A Cleveland Clinic-owned hospital system in Akron, Ohio, is paying the federal government $21.3 million to settle claims it illegally billed the Medicare program.
Akron General Health System allegedly overpaid physicians well above market value for referring physicians to the system, violating the Anti-Kickback Statute and Physician Self-Referral Law, and then billed Medicare for the improperly referred business, violating the False Claims Act, between August 2010 and March 2016.
Along with an AGHS whistleblower,the Cleveland Clinic Foundation, which acquired the system at the end of 2015, voluntarily disclosed to the federal government its concerns with the compensation arrangements, which were enacted by AGHS’ prior leadership, the Department of Justice said Friday.
The Anti-Kickback Statute forbids providers from paying for or otherwise soliciting other parties to get them to refer patients covered by federal programs like Medicare, while the Physician Self-Referral Law, otherwise known as the Stark Law, prohibits a hospital from billing for those services.Despite the laws and a bevy of other regulations resulting in a barrage of DOJ lawsuits and been a thorn in the side of providers for decades, fraud is still rampant in healthcare.
“Physicians must make referrals and other medical decisions based on what is best for patients, not to serve profit-boosting business arrangements,” HHS Office of Inspector General Special Agent in Charge Lamont Pugh said in a statement on the AGHS settlement.
Cleveland Clinic struck a deal with AGHS in 2014, agreeing to pay $100 million for minority ownership in the system. The agreement gave the clinic the option to fully acquire AGHS after a year, which it exercised as soon as that period expired in August 2015.
The settlement stems from a whistleblower suit brought by AGHS’s former Director of Internal Audit Beverly Brouse, who will receive a portion of the settlement, the DOJ said. The False Claims Act allows whistleblowers to share in the proceeds of a suit.
As fraud has increased in healthcare over the past decade — the DOJ reported 247 new matters for potential investigation in 2000, 427 in 2010 and 505 in 2019 — the federal government has renewed its efforts to crack down on illegal schemes. That’s resulted in the formation of groups like the Medicare Fraud Strike Force in 2007 and the Opioid Fraud and Abuse Detection Unit in 2017, which has in turn resulted in the DOJ recovering huge sums in stings, settlements and guilty verdicts.
Some of the biggest settlements reach into the hundreds of millions, and involve billions in false claims.
In 2018, DOJ charged more than 600 people for falsely billing federal programs more than $2 billion; last year federal agencies charged almost 350 people for submitting more than $6 billion in false claims. That last case led to creation of a rapid response strike force to investigate fraud involving major providers in multiple geographies.
Other large settlements include Walgreens’ $270 million fine in 2019 to settle lawsuits accusing the pharmacy giant of improperly billing Medicare and Medicaid for drug reimbursements; hospital operator UHS’ $122 million settlement last summer finalizing a fraudulent billing case with the DOJ after being accused of fraudulently billing Medicare and Medicaid for services at its behavioral healthcare facilities; and West Virginia’s oldest hospital, nonprofit Wheeling Hospital, agreeing in September to pay $50 million to settle allegations it systematically violated the laws against physician kickbacks, improper referrals and false billing.
EHR vendor eClinicalWorks paid $155 million to settle False Claims Act allegations around misrepresentation of software capabilities in 2017, while Florida-based EHR vendor Greenway Health was hit with a $57.3 million fine in 2019 to to settle allegations the vendor caused users to submit false claims to the EHR Incentives Program.
Vaccine passports could become available soon to help people resume their lives — but they face numerous scientific, social and political barriers to being accepted.
The big picture: Reliable and accessible proof of vaccine-induced protection from the novel coronavirus could speed international travel and economic reopening, but obstacles to its wide-scale adoption are so great it may never fully arrive.
Driving the news:The secure digital identity app CLEAR and CommonPass, a health app that lets users access vaccination records and COVID-19 test results, will be working together to offer a vaccine passport service, my Axios colleague Erica Pandey reports.
