Healthcare Issues

The majority of False Claims Act recoveries deal with the largest single item in the federal budget –Health care. In 2014 alone, whistleblowers recovered over $2.3 billion from those who had defrauded Medicare and Medicaid (and thought they would get away with it)! Whistleblowers have thus become an integral part of enforcing our laws. There are several flavors of health care false claims act cases. We have long experience in the areas of kickbacks, upcoding, Stark violations, c0st-report fraud, and other areas.


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. Our more recent successes include a case against Omnicare that resulted in a total settlement of $116 million and another against Hebrew Homes Health Network that resulted in a $17 million settlement – the most ever paid by a nursing home for violations of the Antikickback Statute.

Upcoding, Unbundling, and Unnecessary Procedures

A medical treatment, procedure, or test must generally be considered “medically necessary” before the Government will pay for it. Nevertheless, physicians and other healthcare professionals intent on defrauding the Government have found creative ways to bill for unnecessary procedures, as well as procedures that were never performed in the first place.

One of the more common fraudulent practices occurs when medical providers manipulate or falsify the “bill” they sent to the Government. Doctors, clinics, and hospitals bill Medicare and Medicaid using numeric codes, and each code represents a particular type and level of service. “Upcoding” happens when a provider bills a medical service using a code that applies to a different, usually more-complex service. “Unbundling,” on the other hand, occurs when a provider performs one test to obtain several results but then charges separately for each result. Both schemes can result in a significant overpayment at the taxpayers’ expense – and both schemes have been uncovered and unwound by our team at Morgan Verkamp.

Other types of fraudulent schemes may involve procedures that were properly billed but not properly performed. One of the more common schemes of this type is known as “reflex testing.” Reflex testing, most often practiced in medical laboratories, occurs when a provider performs expensive additional tests that go beyond what the physician ordered or the patient consented to, and then bills the costs of those tests to the Government. Click here to read about our case against Bostwick Laboratories, which involved both illegal kickbacks and a reflex-testing scheme.

False Cost Reports

Hospitals and various 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 misallocate 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. Morgan Verkamp LLC has successfully represented several hospital insiders with knowledge of cost-report fraud.

If you believe that you have information about misconduct by a health care provider, hospital, or related enterprise, contact us for a discussion of the situation, without charge to you.