Wednesday, October 27, 2010

Medicare claims database remains potential treasure trove for fraud investigators

Although the Medicare claims database is currently regarded as a “gold mine” for medical fraud investigators, most of the data remains unavailable to the public. The database contains electronic records of bills paid by Medicare for medical procedures, and is one of the most telling sources of information regarding health care spending in America.

The Wall Street Journal, in conjunction with the nonprofit Center for Public Inquiry, was able to obtain information on 5% of all Medicare beneficiaries over an eight-year period, at a cost to the government “substantially reduced” from the requested $100,000. Additionally, WSJ was required not to publish the names of any particular doctors or Medicare providers. That information has remained confidential from the public since the American Medical Association sued the government to keep secret payments made by Medicare to individual doctors over three decades ago.

Although the information obtained by WSJ represents only a small sample of Medicare beneficiaries, they were still able to identify doctors whose administration of tests and procedures stands out as a statistical aberration, indicating high earning for those doctors and a high likelihood of fraud. Efforts to make the Medicare claims database available for public scrutiny have so far been unsuccessful.

Monday, October 25, 2010

Health care providers must report and return overpayments, NY Medicaid IG says

Reporting and returning overpayments from government health care programs will be the most important Medicaid program integrity issue in 2011, according to New York State Medicaid Inspector General Jim Sheehan

Sheehan told attendees at the Health Care Compliance Association's Physician Practice Compliance Conference that the Patient Protection and Affordable Care Act (PPACA) gives providers a maximum of 60 days after an overpayment is identified to report it, return it, and explain in writing the reason for the overpayment. If the overpayment is retained past that 60 day window, it is a false claim under PPACA. This brings it within the purview of the False Claims Act, and that act's penalties and whistleblower provisions come into play.

Sheehan said that government auditors will also be looking more carefully at orders signed by doctors for durable medical equipment, home health care, and other supplies and services. They will be looking "behind the order" to determine if the service or supply was medically necessary.

Sheehan was quoted in BNA's Health Law Reporter (subscription required).

Tuesday, October 19, 2010

Kentucky hires independent watchdog to prevent and recoup Medicaid abuse

The state of Kentucky has entered into a 3-year contract with Ingenix, a company that will use algorithms and other mathematical formulas to detect fraud and abuse in medical claims from Kentucky Medicaid providers.

A press release from Kentucky Governor Steve Beshear’s office reports that in addition to “the latest computer technology available,” Ingenix will be “conducting onsite audits, desk audits and pre-payment review,” and will additionally be charged with identifying areas for improvement in systems and process and suggesting measures to be taken.

Ingenix will be paid at the rate of 12.5% of the payments recouped using their fraud and abuse detection processes. “In a program the size of Kentucky’s Medicaid program, which continues to grow both in costs and people served, having the most vigilant waste, fraud and abuse detection system in place is critical,” Governor Beshear stated.

Compensation and compliance – a novel combination

Companies are finally starting to use compensation as a reward for compliance – rather than as a reward for improving the bottom line at any cost. BP just announced that it will base fourth quarter bonuses this year on employee performance in terms of safety and risk management, according to the Financial Times.

And GlaxoSmithKline shocked its sales force with news this past summer that it will decide bonuses on “customer feedback, and by a sales professional's adherence to the company values of transparency, integrity, respect and patient-focus” – not success in reaching sales targets, the company said in a statement. While cynics point out that this change in the bonus plan fits with GSK’s efforts to reduce its sales force, if other pharma companies were to take a similar step, perhaps this would reduce the number of outrageous off-label marketing cases in the future.

More medical schools providing fraud and abuse instruction, OIG reports

A new report from the Dept. of Health & Human Service's Inspector General says that forty-four percent of medical schools are providing instruction to students on Medicare and Medicaid fraud and abuse laws.

Current law doesn't require medical schools or hospitals offering physician residency or fellowship programs to provide instruction on compliance with Medicare and Medicaid laws aimed at preventing fraud and abuse, even though such fraud and abuse costs U.S. taxpayers billions of dollars each year and puts the programs’ beneficiaries’ health and welfare at risk.

OIG surveyed all accredited allopathic and osteopathic medical schools and institutions offering residency and fellowship programs to determine whther they provided instruction on compliance with three Federal anti-fraud statutes: the civil False Claims Act, the anti-kickback statute, and the physician self-referral statute.

Sunday, October 17, 2010

Government pursues more foreign bribery cases

The government's prosecution of cases under the Foreign Corrupt Practices Act has resulted in record-shattering fines and criminal convictions of executives. And it seems as though its use will be increasing.

Thus far in 2010 the Dept. of Justice has carried out a dozen prosecutions, after 19 prosecutions in 2009. In addition, the Securities & Exchange Commission has brought civil cases under the law.

Though the FCPA was passed shortly after Watergate, it wasn't used much. With the growing awareness of the damage corruption can do to economies, federal officials have extended its geographic scope and used it to penetrate entire industries, such as investigating whether drug makers are paying overseas bribes to boost sales.

The FCPA prohibits U.S. companies from paying, or offering to pay, foreign government officials or employees of state-owned companies to gain a business advantage. It applies to any company that trades on a U.S. exchange, not just U.S.-based companies.

Dodd-Frank whistleblower provisions not popular with corporate directors

A survey by Corporate Board Member of more than 400 board members reveals that they are not huge fans of the whistleblower provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

One wonders whether the board members who participated in the survey are familiar with the False Claims Act. Since the whistleblower provisions were enhanced in 1986, the FCA has done much to improve enforcement and has increased compliance. The FCA has proven to be an effective deterrent against fraud.

