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The U.S. Department of Health and Human Services Office of Inspector General's (OIG) chief counsel indicated in 2007 that the government's fraud enforcement focus on large organizations was an "ineffective strategy" and that the government was going to begin doing a better job holding the physician gatekeepers accountable for their role in kickback cases. See the <a href="http://www.bakerlaw.com/health-law-updatedecember-13-2007-12-13-2007/">December 13, 2007 issue of the <em>Health Law Update</em></a>. At the same time, the OIG indicated that it also was focusing attention on other individuals responsible for steering organizations into illegal kickback schemes and inadequate quality-of-care circumstances to help address repeat offenders, particularly among pharmaceutical manufacturers and long-term care providers. Five years later, October 2013 could well be dubbed the physician convictions and indictments month.

One case that highlights this trend involves Orange MRI LLC. From early 2009 through 2011, Orange MRI paid physicians for each MRI and CT scan they referred. One physician reported that Orange MRI gave him $100 cash for each Medicare or Medicaid patient he referred for an MRI and $50 for each CT scan referral. As a result of these relatively small payments, twelve physicians and nurse practitioners either have been convicted or have pleaded guilty to receiving kickbacks. Most of those pleading guilty or convicted have been required to forfeit funds and have received prison sentences, although the larger impact of the convictions will be on their ability to continue practicing their profession. This case follows on the heels of the Biodiagnostic Laboratory Services LLC case in September in which two New Jersey doctors pleaded guilty for their roles in a long-running bribes-for-laboratory test referrals scheme in which six physicians already have pleaded guilty.

Physicians were recently indicted in connection with kickbacks paid by Sacred Heart Hospital in Chicago in exchange for the referral of hospital patients covered by Medicare and Medicaid. According to the indictment, Sacred Heart paid physicians bribes concealed as consulting, employment and personal services compensation, rent and instructional stipends from 2004 through 2013.

Another physician employed as the Medical Director at Home Care Hospice Inc. (HCH) was sentenced to 51 months of prison time for receiving kickbacks for patient referrals. The physician entered into a written contract that attempted to camouflage kickbacks as payments for services rendered in the physician's capacity as medical director. The large majority of payments, according to the government, were illegal payments for the referral of Medicare and/or Medicaid patients to HCH.

Following the death of a patient, another physician was convicted of healthcare fraud for lying about his qualifications to practice medicine in New York. He was sentenced to 24 months in prison. The physician in this case submitted a medical staff application that stated (1) he had earned a medical degree, (2) he had never voluntarily withdrawn or resigned any employment or privileges at any healthcare facility in order to avoid the imposition of disciplinary measures, and (3) he had never been denied or suspended from any healthcare facility. In fact, the defendant did not have a degree, had been suspended from his duties as a resident, dismissed from the residency program due to academic incompetence and had resigned from the medical staff of a hospital after being told he would be terminated for poor performance. The New York State Board of Professional Medical Conduct concluded that the defendant obtained his medical license by fraud, and while practicing medicine, engaged in gross negligence and gross incompetence with at least five patients.

A Texas physician recently was sentenced to prison following his conviction of conspiracy to commit healthcare fraud relating to medically unnecessary diagnostic testing and physical therapy. These unnecessary services were billed to Medicare and Medicaid for payment under the physician's billing number. The physician worked in conjunction with the owners and operators of medical clinics and diagnostic testing centers in the Houston area. As part of the scheme, Medicare patients were paid to show up at the clinics for testing. Patient recruiters also were paid for recruiting and bringing patients to the clinics for the unneeded testing. Another Texas physician was sentenced to 48 months in prison for healthcare fraud. The physician and his physician assistant, who previously pleaded guilty, falsely represented that office visits and diagnostics were medically necessary. The physician traded controlled substances for patients agreeing to submit to unnecessary diagnostic tests. In many cases, the physician did not even read the test results and, in any event, did not have the proper training to read them.

A Garland, Texas, physician pleaded guilty to conspiracy to commit healthcare fraud in connection with a physician house call company's billing Medicare for care plan oversight for numerous beneficiaries when the physician was out of town, including dates when he was out of the country and on a cruise. The company submitted claims to Medicare using Dr. Padron's unique Medicare number, with Dr. Padron's permission, regardless of the claim's merit. Dr. Padron also entered a guilty plea to one count of conspiracy to unlawfully distribute a controlled substance stemming from his operation of a "pill-mill."

Not to be outdone, a Kenner, Louisiana, physician pleaded guilty to 35 counts of Medicaid fraud for billing Medicaid for services, such as tests, procedures and treatments not rendered, and knowingly falsifying documents to support the fraudulent billing of those services. To complete the fraud, the physician also recorded bogus diagnoses and symptoms to justify his billing. A Connecticut physician recently entered into a civil settlement to pay $300,000 to resolve allegations that the physician violated the False Claims Act by submitting to Medicare claims for physical therapy services that were medically unnecessary and/or not performed in accordance with Medicare requirements. Specifically, the government alleges that Dr. Xu billed Medicare for one-on-one physical therapy services when the physical therapist was, in fact, providing group therapy, and that he submitted claims to Medicare for therapy services that were rendered by massage therapists. Similarly, a former Rhode Island physician agreed to pay the government $1.2 million dollars for fraudulent claims submitted to the Medicare and Medicaid programs for services not performed or not performed as described. For the trifecta, a Corpus Christi physician was recently charged in a 14-count indictment for a scheme to defraud Medicare and Medicaid by charging for services never received, including, in some cases, services that would have required him to have personally worked more than 24 hours in a single day. He also is alleged to have billed for services to patients posthumously. While we are in Connecticut, let's look at a podiatrist who recently was incarcerated for 30 months for billing Medicare for nail avulsion surgical procedures when he only provided nonreimbursable "routine foot care" services, such as simply trimming or clipping toenails.

A Wichita chiropractor was indicted in a scheme in which he was charged with healthcare fraud, aggravated identity theft, illegally obtaining controlled drugs, money laundering and tax evasion. The indictment alleges that the chiropractor submitted false claims for healthcare services, including: (1) services that were not performed, (2) services that were not performed by properly certified personnel, (3) services performed by physicians when they were not present at the clinic, and (4) services that were medically unnecessary. The chiropractor developed what he called an "integrated practice," hiring physicians, advanced registered nurse practitioners and physical therapists, and ostensibly having them perform procedures he was not qualified to perform. He misrepresented to the Kansas Board of Healing Arts that medical doctors had an ownership in his clinic. He used the names of physicians he employed to submit false claims for services.

While the number of physicians indicted, convicted and sentenced in October was significant, it is not an aberration. The government is actively working to identify and prosecute physicians who participate in or devise illegal kickback schemes.

Careful selection and review of your physician employees/medical staff members, business associates and contractors is an important step in minimizing exposure to wrongdoing and investigations. As Mom said, "be careful who you play with." Employers and contracting parties should consider adding a provision requiring physicians to notify them within a specified number of days after they become aware of an investigation of their practices by Medicare, Medicaid and/or other third party payer that alleges fraud or material violations of law or program requirements.

Doctors Corralled for Kickbacks