Fraud, Abuse & Compliance Archives

April 30, 2007

New York's New False Claims Act

Buried in New York's Health and Mental Hygiene Budget Bill for FY2007-08 is the new "New York False Claims Act," appearing in Article XIII, page 133 of the bill signed into law by Governor Spitzer April 9, 2007 as Chapter 58 of the Laws of 2007. The law is effective immediately.

The new law establishes a minimum penalty of $6,000 per claim (maximum of $12,000) for submitting a false or fraudulent claim. It applies not only to Medicaid claims but to

"any request or demand, whether under a contract or otherwise, for money or property which is made to any employee, officer, or agent of the state or a local government, or to any contractor, grantee or other recipient, if the state or a local government provides any portion of the money or property which is requested or demanded or will reimburse such contractor, grantee, or other recipient for any portion of the money or property which is requested or demanded."
The Attorney General has jurisdiction to investigate state false claims, and there are "qui tam" provisions as well that provide financial incentives of up to 30% for false claims whistleblowers.

Interestingly, Governor Spitzer had pushed for both a false claims act and a "Martin Act" to combat health care fraud in his first State of the State address. Yet the False Claims Act was signed and has taken effect with next to no fanfare. Indeed, Attorney General Cuomo's press release accompanying the appointment of Heidi Wendel, which took place eight days after the New York False Claims Act bill was signed, contains no mention of the new state law. This causes one to suspect that the Martin Act provisions are the real centerpiece of the Governor's Medicaid Reform push.

For those wondering, the Martin Act can be found at Article 23-A of the General Business Law, and grants the Attorney General broad investigatory and prosecutorial powers concerning the offering and sale of securities in New York. The Martin Act was the principal platform upon which Eliot Spitzer stood as then-Attorney General in his highly public campaign to "clean up" Wall Street. The Martin Act's sweeping breadth permitted Spitzer to subpoena the e-mails of Merrill Lynch employees who were privately deriding investments that they were currently publicly recommending.

August 8, 2007

AG Recovers $7 Million from NY Medicaid Contractors

Yesterday's New York Times online reports on two Medicaid health plans that have agreed to return about $7 million in duplicate billings.

Two companies that administered health care for New York State Medicaid recipients have agreed to return $7 million that they received through duplicate billings, the state attorney general’s office said yesterday.

. . .

As part of the settlement announced yesterday, one company, Healthfirst PHSP, has reimbursed the state about $6 million for duplicate payments received between July 2000 and November 2006, the attorney general's office said. The payments were for nearly 6,000 individuals who had been assigned more than one identification number. A spokesman for Healthfirst, which is owned by 39 hospitals in New York City and Long Island, said the company had been working with state officials to correct the problem.

. . .

The attorney general said the second company, St. Barnabas Community Health Plan, which was also known as Partners in Health, agreed to reimburse the state for $902,000 in duplicate billings since 2000. The company stopped operations last year.

Read the full article here. The AG's press release is here.

OIG Approves New York State False Claims Act

In a letter dated August 7, 2007, the Office of the Inspector notified New York's Attorney General Andrew Cuomo that the New York False Claims Act meets the requirements of Section 6031(b) of the Deficit Reduction Act. This means that New York will be entitled to receive 60% of any recoveries from someone who has submitted false or fraudulent claims to Medicaid. The New York False Claims Act was passed as part of the recent budget bill and is codified as Article 13 of the State Finance Law.

October 11, 2007

State False Claims Act Regulations

The Officer of the New York State Attorney General has promulgated emergency regulations under the State False Claims Act. The regulations were published in the September 26, 2007 State Register, and were effective when filed with the Department of State on September 10, 2007. According to the Attorney General's office, adoption of ah emergency rule was necessary because "in the absence of a rule, a procedural vacuum exists that is contrary to the public interest" due to the lack of guidance or procedures for investigating potential false claims.

The Attorney General's office intends to use its authority under General Business Law Section 352 (aka the Martin Act) to investigate conduct that it believes violates the State False Claims Act. Under the Martin Act, the Attorney General has the authority to subpoena witnesses and documents. As David Ross, Esq. pointed out in a recent post to the Health Law Section's Listserve, it is questionable whether the Attorney General can use its powers under one statute to enforce another statute. The Martin Act is New York's "blue sky" law. It has a broad scope and has been liberally interpreted by the courts. We will see whether the courts will be willing to further extend its scope to govern false claims submitted to Medicaid.

Continue reading "State False Claims Act Regulations" »

October 17, 2007

Comptroller's Audit Finds Overpayments

According to a OSC press release issued October 16th:

The State Department of Health (DOH) overpaid about 2,000 medical providers an estimated $600,000 for Medicare Part B services, according to an audit released today by State Comptroller Thomas P. DiNapoli. Auditors found that providers double billed the state for Medicare Part B deductibles and identified one provider who submitted fictitious information to receive higher payments.

The Comptroller's press release is available here.

October 26, 2007

WellCare's FL Office Raided by Feds

According to the Miami Herald Online:

Federal authorities searched the headquarters of Florida's largest provider of managed healthcare for the poor Wednesday and trading of its stock was suspended, but nobody would say why the company is being targeted.

More at the MH here.

Continue reading "WellCare's FL Office Raided by Feds" »

December 26, 2007

Medicaid Fraud Recoveries Up in 2007

From today's Albany Times Union:

A year ago, candidates for governor and attorney general promised voters they would crack down on Medicaid fraud to bring back millions of taxpayer dollars that have been wasted by unscrupulous doctors and scam artists.

. . .

Changes the Health Department implemented under Spitzer's administration were largely responsible for a reported $1 billion savings this year in the health care program for the poor.

Read the full article here.

March 24, 2008

OIG Takes Aim at Docs

Today's New York Times online reports:

A long-running federal investigation into the orthopedic device industry's suspected kickback payments to hip and knee surgeons now has the doctors in the spotlight.

