Medical Fraud

Hospitals provide an important service. Yet every day the power they have when it comes to setting prices and providing essential healthcare is abused. This is not to say that healthcare costs are too expensive, but rather those in charge of billing often make poor judgment calls and defraud the system. Since a huge portion of healthcare expenses flow through Medicaid and Medicare, those government run programs are subject to fraudulent claims quite often.

If you know of hospital billing fraud, you may be able to file a lawsuit on behalf of the federal government to help stop those cheating the system. You may also be able to collect a reward of up to 30% of the settlement that is reached. Schedule your free case review with an attorney from Arentz Law Group P.C. today by calling 1-800-305-6000, or by filling out the contact form on this page.

Hospice Care and Medicaid Fraud

Hospice care is also called end-of-life care. Those who need it are on their last legs, often suffering from cancer or other terminal illnesses. It is a time for grieving families and making the patient as comfortable as possible before the inevitable comes. Unfortunately, it is also a time where providers cheat the system and commit Medicaid fraud.

Hospice is for those who have a life expectancy of six months or less. More often than not, hospice is used when people have less than a month to live. The biggest form of hospice Medicaid fraud is committed when those who don’t meet the end of life requirements are put into hospice care. What’s that mean? It means this expensive treatment is conducted for far longer than needed. Instead of filing paperwork that showed the patients were in good health, charts are faked to show that intensive care is needed.

Take for instance the Medicaid fraud charges brought against Passages Hospice in the Chicago area. This hospice facility claimed that they sought to give patients everything that they need and then some. Apparently that “then some” included billing for services that were completely unnecessary. In fact, one patient received hospice care for more than 4 years; that patient only needed the care for the last month of her life. The result of that one patient alone: $192,000 in Medicaid fraud.

Unfortunately cases like this go by every day without anyone complaining or turning in the perpetrators that are scamming the system for billions of dollars. Unless someone with intimate knowledge of the corruption that is occurring, the government is hard pressed to get the evidence they need to prosecute those committing Medicaid fraud. With your help that can change.

Nursing Home Fraud

Nursing homes provide an essential service to the elderly. While the vast majority of them operate cleanly and provide the service without problems, there are some that defraud the Medicaid system. Essentially they bill for services that were never performed, or services that were unnecessary.

The most common form of fraud that occurs is billing for services that were not done. This can be done in a number of ways. The provider can bill for tests and services, but then never actually perform those tests. Or they can bill for nursing home hours over and above what were actually performed. For instance, a practitioner provides 4 hours of care, but bills for 6.

Why Does this Matter?

Medicare is a government organization. That means it is paid for by the taxpayers. Whenever someone defrauds the system, the taxpayers ultimately have to pay for the deceit. But this isn’t just overcharging for bandages and aspirin; Medicare fraud runs a lot deeper than that.

In 2013 the Medicare program spent around $585 billion. This was for all of their services rendered, but not for the administrative costs of running the program. The FBI keeps track of the fraud that occurs in the entire healthcare industry. Or at least they attempt to. The Bureau believes that between 3% and 10% of all billings are fraudulent. If that estimate is applied to the costs of Medicare, it means that between $17.5 and $58.5 billion is lost every year due to fraud.

That amount of money is a very significant loss to the government (and keep in mind that this is just Medicare fraud; it doesn’t include Medicaid fraud as well). Because it is such a big number, the government wants to stop the fraud whenever it can. That is where they need the help of private citizens.

Since it would be too costly and time consuming to review every single Medicare claim, they government relies on those with intimate knowledge of the billings practices at healthcare facilities. Those who know about the fraud can file a qui tam lawsuit, and sue the facility on behalf of the government. By acting as a whistleblower they can collect compensation for their troubles, and they are protected against negative retaliation from their employer.

Stopping Nursing Home Fraud

The process to stop this fraud is surprisingly simple on your part. If you have knowledge that fraud is occurring (not just suspicions because your bill looked to high), you can file a qui tam lawsuit. Essentially, you can sue the facility on behalf of the federal government.

