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What is a Typical Healthcare Fraud Case?

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 What is a Typical Healthcare Fraud Case?

We are often asked to characterize a typical healthcare fraud case.  In reality the facts are so different that it is hard to frame the cases in a nutshell.  Most frequently there are billings largely invented or services provided far beyond what the patient needed or received.  We reviewed some recent federal filings and some state cases to write this blog.  The cases we selected fairly represent the current focus on DME fraud as well as the more common medical fraud cases. The Hernandez $ 200 million DME fraud case is the largest we have ever seen.

Physical Therapy Billing Fraud (2024)

Chang Goo Yoon, a physicial therapist was convicted of healthcare fraud following a seven-day jury trial. The jury found that he submitted over $300,000 in claims for appointments that never took place. He was arrested in February 2021 and convicted in January 2024.

DME Fraud (2024)

Jeffrey Brooks, received a 7 year prison sentence after he pled guilty to one count of conspiracy to commit health care fraud. On the civil side he had to pay $850,000 for providing kickbacks and causing false claims to be submitted in violation of the federal False Claims Act.

Brooks operated 8 DME companies and he submitted claims to Medicare and CHAMPVA for braces that were not medically necessary, eligible for reimbursement, and/or obtained through the payment of kickbacks and bribes.

The case was aggravated as Brooks and his co-conspirators purchased Medicare beneficiaries’ personally identifying information (“PII”) and purported personal health information (“PHI”) from third party call centers in order to generate doctors’ orders for braces. The doctor’s orders were generated by paying illegal kickbacks and bribes to telemedicine companies to obtain a medical practitioner’s signature on the doctor’s orders, regardless of medical necessity.

Hospital Investors - False Claims (2024)

Columbus LTACH d/b/a Silver Lake Hospital (Silver Lake), a long-term care hospital based in Newark, New Jersey and some of its investors agreed to pay $30.6 million to resolve alleged False Claims Act and Federal Debt Collection Procedures Act violations.

The case was rather technical. The Medicare outlier payment program is designed to provide hospitals with reimbursement for situations where extraordinarily costly patient care is needed. The charges were that Silver Lake distorted the cost outlier payment system by rapidly increasing its charges well in excess of any increase in its costs.

Asante Health System - False Claims for Payment (2024)

Oregon based Asante Health System and a physician agreed to pay $430,000 to settle allegations that the company and its physician knowingly submitted false claims for payment for certain cardiothoracic surgeries to Medicare, Medicaid, and TRICARE.

The allegations were that between January 1, 2015, and January 31, 2021, Asante and Dr. Charles Carmeci, a cardiothoracic surgeonknowingly submitted claims for payment to Medicare, Medicaid, and TRICARE for cardiothoracic surgeries knowing they did not meet the criteria for reimbursement or were otherwise improper.

NP Convicted of DME Fraud (2023)

Elizabeth Hernandez was convicted by for participating in a $200 million scheme involving false and fraudulent claims for genetic testing and medical equipment that the Medicare beneficiaries did not need.

Elizabeth Hernandez, signed thousands of orders for medically unnecessary orthotic braces and genetic tests, resulting in fraudulent Medicare billings in excess of $200 million. This is a very common DME scheme and many young physicians seeking to supplement their income being involved. Telemedicine chart review taking only minutes or (less) can lead to signing A federal jury in Miami convicted a Florida nurse practitioner yesterday for her role in a scheme to defraud Medicare by submitting more than $200 million in false and fraudulent claims for expensive genetic testing and medical equipment that the Medicare beneficiaries did not need.