Having reached settlements with the five leading makers of artificial joints last year over the payments, the government has been focusing on the many doctors who receive money as the companies’ paid consultants.

"We are going to be looking at those soliciting kickbacks," Lewis Morris, the chief counsel in the federal office that pursues civil complaints of Medicare fraud, told an audience of hundreds of doctors, company representatives and investors this month in San Francisco at the annual meeting of the American Academy of Orthopedic Surgeons.

Read the full story here.

April 15, 2008

OIG Self-Disclosure Protocol

Daniel R. Levinson, the HHS Inspector General, has posted an open letter to health care providers regarding the self-disclosure protocol. The letter discusses what needs to be in the initial submission, stresses the need to respond quickly to OIG requests for additional information, and reiterates that the self-disclosure process should be used when a provider believes the conduct may constitute fraud, and not for mere billing errors. Mr. Levinson also indicates that OIG will not require a provider to enter into a Corporate Integrity Agreement or Certification of Compliance Agreement if it follows the self-disclosure process outlined in the letter.

April 30, 2008

Stark II, Phase III, Rev. 2

CMS is proposing significant changes to the Stark II, Phase III rules that were promulgated last September. The changes are contained in the 2009 Inpatient Prospective Payment System Proposed Rule that was published in the April 30, 2008 Federal Register. Here are some highlights.

CMS is proposing to narrow the application of the new "stand-In-the-shoes" rule. Under one proposal, the stand-in-the-shoes rule would not apply if the only financial arrangement between the physician and the physician organization is a compensation arrangement that meets the employment exception, personal services exception, or fair market value exception. A physician will continue to stand in the shoes of his/her physician organization if the physician is an owner and receives a share of the profits, receives any compensation protected under the in-office ancillary services exception or has a space or equipment rental arrangement with the group. This means the stand-in-the-shoes concept would continue to apply to agreements with a physician group, unless the physician-owners receive only employment compensation from the group.

CMS is seeking comments on whether it should develop a set of exceptions to the stand-in-the-shoes rules for arrangement that do not pose a risk of program or patient abuse. Examples include mission support payments made by an academic medical center and payments within an integrated healthcare system. These arrangements are currently exempt from the stand-in-the-shoes rule.

CMS is also soliciting comments on an entity stand-in-the-shoes rule, which it originally outlined in the 2008 Medicare Physician Fee Schedule Proposed Rule. Under the current proposal, a DHS entity would stand in the shoes of any wholly-owned organization, not just a wholly-owned DHS entity. CMS is considering whether to apply this rule to partially-owned organizations and organizations which are controlled, but not owned, by a DHS entity (e.g., non-for-profit membership corporations).

Because of the overlaps that could occur when applying both the entity stand-in-the-shoes rule and the physician stand-in-the-shoe rule, CMS is developing conventions for determining which order to apply the rule. This will make applying the Stark regulations to a particular situation almost as much fun as settling a conflicts of law issue.

If an arrangement with a particular physician does not satisfy a Stark exception, how long is that physician prohibited from making referrals to the DHS entity? CMS is proposing to amend the regulations to establish three finite periods of disallowance: (i) for relationships that are non-compliant for reasons unrelated to compensation, the date the relationship becomes compliant; (ii) for relationships that are non-compliant due to payment for excess compensation, the date on which the excess compensation, plus applicable interest, is returned; and (iii) for relationships that are non-compliant due to payment of insufficient compensation, the date on which the additional required compensation, plus applicable interest, is paid. Note: the DHS entity can't wait until the period of disallowance has ended to submit claims for prohibited referrals.

Finally, CMS is also soliciting comments on its (currently suspended) disclosure of financial relationship reporting initiative, gainsharing arrangements, and physician-owned implant and other medical device companies.

Comments on these proposals are due June 13, 2008.

May 1, 2008

MFCU Doubles Recoveries in '07

From the AG's website:

Attorney General Andrew M. Cuomo today released the 2007 Annual Report of the New York State Attorney General’s Medicaid Fraud Control Unit (MFCU), which was submitted to the Secretary of the U.S. Department of Health and Human Services.

The report, which details MFCU’s activities and major cases for the past year, includes data regarding the $112.5 million in court-ordered civil damages and criminal restitution the Attorney General’s Office obtained - nearly double the $59.4 million recovered in 2006.

Read the press release here. The 2007 Annual Report is available online from the AG here (PDF format).

July 22, 2008

NY Court of Appeals: Non-clinical Hospital Employees Not Eligible for Enhanced Healthcare Whistleblower Protection

Reddington v. Staten Island Univ. Hosp., No. 112 (Jul. 1, 2008).

Examining the statutory definition of "employee" eligible for protection under the enhanced whistleblower protections of New York Labor Law Section 741, the Court held that the phrase "any person who performs health care services for and under the control and direction of any public or private employer which provides health care services for wages or other remuneration" means employees that actually perform the services.

In the case at hand, the employee's job involved interacting with patients and patient families but was not a clinical position. Section 741, the Court wrote, "is meant to safeguard only those employees who are qualified by virtue of training and/or experience to make knowledgeable judgments as to the quality of patient care, and whose jobs require them to make these judgments."

The full opinion is on the Court of Appeals website here.

July 25, 2008

OIG Issues Advisory Opinion on Physician Investment in an ASC

The OIG posted a new advisory opinion regarding investment in an ambulatory surgery center (ASC) by surgeons and a hospital corporation. The proposed 70/30 physician/hospital joint venture does not meet the ASC safe harbor because ((1) the surgeons are investing in the ASC thru a partnership rather than a direct investment, (2) 4/18 surgeons do not meet the requirement that they derive at least one-third of their income from performing ASC procedures, (3) the hospital corporation is in a position to make or influence referrals to the ASC, and (4) the services provided by the hospital corporation to the ASC do not meet the personal services safe harbor. The OIG concluded, however, that the failure to meet these requirements of the safe harbor did not raise significant risks based on the circumstances of the joint venture and the safeguards put into place by the parties.

