Here is a summary of Department of Justice (“DOJ”) and Office of Inspector General (“OIG”) Press Releases from May 23, 2022 to July 1, 2022:

• OIG – May 23, 2022 – On May 23, 2022, Joseph D. Gigante, M.D. entered into a settlement agreement with the OIG in which he agreed to pay $87,210 and be excluded for eight years. The settlement resolves allegations that Dr. Gigante received remuneration from a telemedicine company related to purported telemedicine and diagnostic consultations. The OIG contends that Dr. Gigante solicited and received the remuneration in exchange for ordering DME for which Medicare paid.
• DOJ – May 26, 2022 – The DOJ amended a federal complaint in a lab testing fraud case by adding six Texas physicians. According to the complaint, the six physicians received thousands of dollars in kickbacks in return for referrals of lab testing. The complaint alleges that True Health Diagnostics, LLC (“THD”) and Boston Heart Diagnostics Corporation (“BHD”) conspired with small Texas hospitals to pay physicians to induce referrals to the hospitals for lab testing, that was then performed by THD or BHD. The hospitals allegedly paid a portion of their lab profits to recruiters who, in turn, paid money to the referring physicians. According to the complaint, the recruiters set up management service organizations (“MSOs”) to make payments to referring physicians in which such payments were disguised as investment returns but were actually based on, and offered in exchange for, the physicians’ referrals. The DOJ’s amended complaint was filed in connection with a prior whistleblower lawsuit. The United States intervened and is proceeding against multiple defendants under the False Claims Act (“FCA”).
• DOJ – June 2, 2022 – Kateline Lavache, M.D. (Hampton, GA) was indicted for allegedly prescribing medically unnecessary DME for Medicare beneficiaries in exchange for kickbacks from co-conspirators. Dr. Lavache allegedly prescribed DME without conducting proper consultations with the beneficiaries. It is alleged that Dr. Lavache had no prior relationship with the beneficiaries, was not treating them, and failed to even conduct telemedicine consultations with them. Dr. Lavache is charged with one count of conspiracy to commit health care fraud and wire fraud, as well as four counts of health care fraud. If convicted, she faces up to 20 years in prison for the conspiracy count and up to 10 years in prison for each health care fraud count.
• OIG – June 10, 2022 – On June 10, 2022, Maria G. McIntire, M.D. (Illinois) entered into a $162,690 settlement agreement with the OIG. The settlement agreement resolves allegations that Dr. McIntire received remuneration from telemedicine companies in the form of monetary payments related to purported telemedicine and diagnostic consultations. The OIG contends that Dr. McIntire solicited and received the remuneration in exchange for ordering DME paid for by Medicare.
• DOJ – June 10, 2022 – After a week-long trial, Joe David May, M.D. (an Arkansas physician) was found guilty for his involvement in a kickback conspiracy. It took the jury three hours of deliberation to convict Dr. May. The indictment alleges that Dr. May signed off on illegitimate prescriptions for pain cream in order to trigger a payout from TRICARE. A pharmacy promoter paid recruiters to find TRICARE beneficiaries and then paid others to persuade physicians, including Dr. May, to rubber stamp prescriptions for TRICARE beneficiaries. The statutory penalties for Dr. May’s convictions are (i) wire fraud, mail fraud, and falsifying records, not more than 20 years imprisonment; (ii) violation of the federal anti-kickback statute, not more than 10 years imprisonment; and (iii) conspiracy and making false statements, not more than five years imprisonment.
• DOJ – June 16, 2022 – Marc Sporn (Florida) was sentenced to 14 years in prison for health care and wire fraud that cost Medicare more than $20 million. Sporn owned and operated several telemarketing and telemedicine companies. Sporn allegedly used his companies to market medically unnecessary genetic tests to Medicare beneficiaries, and to sell prescriptions for medically unnecessary genetic tests to labs in exchange for kickbacks. The labs would use the prescriptions to bill Medicare for medically unnecessary goods and services.
• DOJ – June 21, 2022 – Patrick C. Finney, M.D. (Kentucky) has agreed to pay $561,800 to resolve allegations that he violated the FCA. The government’s complaint alleged that Dr. Finney caused to be submitted more than $3 million in false claims by: (i) entering into financial arrangements with Barton Associates, a locum tenens physician staffing firm, to provide telehealth services for clients of Barton Associates, related to the referral of Medicare patients for the furnishing of DME and genetic testing items and services and ordering or arranging for the ordering of DME and genetic testing items and services; (ii) receiving illegal remuneration from Barton Associates and its telehealth clients in exchange for referring Medicare patients and ordering or arranging for the ordering of DME and genetic testing items and services; and (iii) causing to be billed to Medicare false claims for DME and genetic testing, because the claims were tainted by kickbacks and were not medically necessary, as he did not engage in the treatment of the Medicare beneficiaries, had no physician-patient relationship  with the beneficiaries, often did not speak with the beneficiaries, and knew his prescribed goods and services were not medically necessary.
• DOJ – June 23, 2022 – Sudipta Mazumder, M.D. (North Carolina) was indicted for her role in a DME scheme that defrauded Medicare out of $11 million. According to the indictment, Dr. Mazumder worked as an independent contractor for a telemedicine company. Dr. Mazumder allegedly signed fraudulent orders for medically unnecessary back and knee braces. Allegedly, Dr. Mazumder had little to no interaction with the beneficiaries and made no medical determination whether the braces were medically necessary or the beneficiaries need the braces. Dr. Mazumder allegedly received from the telemedicine company unsigned orders for braces, which she signed and returned to the telemedicine company in exchange for $20 for each purported assessment that she performed.
• DOJ – June 28, 2022 – 15 Texas physicians have agreed to (i) pay $2.83 million to resolve FCA allegations arising out of violations of the federal anti-kickback statute (“AKS”) and the federal physician self-referral statute (“Stark”) and (ii) cooperate with the DOJ in its pursuit of other individuals. The settlement resolves allegations that the 15 physicians violated the AKS and Stark by receiving money in remuneration from nine MSOs in exchange for ordering lab tests from Rockdale Hospital dba Little River Healthcare (“Little River”), True Health Diagnostics, LLC (“True Health”) and/or Boston Heart Diagnostics Corporation (“Boston Heart”). Little River allegedly funded payments to certain physicians, in the form of volume-based commissions paid to independent contractor recruiters, who used MSOs to pay physicians for referrals. The MSO payments to the physicians were allegedly disguised as investment returns but, in fact, were based on (and offered in exchange for) the physicians’ referrals.
• DOJ – June 30, 2022 – Justin Segrest (North Carolina), a Nurse Practitioner, pleaded guilty to a conspiracy charge for his role in a DME scheme that defrauded Medicare of almost $15 million. According to the plea documents, Segrest worked for a telemedicine company. In doing so, he allegedly caused thousands of claims to be submitted to Medicare for medically unnecessary braces and other DME. Segrest signed false medical records describing purported “assessments” of Medicare beneficiaries and certifying that he had performed corresponding medical examinations when, in fact, he had no interaction with the beneficiaries and made no medical determination whether the devices were medically necessary or the beneficiaries needed the DME. Segrest received from the telemedicine company unsigned orders for orthopedic braces for the beneficiaries, which he signed and returned to the telemedicine company in exchange for $15 for each purported assessment that he performed.
• DOJ – July 1, 2022 – Reliance Medical Systems, LLC (Utah), a distributor of spinal implant devices, its owners and two of their physician-owned distributors (“PODs”), have agreed to pay $1 million to resolve a lawsuit alleging that they violated the FCA by paying physicians to use Reliance medical devices in spinal surgeries. The DOJ’s lawsuit alleged that the defendants operated PODs that, in reality, were vehicles for the payment of kickbacks to use Reliance’s medical devices in their surgeries. The DOJ contended that the PODs paid physicians based on referrals, made false statements to health care providers, and terminated physicians who did not refer a sufficient number of patients.

