The majority of False Claims Act recoveries deal with the largest single item in the federal budget–Healthcare.
Kickbacks
It is illegal for a hospital or other medical service provider to pay a doctor for referrals of Medicare and Medicaid patients. It is also illegal for a doctor to refer these patients to an entity in which she has an ownership interest, or one which has paid her or provided other “remuneration” (free rent, for example). These schemes can be very complex, but they all pose the risk of causing precious health care resources to be spent for the wrong reasons. Violations of both the Antikickback Statute and the Stark Laws can be addressed under the False Claims Act.
Morgan Verkamp has extensive experience in the area of improper financial relationships in the healthcare industry. Our case, U.S. ex rel. Pogue v. Diabetes Treatment Centers of America, is probably the case most often cited for the proposition that violations of the Antikickback Statute support liability under the False Claims Act. Jointly with the Justice Department, we recently settled another kickback case involving bogus payments to doctors to serve as “medical directors” in exchange for patient referrals for $8.5 million.
Upcoding
Doctors, clinics, and hospitals bill Medicare and Medicaid using numeric codes. Each code represents a particular type and level of service. “Upcoding,” which is one of the most common forms of Medicare and Medicaid fraud, happens when a provider bills a medical service using a code which applies to a different, usually more-complex service.
Morgan Verkamp is now involved in a number of upcoding cases, and works with several capable experts in order to be able to help government lawyers and auditors assess the damage caused to public programs as the result of upcoding frauds.
False Cost Reports
Hospitals and various other other types of providers are required to submit Annual Cost Reports to Medicare. The Centers for Medicare and Medicaid Services (“CMS”) uses these reports to determine how much the government owes the hospital for the prior year, or sometimes how much the hospital owes the government. Cost reports can include building costs, diagnostic-equipment purchases, other capital improvements, payments to doctors, payments for supplies, and almost any other kind of financial transaction. When hospitals mis-allocate or fabricate cost items, it can result in excessive reimbursement of public money, which then goes into determining how much the hospital gets in future years. Many hospital insiders with knowledge of cost-report fraud have brought successful False Claims Act qui tam cases.
Morgan Verkamp successfully prosecuted cost-report fraud in U.S. ex rel. Kaczmarczyk v. SCCI. The government intervened in other parts of the case, but we pursued the cost report allegations on our own and recovered $1 million for the Treasury and our clients.
False Laboratory Charges
Medical laboratories sometimes engage in false billing practices, two of which are “unbundling”–performing one test which gives several results, and then charging separately for each result–and “reflex testing”–performing expensive additional tests based on the outcome of an initial test, when the patient’s doctor only ordered the initial test.