September 16, 2008

Staten Island University Hospital Settles Fraud Cases

Crain's New York Business reported yesterday:

In settlements said to be among the largest civil fraud recoveries against a single U.S. health care institution, Staten Island University Hospital agreed to pay a total of nearly $89 million to settle claims that it defrauded Medicare, Medicaid and the military's health insurance programs. Of that, nearly $15 million will go to New York state, and about $74 million will go to the federal government.

Read the full Crain's piece here.

September 25, 2008

OIG Audit of MR Services

The OIG just issued a report on Provider Relationship and the Use of Magnetic Resonance Under the Medicare Physician Fee Schedule.

This study focuses on the provision of the technical component of MR services. It presents data about all MR services and two subgroups of MR services: (1) those ordered by high users of MR and (2) those in which the orderer of the service had a connection to one or more of the parties involved in providing the service (hereafter referred to as connected services).
Connected services were provided differently than services that were not connected. One-quarter of MR services paid under the MPFS in 2005 were connected services, which were associated with high use. Compared to all other services, connected services were more likely to be ordered by orthopedic surgeons. Multispecialty groups performed and were paid for half of connected services, compared to only one-quarter of all other services. The IDTF and diagnostic radiology specialties played a smaller role in connected services compared to all other services. Finally, connected services were more likely than other services to have been billed as technical component only, to have had payment reassigned, and to have been billed through a provider other than a radiologist.
The complexity and limited transparency with which these services are provided warrants continued attention to ensure that services are reasonable, necessary, and compliant with Medicare statutes and regulations.

November 5, 2008

Changes in Stark Regulations: Stand in the Shoes

The 2009 Hospital Inpatient Prospective Payment System Final Rule published on August 19, 2008 (pp. 48688-48745) makes some significant changes to the Stark regulations. I will be discussing these changes in this and later posts.

CMS has narrowed the “stand in the shoes” provisions, while providing flexibility to use the concept to qualify an arrangement for a direct compensation exception if so desired. Under the current regulations, a physician who is an owner of or employed by a group practice stands in the shoes of his/her group so that if the group has a financial relationship with an entity that furnishes designated health services, so does the physician. Under the new regulations, a physician will only stand in the shoes of the physician organization if the physician has an ownership or investment interest in the physician organization. Physician employees of the group do not stand in the shoes of the group. This change went into effect on October 1, 2008.

There is a carve-out. A physician who has a “titular ownership or investment interest” in the group does not stand in the shoes of the group. A titular ownership or investment interest is one that excludes the ability or right to receive the financial benefits of ownership or investment, including the distribution of profits, dividends, proceeds of sale or similar returns on investment. A so-called “captive PC” arrangement would be considered titular ownership.

Parties to arrangement may elect to treat a non-owner or titular-owner physician as standing in the shoes of the physician organization to qualify it under a direct compensation arrangement. This option is available when the designated health entity does not want to rely on the assurances of a physician organization regarding its financial relationships in determining whether the arrangement qualifies as an indirect compensation arrangement or meets the indirect compensation exception.

November 12, 2008

FDA Warns Public of Extortion Scam by FDA Impersonators

Public awareness note: FDA news today reports that FDA is warning consumers about a fraudulent scheme to extort money from consumers by callers who falsely identify themselves as 'FDA special agents' or other FDA officials. (1) Several instances have been reported to the FDA of calls enticing consumers to purchase discounted prescription drugs by wiring funds to one of several locations in the Dominican Republic. No medications are ever delivered. A subsequent call is received from a fraudulent 'FDA special agent' informing the consumer that a fine of several thousand dollars is required to be sent to an address in the Dominican Republic to prevent incarceration or other legal action. Michael Chappell, the FDA's acting associate commissioner for regulatory affairs advises:

The public should note that no FDA official will ever contact a consumer by phone demanding money or any other form of payment. FDA officials always present identification in person when conducting official business.

FDA is investigating and complaints or information regarding this scheme should be reported to the FDA Office of Criminal Investigations at (800) 521-5783.
FDA reminds consumers to purchase prescription drugs only from licensed pharmacies located in the United States. Information about the proper purchase of on-line medicine can be found at:
Link via (1) to read the full story.

December 8, 2008

Stark IV Regulations

The 2009 Hospital Inpatient Prospective Payment System Final Rule published on August 19, 2008 (pp. 48688-48745) makes some significant changes to the Stark regulations. A previous post discussed the changes to the stand-in-the-shoes regulations. This post discusses the new provisions in 42 CFR § 411.353(c) that provide guidance on defining the period of disallowance when referrals are prohibited due to a financial relationship between an entity and a physician that does not meet an exception.

Under these new provisions, if the noncompliance is unrelated to compensation, the financial relationship is brought into compliance on the date the relationship satisfies all requirements of an applicable exception. If the noncompliance is due to the payment of excess compensation, all excess compensation must be returned to end the period of disallowance. If noncompliance results from the payment of insufficient compensation, then all additional required compensation must be paid. Under this interpretation of the Stark law, a physician may not refer a Medicare patient to a hospital for a designated health service if the physician failed to pay additional rent owed to the hospital under a lease agreement until such additional rent was paid, even if the lease agreement had expired and the physician had vacated the space.

CMS will allow a compensation arrangement to meet an exception if the only missing element is a signature of one or more of the parties to an agreement that otherwise satisfies the requirements of the applicable exception and the signature is later obtained. If the failure to comply with the signature requirement was inadvertent, the parties have ninety (90) days from the date on which the arrangement became non-compliant to obtain the missing signature. If the failure to comply was not inadvertent, but knowing, the parties must obtain the required signature within thirty (30) calendar days following the date on which the compensation arrangement became noncompliant. Under other Medicare statutes, knowing means not only actual knowledge, but also reckless disregard or deliberate ignorance.

