Battling Medicare Fraud:
Ting v. 21st Century Oncology

What reward is available to Medicare fraud whistleblowers?

To encourage whistleblowers to file lawsuits that expose fraud against Medicare and other government programs, the FCA awards such “relators” up to 30% of any money the government recovers as a result of their litigation.

What is Medicare, anyway? How does Medicare fraud typically work?

Medicare is a government health insurance program for (a) people aged 65 years or above; (b) people below 65 years of age living with certain disabilities; and (c) people of all ages with end-stage renal disease. It includes hospital insurance, medical insurance, and prescription drug coverage.

In the simplest terms, Medicare fraud occurs when healthcare providers bill the government for services or supplies that have not been provided. Such fraud is rampant, costing taxpayers hundreds of billions of dollars each year, according to some estimates.

What are some common fraudulent practices?

If you work in a hospital or medical practice, you may have witnessed one or more of the following illegal activities:

• Billing for services not delivered, a.k.a. phantom billing: Billing fraud is one of the most common types of Medicare fraud. Examples include X-rays and blood tests that were never taken; home healthcare hours never provided; billing for full dental plates when only partial dentures were supplied; and services that were supposedly rendered to patients who already had left the facility — or even had died.
• Falsification of patient records: Medical providers may falsify patient records, examinations, and tests to “prove” the necessity of gratuitous surgeries, drug regimens, or treatments. They may convince patients that they are suffering from a potentially life-threatening condition requiring immediate medical attention.
• Unbundling: This refers to billing separately for services that should actually be combined into one billing. Medicare sets reimbursement rates for certain groups of procedures that should be performed together. Medical providers may unbundle the procedures and bill each component of the group separately to increase profits.
• Double billing: As the name implies, double billing refers to an attempt by the medical provider to bill the patient, Medicare, or a private insurance company more than once for the same treatment.
• Kickback fraud: In a quid pro quo agreement, laboratories and pharmaceutical companies may offer kickbacks in the form of money, products, or gifts to medical providers in exchange for referrals. For instance, a pharmaceutical company may bribe doctors or clinics to prescribe its products to patients. A laboratory may offer a commission for every patient the doctor or clinic sends for blood tests or stool cultures.
• Physician self-referrals: Federal law prohibits physicians from referring patients to facilities where the physician or an immediate family member has a financial interest. Services covered by this statute include clinical laboratory services; home health services; physical and occupational therapy services; radiology and imaging services; and inpatient and outpatient hospital services.
• Upcoding: The term ‘upcoding’ refers to exaggerating the service that was rendered to a patient. In this case, providers bill for a more expensive service than what was actually delivered. A simple instance of upcoding is billing for an hour-long visit for a seemingly complex medical case when, in fact, the patient’s visit lasted only ten minutes and involved a simple condition like the flu or common cold.
• Falsification of cost reports: Providers may include personal expenses in their Medicare claims under the guise of actual expenses incurred in the delivery of services to patients. For instance, nursing home operators may add the costs of renovating their own homes in their annual resident care cost reports to Medicare.
• Off-label marketing of pharmaceuticals: The FDA approves drugs after testing for safety and effectiveness. The approval is only for the specific use for which it has been tested. Pharmaceutical companies that market or promote a drug for a use not approved by the FDA have been held to violate the federal False Claims Act.

What laws govern Medicare fraud and abuse?

Both federal and state statutes may apply to Medicare fraud, which may be treated as both a criminal and a civil matter. The most prominent federal laws that may create liability include:

• False Claims Act: The civil FCA safeguards the government from being sold or overcharged for items or services. Filing false or fraudulent payment claims to Medicare can attract fines of up to three times the loss incurred by the program. A particular intent to defraud is not necessary in this case; recklessness, ignorance, and actual knowledge are viewed in the same way. The criminal FCA, meanwhile, imposes fines and imprisonment for submitting false claims.
• Anti-Kickback Statute: Paying for referrals is a crime as far as federal healthcare programs are concerned. The Anti-Kickback Statute forbids paying any form of remuneration to reward patient referrals; here “remuneration” includes cash, meals, hotel stays, rent, and excessive compensation. Entities that offer the kickbacks and those who receive them are both held liable under the statute. Punitive actions include prison time, fines and terminating participation from federal healthcare programs. Federal law also levies civil monetary penalties on physicians who try to influence Medicare beneficiaries to engage their services by offering them remuneration. It is not necessary to prove financial loss to the program or patient harm to demonstrate the violation of the Anti-Kickback Statute.
• Exclusion Statute: Under this statute, entities and individuals convicted of certain criminal offenses are excluded from participating in all federal healthcare programs. The offenses include (a) Medicaid or Medicare fraud, and other offenses involving delivery of services or items under Medicare or Medicaid; (b) patient neglect or abuse; (c) felony convictions for theft, fraud or other financial misconduct related to healthcare; (d) felony convictions for unlawfully manufacturing, distributing, prescribing or dispensing controlled substances. Excluded physicians cannot bill directly for rendering treatment to Medicare beneficiaries; neither can they bill their services indirectly through a group practice or an employer.
• Stark Law: The Physician Self-Referral Law, commonly known as the Stark Law, forbids physicians from making referrals for certain Designated  Health Services to an entity in which the physician or an immediate family member has an investment or ownership interest or with which he/she has a compensation arrangement. Penalties for violating the statute include fines and exclusion from participating in all federal healthcare programs.
• Civil Monetary Penalties (CMPs). These may apply to a variety of conduct, and based on the type of violation, different penalty amounts may be imposed. The penalties range from $10,000 to $50,000 per violation. Some examples of CMP violations include presenting a claim for a product/service not provided, violating the Anti-Kickback statute, and presenting a claim for a product/service for which payment may not be made.

How do I report Medicare fraud?

Anyone can report fraud directly to the U.S. government by going to StopMedicareFraud.gov, a joint Web site of the Department of Justice and the Department of Health and Human Services. Alternatively, you can call 1-800-447-8477. These avenues are valid for reporting any kind of Medicare fraud, including fraud by individual Medicare recipients.

If you have direct evidence of a large, ongoing fraud, you may become eligible for a substantial reward by filing a whistleblower lawsuit on behalf of the government under the False Claims Act. To qualify as a Medicare whistleblower, you must be the original source of information not known to the government or public. You should have no part in planning, initiating or participating in the fraud being reported. Medicare fraud cases can be quite complex. Changing laws and regulations concerning Medicare further complicate issues. The legal services of a whistleblower attorney can be invaluable in building a successful healthcare fraud case.