AMARILLO, TX – In the spring of 2019, Operation Brace Yourself made headlines. The Department of Justice (DOJ), Office of Inspector General (OIG) and CMS brought enforcement actions against DME suppliers, lead generation companies (LGCs), telehealth companies, and telehealth physicians.

The arrangement that was targeted by the government was this: (i) the DME supplier buys leads (for back braces and other orthotics) from the LGC; (ii) the LGC forwards the leads to the telehealth company; (iii) the telehealth company schedules a telephone appointment for the lead to talk to a telehealth physician; (iv) the telehealth physician spends a few minutes on the phone with the lead; and (v) the telehealth physician’s order for the back brace ends up going to the DME supplier that started the process. The money flowed as follows: DME supplier paid the LGC…the LGC paid the telehealth company…the telehealth company paid the telehealth physician…the DME supplier billed (and received payment from) Medicare.

At the end of the day, the arrangement was, in many cases, a kickback – that is – the money that was ultimately paid to the ordering physician came from the DME supplier. The money was filtered through the LGC and the telehealth company. A number of individuals were indicted for kickbacks and over 100 DME suppliers had their Medicare payments suspended.

Towards the end of the summer of 2019, news accounts pertaining to Operation Brace Yourself pretty much ended. Those DME suppliers that engaged in the LGC/orthotics/telehealth practice…and that were not swept up in the initial dragnet…breathed a sigh of relief. Breathing such a sigh of relief was premature. We are again witnessing enforcement actions by the DOJ and CMS against DME suppliers, LGCs, telehealth companies and telehealth physicians. For example, a recent UPIC letter to a DME supplier says, in part:

The purpose of this letter is to notify you of our determination to suspend your Medicare payments, in all jurisdictions….This suspension is based on credible allegations of fraud….This suspension  may last until the resolution of the investigation….[T]he suspension of your Medicare payments is based on, but not limited to, information that you misrepresented services billed to the Medicare program. More particularly, beneficiary interviews and a review of beneficiary records were conducted on the claims identified below and the findings show that there was no prior relationship (“NPR”) between the beneficiaries and the ordering/referring providers.

And a recent letter from the DOJ says, in part:

As you are likely aware, the Department of Justice and the Department of Health and Human Services Office of Inspector General have been actively investigating the practice and provision of telemedicine and the issuance of related DME – or testing related orders….We would like to speak with you concerning the conditions under which [Name of DME Supplier] completed orders for braces and other DME that Medicare and/or Medicaid ultimately covered and reimbursed. The United States Department of Justice is investigating these issues pursuant to the federal False Claims Act…, common law theories of overpayment, and the equitable theory of unjust enrichment, among other possible causes of action….[T]he False Claims Act permits the United States to recover treble damages for false claims made to Medicare and/or Medicaid.

In addition, the United States may recover penalties of between $11,665 and $23,331 per individual false claim…. The United States takes the position that telemedicine orders prepared for braces and other DME without an appropriate examination of the patient are false claims. Moreover, as you may also be aware, subject to certain exceptions, the Anti-Kickback Statute establishes that any claim to Medicare and/or Medicaid that is induced by remuneration paid to the physician in order to make that order is a false claim as a matter of law.

These two letters are emblematic of the aggressive approach that the DOJ is taking against suspect telehealth arrangements. A September 30, 2020 DOJ Press Release states, in part;

Acting Assistant Attorney General Brian C. Rabbitt of the Justice Department’s Criminal Division, Assistant Director Calvin Shivers of the FBI’s Criminal Investigative Division, Deputy Inspector General Gary Cantrell of the Department of Health and Human Services Office of Inspector General (HHS-OIG) and Assistant Administrator Tim McDermott of the Drug Enforcement Administration (DEA) today announced a historic nationwide enforcement action involving 345 charged defendants across 51 federal districts, including more than 100 doctors, nurses and other licensed medical professionals.

These defendants have been charged with submitting more than $6 billion in false and fraudulent claims to federal health care programs and private insurers, including more than $4.5 billion connected to telemedicine, more than $845 million connected to substance abuse treatment facilities, or “sober homes,” and more than $806 million connected to other health care fraud and illegal opioid distribution schemes across the country.

. . .

The cases announced today are being prosecuted by Health Care Fraud and ARPO Strike Force teams from the Criminal Division’s Fraud Section, along with 43 U.S. Attorneys’ Offices nationwide, and agents from HHS-OIG, FBI, DEA, and other various federal and state law enforcement agencies.

. . .

“Telemedicine can foster efficient, high-quality care when practiced appropriately and lawfully. Unfortunately, bad actors attempt to abuse telemedicine services and leverage aggressive marketing techniques to mislead beneficiaries about their health care needs and bill the government for illegitimate services,” said HHS Deputy Inspector General Gary Cantrell. “Unfortunately, audacious schemes such as these are prevalent and often harmful. Therefore, collaboration is critical in our fight against health care fraud. We will continue working with our law enforcement partners to hold accountable those who steal from federal health programs and protect the millions of beneficiaries who rely on them.”