March 13, 2009

OMIG Self-disclosure Guidelines

OMIG has just issued in final the new voluntary self-disclosure guidance, which can be located here.

Hat tip: Ellen Weissman, via the Health Law Listserve

July 22, 2009

DOJ Announces Record Medicaid False Claims Recovery from New York State

From a US Department of Justice press release:

WASHINGTON - - The state of New York and New York City have agreed to pay $540 million to settle allegations that they knowingly submitted, or caused to be submitted, false claims for reimbursement for school-based health care services, primarily speech therapy and transportation, provided to Medicaid eligible children from 1990 to 2001, the Justice Department announced today. The settlement is a record federal recovery by the Justice Department for the Medicaid Program.

Read the rest here.

August 7, 2009

AHLA Publishes Stark White Paper

The American Health Lawyers Association, Public Interest Committee has published a new white paper: A Public Policy Discussion: Taking the Measure of the Stark Law. The Committee sponsored a Convener Session earlier this year to provide a forum for discussing whether the Stark Law works and what changes could be made to improve it. Here are some highlights of the report:

- The benefits of the Stark Law include encouraging the development of corporate compliance programs and discouraging physician ownership of ancillary service providers, such as free-standing imaging centers, that are more likely to lead to abuse.

- The Stark Law has a number of problems. The structure of the law (broad prohibition with statutory and regulatory exceptions) has resulted in a regulatory scheme that is overly complex, impedes changes in health care delivery and payment, and creates an unlevel playing field and unclear boundaries.

- Non-compliance with the law is inevitable, even by the most well-intentioned providers. Technical violations can trigger huge penalties, which has only been exacerbated by the recent amendments to the False Claims Act (FCA) permitting a claim based on the failure to return overpayments, such as payments for services provided pursuant to a prohibited referral.

- Enforcement of the Stark Law has been almost exclusively through the FCA. CMS has not actively sought to recoup payments made pursuant to prohibited referrals and has not established a process for providers to self disclose Stark problems. If a provider were to disclose a Stark problem to CMS, the agency has no authority to compromise the amount of the overpayment. The OIG self-disclosure protocol is not available to disclose Stark problems, unless the conduct also implicates the anti-kickback statute.

- The participants ideas for improvement include reversing the law's premise so that it prohibits only specific types of financial relationships, adding an intent requirement, limiting the types of prohibited relationships to ownership interests or compensation arrangements that vary with the volume or value of referrals, and giving CMS broader rulemaking discretion to enact less complicated exceptions. Specific suggestions include eliminating the signature requirement, written agreement requirement and the exceptions to exceptions.

- With respect to enforcement, participants suggested having a separate set of sanctions for technical violations, which should not give rise to FCA liability, giving CMS the authority to disallow a claim as opposed to prohibiting the provider from billing, and giving CMS the authority to compromise claims. CMS should also establish a Stark self-disclosure protocol.

Overall, the report confirms what many of us have known for a long time. The Stark law is too complex and could result in unfair and disproportionate penalties. It may take one bad case to make it a better law. I hope it isn't any of my clients.

September 28, 2009

More Arrests in AG Fraud Investigation

From the Attorney General's website September 23, 2009:

Attorney General Andrew M. Cuomo today announced the arrest of eight individuals, seven of whom are hospital employees charged with receiving bribes in exchange for confidential patient information. The information was then allegedly used by others to lure patients into receiving unnecessary treatment and then submit over a million dollars in phony personal injury claims to insurance carriers.

Read the AG's press release here. These arrests add to the previous investigation that led to 21 indictments back in July.

October 31, 2009

OMIG Posts Compliance Certification Form

OMIG has posted the certification form that providers must submit under the new compliance plan regulations (18 NYCRR Part 521). As of July 1, 2009, hospitals, home care providers, psychiatric hospitals, OMRDD facilities and providers that order, provide, bill, or claim $500,000 or more from the Medicaid program must establish an effective compliance program. The certification must be submitted by December 31 and certifies compliance with the regulations from the period December 1 to November 30, 2010. Presumably, the person signing the certification statement is certifying that the facility has adopted an effective compliance plan as of the date of the statement, and is not making any representation regarding future compliance.

Who should sign the certification?

The OMIG strongly encourages that someone from senior management (other than the compliance officer) or a member of the governing authority sign the certification as an indication that the provider's compliance efforts and responsibilities extend beyond the compliance officer.

November 13, 2009

Medicaid Fraud Ringleader Williams Gets Three to Nine, Plus Restitution

From the Attorney General's press center:

Attorney General Andrew M. Cuomo today announced the sentencing of the mastermind behind a massive Medicaid fraud scheme on Long Island. David Williams, an owner of a now-defunct Long Island medical supply company, was sentenced to three to nine years in prison for stealing over $1 million from Medicaid. In addition to incarceration, David Williams is also responsible for paying restitution of over $1.1 million to reimburse the Medicaid program.

The press release provides additional detail.

January 26, 2010

New NYLJ Article: "Prohibited Business Practices By Clinical Laboratories"

Section Member Frank Serbaroli, with the New York office of Greenberg Traurig, writes a regular "Expert Analysis" column for the New York Law Journal. The latest article, "Prohibited Business Practices By Clinical Laboratories," appears in the January 26, 2010 edition:

This column reviews a New York law that has been in effect for more than 40 years, and that applies to all clinical laboratories licensed by the State of New York, no matter where the lab is physically located. Clinical laboratories and referring providers that are unaware of this law, or ignore it, do so at considerable risk. Known formally as the Laboratory Business Practices Act (LBPA), the law is found in New York Public Health Law §§585-588.

Link to the reprint posted on the Greenberg Traurig website.

February 22, 2010

New York Municipalities Survive Pharma's Summary Judgment Motion in Medicaid Reimbursement Case

From the Globe Newswire February 5:

The Honorable Patti Saris of the United States District Court for the District of Massachusetts granted the City of New York and New York Counties' motion for summary judgment against 11 pharmaceutical manufacturers in In Re: Pharmaceutical Industry Wholesale Price Litigation on January 27th. The decision states that the defendants violated New York Social Services Law Section 145-b by knowingly reporting fictitious prices on which Medicaid reimbursements were based.

