State and Federal Healthcare Fraud Charges
Because healthcare fraud costs the government and taxpayers hundreds of millions of dollars every year, both the federal government as well as the Texas Attorney General’s Office devote massive resources to prosecute it. Individuals and organizations accused of committing health care fraud are liable for civil and criminal penalties under both systems.
In Texas, there are thousands of healthcare providers and more than 4.7 million Medicaid recipients. As a result, hundreds of millions of dollars are spent to provide such care and the potential for abuse is ripe. For example, in 2010, the state discovered more than $71 million had been over-reported. And last year, in 2017, the Justice Department arrested more than 400 people who allegedly cost the federal government $1.3 billion in false Medicare and Medicaid billings.
These numbers support massive federal and state investigation efforts specifically designed to accuse and imprison healthcare providers believed to be connected to fraud. Doctors, hospitals, nursing homes, pharmacies, medical equipment suppliers, laboratories, medical transportation services, home healthcare agencies, rehab facilities, chemical dependency treatment centers, adult day care facilities, dentists, and other professionals in the medical industry are highly regulated and scrutinized.
Difference between Medicaid and Medicare
Most people have heard of the Medicaid and Medicare programs but few people actually know the distinction between the two programs. Below is a summary of the differences between the two programs.
Medicaid is a financial assistance program that serves low-income patients of any age. Patients usually do not pay any costs for covered medical expenses. A small co-payment may sometimes be required. Medicaid is a federal-state cost sharing program that is administered by state governments in compliance with federal guidelines.
Medicare is an insurance program for elderly patients. The patient’s medical bills are paid from trust funds, which have been paid into by those it covers. It serves people age 65 and older and has no income restrictions. The program also provides care for younger disabled people and dialysis patients. Patients usually pay part of costs through deductibles for hospital stays and other costs. Medicare is a federal program and administered by the U.S. government. It is the same everywhere in the United States and is run by the Centers for Medicare & Medicaid Services, which is a federal agency.
Typical Types of Medicare and Medicaid Fraud Cases Investigated by the Government
The following are typical accusations the government makes against Medicaid/Medicare providers:
- Double billing for services– A provider bills both Medicaid and a private insurance company or the recipient for treatment. In the alternative, two providers will request payment for the same recipient for the same procedure on the same date.
- Billing for services not provided – A provider bills for services that were never performed. This can include billing tests or x-rays that were never given, or a home health care agency or hospital that continues to bill for services rendered to a patient who is no longer a patient of the facility either because of a death or transfer to a different facility.
- Billing for visits that never take place – A provider falsely bills the Medicaid/Medicare program for patient visits that never took place.
- Billing for more than 24 hours in a Day – A provider falsely increases the amount of time spent with patients, for example a physician who bills for more than 24 hours of treatment on a single day.
- Kickbacks – A home healthcare agency owner requires another provider, such as a laboratory, another agency, or pharmacy, to pay the owner a certain portion of the money received for providing services to patients. The owner may also give a kickback to patients for agreeing to be billed for services never received. This practice usually results in more unnecessary services being performed to generate additional income to pay the kickbacks.
- Falsifying medical credentials – Misrepresenting the qualifications of a licensed provider in order to defraud Medicaid/Medicare. For example, a non-physician who impersonates a licensed doctor or who treats patients and prescribes drugs and then bills the Medicaid program as if a doctor had seen the patient.
- Substituting of brand-name drugs for generic drugs – A pharmacy bills Medicaid/Medicare for the cost of a brand-name prescription although a generic substitute was given to the recipient at a much lower cost to the pharmacy.
- Billing for unnecessary services – A medical provider falsifies the diagnosis and symptoms on patient records and billings to obtain payments for laboratory tests or equipment that are not needed.
- Billing for procedures more expensive than those actually preformed – A provider bills for an extensive procedure when a less extensive one was administered or billing for expensive equipment and giving the patient cheaper substitutes.
Texas Medicaid Fraud Control Unit
The Texas Medicaid Fraud Control Unit was established in 1979, as a division of the Office of the Texas Attorney General. The Unit conducts criminal investigations into allegations of fraud by Medicaid providers.
The Medicaid Fraud Control Unit has four primary responsibilities:
- investigating fraud both criminal and civil by Medicaid providers;
- investigating abuse and neglect of patients in health care facilities licensed by the Medicaid program, including home healthcare agencies and nursing homes;
- prosecuting criminal fraud by Medicaid providers or assisting local and federal authorities with such prosecution;
- investigating fraud within the administration of the Medicaid program.
Violations of state law are prosecuted under the most applicable statute including theft, falsifying a government record, or Medicaid fraud. The Medicaid Control Fraud Unit does not investigate fraud committed by Medicaid recipients, only providers. The Texas Health and Human Services Commission Office of Inspector General is responsible for investigating Medicaid recipient fraud.
