multiple labs, allegedly paid kickbacks and bribes to entities that supplied referrals and orders for genetic cancer screening tests (CGX) which were used to bill Medicare and other healthcare benefit program beneficiaries, without regard to medical necessity. The Defendant allegedly paid kickbacks to those providing CGX referrals and, to conceal the bribes, the Defendant and his suppliers entered into sham contracts to make it appear that the suppliers were engaged in, and being paid for, legitimate marketing and referrals services. Other charges for healthcare offenses are pending in FL and PA.
Vision Quest Industries to Pay $2,250,000 to Resolve False Claims Act Allegations
MN. The Defendant, a DME manufacturer, settled allegations that its independent sales representative and the sales representative's company paid kickbacks in the form of commission payments based upon a 20-35% net revenue on the Defendant's DME equipment sold. This marketing scheme set the Defendant up as the exclusive brace supplier for specific braces. Billings were submitted to Medicare. The Defendant also agreed to enter into a five year Corporate Integrity Agreement.
Medical Director Convicted in Health Care Fraud Scheme
TX. The Defendant, a physician, allegedly authorized toxicology and genetic testing for TRICARE beneficiaries without seeing, speaking to, or otherwise treating patients and without incorporating test results into ongoing treatment. Additionally, some patients did not know what they were being tested for and others were enticed to provide urine or saliva specimens in exchange for $50 gift cards. Evidence at trial allegedly demonstrated that the Defendant was paid in exchange for signing off on medically unnecessary and repetitive toxicology and genetic tests.
August 29, 2022 OIG News Release
Idaho Provider Sentenced to Jail for Defrauding State Medicaid Program
ID. The Defendant was the owner and operator of a company that provided home health, supervised employment, mental health counseling and social support to Medicaid participants with developmental disabilities. She allegedly made false representations or directed billing personnel to make false representations regarding services provided to Medicaid patients. This resulted in overpayments being issued to Defendant by ID Medicaid.
Paxton's Medicaid Fraud Control Unit Helps Secure Indictment Against Two Individuals Accused of $6.9 Million Medicaid Fraud and Kickback Scheme
TX. The Defendants, a manager and operator of a family dental clinic, allegedly submitted false and fraudulent claims to Medicaid for dental services that were never provided, paid kickbacks to marketers and caregivers of children to bring the children for treatment by the clinic, and one Defendant allegedly employed and billed Medicaid for a person not licensed to practice pediatric dentistry.
August 25, 2022 OIG News Release
Charlotte Medical Device And Equipment Manufacturer Agrees To Pay Over $780,000 To Resolve Allegations Of False Claims Act Violations
NC. The Defendant, a medical device and equipment manufacturer, settled allegations that it marketed and promoted products that did not meet Medicare's or Medicaid's reasonable and necessary requirements, and so were not eligible for reimbursement. The Defendant allegedly did not receive the necessary approvals or the approvals expired for the products in issue. The matter was initiated through a Qui Tam case.
Missouri doctor sentenced to year in prison for healthcare fraud; he and wife ordered to repay $235,000
MO. The Defendants, a physician and his wife, for nearly a decade, allegedly injected patients with a cheaper, foreign-sourced Orthovisc that had not been approved by the FDA. The patients were unaware of the substitution. The Defendants received reimbursement based on a more expensive medication than was used, lied to their compliance officer and a friend by representing the injections came from a US distributor, and fraudulently persuaded the compliance officer that the Orthovisc had a required National Drug Code number.
August 24, 2022 OIG News Release
AG Ferguson: Health care giant Centene to pay Washington $19 million for overcharging state Medicaid program in 2nd largest Medicaid fraud recovery in WA history
WA. The Defendant, a managed care provider, settled allegations that it overcharged the Medicaid program for pharmacy benefit management services when it failed to pass on discounts it received to the WA Medicaid program and inflated the dispensing fees. In addition to the amount paid to WA, the Defendant is to pay an additional $13 million to the federal government. The matter was initiated through a whistleblower complaint.