Read the rest of the press release at the GlobeNewswire website.

March 3, 2010

Brookhaven Settles Medicare Fraud Charges

According to a PRNewswire, Brookhaven has settled a Medicare fraud matter that stretches back to 2005:

Brookhaven Memorial Hospital Medical Center, a Long Island, N.Y.-based hospital, has agreed to pay $2.92 million, plus interest, to settle allegations that the hospital defrauded Medicare, the Justice Department announced today.

The government alleged that the hospital fraudulently inflated its charges to Medicare patients to obtain enhanced reimbursement from the federal health care program.

More details are available in the release.

April 13, 2010

NYAG Recovers $283 Million in 2009 With 148 Criminal Fraud Convictions

From the Attorney General's website 4/12:

Attorney General Andrew M. Cuomo today announced that his Medicaid Fraud Control Unit (MFCU) obtained a record 148 criminal convictions across New York and recovered over $283 million in 2009. The information is detailed in his office’s Annual Report submitted today to the Secretary of the U.S. Department of Health and Human Services. The entire report can be found at

The AG's press release may be accessed on the AG's website, or link to the report using the live link in the blockquote above.

NYAG Recovers $283 Million in 2009 With 148 Criminal Fraud Convictions

From the Attorney General's website 4/12:

Attorney General Andrew M. Cuomo today announced that his Medicaid Fraud Control Unit (MFCU) obtained a record 148 criminal convictions across New York and recovered over $283 million in 2009. The information is detailed in his office's Annual Report submitted today to the Secretary of the U.S. Department of Health and Human Services. The entire report can be found at

The AG's press release may be accessed on the AG's website, or link to the report using the live link in the blockquote above.

April 14, 2010

NY Hospital Clerk Arrested For Identity Theft

Online today at the Albany Times-Union website:

A medical records clerk from St. Peter’s Hospital was arrested on charges of stealing patients’ personal information and using it to open credit card accounts, police said, and more unknowing victims could be out there.

Albany County Sheriff’s deputies arrested Johnathan Harwood, 23, of Van Buren Avenue, on Monday for opening credit accounts using stolen Social Security numbers and then purchasing merchandise over the Internet. Police said Hardwood was also using the computers at the hospital to purchase items online.

Read the rest of the article at the TimesUnion website.

April 27, 2010

Mt. Sinai, Presby Targeted in Federal Probe

From today's Wall Street Journal online:

Federal prosecutors are investigating allegations that bid rigging and fraud at Mount Sinai Medical Center and New York-Presbyterian Hospital resulted in the hospitals awarding contracts worth tens of millions of dollars to outside contractors.

Purchasing officials at the hospitals, two of the city's largest and most prestigious, are alleged to have gotten more than a million dollars in payments from companies that were then given lucrative contracts to perform work such as re-insulating pipes and removing asbestos, according to documents filed in the Southern District of New York.

Read the rest at the WSJ website.

April 29, 2010

Trouble Deepens at Presby, Hospital Officials Indicted

The Wall Street Journal and HealthLeaders Media both report on federal indictments handed down yesterday in the ongoing probe into bidding practices at New York-Presbyterian Hospital.

From HealthLeaders:

A federal grand jury has indicted two former hospital executives for their alleged roles in a bid-rigging conspiracy at New York Presbyterian Hospital, the Department of Justice announced.

The four-count indictment, handed up Tuesday in U.S. District Court in New York City, charges Emilio "Tony" Figueroa, a former director of facilities operations at NYPH, and Santo Saglimbeni, a former vice president of facilities operations at NYPH, with mail fraud and wire fraud.

Also indicted on the same charges were Michael Yaron and two companies owned by him, Cambridge Environmental & Construction Corp., which does business as National Environmental Associates, an asbestos abatement company, and Oxford Construction & Development Corp.; and Moshe Buchnik, president of two asbestos abatement companies. A third company, Artech Corp., owned by a relative of Saglimbeni, was also named in the indictment.

Read the rest of the HealthLeaders article or the Wall Street Journal clip, which is somewhat shorter.

May 15, 2010

New website, blog:HealthReform.Gov; Annual Report on Fed. Activities to Reduce Health Care Fraud

From 5/14/2010 HHS news release - HHS and DOJ Officials highlighted the new tools in the Affordable Care Act that will help fight fraud, strengthen consumer rights and protect taxpayer dollars.(1) The annual Health Care Fraud and Abuse Control Program (HCFAC) Report (2) released by both Departments showed that innovative strategies to protect consumers helped prevent fraud and recover billions of dollars for taxpayers in 2009.