Qui Tam lawsuits got their start during the Lincoln Administration. There was a lot of fraud going on, but the government needed the help of private citizens to blow the whistle on this fraud. Lincoln passed the False Claims Act which included a qui tam clause. This clause meant that an individual could initiate the lawsuit, and collect a reward for doing so.

Warning Signs of Hospital Fraud

In order to prosecute hospital fraud, the government needs to know that it is going on. In order to catch those defrauding the government, private citizens need to blow the whistle. If you are in a position to catch hospital fraud, keep an eye out for these red flags that could serve as a warning that those responsible for billing are committing fraud.

Multiple Services
If you notice that your doctor wants to include a lot of services, many of which seem unrelated to your procedure, ask for an explanation of why they are necessary. There may be a good reason, or the doctor may be trying to bill for extra services and increase profits.
Blank Insurance Forms
It is good advice to never sign a blank form, no matter what it is for. Blank insurance forms can be changed at a later date with extra services, tests, and procedures filled in. Those items may never have been completed.
Waiver of Deductible
If your deductible or co-pay is waived, there is a good chance something illegal is going on.
False Locations or Providers
If you had a procedure done at a hospital in one city, but the bill shows it was completed at another city, it is likely that it costs more when conducted elsewhere. The provider may be trying to increase your bill amount.
Billing for Non-Covered Services
This one may be harder to catch, especially if you aren’t sure what is covered. Hospitals may engage in fraud by billing a non-covered service as though it is covered.

There are many more warning signs that a hospital is committing healthcare fraud. The bottom line is that if something doesn’t seem right, it probably isn’t. Now keep in mind that hospitals will very often make their bill difficult to understand for the sole reason that you are less likely to complain. This is not fraud, but rather sneaky business tactics.

Who is Hurt by Medicaid Fraud?

Medicaid fraud runs deep.  In the end there are a number of parties that suffer.

It is easy to see that the taxpayers suffer immensely from this fraud.  If the program spends $1 trillion, and $200 billion of that is fraudulent, then there is a huge amount of taxpayer money that is going to something they never approved.  Imagine how much more Medicaid and Medicare could do if the fraud didn’t exist?

But there are more parties hurt by the fraud.  The doctors are hurting the patients and causing them to have to pay more in co-pays, deductibles, and out-of-pocket maximums.  Even more they are eroding away at the trust placed on healthcare professionals.

The entire system itself is hurt as well.  Taxpayers are upset and wonder why they are forced to pay for such waste, Medicaid employees have to work harder to stop the fraud, and ultimately it makes the whole system look flawed.

How Medicaid Fraud Occurs in Hospitals

Medicaid fraud comes in many different forms.  There are a few ways that are more common than others because they are more lucrative.

Phantom Billing
Suppose a patient checks in to the hospital requiring stitches in their arm.  The hospital may stitch them up, and then bill Medicaid for X-rays that never occurred.  Phantom billing is for services never rendered.
Billing for Extra Hours
Many physicians charge by the hour (especially those providing therapy services).  One of the most tempting frauds is to round up hours.  For instance, a half hour therapy session is billed as a full hour.  Or one hour of service is billed as two.
Unnecessary Tests and Services
Some who are committing Medicaid fraud try to justify the fraud by actually conducting the tests and services.  Often those services aren’t medically necessary and only serve to inflate the bill.
Kickbacks are very common forms of Medicaid fraud.  They occur when someone receives a reward for referring a patient.  For example: an ambulance company may get a monetary reward for bringing patients to one hospital over another.
Generic Drugs
A hospital may bill Medicaid for a name-brand drug, but only administer the generic version to the patient.

No matter how it is done, Medicaid fraud is illegal and it costs the US taxpayers billions of dollars every year (some estimates put that figure at almost $200 billion).  There are mistakes that are made, but fraud is a knowing attempt to cheat the system out of money.

What are Kickbacks?

