White Collar Criminal Defense Group

Up-Coding For Orthodontic Appliances Has Dentist Facing Prison Sentence For Medicaid Fraud

Intentional up-coding by health care providers in billing for services is one sure way to draw the attention of regulators and criminal prosecutors.  In cases of Medicaid fraud carried out through up-coding, the risk of criminal prosecution is high even in cases where the amount of loss, relatively speaking, may not appear to be substantial.  A recent case brought by federal prosecutors in Missouri involving billing for the use of orthodontic appliances is illustrative. 

On February 11, an Independence, Missouri dentist entered a plea of guilty in federal court for his role in a conspiracy to collect more than $166,000 in fraudulent Medicaid payments for child patients of the clinics he operated.  He entered the guilty plea to a criminal information that charged him with healthcare fraud.  The dentist, Dr. James R. Dye, as part of his plea, admitted that he and his co-conspirators purchased orthodontic appliances, known as Ortho-Tain, for approximately $50.00 each.  The Ortho-Tain device is an orthodontic appliance designed to straighten teeth without braces.  Dye and his co-conspirators, however, did not bill Medicaid for the Ortho-Tain as an orthodontic device.  Rather, they billed Medicaid for each appliance that they prescribed to a child patient as a speech-aid prosthesis, charging approximately $695 per device.

During the period of the alleged conspiracy, Dye submitted 218 total claims, for which he received reimbursement of $675.00 to $695.00 per claim, totaling $151,105.  The other dentists, with whom he conspired, submitted the other claims and were responsible for the remaining amounts.

According to the information and the plea agreement entered into by Dye, the Ortho-Tain is not a speech aid prosthesis, and should have been pre-certified by Medicaid and billed using a different orthodontic code. Dye admitted that his patients did not qualify for and, thus had not received prior authorization for orthodontic treatment, so he knew the Ortho-Tain products should not have been billed and paid as orthodontic devices.  He admitted further that he and his co-conspirators knew that Medicaid did not cover the orthodontic services unless the Medicaid programs requirements were met and they received pre-certification, which itself requires review by a dentist/orthodontist employed by Medicaid.  It was part of the scheme to bill the Ortho-Tain appliances as speech aid prostheses in order to bypass the pre-certification requirement.

The statute under which Dye entered his guilty plea provides for a maximum prison sentence of ten (10) years.  His sentencing hearing has not yet been scheduled.

Nevada Man Indicted For Sales Of Counterfeit And Misbranded Contact Lenses

Last week, a Las Vegas resident was indicted in the District of Nevada on allegations that he sold counterfeit and misbranded contact lenses to customers via the internet.  The defendant, Dmitriy Melnik, now faces one count of conspiracy to traffic in counterfeit goods and to introduce misbranded devices into interstate commerce, four counts of trafficking in counterfeit goods, and five counts of introducing misbranded devices into interstate commerce.  The governments alleged that Melnik imported colored contact lenses from the Peoples Republic of China and South Korea – knowing them to be counterfeit or otherwise unauthorized by the FDA – to be sold in the United States. 

Many of the contact lenses had counterfeit trademarks names and symbols of name brand lenses while others had labels of brands produced and sold in Asia.  It was also alleged that some contact lenses were contaminated with a potentially dangerous bacteria.  Contact lenses – even those which are solely decorative and do not correct vision – are considered medical devices and, thus, regulated by the FDA.  Medical devices like contact lenses must also receive FDA authorization to be imported into the United States and sold in interstate commerce.

Trafficking in counterfeit goods, a violation of 18 U.S.C. § 2320, carries a variety of penalties depending on whether the crime was a first or subsequent offense, resulted in serious bodily injury or death, or involved counterfeit military goods or counterfeit drugs.  The potential terms of imprisonment range from a maximum of 10 years for a first offense, 20 years for a second offense or if serious bodily injury occurred, or 20 years for an offense involving counterfeit military goods or counterfeit drugs.  These penalties were increased to this level in 2012 which, in turn, led to amendments to the federal sentencing guidelines in 2013 under which Mr. Melnik would be sentenced if convicted.