In addition to strengthening law enforcement capabilities, the new law also will help shift the emphasis from the old model of pay and chase to a new model that puts a premium on fraud prevention and program integrity.
The Report states that during Fiscal Year 2009, the Fed. Gov't won or negotiated approx. $1.63 billion in judgments and settlements and it attained additional administrative impositions in health care fraud cases and proceedings. The Medicare Trust Fund rec’d transfers of approx. $2.51 billion during this period as a result of these efforts, as well as those of preceding years, in addition to over $441 million in Fed. Medicaid money similarly transferred separately to the Treasury as a result of these efforts. The HCFAC account has returned over $15.6 billion to the Medicare Trust Fund since the inception of the HCFAC Program in 1997. Among the Program’s health care fraud and abuse enforcement accomplishments described in the Report, (pp 15-16) Fraud by Pharmaceutical Manufacturers include 7 enforcement summaries. Certain defendants’ agreed:
-- to pay $2.3 billion, the largest health care fraud settlement in the history of the DOJ and HHS/OIG, to resolve criminal and civil liability arising from the illegal promotion of certain pharmaceutical products,
--to pay approx. $1.4 billion in a global criminal , civil and administrative settlement to resolve allegations of illegal marketing of a drug,
-- to pay $97.5 million plus interest to settle allegations of kickbacks,
-- to pay a total of $28 million in a Medicaid fraud settlement to resolve civil liabilities related to false pricing of certain intravenous drugs and blood products,
--to pay $1.3 million to settle allegations of overbilling Medicaid.
-- and paid $95.5 million under False Claims Act allegations regarding secret discounts,
--and paid $1.4 million to resolve allegations of marketing devices not approved by FDA.
Fraud enforcement actions against pharmacies (5 actions), labs (2) include a defendant who admitted to operating Internet Web Sites which advertised brand name prescription drugs imported from China and Mexico that were falsely labeled, not approved, not obtained from licensed pharma. manufacturers and not sold in compliance with FDA regs. HHS Sec’y Sibelieus posts more on the subject on HealthReform.Gov blog.(3)
(4) new health reform law includes a series of authorities and responsibilities for the Department of Health and Human Services. The law also calls on the Department to publish information regarding these new authorities. Information regarding the new law, the Department’s role and links to the Affordable Care Act, and the Healthcare and Education Reconciliation Act. Visit the website at HealthReform.Gov

June 7, 2010

AG Nets $5.7 Million, Arrests Four in Medicaid Fraud Scheme

From the AG website June 2, 2010:

Attorney General Andrew M. Cuomo today announced the arrest and indictment of four individuals and three corporations for stealing over $5.7 million through a Medicaid fraud scheme run out of dental clinics in Brooklyn, Queens, and the Bronx.

Read the rest of the press release on the AG's website.

August 17, 2010

Governor Signs "Ian's Law", others

Governor Paterson has signed a bill, Ian's Law, that addresses the discontinuance of a class of health insurance policies when such action is based on claims experience or a health status-related factor. Although such an action is prohibited by current law, the new law strenghtens notice and enforcement provisions and creates a new process to provide certain insureds relief when they are negatively affected by a discontinuance, even when such action is entirely proper. Senator Schneiderman, the lead Senate sponsor of the bill and current attorney general candidate, achieved national press coverage on the issue.

Paterson also signed a bill making changes to the False Claims Act that will give OMIG increased jurisdiction and another allowing direct admission into "Enhanced Assisted Living Residences" - fixing what was largely seen as a technical flaw in the original 2005 Assisted Living Reform Act.

The Governor's press release indicating all bills recently acted upon is here

August 18, 2010

Comptroller Highlights Medicaid Overspend

Reported on the AP wire today:

An audit shows Medicaid overspent $40 million for excessive teeth cleanings and oral exams over five years, including payments to one dentist who charged the government for 79 oral exams for one patient.

Read the rest of the AP release for more details.

October 14, 2010

DOJ Busts Largest Medicare Fraud Ring Ever

From the New York Times online October 13, 2010:

An Armenian-American crime syndicate stole the identities of doctors and thousands of patients and used them and more than a hundred spurious clinics in 25 states to bill Medicare for more than $100 million for treatments no doctor ever performed and no patient ever received, the federal authorities announced on Wednesday.

Prosecutors said the case represented the largest Medicare fraud operation ever carried out by a single group that resulted in criminal charges. The group succeeded in stealing $35 million in Medicare reimbursements, officials said, before the charges were leveled and arrests were made on Wednesday.

Read the article on the New York Times website.

November 8, 2010

Medical Student Education is Part of Plan for Fighting Health Care Fraud

At a health care fraud prevention summit in Brooklyn on November 5, U.S. Attorney General Eric Holder and Department of Health and Human Services Secretary Kathleen Sebelius discussed the Obama administration's efforts to combat health care fraud and abuse. Among the topics of discussion was an Internet-based program to explain the federal fraud and abuse laws to medical students, "so they can comply with federal law, avoid liability and spot signs of potential fraud" when they become practicing physicians. Read more about the summit and find links to the medical student training program here.

December 16, 2010

Drug regulation and investments in it-the Matrixx case

The ‘Questions’ presented in the Supreme Court case Matrixx Initiatives, Inc. et al petitioners v. James Siracusano, et al (No. 09-1156) vary among the documents filed in the case, illustrating the complexity of 21st century drug regulation and investments in it. Especially helpful in framing the questions and developing the arguments, the US Amicus Curiae brief supports respondents. In the Brief, the DOJ/SEC ask the question as follows: …whether, in order to state a Section 10(b) claim based on Matrixx’s failure to disclose information regarding the possible association between the use of Zicam and anosmia (loss of the sense of smell), respondents were required to allege evidence of a ‘statistically significant’ association. The Brief states by quoting that ‘ a fundamental purpose of the Exchange Act was to substitute a philosophy of full disclosure for the philosophy of caveat emptor.’ They argue under section A. 1 that respondents have adequately pleaded that petitioner’s public statements contained material omissions and they acted with scienter--that information suggesting that a drug causes an adverse effect may be ‘material’ to investors even absent statistical significance, noting further that information suggesting a possible link between a drug and an adverse effect may alter the behavior of consumers , regulators, and potential product – liability plaintiffs, even absent statistically significant evidence of causation..’ pp 11-25 (1)
Of related interest and in a broader context, the ‘why’ of AER’s and ADE’s is highlighted in the FDA’s Strategic Plan on the Evolving Role of FDA Risk Communication (2009 document). The 21st century challenges FDA describes are well worth reading in entirety, but below are excerpts that begin to frame the big picture. (2 )
(1) (linked from SCOTUS- follow the Matrixx case link, note: oral arguments Jan 10 2011)

Continue reading "Drug regulation and investments in it-the Matrixx case" »

December 22, 2010

Drug price reporting practices

From the US DOJ's Office of Public Affairs (1), 12/20/10, (excerpts)-
-A pharmaceutical manufacturer agreed to pay $280 million to settle False Claims Act allegations resolving claims by the United States that the defendants engaged in a scheme to report false and inflated prices for numerous pharmaceutical products, knowing that federal health care programs relied on those reported prices to set payment rates. The actual sales prices for their products were far less than what they reported.
-This is the fourth such settlement with pharmaceutical manufacturers that the DOJ has announced this month.
-The Justice Department's total recoveries in False Claims Act cases since January 2009 now approach $6.8 billion.
-This settlement highlights the OIG's decade-long commitment to protecting against artificially inflated drug prices. Our analyses of drug price reporting practices, including the use of Average Wholesale Price, have consistently identified excessive Medicare and Medicaid payments resulting from these practices, said Daniel R. Levinson, Inspector General, HHS.