August 23, 2022 OIG News Release
Lawrence woman fined, ordered to repay more than $5,000 to Kansas Medicaid program
KS. The Defendant, a personal care attendant for her son, agreed to a consent judgement to resolve allegations that she provided her confidential user information to her son, who logged into an app 91 times, indicating his mother was providing him services at times when the Defendant was working as an emergency room nurse and not as her son's personal care attendant.
Essilor Agrees to Pay $16.4 Million to Resolve Alleged False Claims Act Liability for Paying Kickbacks
TX. The Defendant, a manufacturer and distributor of optical lenses and equipment used to produce optical lenses, allegedly paid remuneration to eye care providers (optometrists and ophthalmologists) to induce them to order and purchase the Defendant's products for their patients in violation of the AKS. The matter was initiated through a Qui Tam complaint. The Defendant agreed to enter into a 5 year Corporate Integrity Agreement, which will include implementing systems, policies, processes, and procedures to ensure that any discounts, rebates or other reductions in price offered to providers comply with the AKS.
August 19, 2022 OIG News Release
Hospice agrees to pay nearly $1M to settle false claims liability
TX. The Defendant, a hospice provider, allegedly submitted false claims for hospice care for patients who were not eligible for, and did not qualify for, the hospice benefits. Patients were not terminally ill, which is an eligibility requirement for hospice care. The matter was initiated through a Qui Tam complaint.
Two indicted for exploiting adult day care patients in Medicare fraud scheme
TX. The Defendants, a physician and an employee, allegedly paid kickbacks to adult day care companies to gain Medicare beneficiary information under the guise of providing medical services. The Defendants and other co-conspirators allegedly used that information to perform a variety of unnecessary medical tests and procedures and order prescriptions for expensive medications that were not needed; additionally, primary care physicians of patients were allegedly not consulted prior to, or after, the examinations. It is also alleged the Defendants were paid kickbacks by marketers for ordering laboratory tests and prescriptions that were unnecessary and that patients did not want – in many instances the patients allegedly did not receive their test results or the prescribed medication. One Defendant allegedly forged patient signatures on consent forms related to the fraudulent laboratory testing services and prescriptions.
Kansas Brothers Indicted for $3.7 Million Healthcare Fraud Scheme
KS. The Defendants allegedly created several businesses and misrepresented the ownership of the enterprises in documents, submitted false billing for medical services not administered to patients, used a physician's provider number without his authorization, and falsified the physician's electronic signature indicated on documents stating he performed medical procedures he did not perform.
Kansas Chiropractor Indicted for PPP Loan Fraud
KS. The Defendant, a chiropractor, allegedly fraudulently obtained Paycheck Protection Program (PPP) loans from two banks and then used a third bank to conceal the proceeds. OIG is charged with oversight/auditing of PPP funds.
August 18, 2022 OIG News Release
Ventura County's Organized Health System and Three Medical Providers Agree to Pay $70.7 Million to Settle False Claims Act Allegations
California County Organized Health System and Three Health Care Providers Agree to Pay $70.7 Million for Alleged False Claims to California's Medicaid Program
Attorney General Bonta, U.S. Department of Justice Secure $70.7 Million in Settlements Against a Southern California County Organized Health System and Three Healthcare Providers for Violations of the False Claims Act
CA. The Defendants, a Venture County Medi-Cal Managed Care Commission (operator of multiple varying healthcare providers); a non-profit hospital; and non-profit healthcare organization, allegedly submitted false claims to Medi-Cal for "Additional Services" provided to Adult Expansion Medi-Cal members that were not allowed medical expenses under their Medicaid contracts with CA; the pre-determined amounts did not reflect FMV of the Additional Services provided; and/or the Additional Services duplicated services already provided. Additionally it was alleged that the payments were unlawful gifts of public funds. The matter was initiated by a Qui Tam complaint. Two of the Defendants agreed as part of the Settlement to execute a five year Corporate Integrity Agreement. One Defendant, Clinicas del Camino Real Inc., although it entered into a healthcare fraud settlement with the US, refused to enter into a CIA and is listed on the OIG's website as a provider that is High Risk – Heightened Scrutiny. As part of the Settlement Agreement, OIG reserved the right to exclude Clinicas for the alleged conduct.