Kickbacks are one of the most common forms of Medicaid fraud around. The reason is that they appear to be innocent, and one could try to justify them as a referral fee or finder’s fee. Here is how they work:

Suppose a hospital teams up with a pharmaceutical company. They let the pharmaceutical rep look at the patient files, and the rep then makes suggestions on which drug the doctor should prescribe. The doctors do so and the pharmaceutical company earns millions of dollars due to these recommendations. They then pass along a portion of the earnings to the doctor in the form of cash or gifts. Those recommendations and prescriptions may not be in the patient’s best interest; they are in the best interest of the pharmaceutical company and the doctor. There are laws making kickbacks illegal because of this.

Another example of kickbacks happened in Houston, Texas not too long ago. The president of Riverside General Hospital, along with about 10 other individuals, were recently charged with Medicaid fraud that cost the government, and ultimately the taxpayers millions of dollars. This hospital provided mental healthcare to individuals. As a way of bringing in more patients, they would offer kickbacks to a group home for sending over individuals. Those individuals may not have needed the service, may not have been eligible to receive that service, or may not have been able to benefit from it. With the constant flow of patients, many of whom did nothing but watch TV all day, the hospital managed to defraud Medicaid and Medicare for $158 million.

Kickbacks are a tricky subject because they can often appear innocent. However, the government, through the Stark Laws, has made them illegal as a means of protecting the best interest of the patient rather than the best interest of the doctor.

Upcoding is a Form of Medicare Fraud

There are a lot of different ways that Medicare fraud can occur. The provider may bill for 2 hours when only 1 was performed. The provider may conduct unnecessary tests and procedures. Or the provider may upcode the billing.

Upcoding is a form of Medicare fraud, and it is very difficult to catch. What is Medicare upcoding? It is when a service is conducted, but a more extensive, and more expensive, service is billed for. For example, suppose a patient visits the doctor for an annual physical. That service generally costs about $100. However, when Medicare receives the bill, it is listed as a more extensive service that costs $150. Upcoding a bill, which brings in more money for the provider, is Medicare fraud. And it is illegal.

The billing procedure for Medicare is complex. Because the system is so big, and so complex, many providers feel they can defraud the system and get away with it. They feel they have earned the extra money and no harm is done by cheating the system out of just a little bit.

In order to combat this fraud, those who have intimate knowledge of Medicare billing at any particular provider must blow the whistle when they see fraud occurring. In order to encourage people to turn in those defrauding Medicare the government offers a reward for their troubles, and has laws in place to protect whistleblowers from negative repercussions from their employer.

The Size of Medicaid and Medicare Fraud

It is estimated that the entire healthcare industry is a $2.5 trillion industry.  Medicaid and Medicare make up about $1 trillion of that industry.  These two programs help millions of people receive healthcare.  Every year, fraud in these two programs costs the taxpayers billions of dollars.

The FBI estimates that healthcare fraud is between 3 and 10%.  That means for the industry as a whole, there is $75 to $250 billion worth of fraud.  If we use that same estimate for just the Medicaid and Medicare programs, the number is between $30 and $100 billion.  But some say that these two programs are defrauded far more often than other insurance programs, and the losses could be as high as $200 billion every single year.

Fortunately, every year some of those who choose to cheat the system are caught.  They make a mistake, or someone finally blows the whistle on them, and their fraud is discovered and they are forced to repay what they have stolen.  But more could be done.  Out of the potentially $200 billion that was cheated from the system, about $1.7 billion was recovered in 2011.  If more was done to aggressively pursue those defrauding the system, then the healthcare industry could be in much better condition.

In order for more fraud to be recovered, more has to be done by those with intimate knowledge of that Medicaid fraud or Medicare fraud.  Those working at the facilities that are engaged in the fraud can help do their part to recover it, and they can earn a reward for doing so.  That reward could be as much as 30% of the settlement amount.

Inflating Hours is Medicaid Fraud

Medicaid fraud happens when a number of corners are cut.  Most often it is billing for services that never occurred, or inflating the number of hours spent caring for a patient.  

