$100 Million Medicare Fraud => 9-Year Sentence

Defendant Andrew Chmiel got a one-way ticket to federal prison for 9 years following his conviction for Medicare fraud, courtesy of the U.S. Attorney's office in the District of South Carolina. He was also ordered to pay $98,935,533.00 in restitution.

Touting this as one of the biggest Medicare fraud cases ever, the press release on this case described the essentials of the scheme (emphasis added): 

Chmiel’s charges were brought in 2019 as part of Operation Brace Yourself, an investigation that originated in South Carolina. Operation Brace Yourself, which was prosecuted in conjunction with the Department of Justice’s Criminal Division Fraud Section, was a multi-jurisdictional investigation that involved the execution of more than 80 search warrants in 17 federal districts.

As for Chmiel’s criminal conduct, evidence presented to the court showed that Chmiel controlled and operated at least 10 DME companies, which were located throughout the United States. These DME companies were used by Chmiel and his co-conspirators to submit false and fraudulent claims to Medicare for braces that were not medically necessary and/or were obtained through the payment of kickbacks and bribes. 

To effectuate the scheme, these DME companies entered into agreements with an offshore call center to purchase completed doctors’ orders so the DME companies could bill Medicare. This offshore call center was advertising through television and internet advertisements.  Once a Medicare beneficiary called a 1-800 number that was on the advertisements, that Medicare beneficiary would be screened for eligibility and then convinced that he or she needed a brace, and oftentimes upsold on other braces.  The call center would then contact a telemedicine company whose physician and/or or nurse practitioner would issue a prescription without regard to the medical necessity.  Throughout the investigation the evidence revealed that beneficiaries were prescribed braces without ever being examined by, seeing, or, in some instances, even speaking to a medical professional. Evidence presented showed that Chmiel was attempting to hide that he was purchasing completed doctors’ orders by creating fraudulent and false invoices for alleged marketing and business processing services.

Throughout the health care fraud scheme, Chmiel’s companies, which included 10 DME companies, two dropship companies, and two additional companies that were used to facilitate the fraud – D.O. Delivery and Pain Center – billed Medicare in excess of $200 million and Medicare paid Chmiel’s companies in excess of $95 million.

For the past two decades, durable medical equipment has been a fertile field for fraud and, correspondingly, for federal fraud prosecutions. The perpetrators of these schemes apparently fail to take into account the investigatory tools available to the Department of Justice and the fact that the government has computers that can crunch a lot of Medicare claims. $200 million worth of DME orders from 10 DME companies was bound to be picked up by some computer's filter or algorithm. 

Criminal Liability of Health Care Providers

Some types of criminal prosecutions of health care providers are rare, while others are not.

1. Not-so-rare. This category includes fraud (against private insurers and public health programs like Medicare, Medicare, and Tricare); criminal prosecutions involving violations of the Anti-Kickback Law are announced by DOJ and state AGs every week (if not every day). Last Friday, for example, the Massachusetts Attorney General announced indictments against a dentist and his dental practice for billing the Medicaid program for services that were never rendered or were not rendered by the dentist. The charges included multiple counts of Medicaid False Claims and Larceny Over $1,200. 

Violations of state and federal Controlled Substances Acts often have a provider -- a physician, nurse, or pharmacy worker -- with access to drugs in the middle of the scheme. A recent example comes from the U.S. Attorney for the Northern District of New York. whose office announced on March 1 that a nurse practitioner received a 70-month sentence "for distributing controlled substances outside the course of professional practice and for no legitimate medical purpose." In her plea agreement, the defendant admitted that she 

unlawfully prescribed controlled substances to a total of 54 patients.  Simonson issued hundreds of unlawful prescriptions, including for the opioids hydrocodone and oxycodone, benzodiazepines (clonazepam, diazepam, and lorazepam), and the stimulants amphetamine (e.g. Adderall) and methylphenidate.  For instance, Simonson admitted that she issued a total of 63 oxycodone prescriptions to two residents of Suffolk County, New York, without treating either of them for a medical condition. The Suffolk County residents usually paid Simonson by mailing her packages of cash concealed within DVD cases.