October 10, 2010

New NYLJ Article: "Decision Strikes Medicaid Extrapolation, Upholds Strict Recordkeeping"

Section Member Frank Serbaroli, with the New York office of Greenberg Traurig, writes a regular "Expert Analysis" column for the New York Law Journal. The latest article, "Decision Strikes Medicaid Extrapolation, Upholds Strict Recordkeeping," appears in the September 28, 2010 edition of the Journal:

A recent decision by an administrative law judge (ALJ) for New York State's Department of Health has dealt a setback to the Office of Medicaid Inspector General (OMIG) and its use of "extrapolation" of claims sampling in calculating Medicaid repayment demands. The decision has been widely circulated in the provider community, where it was received with considerable satisfaction. But the case is not so simple . . .

For the full article, link to the reprint posted on Greenberg Traurig's website.

December 5, 2010

New NYLJ Article: "Medicaid Recovery Audit Contractors Coming Soon"

Section Member Frank Serbaroli, with the New York office of Greenberg Traurig, writes a regular "Expert Analysis" column for the New York Law Journal. The latest article, "Medicaid Recovery Audit Contractors Coming Soon," appears in the November 29, 2010 edition of the Journal:

Fraud has been a long-standing problem in New York's Medicaid program, and in those of many large states. The task of rooting out and preventing fraud and abuse in New York's Medicaid program was at one time primarily the responsibility of the New York State Department of Health, which administers Medicaid, and the Attorney General's Medicaid Fraud Control Unit (MFCU).

Several years ago, the Legislature created the Office of Medicaid Inspector General (OMIG) to fight Medicaid fraud via audits, investigations, program reviews, data-gathering and datamining, and developing recommendations to the state on methods of preventing fraud. Under the Federal-State Health Reform Partnership (F-SHRP) Agreement with New York, OMIG has the task of recovering at least $1.6 billion in Medicaid funds over four years, and seems on track to meet or exceed that goal.

For the full article, link to the reprint posted on Greenberg Traurig's website.

February 11, 2011

New NYLJ Article: "Feds Taking Aim At In-House Lawyers, Executives"

Section Member Frank Serbaroli, with the New York office of Greenberg Traurig, writes a regular "Expert Analysis" column for the New York Law Journal. The latest article, "Feds Taking Aim At In-House Lawyers, Executives," appears in the February 2, 2011 edition of the Journal:

Federal prosecutors, apparently frustrated that unprecedented fines and penalties and burdensome corporate integrity agreements are proving to be insufficient deterrents, now appear determined to bring criminal cases against corporate executives in the health care industry, including in-house lawyers and chief compliance officers, using the responsible corporate officer doctrine. The government's intent is evident in recent pronouncements, and in the culmination of a case where the general counsel and two senior executives of a pharmaceutical company were not only criminally convicted, but subsequently excluded from all government health benefit programs.

For the full article, link to the reprint posted on Greenberg Traurig's website.

May 31, 2011

Jail Time for HIPAA Violator

Today's HealthLeaders Media has an article on a recent HIPAA sentencing:

A federal judge has sentenced a man to six years in prison for his role in a prescription fraud scheme that included crimes of healthcare fraud, aggravated identity theft and violations of HIPAA, the U.S. Attorney's office in Alabama announced Wednesday.

Read the rest of the article on the HealthLeaders website, or click the "criminal charges" tag below to see other posts on Supraspinatus that concern HIPAA and jail time.

June 21, 2011

State's top Medicaid-fraud cop asked to resign | Crain's New York Business

Today's Crain's New York carries an article on the impending resignation of NY Medicaid Inspector General Jim Sheehan:

New York's hard-charging Medicaid Inspector General Jim Sheehan has been told to resign within 30 days. Mr. Sheehan got the news Tuesday. The official announcement is expected to be made by the office of Gov. Andrew Cuomo.

Read the full article on Crain's website.

July 27, 2011

NY Pharmacists Busted for $3 Million Medicare Fraud

CBS news reported yesterday:

Two New York State pharmacists were arrested Tuesday for allegedly defrauding Medicare of more than $3 million after billing the federal government for prescriptions they never filled.
Read the full article (with video!) on the CBS website.

August 11, 2011

Medicaid Parts Ways With Espada's Soundview

Medicaid has terminated the participation of Soundview, with whom New York Senator Pedro Espada, Jr. was affiliated, on the heels of an OMIG notice of proposed agency action.

The New York State Department of Health today terminated the Comprehensive Community Development Corporation, also known as Soundview, from the Medicaid program effective September 12, 2011. After that date, the Corporation will not be eligible for reimbursement for services rendered to Medicaid recipients.

In a letter to the Constance Bruno, Chairman of the Board, the Department cited that the Corporation failed to have a Compliance Plan as required by state statute and regulation. . . .

The letter also noted that the Corporation's Medicaid service delivery is managed by two individuals who were excluded from participation in the New York State Medicaid program earlier this year by the Office of the Medicaid Inspector General. These individuals are Pedro Espada, Director of Environmental Care; and Pedro Espada, Jr., President and Chief Executive Officer.

The Department's actions were taken following release today by the Office of the Medicaid Inspector General of a notice of proposed agency action recommending that New York State exclude Soundview from the Medicaid program. The OMIG's notice is based on significant failures in the Corporation's business operations and lack of controls to ensure compliance with state and federal billing and operational requirements.