Here is how that looks:

Suppose a patient goes to see a therapist.  That therapist will sit down and work with the patient, and bill Medicaid for those hours.  There are strict rules as to what constitutes a billable hour.  For instance, any time spent with the patient is a billable hour.  Time spent preparing for the session, and transcribing notes afterward may also be billable.  However, time spent driving to the patient’s home (if it is a home visit) or other activities not directly related to the treatment are not billable hours.  A healthcare provider that wants to defraud Medicaid may claim to have worked with the patient for 2 hours, when only 1 hour of treatment was provided.

But it doesn’t even need to go that far.  Medicaid fraud can occur when hours are simply rounded up rather than left at their half and quarter hour intervals.  For instance, if a healthcare provider works with a patient for 45 minutes, they may record that they spent 1 hour.  It may not seem like much, but that can add up to 2 extra hours each day or 520 hours per year.

One recent case happened in New York.  In January 2014 the Attorney General announced that a settlement had been reached with Home Care of Rochester for $2.5 million.  The bulk of that money was defrauded from Medicaid by billing for costs not associated with patient care (advertisement, country club dues, vehicles, etc.).  But the provider was also charged with inflating their billable hours by more than 6,500 hours during a 4 year stretch.

Medicare and Medicaid Whistleblower Lawsuits

Every case is different. However, there are common themes that run through them. Here are some of the high profile cases in recent years and how those defrauding the government were brought to justice.

Nursing Home Fraud
A nursing home in Mission Viejo paid $48 million in a settlement in 2013. The nursing home performed tests and services that weren’t medically necessary, or that never even took place. The fraud was uncovered by two former employees of the company that owns the nursing home.
Healthpoint Ltd.
Healthpoint Ltd. and DFB Pharmaceuticals developed a drug called Xenaderm. This drug was supposed to help treat bedsores, a common problem in nursing homes. However, the drug never found FDA approval, but it was marketed anyway. The case was complicated due to FDA laws and how drugs work, but in the end Healthpoint and DFB were fined up to $48 million.
Vanguard Healthcare
Vanguard Healthcare operates 18 nursing facilities in Mississippi and Tennessee. An ex-employee of one of the facilities was fed up with the fraud taking place and filed a qui tam lawsuit against the company. The result is that Vanguard must repay $2 million; an amount equal to that which they cheated from the system.
$260 Million
In 2014 the department of Health and Human Services uprooted 90 individuals, including 27 medical professionals, which were involved in a massive Medicare fraud ring. The cumulative penalties that they must pay for defrauding the system are around $260 million.

Medicare and Medicaid are huge programs with billions of dollars flowing through them every single year. Because of the size, there are also billions of dollars every year that are defrauded from the system. It is only with the help of those who work for nursing facilities and other healthcare providers that these fraudsters can be brought to justice.

Qui Tam

There is a Latin phrase which states, “qui tam pro domino rege quam pro se ipso in hac parte sequitur,” which roughly means he “who sues in this matter for the king as well as for himself.”  Commonly this is just shortened to qui tam.

The way these lawsuits work is that when someone discovers fraud that is costing the government money, they can file a suit against the defendant on behalf of the federal government.  The idea is that the whistleblower, called the relator, is rewarded for his or her service, the government is reimbursed for a portion of their losses, and the defendant is stopped from causing further damage and corruption.

The actual process of qui tam, however, is a little more difficult than just collecting restitution.  Once the government is notified, there are protections for the whistleblowers that are put in place (so no revenge can be sought on the relator) and the government investigates deciding whether or not they should get involved in the lawsuit.  If found guilty, the defendant will pay restitution and a penalty (as high as $11,000).  The relator, or whistleblower, is eligible to collect up to 30% of the settlement proceeds.

What is a Qui Tam Case?

During the Lincoln Administration the country was in the heart of the Civil War. Because the war took a lot of supplies, the government was ordering vast amounts of goods. There were some unscrupulous dealers that knew they could sell boxes of food that was already spoiled, horses that were near death, and boxes that should have weapons in them, but instead only contained sawdust. They were getting rich by defrauding the government.