The news comes as a growing number of countries and companies are talking up plans to introduce similar vaccine passports that could help the protected return to normal life and travel as soon as possible.
“To restart the economy, to save certain industries, I think you need a solution like this,” Eric Piscini, a vice president at IBM who oversaw the development of the company’s new health passport app, told the New York Times.
Yes, but: There are numerous health, ethical and operational questions that need to be resolved before vaccine passports could become an effective part of daily life.
Health: Medical experts still don’t fully know how effective vaccinations — or exposure to the virus — are at preventing onward transmission of COVID-19.
While the CDC is set to soon release new guidance around social activity for fully vaccinated people, current recommendations still call for them to keep wearing masks and practicing social distancing.
Until it’s clear that vaccination effectively prevents transmission, there’s a limit to how useful any vaccine passport can be for public health — especially if emerging variants render some vaccines less protective.
“The utility of a vaccine passport is only as good as the evidence of how long the immunity lasts,” David Salisbury, an associate fellow at think tank Chatham House, told Bloomberg. “You could find yourself with a stamp in your passport that lasts longer than the antibodies in your blood.”
Ethical: The most obvious use case for vaccine passports is for international travel, which has been crippled by onerous quarantine restrictions. But such a system risks locking out billions of people who are unable or unwilling to get the vaccine.
A bigger ethical concern is the many people in developing countries who may not get access to vaccines of any sort for months or even years while rich nations hoard supplies.
And if vaccine passports are used not just for international travel but to allow people to work and engage in social life domestically, they could create cripplingly unequal barriers that might paradoxically reinforce vaccine hesitancy.
Operational: Passports for international travel are regulated by governments and have decades of history behind them, but there’s no such unified system for vaccine passports, which are being introduced by governments and businesses with different standards, making them a target for fraud.
The U.S. in particular has a decentralized medical system that can make it difficult for people to easily access their health care records, especially if they lack digital literacy.
“I can pretty much 100% guarantee that fraud is going to occur,” says Jane Lee, a trust and safety architect at the cybersecurity company Sift. “We will have a lot of bad actors where they pretend to offer a service that will provide some sort of vaccination passport, but it’s really a phishing campaign.”
Be smart: None of these obstacles are insurmountable on their own. But as we saw with the failures of digital contact tracing, just because a technological solution exists doesn’t mean it will be effective or adopted by the public.
“There’s a huge motivation to make this work socially,” says Kevin Trilli, chief product officer at Onfido, an identification verification company. “But there’s a lot of governmental issues that are going to really make the system difficult to implement.”
There’s a time pressure at work here as well, especially in the U.S, where vaccination rates have picked up. The more people who are vaccinated, the less value there will be in creating a complex system to sift the protected from the unprotected.
The bottom line: Some form of vaccine visas will likely be introduced for international travel, but it seems unlikely they’ll become a passport to resuming normal life.
The CEO of a chain of medical clinics in Michigan and Ohio was sentenced March 3 to 15 years in prison and ordered to pay $51 million in restitution for his role in a $150 million healthcare fraud scheme, according to the U.S. Justice Department.
Mashiyat Rashid was sentenced after pleading guilty in 2018 to money laundering and conspiracy to commit healthcare fraud and wire fraud. Twenty other defendants, including 12 physicians, have been convicted for their involvement in the scheme.
Mr. Rashid, who served as CEO of Tri-County Wellness Group from 2008 to 2016, developed and approved a corporate policy to administer unnecessary back injections to patients in exchange for prescriptions of over 6.6 million doses of medically unnecessary opioids, according to the Justice Department.
Many patients experienced pain from the unnecessary injections, and some developed adverse conditions, including open holes in their backs, according to testimony at Mr. Rashid’s trial. Physicians at the clinics denied patients, including those addicted to opioids, medication until they agreed to get the injections, according to court documents.
According to evidence presented at trial, Mr. Rashid only hired physicians who were willing to administer the unnecessary injections in exchange for a split of the Medicare reimbursements for the procedures. Tri-County Wellness Group was paid more for facet joint injections than any other medical clinic in the U.S., according to the Justice Department.
