White Collar Criminal Defense Group

Kickbacks And Falsification Of Records At Center Of $20 Million Home Healthcare Fraud Conspiracy

Last Tuesday Miami physician Henry Lora pled guilty to federal criminal charges arising out of a $20 million healthcare fraud conspiracy.  In entering the plea, Lora admitted that as the medical director of Merfi Corporation, a Miami-area clinic, he accepted kickbacks and bribes.  He also acknowledged that he, along with co-conspirators, wrote prescriptions for home healthcare and other services for Medicare beneficiaries, when those services were either not medically necessary or not provided.

Lora entered a plea of guilty to one count of conspiracy to commit healthcare fraud and one count of conspiracy to defraud United States, receive healthcare kickbacks and make false statements relating to healthcare matters.  The fraudulent conduct for which he pled guilty included the falsification of patient records, which was done to make it appear as if the beneficiaries qualified for the services.

As a result of his plea of guilty to both counts, Lora faces a maximum combined sentence of 25 years.  In 2014, the owner of Merfi, Isabel Medina, was sentenced to nine years in prison for her conviction of conspiracy to commit healthcare fraud.

HHS OIG Continues To Encourage Settlements Under The Provider Self-Disclosure Protocol

In April of 2013 HHS OIG substantially overhauled its self-disclosure protocol (SDP), which was established in 1998 for the purpose of allowing providers to voluntarily identify, disclose, and resolve instances of potential fraud involving federal healthcare programs.  The SDP provides guidance on how to investigate the conduct, quantify damages and report the conduct to OIG to resolve the provider’s liability under OIG’s Civil Monetary Penalty (CMP) authorities.

In calendar year 2015, OIG entered into more than 60 settlements with providers for violations that were submitted in accordance with the self-disclosure protocol.  Through the first month of 2016, OIG has entered into 8 settlements.  If the trend continues, it would result in a noticeable increase in the number of SDP settlements over the previous year.

The SDP settlements reached thus far in 2016 provide some insight into the types of cases that may be appropriate for providers and counsel when considering the best method for resolving instances of potential health care fraud:

• A hospital paid $60,649.29 for submitting claims to Medicare for erroneously billing Hospital-Based Ambulatory Care services performed by the hospital’s clinic as though they were provided in the hospital section of the facility.
• A health care services company that provides primary care agreed to pay $27,061.58 for employing an individual that they knew or should have known was excluded from participation in Federal health care programs.
• A hospital paid $23,483.39 for employing an individual that they knew or should have known was excluded from participation in Federal health care programs.
• A cardiology group paid $422,741.50 for making claims to Medicare for services not provided, as evidenced by “cloned” patient progress notes, and for submitting claims for patient E&M (evaluation and management) services with CPT codes that reflected a higher level of service than actually performed.
• A health care services company that operates skilled nursing and assisted living facilities paid $80,526 for inducement of Medicare beneficiaries to fill drug prescriptions at its facility locations.  OIG indicated that the company engaged in improper inducement by waiving Medicare Part D copayments without conducting an individualized determination of financial need for residents of the skilled nursing and assisted living facilities.
• A toxicology lab paid $30,137.69 for employing an individual that it knew or should have known was excluded from participation in Federal health care programs.

These settlements provide evidence that OIG continues to encourage providers to utilize the SDP as a vehicle for self-disclosure of potential violations of the civil monetary penalties law.  When providers, compliance officers and counsel encounter potential violations of the Civil Money Penalties law and/or the False Claims Act, consideration of use of the self-disclosure protocol should be part of each provider’s decision-making process.  A link to OIG’s Provider Self-Disclosure Protocol Page can be found here.