Health Care Fraud

For the last decade, the prosecution of health care fraud, such as schemes to cheat Medicare and Medicaid, has been the number one focus for those enforcing the False Claims Act. In government fiscal year 2007 alone, the United States recovered over $1.54 billion through settlements and judgments in False Claims Act cases involving health care fraud. Handling these cases requires not only an in-depth knowledge of the coverage and billing rules governing these complex government programs, but also a familiarity with the workings of the various government agencies that oversee these programs, investigate alleged health care fraud, and enforce the False Claims Act.

The attorneys at Vogel, Slade & Goldstein have handled Medicare, Medicaid, and other health care fraud cases that have recovered hundreds of millions of dollars for the taxpayers and millions of dollars for the firm’s clients.

There are a variety of schemes through which health care providers bilk federal health programs. The health care fraud cases that have received the most law enforcement attention in recent years, and that have been the major focus of the cases brought by the Vogel, Slade & Goldstein attorneys, have been the following:

Kickbacks & Stark Law Violations. Hospitals, long term care facilities, physician specialists, medical device manufactures and pharmaceutical companies sometimes provide physicians (and others) with financial incentives to induce these physicians to refer patients to them or to use their products or services. When this happens, the independence of medical decision making can be compromised, and the Anti-Kickback or Stark laws may be violated, resulting in health care fraud and false claims. The applicable law and regulations in this area are detailed and evolving; however, generally speaking it can be said that, depending on the circumstances, the rules can prohibit many types of financial remuneration, including free samples and grant money, below fair market price leases, and above fair market price “consulting” and “speaking” fees.

“Off-label” Marketing. Generally speaking, Medicare, Medicaid and other government health programs do not cover uses of a drug that have not been determined to be “safe” and “effective,” such as uses not approved by the Food & Drug Administration on the product label. When a pharmaceutical company markets a drug for an “off-label” use, it may cause the submission of false claims on government health programs, putting itself at risk of liability under the False Claims Act and other civil and criminal laws penalizing health care fraud.

Pharmacy Fraud. Pharmacies submit drug claims directly to federal health care programs, and can run afoul of the False Claims Act in various ways, through health care fraud schemes such as: billing for only partially-filled prescriptions or diluted medications; substituting drug forms or types without proper physician approval to maximize reimbursement; billing for more than their “usual and customary charge to the general public” and failing to provide credit for returned merchandise.

“Unbundling” Fraud. Federal health care programs often pay a fixed fee for a designated package of goods, such as a variety of tests run on a single sample of blood. Providers will sometimes bill separately for the components in the bundled package, even though the services were performed simultaneously, in order to maximize reimbursement. This conduct can amount to health care fraud that violates the False Claims Act.

“Upcoding” Fraud. Hospitals, doctors and others will sometimes exaggerate the seriousness or complexity of a patient’s condition or the rendered services to collect a higher fee. Using the wrong Diagnosis Related Group (“DRG”) or Current Procedural Terminology (CPT) code to improperly increase reimbursement is known as “upcoding.” This type of health care fraud has often been redressed through False Claims Act lawsuits.

Medically Unnecessary Care. To increase reimbursement or in response to improper financial incentives, such as kickbacks, health care providers will sometimes order or bill a federal health care program for goods or services that were not “reasonable and necessary” for the patient. Because federal health care programs usually cover only “reasonable and necessary” care, these bills often are “false claims” subject to the False Claims Act and other laws governing health care fraud.

Billing for Services not Provided (including Deficient Care and Managed Care Fraud). This “garden variety” health care fraud involves not only the obvious - - billing for a service not provided at all, but also a more subtle type of fraud - - billing for a service provided in such a deficient fashion that the government payer did not get the benefit of its bargain. An example of the latter type of scam is a nursing home or other long term care provider billing Medicare or Medicaid for care that is of such low quality and so deficient that it is affirmatively harmful to patients. Another example would be a Medicare or Medicaid managed care organization repeatedly denying covered services or refusing to enroll eligible beneficiaries.

Cost Report Fraud. Medicare and Medicaid pay hospitals and other providers for certain costs beyond the direct costs of patient care. Providers seek payment for these costs on cost reports submitted to the federal health program. When providers misrepresent the nature or amount of the costs they have incurred on their cost reports, they face potential liability under the False Claims Act. Another type of health care fraud involves a hospital’s representation of their cost to charge ratio, a number that has a direct bearing on their reimbursement for “outlier” cases and other care paid partially on a cost basis.