To combat this fraud, Lincoln passed the False Claims Act. This act contained a qui tam clause. That clause basically says that an individual can file a lawsuit against those trying to defraud the government on behalf of the government. For their troubles they collect a reward that is often tied to the amount of the settlement.

How Nursing Home Qui Tam Cases Work

A qui tam case can be filed wherever someone, or some company, is trying to defraud the government. One of the biggest areas of fraud is in the healthcare industry, specifically when it comes to Medicare and Medicaid. There are a lot of nursing homes that commit fraud by inflating the cost of goods, billing for services that were not needed or simply never occurred, and many other methods.

If you know of the fraud that is occurring, you can blow the whistle on those who are cheating the system. Your first step is to contact an attorney from Arentz Law Group and begin gathering evidence.

Your attorney will work with you to build a solid case; that case is then turned over to the US Government. When it is approved, they will start their own investigation. Upon conviction, you will earn a reward that is up to 30% of the fine and settlement that the company agrees upon with the government.

UBS Tax Evasion

You may recall UBS being in the news in early 2013.  This banking giant was found to be utilizing offshore accounts in tax haven countries to hide interest and earnings in the accounts of some of its American clients.  The reason UBS was caught was because international banker Bradley Birkenfeld blew the whistle on the company.  Back in 2009 he exposed their corrupt dealings, and by late 2012 the investigation went through.  The result was that UBS paid a fine of $780 million, and Birkenfeld collected $104 million for his troubles.  Savings to the US government: an estimated $4 billion.

Pfizer Pushing “Off-Label” Uses of Drugs

In 2003 John Kopchinski had had enough.  He filed a qui tam lawsuit against Pfizer for pushing their pain drug Bextra for uses that were not FDA approved.  This former sales rep for the drug manufacturer saw firsthand how Pfizer was seeking to work the system in order to make more sales.  Not only was the off-label push costing the Medicare and Medicaid programs money, it was also endangering the patients.  After 6 years of investigation, litigation, and legal actions, John’s whistle blowing paid off.  Pfizer had to pay $2.3 billion in total compensation, of which John collected over $51 million for his troubles.

Teledyne Relays Sells Faulty Equipment

Emil Stache worked for Teledyne in the late 1980’s.  During that time the company was responsible for selling relay switches to the government that were “super reliable.”  These relays went through much more rigorous testing than anything used for commercial purposes.  However, Stache soon realized that these relays were failing a majority of the tests, yet the company still claimed they were reliable.  After some backlash from his employer, and subsequently being relieved of his duties, Stache filed a lawsuit unaware of the qui tam provision of the False Claims Act.  With his help the government was able to bring a case against Teledyne which resulted in them paying $88 million in fines and restitution.  Stache collected an undisclosed sum.

Filing a Medicaid Qui Tam Lawsuit

During the Lincoln Administration there was a lot of fraud going on. To help oust the fraudsters Lincoln passed the False Claims Act; which had a qui tam clause in it. This act and its clause allowed individuals to file a lawsuit on behalf of the government. Those who helped bring the fraudsters to justice received a reward and a portion of the settlement.

Today that law and clause are still in effect. In fact, if you help to bring an unscrupulous medical facility to justice, you can receive up to 30% of the settlement for your whistleblowing. While most of those who have intimate knowledge about the billing practices are those who work for those defrauding the system, it is possible for anyone to file one of these lawsuits.

The way it works is you work with your qui tam attorney at Arentz Law. Together you will gather as much evidence as you can, and then your attorney will work with the government investigators to help build a case against those scamming the system. You will have all of the rights and protection guaranteed under the whistleblower protection act.

Contact Arentz Law Regarding Your Medicaid Fraud Lawsuit

If you have witnessed Medicaid fraud, and you want to blow the whistle on those cheating the system, your first step is to get in touch with an attorney from Arentz Law Group. Schedule your free case review by calling 1-800-305-6000, or by filling out the contact form on this page.

A Medicaid qui tam attorney from Southern California can handle your case no matter what state the fraud is taking place in.

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