Proceeds of the fraud were used to fund private jets and to buy luxury cars, real estate and tickets to NBA games, prosecutors said. Mr. Rashid was ordered to forfeit to the U.S. government $11.5 million in proceeds traceable to the healthcare fraud scheme, including commercial and residential real estate and Detroit Pistons season tickets.
The CEO of a group of Texas-based hospice and home health companies was sentenced Feb. 3 to 15 years in prison for his role in a $150 million healthcare fraud and money laundering scheme, according to the Department of Justice.
Henry McInnis was sentenced more than a year after he was convicted of conspiracy to commit healthcare fraud, conspiracy to commit money laundering, obstruction of justice and healthcare fraud.
From 2009 to 2018, Mr. McInnis and others submitted more than $150 million in false and fraudulent claims for healthcare services. The claims were submitted through Merida Group, a hospice company with dozens of locations in Texas.
Mr. McInnis was CEO of Merida. He had no medical training but acted as the director of nursing for the company. He also enforced a companywide practice of falsifying medical records to conceal the scheme and ordered employees to change medical records to make it appear patients were terminally ill.
Mr. McInnis also paid bribes to physicians to certify unqualified patients for home health and hospice.
Mr. McInnis was sentenced less than two months after the owner of Merida Group, Rodney Mesquias, was sentenced to 20 years in prison and ordered to pay $120 million in restitution.
The owner of two pharmacies and a management company in Florida pleaded guilty Jan. 25 to his role in a $931 million healthcare fraud scheme. He is the seventh defendant to plead guilty in the scheme, according to the U.S. Justice Department.
Larry Smith pleaded guilty to conspiracy to commit healthcare fraud, and his sentencing is set for Oct. 25. In his written plea agreement, Mr. Smith admitted to conspiring with others to defraud pharmacy benefit managers into paying for fraudulent prescriptions. As part of the plea agreement, Mr. Smith agreed to pay restitution of $24.9 million and forfeit approximately $3.1 million.
An indictment charged Mr. Smith and others with a nationwide conspiracy to defraud pharmacy benefit managers by submitting $931.4 million in bills for fraudulent prescriptions purchased from a telemarketing company. After improperly soliciting patient information, the marketing companies received approvals through telemedicine prescribers then sold the prescriptions to pharmacies in exchange for kickbacks, said Derrick Jackson, special agent in charge at HHS’ Office of Inspector General in Atlanta.
In September 2018, HealthRight, a telemedicine company, and its CEO Scott Roix pleaded guilty to conspiracy to commit healthcare fraud for their roles in the scheme. They agreed to pay $5 million in restitution. Mr. Roix’s sentencing is scheduled for Oct. 25.
Mihir Taneja, Arun Kapoor, Maikel Bolos and Sterling-Knight Pharmaceuticals also pleaded guilty in December 2020, according to the Justice Department.
At the last minute, President Donald Trump granted pardons to several individuals convicted in huge Medicare swindles that prosecutors alleged often harmed or endangered elderly and infirm patients while fleecing taxpayers.
“These aren’t just technical financial crimes. These were major, major crimes,” said Louis Saccoccio, chief executive officer of the National Health Care Anti-Fraud Association, an advocacy group.
The list of some 200 Trump pardons or commutations, most issued as he vacated the White House this week, included at least seven doctors or health care entrepreneurs who ran discredited health care enterprises, from nursing homes to pain clinics. One is a former doctor and California hospital owner embroiled in a massive workers’ compensation kickback scheme that prosecutors alleged prompted more than 14,000 dubious spinal surgeries. Another was in prison after prosecutors accused him of ripping off more than $1 billion from Medicare and Medicaid through nursing homes and other senior care facilities, among the largest frauds in U.S. history.