Read the entire press release on the Department of Health's website, including the letter to Constance Bruno.

September 23, 2011

HHS Releases Final Medicaid Recovery Audit Program Rules

The US Department of Health and Human Services released a final rule under the Affordable Care Act implementing the Medicaid Recovery Audit Program. The following is from the rule summary in the unpublished release of the rule:

This final rule implements section 6411 of the Patient Protection and Affordable Care Act (the Affordable Care Act), and provides guidance to States related to Federal/State funding of State start-up, operation and maintenance costs of Medicaid Recovery Audit Contractors (Medicaid RACs) and the payment methodology for State payments to Medicaid RACs. This rule also directs States to assure that adequate appeal processes are in place for providers to dispute adverse determinations made by Medicaid RACs. Lastly, the rule directs States to coordinate with other contractors and entities auditing Medicaid providers and with State and Federal law enforcement agencies.

Read the complete version of the release here.

October 14, 2011

New York Downtown Hospital agrees to pay $13.4 million in Medicaid payment scheme -

From the New York Post online October 10:

New York Downtown Hospital has agreed to cough up $13.4 million to settle charges of participating in a massive Medicaid drug- treatment scam -- after being accused of operating a shady, unlicensed inpatient detox program that gave kickbacks for patient referrals, The Post has learned.

Federal prosecutors and the state Attorney General's Office accused Downtown Hospital and other medical facilities of illegally recycling hundreds of patients for profit through their detox units and billing Medicaid.

Read the rest of the Post article online.

November 1, 2011

New York Settles Medicaid Fraud Suit for $70 Million -

From the New York Times website today:

New York City will pay the federal government $70 million to settle a lawsuit that accused the city of overbilling Medicaid by improperly approving home care for frail and elderly clients, both parties said on Monday.

In the settlement, the city acknowledged that for a decade, from 2000 to 2010, it had re-authorized personal care for certain patients without having physically obtained the required assessments from doctors, nurses or social workers. The city also admitted that it sometimes did not get "independent medical reviews," as required when there was a dispute over the amount of care needed.

Read the full article at the New York Times website.

November 3, 2011

12 Are Charged in Medicare Fraud Schemes Said to Cost $95 Million -

From the New York Times "City Room":

Federal agents swarmed several medical clinics and homes in New York City on Wednesday, arresting 10 people on charges of running Medicare fraud schemes that bilked the government out of $95 million, federal officials said.

Read the rest here.

January 6, 2012

Study of Medicare Patients Finds Most Hospital Errors Unreported -

Hospital adverse events are woefully underreported, if a new inspector general report covered in today's New York Times is to be believed:

Hospital employees recognize and report only one out of seven errors, accidents and other events that harm Medicare patients while they are hospitalized, federal investigators say in a new report.

Read the full article on the New York Times website.

March 19, 2012

New Medicaid Inspector General Supports Less 'Adversarial' Audits -

From today's New York times:

"Medicaid is to New York what corn is to Iowa," [Jim Sheehan] said.

Read the full article on the New York Times website.

December 17, 2014

SUNY Foundation to Pay $4 Million for Falsifying Medicaid Data

From John O'Brien at

An agency tied to the State University of New York has agreed to pay the federal government $3.75 million to settle claims that its employees doctored audits to hide the number of ineligible people receiving Medicaid benefits.

Federal prosecutors accused the Research Foundation of SUNY of falsifying its audits of how efficiently the state was running its Medicaid program between October 2007 and September 2008.

Read the full article on the website.

February 26, 2015

An Interesting Take on AKS Referrals

Here's a clip from a National Law Review article from Tuesday, February 17:

On Feb.10, 2015, the U.S. Court of Appeals for the Seventh Circuit expanded the definition of "referral" under the Anti-Kickback Statute (AKS) by holding that a referral under the AKS is found when a provider authorizes a patient for specialist treatment even if the provider does not recommend a certain specialist.

Read the full article here.

May 18, 2015

Westchester Medical Center Settles Anti-Kickback and Stark Claims for $18+ Million

Preet Bharara, US Attorney for the Southern District of New York, announced the settlement Thursday by way of a press release.

Preet Bharara, the United States Attorney for the Southern District of New York, Scott J. Lampert, Special Agent in Charge of the U.S. Department of Health and Human Services, Office of Inspector General's ("HHS-OIG") New York Region, and Diego Rodriguez, the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation ("FBI"), announced today that the United States has settled civil fraud claims under the False Claims Act against WESTCHESTER COUNTY HEALTH CARE CORPORATION d/b/a WESTCHESTER MEDICAL CENTER ("WMC") related to WMC's alleged violations of the Anti-Kickback Statute and the Stark Law and submission of costs reports to Medicare seeking reimbursement for charges WMC did not incur. In connection with the settlement, which was approved by U.S. District Judge Lewis A. Kaplan on May 14, 2015, the defendant agreed to pay a total of $18,800,000 to resolve its liabilities, and made admissions as to its conduct.

Read the full press release, including details regarding the relationships that were found to be problematic, here.

June 4, 2015

OCR Confirms Launch of Phase II HIPAA Audits

According to a May 18 article in the National Law Review, covered entities have reported receiving notices of the Phase II audits, which were supposed to have begun last year.

The audits begin with surveys, which are going out to between 500 and 800 entities, from which OCR will select 350 covered entities to participate in audits. Most of the audits will be desk audits, but many will be comprehensive on-site audits.

Red the full article in the National Law Journal here.

About Fraud, Abuse & Compliance

This page contains an archive of all entries posted to HEALTH LAW SECTION BLOG in the Fraud, Abuse & Compliance category. They are listed from oldest to newest.

Consumer/Patient Rights is the previous category.

Health Care Providers is the next category.

Many more can be found on the main index page or by looking through the archives.