But directors don't seem to believe that many of Dood-Frank's most important provisions will improve governance. Only 1% thought that financial incentives to whistleblowers would be effective. 18% thought executive compensation clawback provisions would help, while 11% chose mandatory say-on-pay and another 11% chose proxy access requirements as potentially effective. 59% thought none of these provisions would improve governance.

67% responded that they thought the SEC whistleblower provisions would be detrimental to corporate governance.

The success of the False Claims Act would seem to contradict the beliefs of the directors.

Thursday, October 14, 2010

FDA threatens pharma executives with individual penalties for off-label marketing

A round of applause for Food and Drug Administration Deputy Chief for Litigation Eric Blumberg. He said yesterday at a conference in Washington that executives of pharma companies that promote off-label marketing of drugs could be prosecuted for misdemeanors under what’s known as the “Park Doctrine,” Bloomberg reported.

“It’s clear we’re not getting the job done with large, monetary settlements,” Blumberg said. “Unless the government shows more resolve to criminally charge individuals at all levels in the company, we cannot expect to make progress in deterring off-label promotion.”

The Park Doctrine, named after a 1975 Supreme Court case, allows the government to prosecute chief executive officers and other executives for violations of the federal Food, Drug and Cosmetic Act. They could be fined up to $100,000 and sentenced to one year in jail, with the possibility of being barred from working in the pharma industry.

Tuesday, October 12, 2010

CHRISTUS Health will pay nearly $1 million to settle whistleblower suit

CHRISTUS Health, a Texas-based hospital chain, has agreed to pay almost $1 million to settle allegations that it committed Medicare fraud by falsely billing for unapproved medical costs and failing to disclose overpayments.

Whistleblower Mark Razin was a Healthcare Financial Advisors employee who worked with CHRISTUS on cost reports to maximize Medicare reimbursement. The allegations against CHRISTUS include wrongful billing to Medicare for advertising, marketing and administrative costs. CHRISTUS also allegedly failed to disclose errors made by a fiscal intermediary that reviewed Medicare cost reports which caused the overpayments. Hospitals are required to report overpayments caused by reimbursement errors to Medicare.

Other former clients of Healthcare Financial Advisors have settled FCA suits, including Loma Linda Behavioral Medicine Center, Lovelace Health System, Jackson Memorial Hospital, Eisenhower Medical Center, St. Elizabeth Regional Medical Center, and St. Joseph's Hospital in Houston.

Razin was represented by Phillips & Cohen LLP attorney Mary A. Inman.

Sunday, October 10, 2010

Phillips & Cohen picked for 2010 “Plaintiffs’ Hot List;” recognized for whistleblower work

Phillips & Cohen LLP, the nation’s most successful law firm representing whistleblowers, has been selected for the National Law Journal’s “Hot List” of the Top 12 plaintiffs’ law firms in the U.S. for 2010.

It is the fourth time in seven years that Phillips & Cohen has been named to the National Law Journal’s highly selective “Hot List” for its work on whistleblower cases.

Phillips & Cohen was the only law firm on the list singled out for its work on whistleblower cases, which includes the “qui tam” lawsuit that resulted in Pfizer paying $1.8 billion last year to settle the case and a related criminal fine.

Phillips & Cohen’s whistleblower cases have recovered more than $6.89 billion in civil settlements and related criminal fines and earned its whistleblower clients more than $730 million in rewards under federal and state government whistleblower reward programs.

Securities fraud whistleblower exposed Ponzi scheme

The story of a stock trader who went undercover to help the FBI expose a Ponzi scheme shows some of the problems that have confronted the government even when it knows that a fraud is occurring.

Ty Schlobohm brought his concerns about investments promoted by Trevor Cook to the attention of the Justice Department, the Securities & Exchange Commission and the Commodities Futures Trading Commission. But the agencies involved sometimes questioned whether they had jurisdiction and collecting evidence for a criminal case took a long time.

As the New York Times article notes, "That the authorities brought Mr. Cook to justice is undoubtedly a positive outcome. But Mr. Schlobohm’s journey as a whistle-blower, and some of the financial losses that still occurred even though authorities were closely monitoring Mr. Cook, also underscore the limitations of the system."

Joseph T. Dixon III, the criminal prosecutor in the case, acknowledged the importance of private individuals assisting the government. “We need citizens in the business community to come forward with information so we can move forward.” He also noted that for some there may be no financial incentive and sometimes may even entail a financial risk.

Revisions to the SEC and CFTC whistleblower programs are intended to increase the rewards given to those who come forward with information about investment fraud. They may have come too late for Ty Schlobohm, but he voices no qualms about his desision.

Mr. Schlobohm is represented by Phillips & Cohen LLP.

Tuesday, October 05, 2010

Drug companies under investigation for bribing officials overseas

Several large drug companies - including Merck & Co., AstraZeneca, Bristol-Myers Squibb, and GlaxoSmithKline - have said that they are being investigated for bribing government officials overseas to gain a larger share of business, the Wall Street Journal reports. This would violate a 1977 law that prevents companies whose stock is traded in the U.S. from incentivizing the sale of drugs overseas with financial inducements.

Lanny Breuer, the head of the Justice Department's Criminal Division, told drug company executives last year that he would prioritize investigation into foreign bribery in the industry over the next several years. The Wall Street Journal reports that overseas sales have grown to become a significant portion of drug companies’ income, and that these companies may encounter more risk of bribery, given their high level of contact with officials overseas, where the government is more involved in drug purchasing and regulation.

Currently, no companies have been accused, and it is possible that investigations will not result in charges filed. However, given the breadth of the types of violations that are being investigated, some experts believe that some punitive response will likely follow from illegal activities that companies may currently consider “a cost of doing business.”