“All of us are shaking our heads with these insurance fraud criminals just walking free,” said Matthew Smith, executive director of the Coalition Against Insurance Fraud. The White House argued all deserved a second chance. One man was said to have devoted himself to prayer, while another planned to resume charity work or other community service. Others won clemency at the request of prominent Republican ex-attorneys general or others who argued their crimes were victimless or said critical errors by prosecutors had led to improper convictions.
Trump commuted the sentence of former nursing home magnate Philip Esformes in late December. He was serving a 20-year sentence for bilking $1 billion from Medicare and Medicaid. An FBI agent called him “a man driven by almost unbounded greed.” Prosecutors said that Esformes used proceeds from his crimes to make a series of “extravagant purchases, including luxury automobiles and a $360,000 watch.”
Esformes also bribed the basketball coach at the University of Pennsylvania “in exchange for his assistance in gaining admission for his son into the university,” according to prosecutors.
Fraud investigators had cheered the conviction. In 2019, the National Health Care Anti-Fraud Association gave its annual award to the team responsible for making the case. Saccoccio said that such cases are complex and that investigators sometimes spend years and put their “heart and soul” into them. “They get a conviction and then they see this happen. It has to be somewhat demoralizing.”
Tim McCormack, a Maine lawyer who represented a whistleblower in a 2007 kickback case involving Esformes, said these cases “are not just about stealing money.”
“This is about betraying their duty to their patients. This is about using their vulnerable, sick and trusting patients as an ATM to line their already rich pockets,” he said. He added: “These pardons send the message that if you are rich and connected and powerful enough, then you are above the law.”
The Trump White House saw things much differently.
“While in prison, Mr. Esformes, who is 52, has been devoted to prayer and repentance and is in declining health,” the White House pardon statement said.
The White House said the action was backed by former Attorneys General Edwin Meese and Michael Mukasey, while Ken Starr, one of Trump’s lawyers in his first impeachment trial, filed briefs in support of his appeal claiming prosecutorial misconduct related to violating attorney-client privilege.
Trump also commuted the sentence of Salomon Melgen, a Florida eye doctor who had served four years in federal prison for fraud. That case also ensnared U.S. Sen. Robert Menendez (D-N.J.), who was acquitted in the case and helped seek the action for his friend, according to the White House.
Prosecutors had accused Melgen of endangering patients with needless injections to treat macular degeneration and other unnecessary medical care, describing his actions as “truly horrific” and “barbaric and inhumane,” according to a court filing.
Melgen “not only defrauded the Medicare program of tens of millions of dollars, but he abused his patients — who were elderly, infirm, and often disabled — in the process,” prosecutors wrote.
These treatments “involved sticking needles in their eyes, burning their retinas with a laser, and injecting dyes into their bloodstream.”
Prosecutors said the scheme raked in “a staggering amount of money.” Between 2008 and 2013, Medicare paid the solo practitioner about $100 million. He took in an additional $10 million from Medicaid, the government health care program for low-income people, $62 million from private insurance, and approximately $3 million in patients’ payments, prosecutors said.
In commuting Melgen’s sentence, Trump cited support from Menendez and U.S. Rep. Mario Diaz-Balart (R-Fla.). “Numerous patients and friends testify to his generosity in treating all patients, especially those unable to pay or unable to afford healthcare insurance,” the statement said.
In a statement, Melgen, 66, thanked Trump and said his decision ended “a serious miscarriage of justice.”
“Throughout this ordeal, I have come to realize the very deep flaws in our justice system and how people are at the complete mercy of prosecutors and judges. As of today, I am committed to fighting for unjustly incarcerated people,” Melgen said. He denied harming any patients.
Faustino Bernadett, a former California anesthesiologist and hospital owner, received a full pardon. He had been sentenced to 15 months in prison in connection with a scheme that paid kickbacks to doctors for admitting patients to Pacific Hospital of Long Beach for spinal surgery and other treatments.
“As a physician himself, defendant knew that exchanging thousands of dollars in kickbacks in return for spinal surgery services was illegal and unethical,” prosecutors wrote.
