The Ugly Case of Healthcare Fraud in Texas

Forest Park Medical Center (FPMC) in Dallas and other Texas cities was touted as a "Luxury" hospital with a "spa-like atmosphere," which did not accept lower-paying Medicare, Medicaid, or "in-network" managed-care insurance rates, but did allow for physician ownership, . As such, it rapidly attracted the attention of physician investors and their referrals. A little too rapidly for some observers.  Then came its money woes.  Sabra, a real estate investment trust which had loaned $110 million to finance the Dallas campus of Forrest Park, began to fret over deferred rent payments and filed liens on all the equipment.

According to a 2015 D Magazine article, "Drs. Richard Toussaint, an anesthesiologist, and Wade Barker, a bariatric surgeon, were tired of the bureaucracy and inefficiencies they'd seen firsthand at other hospitals. So they decided to build their own."  

A year later, Forrest Park had filed for bankruptcy and Toussaint had been convicted of seven counts of healthcare fraud. The jury found Toussaint billed for procedures he could not possibly have performed, as he, himself was under general anesthesia, or out of the country at the time of the surgeries.

Last Thursday, the Department of Justice released a shocking press release  that 21 surgeons, healthcare professionals, a referring personal injury attorney, and others had been indicted in a massive kickback conspiracy involving over $500 million in insurance claims.  

According to prosecutors, "FPMC's strategy was to maximize profit for physician investors by refusing to join the networks of insurance plans for a period of time after its formation, allowing its owners and managers to enrich themselves through out-of-network billing and reimbursement."  This strategy, isn't actually illegal. No one can be forced to join an insurance network, including Medicare or Medicaid.

What would be illegal, if the prosecutors can make their case, is the alleged $40 million in bribes and kickbacks paid for referring certain patients to FPMC.  For example, according to the indictment, hospital accepted the referral of patients with high reimbursing, out-of-network private insurance benefits, and benefits under certain non-Medicare and Medicaid federally-funded programs, such as Federal Employees Health Benefits Program or Federal Federal Employees' Compensation Program also known as federal workers compensation.  FPMC's owners, managers, and employees then allegedly attempted to sell patients with lower reimbursing insurance coverage, namely unwitting Medicare and Medicaid beneficiaries to other facilities in exchange for cash.  

Although the typical arrangement in Texas would call for the carve-out of Medicare and Medicaid programs, the intent being to avoid the possibility of running afoul of the Department of Health and Human Services Office of Inspector General, ("HHS OIG"), what many fail to appreciate is the manifold number of federal healthcare programs which could be implicated.  Each federal department has its own OIG. Federal worker's compensation and federal employees health insurance benefits are guarded by the United States Department of Labor OIG. Military plans, or TRICARE, is protected by the Department of Defense OIG.

That's what initially triggered federal jurisdiction at Forest Park, according to the indictment.  The bribes and kickbacks  included more than $10 million to  TRICARE, more than $25 million to the Department of Labor FECA healthcare program, and more than $60 million to the federal employees' and retirees' FEHBP healthcare program.

Each of the 21 defendants is charged with one count of conspiracy to pay and receive healthcare bribes and kickbacks; the maximum statutory penalty upon conviction is five years in federal prison and a $250,000 fine.

An indictment is not proof of guilt. All defendants are entitled to a presumption of innocence. Only where a unanimous jury finds, based upon the highest burden of proof beyond a reasonable doubt, or upon the entry of a plea of guilty, would a defendant be convicted of any crime.