OIG Settlements Prove Physician Fraud Continues

Working with physicians across the country, I gain great insight from hearing their thoughts on healthcare. Whenever there is discussion that arises regarding the anti-kickback statute (AKS), Stark, or other federal and state laws, there is generally consensus that these laws are overbearing and overly restrictive and that they stifle physician ingenuity.

As someone who regularly counsels physicians on the application of healthcare regulations, I can agree the laws lack much clarity and can be frustrating to deal with when trying to structure transactions. However, should we get rid of these laws as some would advocate? While many providers are extremely careful (and perhaps overly cautious) for fear of violating the law, others simply believe they are above the law or will not get caught. There could be those who did not realize what they were doing was illegal, but I have to believe those cases are few and far between. So who are these physicians that are paying and receiving kickbacks, billing for medically unnecessary services, and defrauding the government? These are physicians in every community across the country. These are the providers that cause the government to increase enforcement actions year after year.

Some recent settlements posted by the OIG give great insight:

1. The Department of Justice announced two cardiovascular disease laboratories agreed to pay $48.5 million to settle claims of paying kickbacks and conducting unnecessary testing. In this case, the laboratories (among other charges) allegedly induced physicians to refer patients to them for blood tests by paying the physicians processing and handling fees between $10 and $17 per referral and routinely waiving patient co-pays and deductibles. The lawsuits were filed by physicians and others under the qui tam (whistleblower) provisions of the False Claims Act.

2. In New York, a doctor with a practice in Rockville Center, N.Y., admitted accepting bribes in exchange for test referrals as part of a long running and elaborate scheme operated by Bio Diagnostic Laboratory Services, LLC (DLS). Thirty-eight people, 26 of them doctors, pleaded guilty in connection with the bribery scheme which was resulted in more than a $100 million in payments to DLS from Medicare and various private insurance companies. Under the scheme, the doctor accepted bribes in return for referring patients' blood specimens to DLS and was often paid in excess of $5,000 per month. His referrals generated approximately $2.9 million in lab business for DLS.

3. A Detroit area medical doctor referred Medicare beneficiaries to home health services in exchange for illegal cash kickbacks was part of a $3.6 million home healthcare fraud scheme and pleaded guilty for his role in the scheme. According to the plea agreement, the physician referred patients to Detroit area home health agency Advanced Home Health Care Services, Inc. (the Advanced) and other agencies in exchange for cash kickbacks. The agency's owner billed Medicare for $3.6 million in home health services that were not medically necessary or not even provided through Advanced. The doctor admitted that Medicare paid a total of $770,668 to Advanced and $118,376 to other home healthcare companies for fraudulent claims based on his referrals.

This list goes on and on. I invite you to check it out yourself and subscribe to it for daily updates; there is no better evidence of the type of activity that is occurring nationwide (and this list is just a glimpse). With this staggering amount of fraud and illegality in the area of healthcare, what choice does the government have but to try and find new and better ways to track and prosecute offenders? Unfortunately, the activities of these bad actors affect all physicians and other providers in the healthcare industry and will continue to make the business of healthcare an overly regulated one for all.