To settle the government's civil case against her, the defendant "admitted that she improperly prescribed controlled substances to 105 patients (including the 54 listed in her criminal plea agreement), often without ever examining patients and maintaining medical records justifying her decision to prescribe controlled substances."

2. Very rare. This category involves provider errors that result in iatrogenic injury. Most such cases, of course, are handled on the civil side by medical-malpractice and medical-negligence claims. In a small percentage of cases, though, a provider will be indicted. Most such cases involve extreme departures from the standard of care resulting in a patient's death. An example was reported by the NY Times earlier this month:

A Colorado paramedic convicted in the 2019 death of Elijah McClain, a young Black man whose case helped drive the national police reform movement, was sentenced on Friday to five years in prison.

The case was a rare criminal prosecution of emergency medical personnel, and stirred outrage among paramedics and firefighters across the nation who worry that urgent decisions made as part of their jobs can be criminalized.

The paramedic, Peter Cichuniec, 51, a former lieutenant with Aurora Fire Rescue, was convicted in December of criminally negligent homicide and second-degree assault for the unlawful administration of drugs. He was one of five police officers and paramedics prosecuted in state district court over three consecutive trials. . . .

In August 2019, Mr. McClain, a 23-year-old massage therapist, was returning home from a store when he was confronted by police who were responding to a 911 call about a suspicious person. During a quickly escalating encounter, Mr. McClain was forcefully restrained by police and placed in a carotid chokehold, a neck restraint that has since been banned in Aurora and other police departments. Paramedics then injected him with an overdose of the powerful sedative ketamine. He died in a hospital several days later.

Top Four Kick-the-Can Issues in Health Care

Becker's is an incredible daily resource through various newsletters aimed at hospital management, CFO's, and policy makers. From their vantage, they have a good feel for the recurring issues that government ignores and that might yield at least somewhat to public-private partnerships. Here are their top four:

1. Hospital closures. It seems lawmakers only start to take notice of hospital financial solvency when closure announcements are made. Lost in this 11th-hour dynamic is concern for patient safety and care quality. The closure of a hospital is one thing. But just as important — and often neglected — is scrutiny of the quality of care patients receive in the period leading up to the announcement of closure. 

2. Hospital staff safety. The Safety from Violence for Healthcare Employees Act was introduced in the House last April and in the Senate last September. The bipartisan legislation would make it a federal crime to knowingly assault hospital workers and enact federal protections for healthcare workers like those in effect for aircraft and airport workers. 

Since the legislation's introduction, individual acts of violence in hospitals continue to unfold and make headlines as more longitudinal data is released showing just how much more hostile healthcare settings have become. More than double the number of health workers reported harassment at work in 2022 than in 2018, including threats, bullying, verbal abuse, or other actions from patients and co-workers that create a hostile work environment, according to CDC data. More than 5,200 nursing personnel were assaulted in the second quarter of 2022, according to data from Press Ganey, amounting to about 57 assaults per day. 

3. Healthcare workforce shortages. Much attention is paid to technology solutions and AI support systems to augment the healthcare staff and workers who are in short supply. But look more closely, and the foundation of data about the U.S. workforce looks like Swiss cheese. 

There are more than 8,300 designated primary care shortage areas in the U.S., and nearly 200 of them have been federally designated as such for at least 40 years. This finding stems from an analysis that KFF Health News published last month. One area on the far south side of Chicago has been designated as a shortage area since 1978. Another area in the Baton Rouge metro area in Louisiana, has been named a shortage area since 1979, most recently with 22 full-time primary care physicians for nearly 140,000 people. 

4. Hospital cybersecurity. Becker's covered one of the earliest hospital ransomware attacks on a small hospital in Kentucky in 2016. Methodist Hospital in Henderson, Ky., operated in an internal state of emergency for five days and did not pay the ransom. Since, we've seen cybergangs and criminals grow more savvy, emboldened and nefarious in their targeting of hospitals. Health system ransomware attacks nearly doubled in 2023, with 141 U.S. hospitals affected last year and data stolen in 32 of 46 of the events. 

