November 2009

According to a report issued by the Office of Management and Budget (OMB) of the White House, the Federal government made $54 billion in improper payments in 2009 from the Medicare and Medicaid programs.  The OMB reports that in response, President Obama is expected to sign an Executive Order this week designed to boost inter-agency transparency, hold agencies accountable, and create incentives for compliance.  This is just another indication that fraud, waste and abuse enforcement efforts will likely spike considerably in the coming months and years, and physicians and other providers need to be sure they are devoting adequate resources compliance efforts. 

While all eyes are on the health care reform debate, a new Senate bill would give the government improved tools for investigating and prosecuting fraud and abuse in both federal and private health insurance programs. One of the most significant proposed changes would authorize a qui tam whistleblower action under the False Claims Act based solely on allegations of a violation of the Anti-Kickback law.

Senator Ted Kaufman (D-DE) introduced the Health Care Fraud Enforcement Act of 2009, co-sponsored by Committee Chairman Patrick Leahy (D-VT) and Committee members Arlen Specter (D-PA), Herb Kohl (D-WI), Chuck Schumer (D-NY) and Amy Klobuchar (D-MN).

Kaufman’s proposed legislation would modify federal sentencing guidelines, health care fraud statutes, and forfeiture, money laundering, and obstruction statutes, including:

Sentencing increases: The bill directs the Sentencing Commission to increase the guidelines range for health care fraud offenses and clarifies that the full potential scope of the fraud should be considered at sentencing.

Redefining “health care fraud offense”: The bill includes all health care crimes within the definition of “health care fraud offense,” regardless of where they are codified. (ERISA, drug marketing, and kickback crimes are currently not included) This change will make available to law enforcement the full range of antifraud tools, including criminal forfeiture and obstruction penalties, to combat these offenses.


Continue Reading Senate Bill Would Strengthen Anti-Fraud Efforts

A cautionary tale for physicians who lease space or provide medical director services to hospitals.  These common arrangements are coming under increasing scrutiny, and must be commercially reasonable to withstand challenge.
McAllen Hospitals L.P., d/b/a/ South Texas Health System entered into a settlement agreement with the Department of Justice on October 30, 2009 to pay $27.5 million to resolve allegations of violations of the Stark and Anti-Kickback law arising from lease and medical directorship payments to physicians.  A qui tam whistleblower suit was brought by a former employee fired by the health system who will receive $5.5 million from the settlement.  The system also agreed to a five-year Corporate Integrity Agreement.
The suit alleged that McAllen leased an unfinished office suite with a dirt floor from a referring physician for $8,000 per month, paid four physicians questionable medical director fees, wrote off a $150,000 loan to a cardiology group, and provided free rent, equipment, supplies and housekeeping services to other referring physicians, among other violations.  The small Texas community had attracted national attention earlier this year when an article in the New Yorker reported that its average Medicare spending per enrollee was nearly two times the national average, and $3,000 more than the average local annual income, without a notably sicker population or better medical outcomes.  These statistics may help the government publicize the connection between hospitals that pay kickbacks to induce referrals and increased costs passed along to Medicare.

For more information regarding this settlement agreement, please contact William H. Maruca.