According to court documents and evidence presented at trial, Elizabeth Hernandez, 45, of Homestead, signed thousands of orders for medically unnecessary orthotic braces and genetic tests, resulting in fraudulent Medicare billings in excess of $200 million. As part of the scheme, telemarketing companies would contact Medicare beneficiaries to convince them to request orthotic braces and genetic tests, and then send pre-filled orders for these products to Hernandez, who signed them, attesting that she had examined or treated the patients. In reality, she had never spoken with many of the patients. In 2020, Hernandez ordered more cancer genetic tests for Medicare beneficiaries than any other provider in the nation, including oncologists and geneticists. She then billed Medicare as though she were conducting complex office visits with these patients, and routinely billed more than 24 hours of “office visits” in a single day. Hernandez personally pocketed approximately $1.6 million in the scheme, which she used to purchase expensive cars, jewelry, home renovations, and travel.

The jury convicted Hernandez of one count of conspiracy to commit health care fraud and wire fraud, in addition to four counts of health care fraud and three counts of making false statements relating to health care matters. She is scheduled to be sentenced on Dec. 14. She faces a maximum penalty of 20 years in prison for conspiracy, 10 years in prison on each health care fraud count, and five years in prison on each false statement count. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory RX for this testing and devices.

The “patients” are often recruited at “old age homes” with slick presentations and an offer of free testing or free braces and more entertainment and additional events. It is like hosting a BINGO game and then having people sign a blank form.

The jury convicted Hernandez of one count of conspiracy to commit health care fraud and wire fraud, in addition to four counts of health care fraud and three counts of making false statements relating to health care matters.

Major Nine Defendant Fraud Indictment (2023)

A November 2023 indictment, by a federal grand jury in Roanoke, Virginia charged nine people with healthcare fraud conspiracy, money laundering, and obstruction of justice.

The documents reflect that:

Carolyn Bryant-Taylor, 59, of Clinton, Maryland; Kafomdi “Josephine” Okocha, 48, of Upper Marlboro, Maryland; Samuel Okocha, 50, of Upper Marlboro, Maryland; Shekita Gore, a.k.a. Shekita Steele, 38, of Clinton, Maryland; Berthe Feuzeu, a.k.a. Berthe Djuni, 48, of Manassas Park, Virginia; Anthony Kanu, 57, of Bladensburg, Maryland; Elizabeth Ilome, 41, of Stafford, Virginia; Eno Utuk, 47, of Stafford, Virginia; and Rhabiatu Kamara, 45, of Fort Washington, Maryland were charged with conspiracy to commit health care fraud.

The Indictment says that these individuals were involved with 1st Adult N Pediatric Healthcare Service. The defendants are alleged to have conspired to submit false claims to Medicaid for services that were not provided to patients, including falsifying records and documentation in support of the fraudulent claims submitted for reimbursement.

For cases such as this, look for many of the defendants to insist that they simply did their job without any sense that what they were doing was wrong.  In our experience this can genuinely be true or at least sufficient to lead to a plea bargain or even dismissal of charges.

Blue Cross Robocall Warning (2024)

Blue Cross warned of robocalls that fish for vulnerable subscribers. Once the call is “accepted” by pressing “1" to speak to a real person, the subscriber will be asked to provide personal information, credit card information and other data allowing access to financial accounts.

While not “healthcare fraud” it does target an elderly and vulnerable population.

State Fraud Investigations - California

California has a state fraud investigations unit through the District Attorneys' Disability and Healthcare Program. This program funds local prosecutors to pursue healthcare fraud. In 2021 through 2022, the program provided $6,081,000 to 10 offices. Once an office is funded it has a major incentive to bring cases. Otherwise, jobs which were created by the funding are lost. People who supervise these divisions risk losing their “kingdom”. Hence once funding starts in a particular county you can expect increased prosecutions. The full name of the funding mechanism is the Disability and Healthcare Insurance Fraud Grant Program.

If you look at the conflict of interest issue there is a question whether this funding taints the investigation and charging process sufficiently to trigger judicial review of the validity of cases that are brought. So far this has not been a very effective tactic but that does not mean it is an invalid concern.

Our criminal lawyers are expert in healthcare matters and healthcare fraud defense. Daniel Horowitz is one of the nations leading criminal defense attorneys defending state or federal fraud cases. Our office is located in Contra Costa County, California but we defend major criminal cases nationwide.  

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