These attacks can wreak havoc and cause harm to entire healthcare infrastructures across state lines. Last November, the hack of 30-hospital Ardent Health Services, based in Nashville, Tenn., caused ambulances to be diverted across six states. The actors behind these attacks have also grown more cruel, hitting children's hospitals (most recently Lurie Children's, a level 1 pediatric trauma center in Chicago), demanding $900,000 from a safety-net hospital in 48 hours, publishing data about hospital staff, or activating other hospital equipment mid-attack.

Physician Acquitted in $15M Healthcare Fraud Prosecution

A federal jury in Maryland convicted the physician on five counts of healthcare fraud in connection with his billing practices for level 4 CPT codes for evaluation and management services (E/M) for Covid patients. According to Becker's Hospital Review:

Ron Elfenbein, MD, 49, owned First Call Medical Center and Chesapeake ERgent Care, which operated multiple drive-thru COVID-19 testing sites. He instructed employees, in addition to billing for COVID-19 tests, to bill for high-level evaluation and management visits, according to an Aug. 4 Justice Department news release. Dr. Elfenbein ordered the high-level visits to be billed for all patients, including those who were asymptomatic, getting tested for their employment requirements or being tested so that they could travel, according to the release. Dr. Elfenbein was accused of submitting false claims for tens of thousands of high-level visits that were ineligible for reimbursement. 

As analyzed by Husch Blackwell:

[U]nlike some CPT codes, E/M CPT codes are imprecise. There is purpose in E/M CPT codes’ imprecision in that it allows physicians flexibility to exercise their best judgment given the multitude of factors that go into medical decision-making.

But that imprecision in E/M CPT codes makes for difficult federal prosecutions. As the court held in overturning Dr. Elfenbein’s convictions, CPT codes’ “imprecision does not necessarily integrate well with the clear notice and due process guarantees of our criminal law” and “where the relevant CPT codes and related definitions are ambiguous and subject to multiple interpretations, problems clearly arise.” 

Does this mean DOJ can't win ambiguous-CPT code cases? Not at all (from Husch):

The court was careful to make clear that it is possible for the Justice Department to successfully prosecute defendants who take advantage of ambiguous CPT codes, but that such prosecutions must show objective falsity in a way the prosecutors failed to do in Dr. Elfenbein’s trial. The “Government sails in shallow waters when it prosecutes a case of this type; these cases require careful navigation,” wrote the court.

To make its point, the court pointed to several cases in which the Justice Department was able to navigate ambiguous waters, including one E/M CPT case in which the prosecution’s expert testified the medical judgment was “not even close to being properly classified” at the code’s level. And so, while prosecutions based on ambiguous CPT codes are clearly an uphill battle for the Justice Department, they are not insurmountably uphill. 

The district court's 90-page opinion is here. 

Latest Fraud Enfocement Actions include $148 Million Scheme

Here's the latest rundown from USDOJ, with some details on a couple of the most notable actions:

Lab Owner Pleads Guilty To $1.7 Million COVID-19 Test Fraud Scheme (December 1, 2023; U.S. Attorney's Office, Northern District of Texas)

Physician Sentenced For $1.2M Pill Mill Scheme (November 30 2023; U.S. Department of Justice)

Philadelphia Pharmacy Pleads Guilty To More Than $500,000 In Fraudulent Insurance Claims As Part Of Prescription Medication Scam (November 28, 2023; Pennsylvania Attorney General)

▶︎Man Charged In $148M Medicare And Medicaid Fraud Scheme (November 30 2023; U.S. Department of Justice)

A federal grand jury in Baton Rouge, Louisiana, returned an indictment today charging a Louisiana man for his role in a scheme to defraud Medicare and Medicaid of over $148 million in medically unnecessary definitive urine drug testing services.   