There are a number of important lessons to be derived from these press releases:

• Google “Jay Leno Hugh Grant Interview” – The younger readers of this article will have no idea what this means. The older readers will know exactly what this means. In reviewing the above 11 stories, it is easy to ask: “What were they thinking?” If our brain tells us one thing and our stomach tells us something else, we need to ignore our brain and trust our stomach. Humans have the capacity to intellectually rationalize dishonest decisions…but our stomach never lies.
• Making Quick Money/Making a Lot of Money – Whenever a DME supplier is presented with the opportunity to make quick money or to make substantially more money than the supplier has made in the past, there is a high likelihood that the opportunity is “Fool’s Gold” and will eventually blow up in the supplier’s face.

• Be Wary of Marketers/Lead Generation Companies (“LGCs”)/Telehealth Companies – Our experience is that DME suppliers, pharmacies, physicians and other providers get sucked into trouble by non-health care providers such as marketers, LGCs and telehealth companies. These non-providers contact providers for one purpose…and one purpose only: they want to reach their hand into the stream of money that flows to providers. The marketers/LGCs/telehealth companies do not have much to lose. For example, they are not required to have degrees, or licenses, or numbers/permits, or certifications, or accreditation, etc. You get the idea. The health care providers that jump into bed with marketers/LGCs/telehealth companies have everything to lose. If there is a government investigation or a recoupment action, the primary target will be the health care provider, not the non-provider. Marketers/LGCs/telehealth companies have been the driving force in promoting (i) diabetic testing supplies, (ii) seat lifts, (iii) compounded pain creams, and (iv) back and knee braces. And today, software vendors and other non-providers are a driving force in motivating physicians to enter into the remote physiological monitoring (“RPM”) space. The bottom line is that a DME supplier needs to be wary of any marketer/LGC/telehealth company that approaches the supplier.
• Many Roads Lead to the FCA – Most DME suppliers understand that if they submit a claim for equipment not delivered, or if they submit a claim for Product A but delivered Product B, then such claim constitutes a “false claim.” But what many suppliers do not know is that if a claim arises out of an arrangement that violates the AKS, Stark, the beneficiary inducement statute, or the telephone solicitation statute, then the claim becomes a “false claim.”