Many of the spinal surgery patients “were injured workers covered by workers’ compensation insurance. Those patient-victims were often blue-collar workers who were especially vulnerable as a result of their injuries,” according to prosecutors.
The White House said the conviction “was the only major blemish” on the doctor’s record. While Bernadett failed to report the kickback scheme, “he was not part of the underlying scheme itself,” according to the White House.
The White House also said Bernadett was involved in numerous charitable activities, including “helping protect his community from COVID-19.” “President Trump determined that it is in the interests of justice and Dr. Bernadett’s community that he may continue his volunteer and charitable work,” the White House statement read.
Others who received pardons or commutations included Sholam Weiss, who was said to have been issued the longest sentence ever for a white collar crime — 835 years.“Mr. Weiss was convicted of racketeering, wire fraud, money laundering, and obstruction of justice, for which he has already served over 18 years and paid substantial restitution. He is 66 years old and suffers from chronic health conditions,” according to the White House.
John Davis, the former CEO of Comprehensive Pain Specialists, the Tennessee-based chain of pain management clinics, had spent four months in prison. Federal prosecutors charged Davis with accepting more than $750,000 in illegal bribes and kickbacks in a scheme that billed Medicare $4.6 million for durable medical equipment.
Trump’s pardon statement cited support from country singer Luke Bryan, said to be a friend of Davis’.
“Notably, no one suffered financially as a result of his crime and he has no other criminal record,” the White House statement reads.
“Prior to his conviction, Mr. Davis was well known in his community as an active supporter of local charities. He is described as hardworking and deeply committed to his family and country. Mr. Davis and his wife have been married for 15 years, and he is the father of three young children.”
CPS was the subject of a November 2017 investigation by KHN that scrutinized its Medicare billings for urine drug testing. Medicare paid the company at least $11 million for urine screenings and related tests in 2014, when five of CPS’ medical professionals stood among the nation’s top such Medicare billers.
The indictment describes an inside job involving Beaumont employees who sold stolen sponges, adhesives and instruments used to inspect eyes and ears. The equipment included cystoscopes, a thin tube with a camera that is inserted through the urethra and into the bladder.
“Some of the medical devices stolen and re-sold over the Internet were possibly contaminated devices that were previously used in various surgical and other medical procedures on patients,” according to the indictment.
The three individuals charged in the indictment are:
Paul Purdy, 49, of Bellbrook, Ohio
Valdet Seferovic, 32, of Auburn Hills
Zafar Khan, 40, of Fenton
Purdy and Seferovic not respond to messages seeking comment Thursday while Harold Gurewitz, a lawyer for Khan, declined comment. The three defendants are scheduled to make initial appearances Jan. 21 in federal court.
“These defendants used their employment status to circumvent the safety protocols established by Beaumont Hospital to profit from the theft of medical devices and put the health and safety of the general public at risk in doing so,” U.S. Attorney Matthew Schneider said in a statement.
The wire fraud and conspiracy charges listed in the 18-count indictment are punishable by up to 20 years in federal prison.
Beaumont officials have cooperated fully with the investigation, health system spokesman Mark Geary wrote in an email to The Detroit News.
“This kind of theft does a disservice to more than just Beaumont — it does a disservice to the community,” Geary wrote. “We have confidence in the legal process and trust a just result will be achieved.”
Purdy and Seferovic were friends who worked at Beaumont and had access to storage areas inside one of the system’s hospitals, prosecutors alleged. The duo gained access to medical supplies and devices, according to the government, and devised a plan to steal the equipment and sell the items throughout the U.S.
Purdy, who worked for Beaumont until resigning in 2017, never told buyers the items were stolen, prosecutors said. After he quit, Purdy recruited Seferovic to continue stealing items from the medical supply, cleaning and disinfecting rooms, according to prosecutors.
“Medical devices that are removed from their rightful place in a hospital or other medical setting put patients’ health at risk by denying them access to needed diagnostic imaging and treatment,” Lynda Burdelik, special agent in charge of the U.S. Food and Drug Administration’s Criminal Investigations field office in Chicago, said in a statement.