According to court documents, Brad Paul Schaeffer, 48, of Zachary, was a co-owner and chief executive officer of MedComp Sciences LLC (MedComp), a diagnostic laboratory located in Zachary. From approximately January 2013 through approximately August 2022, MedComp, at the direction of Schaeffer, allegedly billed Medicare and Medicaid for definitive testing of at least 15 substances in urine specimens it received, regardless of the patient’s treatment plan and history, or the request of the referring provider. 

To perpetuate the fraud, Schaeffer, through MedComp, allegedly took several actions, among them, writing off patient co-pays, directing MedComp staff to fill out and submit order forms on providers’ “behalf,” concealing the true nature, permissibility, and extent of testing from providers, orchestrating a pass-through billing scheme using hospitals, and paying kickbacks to physicians disguised as laboratory ownership interests. Schaeffer then allegedly used the fraudulent proceeds for his own benefit, including spending thousands of dollars to renovate a pool and on a pool house in his backyard, and to restore a truck. 

▶︎Caretaker Charged With Involuntary Manslaughter, Neglect For Failure To Renew Patient’s Medications Which Led To Fatal Seizure Episode (November 29, 2023; Pennsylvania Attorney General)

Kelly Gonzales, 48, was the administrator at ARC of Lawrence County, a personal care home in New Castle, when she failed to renew a prescription for the patient’s anti-seizure medication. Gonzalez then altered medical records to indicate that a health care provider discontinued the medication — which was not true.

As the administrator of the personal care home, Gonzales was responsible for the administration and management of the home, including the health, safety, and well-being of the residents. This included ensuring the residents’ paperwork was complete, that they attended all medical appointments, and received their prescribed medication in a timely manner.

According to the complaint, the resident was diagnosed with a seizure disorder and was prescribed anti-seizure medication to control his seizures. He died at the care home on Dec. 2, 2021 after not receiving his medication for over 10 days. Upon autopsy, it was discovered that the seizure disorder caused his death and that the levels of anti-seizure medication in his system were well below therapeutic levels.

Gonzales was charged Tuesday with felony counts of neglect of a care dependent person and tampering with records, and misdemeanor involuntary manslaughter. Gonzales surrendered Tuesday, was arraigned and released on her own recognizance.

Mental Health and the Criminal Justice System

Much has been written about the shockingly low level of mental health facilities and services in Texas, especially if you are poor or uninsured or incarcerated. And much has been written about months and years of incarceration that may befall a defendant who cannot make bail. The combination of inadequate services and long-term incarceration is a prescription for disaster.

PBS's "Frontline" (with its local affiliate, KFAE, in Charlotte, NC) took a look at this situation through the lens of one prisoner who cycled between jail and the mental health system, such as it is, for five years while waiting for his trial. Text and audio are here.

Violent attacks on hospital staff: What's the solution?

The reports of violent attacks on doctors and nurses in hospitals, clinics, medical offices, and other health care settings keep coming in. From The Hospitalist (Mar. 1, 2023):

Even before the onset of the COVID-19 pandemic, health care workers suffered more workplace injuries as a result of violence than any other profession, with approximately 654,000 harmed annually, according to American Hospital Association studies. Since the pandemic began, violence against hospital employees alone has markedly increased. For example, 44% of nurses reported an increase in physical violence and 68% reported an increase in verbal abuse. (emphasis added)

The weapons tend to be knives and guns. Maybe it's a sign of the times, with random violence increasing all around us each year, there seems to be a steady stream of stories of violent attacks against health care personnel. (See, e.g., American Association of Critical-Care Nurses (blog)). I have further thoughts, but first, consider a recent example: "Man charged in fatal shooting of Tennessee surgeon" (Becker's Hospital Review, July 13). The shooter had reportedly been seen in this orthopedic surgery clinic earlier in the day, returned to the clinic, and shot the orthopedic surgeon.