“The FBI, together with our federal, state, and local partners, remains steadfast in our commitment to identify and root out health care fraud, no matter what form it takes,” said Assistant Director Calvin Shivers. “We will continue to work tirelessly to ensure public and private health care dollars are used as intended, to promote the health and safety of all Americans and safeguard continued access to critical health care services.”

. . .

The largest amount of alleged fraud loss charged in connection with the cases announced today – $4.5 billion in allegedly false and fraudulent claims submitted by more than 86 criminal defendants in 19 judicial districts – relates to schemes involving telemedicine: the use of telecommunications technology to provide health care services remotely. According to court documents, certain defendant telemedicine executives allegedly paid doctors and nurse practitioners to order unnecessary durable medical equipment, genetic and other diagnostic testing, and pain medications, either without any patient interaction or with only a brief telephonic conversation with patients they had never met or seen. Durable medical equipment companies, genetic testing laboratories, and pharmacies then purchased those orders in exchange for illegal kickbacks and bribes and submitted false and fraudulent claims to Medicare and other government insurers. In addition to the criminal charges announced today, CMS Center for Program Integrity separately announced that it has taken a record-breaking number of administrative actions related to telemedicine fraud, revoking the Medicare billing privileges of 256 additional medical professionals for their involvement in telemedicine schemes.

The continued focus on prosecuting health care fraud schemes involving telemedicine builds on the efforts and impact of the 2019 “Operation Brace Yourself” Telemedicine and Durable Medical Equipment Takedown, which resulted in an estimated cost avoidance of more than $1.5 billion in the amount paid by Medicare for orthotic braces in the 17 months following that takedown.

In connection with the nationwide enforcement action announced today, the Department of Justice also announced the creation of the National Rapid Response Strike Force of the Health Care Fraud Unit of the Criminal Division’s Fraud Section. The National Rapid Response Strike Force’s mission is to investigate and prosecute fraud cases involving major health care providers that operate in multiple jurisdictions, including major regional health care providers operating in the Criminal-Division-led Health Care Fraud Strike Forces throughout the United States. The National Rapid Response Strike Force led the telemedicine initiative and helped lead the sober homes cases included in today’s announcement.

Prior to the charges announced as part of today’s nationwide enforcement action and since its inception in March 2007, the Health Care Fraud Strike Force program had charged more than 4,200 defendants who have collectively billed the Medicare program for approximately $19 billion.

Receipt of a CMS Suspension Letter
Normally, the letter will afford the DME supplier the opportunity to submit a rebuttal within 15 days. The DME supplier, or its health care attorney, should submit such a rebuttal. The rebuttal needs to be fact driven. The rebuttal should not be opinion based or otherwise editorialize. The chances of the suspension being reversed are extremely small. The real purpose behind the rebuttal is not to expect a reversal of the payment suspension – but rather – the real purpose is to make a credible and fact-driven argument that the DME supplier did not engage in fraud. Said another way, the DME supplier does not want to receive a letter from the DOJ.

Receipt of a DOJ Letter
The DME supplier needs to contact a health care attorney who has experience in working with the DOJ. The supplier’s health care attorney needs to immediately open up communications with the DOJ in order to establish an ongoing dialogue. The attorney needs to determine what information/documents the Assistant United States Attorney (“AUSA”) is asking for…and the deadline by which the AUSA expects to receive the information/documents. Then the attorney needs to work with the supplier to organize and submit the information/documentation in the format dictated by the AUSA. Thereafter, the goal of the supplier’s attorney will be to establish that no criminal or fraudulent intent was present. The DME supplier and its attorney want the investigation to stay on the civil side of the equation; they do not want the investigation to cross the line to the criminal side. If the supplier and its attorney are successful in keeping the investigation on the civil side, then their goal will be to seek a dismissal if the facts warrant such a dismissal or reach a settlement that is acceptable to the DOJ…and that the DME supplier can live with. Such a settlement may in some cases entail the supplier (i) paying money to the DOJ and (ii) entering into a Corporate Integrity Agreement with the OIG.

Six Important Lessons

• Every Employee is a Potential Whistleblower – If a DME supplier is doing something it should not be doing, then someone knows about it. That “someone” is usually an employee. Virtually all employees are aware of whistleblower lawsuits. If an employee witnesses fraudulent actions by his/her employer, then the employee may be motivated to gather information and then hire an attorney who specializes in filing whistleblower lawsuits. The lawsuit will be in the name of the employee and also in the name of the United States. The lawsuit will be filed in federal court and it will “go under seal.” This means that no one knows about the lawsuit except for the government. A civil Assistant U.S. Attorney (“AUSA”) will review the lawsuit and will likely appoint agents to investigate the allegations set out in the lawsuit. This investigation may take 6 to 12 months. After the investigation is completed, or even if it is still ongoing, if the AUSA concludes that the whistleblower lawsuit has merit, then the DOJ will “intervene.” This means that the DOJ will take over prosecuting the lawsuit and the employee (and his/her attorney) can pretty much “sit on the sidelines.” It is at this time that the lawsuit is unsealed and is served on the employer. The lawsuit is based on alleged violation of the federal False Claims Act (“FCA”). Normally, whistleblower lawsuits are settled, with the relator receiving 15% to 20% of the settlement proceeds. If the civil AUSA concludes that the facts indicate that a crime was committed, then the civil AUSA will hand the file over to a criminal AUSA to determine if, in addition to the civil allegations set out in the whistleblower lawsuit, the DOJ wants to bring criminal charges against the employer.
• A Kickback Results in a False Claim – Most suppliers understand that if they bill for a product not delivered—or deliver one type of product and deliver another type of product—then a “false claim” arises. Equally as important, however, is that if a supplier is engaged in a kickback arrangement, then claims that ultimately arise out of that arrangement are also “false claims.”