Leavenworth woman ordered to repay $3,500 for Medicaid fraud
KS. The Defendant, a personal care attendant for her mother-in-law, allegedly submitted false claims to Medicaid as if she were providing home care after her mother-in-law was hospitalized and had died.
Owner & Operator Of Former Nashville-Based Lowry Medical Supply, Inc. Charged In HealthCare Fraud Conspiracy – Charges Allege Approximately $30 Million Fraudulently Billed to Medicare
TN. The Defendants, an owner and operator of a defunct medical supply company, allegedly paid kickbacks and bribes in exchange for referral of Medicare beneficiaries by medical professionals; worked with fraudulent telemedicine companies for braces that were medically unnecessary; and lured Medicare beneficiaries who were elderly or suffering from dementia into a scheme to mail orthotic braces that the beneficiaries never asked for, never wanted, and never needed, which were then billed to Medicare. In 2018, the Defendants had been warned by a Medicare accrediting agency of the violations of Medicare rules, but did nothing to change their practices.
Two charged in $6M pediatric dental Medicaid fraud/kickback scheme
TX. The Defendants, an operator and manager at a dental clinic, allegedly submitted false and fraudulent claims to Medicaid for dental services that were never provided as billed; paid kickbacks to marketers and caregivers of children Medicare insures to bring them to their dental clinic for services; employed an individual to practice pediatric dentistry without a license and billed Medicaid for services; and laundered Medicaid monies to a personal bank account.
August 17, 2022 OIG News Release
Mallinckrodt to Pay More Than $230 Million to Settle Lawsuit Alleging Underpayment of Medicaid Drug Rebates
ID. Mallinckrodt's financial settlement with ID is announced and it involves Mallinckrodt's and its predecessor, Questcor's, underpayment of Medicaid drug rebates to ID and, as a result, violations of the FCA.
August 16, 2022 OIG News Release
Local home health care business owner sent to prison for $10M Medicare fraud
TX. The Defendant, an owner of two home care businesses, allegedly billed Medicare by fraudulently using the names of beneficiaries that were not patients of the Defendant's agencies. Additionally, it was alleged the beneficiaries did not need home health services, were not treated by a physician, and never were patients.
If you have any questions on any of the summaries, or if you would like assistance in developing a compliance plan (including compliance training materials) to address any OIG Enforcement activity or other compliance or risk management matter, please contact Matthew Babcock at Harris Beach, PLLC at firstname.lastname@example.org or (518) 225-4731.
- AG = Attorney General
- AKS = Anti-Kickback Statute
- CIA = Corporate Integrity Agreement
- CMP = Civil Monetary Penalties
- CMS = Centers for Medicare and Medicaid Services
- CPT = Current Procedural Terminology Codes
- DME = Durable Medical Equipment
- E&M = Evaluation & Management services
- FEHBP = Federal Employees Health Benefits Program
- FMV = Fair Market Value
- DOJ = United States Department of Justice
- FCA = False Claims Act
- FWA = Fraud, Waste & Abuse
- HHS = Department of Health and Human Services
- IA = Integrity Agreement
- LTC = Long Term Care (usually facilities)
- MCO = Managed Care Organization (typically Medicaid)
- MFCU = Medicaid Fraud Control Unit
- MSO = Management Services Organization
- OIG = Office of Inspector General in HHS
- OT = Occupational Therapy
- PBM = Pharmacy Benefit Managers
- PT = Physical Therapy
- SNF = Skilled Nursing Facility
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.