It goes without saying that violence against doctors, nurses, and other health care workers simply shouldn't be a thing. We remember the political assassination of Dr. George Tiller 14 years ago while he was ushering in a worship service at his church in Wichita, Kansas. The killer was described as an "anti-abortion extremist." But much more violence and threats of violence occur every day in ordinary clinical settings. The work of clinical staff is performed with often emotionally fraught individuals (patients, family members), and then there are others with perceived grievances against the health care system or the world. The CDC has a useful list of risk factors:

The clinical setting is one of intensified emotions. Patients who are at risk of perpetrating violence include those who:

• are under the influence of drugs or alcohol
• are in pain
• have a history of violence
• have cognitive impairment
• are in the forensic (criminal justice) system
• are angry about clinical relationships, e.g., in response to perceived authoritarian attitude or excessive force used by the health provider
• have certain psychiatric diagnoses and/or medical diagnoses.

Clinics are designed to be open and welcoming, not armed fortresses. Doctors and nurses don't pack heat, and possession of a firearm on hospital property is universally prohibited (except in states where such prohibitions are themselves prohibited). They are vulnerable professionals -- first responders and health care workers -- who spend their careers comforting and healing. Violence is obscene and should be unthinkable in any workplace, including elementary schools, places of worship, and health care settings. 

There is no shortage of resources for dealing with violence in hospitals and clinics, including programs and best practices suggested or endorsed by the following:

• the American Hospital Association (Hospitals Against Violence; 2022 fact sheet)
• the federal Occupational Safety and Health Administration (OSHA) (report)
• the Centers for Medicare and Medicaid Services (CMS) (report)
• the Centers for Disease Prevention and Control (CDC) (course materials)

Health care settings are especially risky places to work, as many of the resources quoted and cited above establish. While we're at it, let's not forget the gun culture, the threat of which permeates every aspect of our lives. I wrote about this on Father's Day. The insanity has to stop.

Plastic surgeon to be sentenced after manslaughter conviction

It is rare, but not unheard of, for a physician to be prosecuted criminally for conduct that would otherwise be treated as medical malpractice and tried in a civil courtroom. Even egregious departures from the applicable professional standard of care will usually be treated as gross negligence or, rarely, an intentional tort (like assault), either of which may give rise to liability for punitive damages, usually multiples of the compensatory damage award. Again, even in most of these extreme-negligence/intentional-tort cases, prosecutors seldom seek criminal charges.

So when Beckers Hospital Report picked up a story from Colorado about a plastic surgeon who has been convicted of attempted reckless manslaughter and obstruction of telephone service (both felonies), a couple of questions occurred to me:

1. How bad was the surgeon's conduct to expose him to criminal liability?
2. "Obstruction of telephone service"? What on earth?

The surgeon was performing a breast augmentation procedure on an 18-year-old patient who, while under anesthesia, suffered a cardiac arrest and went into a coma. Staff members asked the surgeon for permission to call 911, and the surgeon said no. (Interference with telephone service?) 

Instead, the surgeon performed CPR himself and didn't allow a call to emergency responders until 5 hours after the cardiac arrest. The patient died 1 year later in a nursing home (NBC News, June 15, 2023).

More questions:

1. "Attempted" manslaughter? I am guessing the charge was negotiated down to attempt, despite the fact that the surgeon surely caused the patient's eventual death. The one-year delay before the patient died may have made it at least questionable that the state could prove causation in a manslaughter case. I'm not a Colorado attorney, but there also may be a statute or case law that bears on the issue of causation when there's a substantial delay between the injury and the death -- unlikely, but possible.
2. What were the clinic's staff thinking? That they might be fired if they disobeyed the surgeon's instruction not to call for help? I hate to be a Monday-morning quarterback, but this is really unconscionable.

The press version of legal cases often raise more questions than they answer and frequently get details wrong. But from what's available in NBC's reporting, this looks like a case that deserved to be scrutinized by the criminal justice system.

Hellacious Health Care Fraud Cases of the Week (III)

A fresh crop of miscreants -- some charged, some convicted, some sentenced. It's hard to quantify, but the continuing tidal wave of fraud enforcement actions leads me to question the deterrent effect claimed by criminal law theorists. Or it may be that criminal liability deters penny ante stuff but when the payoff is in the millions, the possibility of some time in jail may pale in comparison the the potential gain.

