Medicare Compliance & Reimbursement

As fraud grows, the feds double down with bigger penalties.

Medicare’s stream of rollbacks may lead you to believe that the feds are easing up on compliance, but that’s not the case. In fact, trends suggest that enforcement is actually on the rise — and fraudsters are receiving hefty fines and longer sentences.

Context: The HHS Office of Inspector General’s (OIG) enforcement activity ramped up slowly this September. However, over the course of a seven-day spread — Sept. 12 to 19 — the federal watchdog and its subsidiaries toppled past enforcement records, including one the Department of Justice (DOJ) calls the “largest healthcare fraud scheme ever charged.”

See DOJ’s History-Making Enforcement

On Sept. 12, the DOJ sentenced Miami Beach, Florida-based skilled nursing and assisted living facilities’ owner, Philip Esformes, to 20 years in prison for decades of healthcare fraud that included submitting claims for medically unnecessary and inappropriate services, kickbacks, money laundering, bribery, and conspiracy. Esformes may have personally bilked the feds out of more than $37 million over his 20-plus years of defrauding Medicare, suggests the DOJ release.

“The illicit road Esformes took to satisfy his greed led to millions in fraudulent healthcare claims, the largest amount ever charged by the Department of Justice,” said Denise M. Stemen, Federal Bureau of Investigation (FBI) deputy special agent in charge at the Miami field office. “Esformes cycled patients through his facilities in poor condition where they received inadequate or unnecessary treatment, then improperly billed Medicare and Medicaid.”

In addition to fraud, Esformes bribed Florida state regulators to lie about the conditions of his facilities during inspections. Plus, he used his “criminal proceeds” to live lavishly and even bribed his son’s entrance to the University of Pennsylvania. A determination on the financial side of his restitution and forfeiture is scheduled in court on Nov. 21, the DOJ noted.

Here’s the Rest of That Week’s Top Takedowns

From medical device snafus to pharmacy busts to massive false claims cases, federal enforcement was a smorgasbord of fraud and abuse. Read on for the highlights.

New Jersey: Sept. 12 was a busy day for DOJ. Toms River physician Joseph DeCorso pled guilty for prescribing orthotic braces via a telemedicine fraud scheme to elderly patients he’d never seen nor spoken to.

DeCorso “admitted that his conduct resulted in a $13 million intended loss to Medicare” and he “agreed to pay over $7 million in restitution to the United States, as well as forfeit assets and property traceable to proceeds of the conspiracy,” a release mentioned.

New York: Medical device firm Avalign Technologies Inc. and its partner, Instrumed International Inc., settled a False Claims Act (FCA) suit with the U.S. Attorney for the Southern District of New York for $9.5 million for “manufacturing and selling” devices that put patients in danger, proclaimed a DOJ release. The devices, which were used for circumcisions, spinal surgeries, and other procedures, were neither Food and Drug Administration (FDA)-approved nor cleared for sale under an FDA pre-amendment exception, dating back to 1976.

New Jersey: Alex Fleyshmakher, Ruben Sevumyants, Samuel Khaimov, and Yana Shtindler, in coordination with regionally-based Prime Aid Pharmacies, worked to boost high-end drug prescriptions for Hepatitis C, Crohn’s disease, and rheumatoid arthritis to its specialty pharmacies, said the DOJ. As far back as 2009, the co-conspirators used bribes and kickbacks to coerce physicians and their employees to push more expensive drug options, which garnered the pharmacies more money due to their agreements with several pharmacy benefit managers working as intermediaries with Medicare and other payers.

The feds estimate the fraud around $99 million. A trial date has not been released by DOJ; however, the brief mentions that if convicted the defendants’ charges are punishable by several years in prison and hundreds of thousands in fines.

California: On Sept. 18, 14 clinicians were among 34 charged in a massive Southern California federal healthcare fraud operation, targeting medically unnecessary prescriptions, services, and tests, according to a DOJ release. The various schemes amounted to more than $257 million in fraudulent payments from Medicare, Medicaid, private payers, and union programs.

The list of enforcers, in addition to DOJ and OIG, included various subdivisions in the Department of Labor, Amtrak, California OIG, California’s Department of Insurance, the Medicare Fraud Strike Force, and others

The biggest charges were brought against a quartet of cardiologists and an employee for performing medically unnecessary cardiac treatments and testing at Global Cardio Care in Inglewood. Their Medicare fraud alone exceeds $135 million.

“The Department of Justice is using every tool at our disposal to target the medical professionals and others who place their personal greed above the public good,” warned Brian A. Benczkowski, DOJ assistant attorney general in the criminal division.

Texas: Sixteen physicians were among the 58 charged in a “pill mill” network that includes the illegal distribution of more than 6.2 million opioid pills and cost Medicare $66 million in losses, according to a DOJ brief.

The charges are pervasive and the defendants come from all four federal districts in the longhorn state.

“Texas may have four U.S. Attorneys, but we are focused on one health care mission: shutting down pill mills and rooting out corruption in health care. From Lufkin to Laredo and Dallas to Del Rio, one of us will shut these operations down,” cautioned Ryan K. Patrick, U.S. attorney for the Southern District of Texas

Review these cases and more OIG enforcements at  https://oig.hhs.gov/fraud/enforcement/criminal/index.asp.