• Products and Services That Are Not Medically Necessary – Let’s talk about back braces. For decades, Medicare beneficiaries got along just fine without back braces. And then beginning about five years ago, a huge number of beneficiaries received back braces. Was this spike in demand driven by the medical needs of the beneficiaries—or was this spike driven by LGCs, the DME suppliers that paid the LGCs, telehealth companies, and telehealth physicians? The answer is obvious. The lesson for DME suppliers is that if they aggressively operate in a particular market, it is important that their business model be legally compliant. The bottom line is that if a supplier finds itself submitting a large number of claims for products that were not used very much in the past, the supplier will likely be subjected to scrutiny.
• Large Claims Submissions Invite Scrutiny – Third party payors (“TPPs”) have edits in place that spot claims submissions that are “out of the ordinary.” Examples are:
  • A DME supplier has a history of submitting claims (i) at a historically-established dollar level and (ii) for particular products. But then the TPP notices a spike in the dollar amount of claims submissions for a particular product.
  • A DME supplier submits a noticeably greater number of claims for a particular product category than other suppliers.
• 1099 Independent Contractor Marketing Reps – The federal anti-kickback statute (“AKS”) prohibits a DME supplier from giving anything of value (e.g., commissions) to persons/entities in exchange for (i) referring patients covered by a federal health care program (“FHCP”), (ii) arranging for the referral of FHCP patients, or (iii) recommending the purchase of a product or service covered by an FHCP. If a supplier pays commissions to 1099 independent contractor marketing reps for generating FHCP patients, then the AKS is implicated. The safest course of action is for marketing reps to be bona fide employees of the supplier. A supplier can pay to a W2 employee marketing rep (i) a base salary plus (ii) discretionary bonuses based on a number of factors.
• Trust Your Stomach, Not Your Brain – In considering whether or not to engage in an arrangement, if your brain tells you one thing and your stomach tells you something else, then trust your stomach and ignore your brain. Our brains allow us to rationalize dishonest decisions. But our stomachs never lie …

AAHOMECARE’S EDUCATIONAL WEBINAR

Targeted Probe and Education Review: What It Is and How to Respond

Presented by: Jeffrey S. Baird, Esq., Brown & Fortunato, P.C. & Denise M. Leard, Esq., Brown & Fortunato, P.C.

Tuesday, October 20, 2020

2:30-3:30 p.m. EASTERN TIME
Well … it is an understatement to say that we are living in uncertain times. However, what is certain is that the demand for DME will continue to increase. This is due to the aging of the 78 million Baby Boomers, the impact of COVID-19, and the need to keep people out of the hospital. As we eventually return to a semblance of normalcy, DME suppliers will have to respond to post-payment audits. Over the years, post-payment audits have been unfair to DME suppliers. CMS has attempted to address this unfairness by implementing the Targeted Probe and Educate (“TPE”) program. Under the TPE program, the supplier is not subjected to unlimited requests for documentation … followed by vague denials. Rather, under the program the DME MAC (i) requests a limited number of patient files, (ii) reviews the files, (iii) explains any denials, and (iv) provides education to the supplier that addresses the denials. This webinar will discuss what the TPE program is and how the DME supplier should respond to a TPE request. Equally as important, this webinar will talk about the steps the supplier should take to ensure that its documentation will pass TPE review.

Registration will be posted soon for Targeted Probe and Education Review: What It Is and How to Respond on Tuesday, October 20, 2020, 2:30-3:30 p.m. ET, with Jeffrey S. Baird, Esq. and Denise M. Leard, Esq., of Brown & Fortunato, PC.

FEES:
Member: $99.00
Non-Member: $129.00

AAHomecare’s Retail Work Group
The Retail Work Group is a vibrant network of DME industry stakeholders (suppliers, manufacturers, consultants) that meets once a month via video conference during which (i) an expert guest will present a topic on an aspect of selling products at retail, and (ii) a question and answer period will follow. The next Retail Work Group video conference is scheduled for November 12, 2020, at 11:00 a.m. Central. Lisa Wells of NATURALLY ABLE will address “Reaching Your Retail Audience Beyond Google Ads.” Participation in the Retail Work Group is free to AAHomecare members. For more information, contact Ashley Plauché Manager of Member & Public Relations, AAHomecare ([email protected]).

Jeffrey S. Baird, JD, is chairman of the Health Care Group at Brown & Fortunato, PC, 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].