• And This is Where Whistleblowers Come In – If a DME supplier is doing something it should not be doing, someone knows about it. That “someone” is normally an employee or ex-employee. Hopefully, the employee will address the problem with the supplier’s compliance department…and the compliance department will resolve the problem as the law requires. But the employee may hire an attorney who specializes in bringing whistleblower (or “qui tam” lawsuits) against providers/suppliers. In the lawsuit, the whistleblower becomes a “Relator.” The lawsuit is in the name of the Relator “and in the name of the United States.” The whistleblower suit is based on the FCA. The allegations in the lawsuit are that the DME supplier conducted activities that violate one of the above-mentioned statutes and that the resulting claims are “false claims.” Whistleblower lawsuits are civil, not criminal. However, many criminal cases arise from whistleblower lawsuits.

• Criminal Case – Resolve it Quickly – If a DME supplier finds itself the target of a criminal investigation, it needs to proactively work with the Department of Justice (“DOJ”) to resolve the case as quickly as possible. If the planets align just right, the criminal case will transition to a civil settlement. If the supplier is unable to convince the DOJ to reach a civil settlement, then the supplier should work with the DOJ to come up with a plea that, while unpleasant, the supplier can live with. It is much easier for a DME supplier to reach a plea agreement (that the supplier can live with) before an indictment is handed down. The punishment resulting from an agreed criminal plea will normally be much lighter than the punishment handed down after a jury conviction. The odds of being convicted in a federal criminal trial for health care fraud are extremely high. And so only in extraordinary circumstances should the DME supplier proceed to trial.

• Civil Case – Resolve it Quickly – The penalties under the FCA are massive. If a DME supplier goes to trial in defending a civil whistleblower lawsuit in which the DOJ has intervened (i.e., has taken the lawsuit over), and if the supplier loses, the judgment will be way more than what the supplier can pay. Unless the supplier is sure that it has good facts…and has the law on its side…then at the outset, the supplier needs to work proactively towards a settlement that the supplier can live with.

AAHOMECARE’S EDUCATIONAL WEBINAR

When it is Proper to Re-Start the 36 Month Oxygen Rental Period

 Presented by: Jeffrey S. Baird, Esq., Brown & Fortunato & Lisa K. Smith, Esq., Brown & Fortunato

Tuesday, July 19, 2022

1:30-2:30 p.m. CENTRAL TIME
The importance of DME suppliers has come to the forefront during the pandemic. In short, DME suppliers (particularly oxygen equipment suppliers) are instrumental in keeping patients out of the hospital. This program focuses on those suppliers that provide oxygen concentrators … and in particular on when it is proper for the supplier to re-start the 36 month oxygen rental period. When a DME supplier provides an oxygen concentrator to a Medicare beneficiary, Medicare will pay the supplier for the first 36 months and then the supplier will be obligated to service the beneficiary’s oxygen needs, for very little compensation, for the next 24 months. The beneficiary’s continuous use of the concentrator may be interrupted by one of the following events: (i) the concentrator is lost, stolen, or damaged beyond repair; (ii) there is an extended break in need of greater than 60 days; (iii) the supplier sells its assets to another supplier; (iv) the supplier goes out of business; (v) the supplier files bankruptcy; or (vi) the beneficiary relocates outside the supplier’s service area. This program will discuss whether the 36 month rental period will start over when one of these interruptions occur. 

Register for When it is Proper to Re-Start the 36 Month Oxygen Rental Period on Tuesday, July 19, 2022, 1:30-2:30 p.m. CT, with Jeffrey S. Baird, Esq., and Lisa K. Smith, Esq., of  Brown & Fortunato.

Members:  $99
Non-Members:  $129 

Jeffrey S. Baird, Esq., is chairman of the Health Care Group at Brown & Fortunato, a law firm with a national health care practice based in Texas. He represents pharmacies, infusion companies, HME companies, manufacturers, and other health care providers throughout the United States. Mr. Baird is Board Certified in Health Law by the Texas Board of Legal Specialization and can be reached at (806) 345-6320 or [email protected].