Texas Medicaid Fraud Prevention Act
The Texas Medicaid Fraud Prevention Act, contained in Chapter 36 of the Texas Human Resources Code, is an instrumental piece of legislation that was enacted in 1995 and often used to fight healthcare fraud in Texas. Under Texas’s Medicaid Fraud Prevention Act, individuals may be liable for knowingly submitting false or fraudulent claims to the state’s Medicaid program. The act also has a provision that allows for a reward that goes to the individual who reports fraudulent activity or abuse of funds in the state Medicaid program. The reward may not exceed 5 percent of the amount of the penalty that results. Also the act provides protection for those who act as whistleblowers against retaliation from their employers.
Federal Laws Governing Medicare/Medicaid Fraud
These federal laws are some of the more commonly used criminal and civil statutes the government can impose upon individuals or organizations that commit fraud in the Medicare Program, including Medicare Parts C and D, and the Medicaid Program. Violations of these laws may result in denial of claims, civil monetary penalties, denial from participation in federal health care programs, and criminal and civil liability.
False Claims Act 31 U.S.C. § 3729
The False Claims Act protects the government from being overcharged or sold substandard goods or services. The False Claims Act imposes civil liability on any person who knowingly submits, or causes the submission of a fraudulent claim to the Federal government. The “knowing” standard includes acting in deliberate ignorance or reckless disregard of the truth related to the claim.
Criminal Health Care Fraud Statute 18 U.S. Code § 1347
The Criminal Health Care Fraud Statute prohibits knowingly and willfully executing, or attempting to execute, a scheme or artifice in connection with the delivery of or payment for health care benefits, items, or services to defraud any health care benefit program, or to obtain any of the money or property owned by any health care benefit program.
Anti-Kickback Statute 42 U.S.C. § 1320a-7(b)
The Anti-Kickback Statute makes it a criminal offense to knowingly and willfully offer, pay, solicit, or receive any remuneration indirectly or directly to induce or reward referrals of items or services reimbursable by a Federal health care program.
The Stark Law 42 U.S.C. § 1395nn
The Stark Law, also known as the “Physician Self-Referral Statute,” generally prohibits referrals of Medicare and Medicaid beneficiaries by a doctor to an organization for the provision of “designated health services” if the doctor, or the doctor’s immediate family member, has a fiduciary relationship with the organization.
Investigation Tactics and Potential for Prosecutorial Overreach
The Department of Justice has earmarked funds to provide specialized prosecutors in most federal jurisdictions, including the Northern District of Texas. For example, in Dallas the U.S. Attorney’s Office employs several healthcare fraud prosecutors known as the “Healthcare Strike Force.” These individuals are put in charge of separate teams consisting of Texas Attorney General and FBI analysts and investigators who investigate potential fraud. This is obviously meant to be a public good. However, a close look at the way these cases inseminate and how they are investigated raises concerns. The Department of Justice has a Medicare Fraud Strike Force that has two locations in Texas.
Typically a healthcare fraud case starts in one of two ways. Either an unhappy insider files a report to authorities known as a qui tam or an analyst uncovers a claim pattern that he or she regards as suspicious.
A qui tam is, in effect, a whistleblower action. If an employee feels that his or her employer is falsely billing a government program, then that person may report the employer. Unfortunately, not all whistle blowers are acting out of a sense of duty. Sometimes disgruntled employees can use this process to bring painful pressure upon employers via an investigation. For example, healthcare providers could be approached by investigators demanding to interview employees and take office records. These actions can cause anxiety, fear, and massive reputational harm. Thus qui tam investigations present significant peril, sometimes wrongly, to providers.
In addition to whistle-blower initiated investigations, government entities sometimes run audits of Medicare/Medicaid claims. For example, if a dentist in Plano files twice the number of Medicaid claims for bridgework than the second-highest biller in that region, the Government may decide to raid the business and engage in high pressured interviews with employees.
Compounding the danger for healthcare providers is that they often assume that law enforcement interviews are objective, fact-finding inquiries. This is a dangerous assumption. Actually, investigators typically conduct interviews after their mind is made up that a crime has taken place. This means that the interview is biased against the provider and designed to develop incriminating evidence. Providers should seriously consider whether to participate in such an interview and whether to do it alone.
If you or a loved one is facing a healthcare fraud investigation or have been charged with healthcare fraud, call the Federal Criminal Defense Attorneys at Varghese Summersett PLLC today for a complimentary strategy session. During this call we will:
Discuss the facts of your case;
Discuss the legal issues involved, including the direct and collateral consequences of the allegation; and
Discuss the defenses that apply to your plan and in general terms discuss our approach to your case.
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