NY Health System Settles E&M Upcoding, Healthcare Fraud Case

Other recent healthcare fraud schemes involved a family doctor submitting false claims for unnecessary services and prison time for a healthcare CEO using kickbacks for referrals.

A New York-based health system will pay the federal government $14.7 million to settle healthcare fraud allegations that claim the system engaged in evaluation and management (E&M) upcoding.

According to the Department of Justice (DoJ), Health Quest Systems, Inc. and some of its subsidiaries allegedly submitted claims for E&M service levels that were not supported in the medical record. The health system billed the E&M services two levels higher than what the medical record indicated.

“This resolution is a testament to our deep commitment to protecting the integrity of federally- funded healthcare programs,” stated Acting Assistant Attorney General for the Justice Department’s Civil Division Chad A. Readler.  “We are determined to hold accountable healthcare providers that knowingly claim taxpayer funds to which they are not entitled.”

Health Quest System, Inc.’s subsidiary hospital Putnam Health Center also agreed to pay a portion of the multi-million-dollar settlement to resolve claims that the hospital violated the physician self-referral law.

From March 1, 2014, through Dec. 31, 2014, Putnam Health Center potentially submitted false claims for inpatient and outpatient services that were referred to the hospital by two orthopedic physicians. The DoJ stated that the two physicians had a direct financial relationship with Putnam Health Center for delivering administrative services.

The physicians received compensation from the hospital, the DoJ elaborated. But the United States is claiming that the compensation “exceeded the fair market value for the services, and thereby violated the Physician Self-Referral Law, which prohibits a hospital from billing Medicare for certain services referred by physicians with whom the hospital has an improper compensation arrangement.”

Furthermore, the federal government alleged that Putnam Health Center meant for the compensation to the two physicians to induce referrals to the hospitals. If true, the actions of the hospital would violate the anti-kickback statute.

To settle all healthcare fraud allegations, Health Quest Systems, Inc. agreed to pay over $895,000 to the state of New York on top of the $14.7 million settlement. The health system will also enter a Corporate Integrity Agreement with the HHS Office of Inspector General (OIG) to ensure future medical billing compliance.

“Today’s settlement holds Heath Quest responsible for false billings to federally funded health care programs, as well as claims tainted by a hospital’s payments to two physicians for administrative services where it appears that one purpose of those payments was to improperly induce referrals,” stated United States Attorney for the Northern District of New York Grant C. Jaquith.

“Hospitals and providers must be vigilant to make sure that claims accurately reflect medical services provided and are supported by sufficient documentation.  We will continue to investigate whistleblower complaints vigorously to protect public funds.”

FAMILY PRACTICE PHYSICIAN AGREES TO PAY $360K TO SETTLE FALSE CLAIMS ALLEGATIONS

In other recent healthcare fraud news, a former family practice doctor in the Pittsburgh area faced False Claims Act allegations after reportedly submitting false claims to Medicare and Medicaid.

Brent E. Clark, MD, allegedly submitted false claims to the federal healthcare programs for services that were either medically unnecessary or unreasonable, the Western District of Pennsylvania Attorney General’s Office reported.

The Attorney General’s Office elaborated that Clark billed Medicare and Medicaid between February 2015 and February 2017 for unnecessary or unreasonable office visits and procedures. He also falsified records to support the unnecessary or unreasonable services, the report added.

Clark agreed to pay the federal government $360,000 to resolve the False Claims Act allegations.

FORMER HEALTHCARE EXEC FACES 9.5 YEARS IN PRISON FOR HEALTHCARE FRAUD

For his role in a $19.4 million healthcare fraud and kickback scheme, the former CEO of Indiana’s largest nursing home chain, American Senior Communities, may spend 114 months in a federal prison.

US District Court Judge Tonya Walton Pratt sentenced James Burkhart for his involvement with three federal felony offenses: conspiracy to commit fraud, conspiracy to violate the healthcare anti-kickback statute, and money laundering. Burkhart pleaded guilty to all three offenses.

The healthcare fraud scheme funneled millions of dollars in fraud and kickback payments to Burkhart and American Senior Communities’ COO Daniel Benson and Burkhart’s associate Steven Ganote. Burkhart and his co-conspirators funneled the money using a series of shell companies.

The Attorney General’s Office for the Southern District of Indiana noted that the money stolen primarily came from the Health & Hospital Corporation of Marion County, which is part of Indiana’s public health system.

Burkhart engaged in healthcare fraud and kickback schemes by inflating vendor bills and creating secret deals with vendors on the side. Being the largest nursing home chain in the state, American Senior Communities bought a wide range of goods and services from outside vendors, and the nursing home chain used the majority of the money from Health & hospital to pay the vendor bills.

By inflating vendor bills, Burkhart would pay the amount for the bill using Health & Hospital funds and kick the excessive payment amount back to himself and his co-conspirators.

In other cases, the former healthcare executive also created shell companies that would inflate vendor bills and submit them to American Senior Communities. He also submitted false bills for fictitious services using shell companies or convincing existing vendors.

The Attorney General’s office also stated that the then-CEO received a kickback for each patient American Senior Communities’ referred to Burkhart’s chosen home health or hospice company.

In addition to federal prison time, Burkhart must also pay full restitution and serve three years of supervised release.