Fraud by Medical Practices

What is fraud by medical practices?

Fraud by medical practitioners under the False Claims Act encompasses a wide variety of schemes to improperly obtain payment from federal and state health insurance programs, such as billing for services that were medically unnecessary or not provided, upcoding claims for reimbursement, and paying or receiving kickbacks for patient referrals.

The False Claims Act applies to many different types of fraud committed by physician practices. For example, a practice can be liable if it is billing a federally- or state-funded insurance program (such as Medicare or Medicaid) for services that were not actually rendered, or for services that were clearly medically unnecessary and unreasonable, such as cardiac bypass surgery for patients without blockages in arteries. Thus, in 2005, four cardiologists practicing at Redding Medical Center in Redding, California, paid $32.5 million to settle a qui tam False Claims Act action alleging that they had billed for unnecessary heart surgeries. Tenet Healthcare Corporation, the owner of Redding Medical Center, paid almost $60 million to resolve the whistleblower allegations.

A practice can also be liable under the False Claims Act if it is “upcoding,” i.e., rendering services to patients but submitting claims to government-funded insurance program for higher levels of service than what is being provided. For another example, a practice can be liable if it provides, and bills a government-funded insurance program for, a service that was so substandard that the patient did not receive the service that was paid for. Billing companies also may be liable under the False Claims Act if they knowingly overcharge government insurance programs for physician services.

The False Claims Act also covers other kinds of misconduct besides the specific examples described above. The Act extends to situations where the medical practice provided the amount and quality of services that were paid for, but the service was provided in violation of another law or rule which, if the violation were known by the Government, would result in a denial of payment. For example, suppose a doctor pays or receives kickbacks to or from another entity in order to induce the referral of Medicare patients for treatments, in violation of the Anti-Kickback Statute (“AKS”), 42 U.S.C.A. § 1320a-7b. The Medicare program will not pay claims for services that were performed on patients who were referred in violation of the AKS. Consequently, if the doctor bills Medicare for services resulting from AKS violations – even though the services were medically necessary and were provided exactly at the level billed – the claims would be in violation of the FCA.

The same is true if a physician violates the prohibition against physician self-referrals, known as the Stark Act, 42 U.S.C. § 1395nn, by referring patients to certain categories of health care providers (such as clinical laboratories, therapists, radiologists, pharmacies, or suppliers of durable medical equipment) in which the physician has a financial stake. The Stark law prohibits a provider from billing Medicare or Medicaid for services referred in violation of this statute.

VSG’s Qui Tam Lawyers Are Experienced in Handling Healthcare Provider Fraud Cases

Following a trial conducted by a VSG partner and government counsel, Emergency Physicians Billing Service paid over $28.8 million to resolve claims in a qui tam whistleblower lawsuit that it systematically overcharged Medicare for emergency physician services.

In another VSG qui tam False Claims Act case, a Florida radiologist paid $7 million to settle a whistleblower lawsuit that he billed Medicare for medical imaging tests that were not ordered and were medically unnecessary, and that he paid kickbacks for patient referrals. The settlement was among the largest recoveries ever for Medicare fraud against a single healthcare provider and his practice.