Two Jacksonville Compounding Pharmacies And Their Owner Agree To Pay At Least $7.4 Million To Resolve False Claims Act Allegations (June 15, 2023; U.S. Department of Justice) Three Defendants Plead Guilty In Personal Care Attendant Fraud Cases (June 15, 2023; Massachusetts Attorney General) Attorney General Josh Stein Announces $4.7 Million Health Care Conviction (June 14, 2023; North Carolina Attorney General) Carr: Hart County Man Indicted For Elder Exploitation (June 14, 2023; Georgia Attorney General) Office Of The Attorney General’s Medicaid Fraud Control Unit Sends Owner Of Home Health Company To Prison For 57 Months For $1.4 Million Fraud Scheme (June 13, 2023; Texas Attorney General) Attorney General Alan Wilson Announces Arrest Of Kershaw Co. Man For Exploitation Of A Vulnerable Adult (June 13, 2023; South Carolina Attorney General) TennCare Fraud Investigation Leads To Arrest In Memphis(June 9, 2023; Tennessee Attorney General)

Massive HHS settlements & judgments in 2020 for false and fraudulent claims

The gory details are contained in a report of the Inspector General released this month. Becker's Hospital CFO Report has a summary (emphasis added): 

HHS' watchdog agency, the Office of Inspector General, recovered $3.1 billion in false and fraudulent claims in 2020, according to a July report. 

OIG won or negotiated more than $1.8 billion in judgments and settlements in 2020, which, combined with efforts from previous years, led to 2020's $3.1 billion recovery. Of the $3.1 billion, $2.1 billion was transferred to the Medicare Trust Fund, and $128.2 million in Medicaid funds was transferred to the Treasury. 

A total of 440 people were convicted of healthcare fraud and related crimes in 2020, the OIG said. The Department of Justice opened 1,148 healthcare fraud investigations in 2020, according to the report.

Even after teaching health law (including fraud and abuse) for 33 years, I am still gobsmacked by the amount of thievery and other forms of law-breaking that goes on in the healthcare industry. I am reminded of Willie Sutton's reported response to a reporter's question why he robbed banks: "Because that's where the money is."  The health care sector represents 18% of GDP, more than defense and all levels of education combined. Yep, that's where the money is all right.

 

Grand Jury Declines to Indict Houston Doctor Accused of Stealing COVID Vaccine

As reported by The NY Times, The Associated Press, KHOU-TV, the Houston Chronicle, and Forbes, Dr. Hasan Gokal will not be indicted by the Harris County grand jury on charges that he stole vials of COVID-19 vaccine for family and friends. His defense consisted of the following:

1. The doses were about to be destroyed due to nonuse and aging.
2. It was his duty as a physician -- and one employed by the Harris County health department -- to maximize health and protect life.
3. Allowing the doses to be destroyed would have been a violation of his professional duties and sacred oath.

In short: "In an interview with The Associated Press, Gokal, 48, said when he was confronted with the possibility that a life saving vaccine could be lost, he made the decision to find eligible people late at night who could be given the expiring doses."

Although Harris County Public Health fired Gokal over the incident, the defense worked with the Texas Medical Board, which dismissed charges against him, as well as with a Harris County Court-at-Law Judge, who dismissed the theft charges against him. Prosecutors then turned to the grand jury, which rejected the case on June 30.

I'm searching for the right analogy to capture what was wrong with the prosecutor's case. Is this an "inverse Jean Valjean" situation, where the loaf of bread (vials of vaccine) would have been stolen not to feed Gokal's family (though his wife did get one of the doses) but the family of others? 

It's difficult to criticize Gokal's action if [1] the vaccine was going to be destroyed unless he acted, [2] noöne would be harmed if he did act (so this is not a variation on The Trolley Problem), [3] 9 otherwise at-risk individuals acquired some protection from infection at a time (late December 2020) when COVID-19 was still running rampant, and [4] Gokal himself wasn't responsible for creating the dilemma in the first place.