Purdy paid Seferovic for stolen items via PayPal and resold the devices on eBay and Amazon, according to the government. On March 28, 2018, the indictment alleges Purdy received a $4,800 wire payment from the sale of two cystoscopes.
That same day, Seferovic received a $2,550 payment via PayPal, according to the government.
In fall 2017, Seferovic also agreed to steal and sell medical devices and supplies to Khan, who owns Wholesale Medical & Surgical Suppliers of America, LLC in Flint, according to the indictment.
Seferovic would transfer stolen supplies to Khan during meetings in metro Detroit, including at a Walmart parking lot, according to the indictment. Khan, in turn, would sell the supplies and devices online at below retail price.
Seferovic’s job duties and status was unclear Thursday.
The investigation and alleged crimes have prompted internal changes at Beaumont.
“…Beaumont has enhanced security protocols and implemented additional checks and balances across the organization to reduce the chances of something like this happening again,” Geary said.
A Florida healthcare executive is appealing $43 million in financial penalties after President Donald Trump commuted his 20-year prison sentence in December, according to law.com.
Philip Esformes, who operated a chain of skilled nursing facilities and assisted living facilities in Florida, was sentenced Sep. 12 to 20 years in prison. The sentencing came roughly five months after a 12-person jury found him guilty of more than 20 charges, including paying and receiving kickbacks, money laundering and bribery. He was convicted after an eight-week trial for his role in a $1.3 billion Medicare and Medicaid fraud case.
President Trump in late December commuted Mr. Esformes’ prison sentence. The communication left other aspects of his sentence intact, including restitution.
Mr. Esformes still must forfeit $38 million and owes about $5 million in restitution, according to McKnight’s Senior Living. In the appeal of the financial penalties, lawyers cite the federal government’s “inability to show a single instance of fraudulent billing,” according to the report.
The owner of an Atlanta-based home healthcare provider was sentenced to five years and three months in prison for defrauding Medicaid out of nearly $1 million, the U.S. Justice Department said Dec. 2.
Diandra Bankhead, owner and operator of Elite Homecare, admitted to submitting thousands of claims for services that were never provided to children in the Georgia Pediatric Program between September 2015 and April 2018. Children who are eligible for services under the program typically suffer from physical and cognitive disabilities.
Ms. Bankhead and Elite Homecare submitted more than 5,400 claims to Georgia Medicaid, receiving $1.2 million in reimbursement. About $1 million was determined to be fraudulent, prosecutors said.
Prosecutors said Ms. Bankhead defrauded Medicaid in several ways, including submitting fraudulent credentialing information to become a Georgia Pediatric Program provider, submitting claims for in-home nursing services provided to families who had not hired Elite and submitting claims in which employees provided more than 24 hours of services in a day.
“It is outrageous that Bankhead profited off children who suffered from significant physical and cognitive disabilities,” said U.S. Attorney Byung Pak. “For years her scheme exploited Medicaid-eligible children and their families by billing for services never performed and for children never seen, diverting critical resources from those who needed them most.”
Ms. Bankhead pleaded guilty in federal court to one count of healthcare fraud in August 2019. She was also ordered to pay $999,999 in restitution.
A company that owned and operated more than 30 urgent care centers has agreed to pay $12.5 million to resolve overbilling allegations, the Department of Justice announced Sept. 3.
UCXtra Umbrella, which did business in Arizona as Urgent Care Extra, previously admitted to engaging in healthcare fraud and monetary transactions derived from unlawful activity. The company admitted that it had billing procedures in place that caused its providers to overstate the complexity of the medical services provided to patients. This resulted in falsely inflated reimbursement rates from health insurance companies, according to the Justice Department.
The company also admitted that staff were encouraged to order tests and procedures that may not have been medically necessary to justify higher billing codes and reimbursement.
Health insurance companies overpaid the company by an estimated $12.5 million due to the fraud scheme, according to the Justice Department.