When Health Care Fraud Turns Criminal

by Veronica Nannis
May 4th, 2017

      Did you know that sometimes civil health care fraud can result in criminal convictions? It’s rare. But when it happens, it ruins lives, careers and risks serious patient harm. What might start small, can quickly snowball when greed eclipses medical judgment. When supervision and peer review get overshadowed by revenue, civil fraud can be a crime.

            Civil fraud turned criminal charges

Just some of the media headlines discussing civil-fraud-turned-criminal have included:

  • Dr. Aria Sabit — 235-month prison sentence for health care fraud connected to performing medically unnecessary, invasive spinal surgeries, implanting unnecessary medical devices and kickbacks to his Physician Owned Distributorship (POD).[i] His license was also stripped for gross negligence and “dishonest and corrupt acts.”[ii] 
  • Dr. Cully White 6-month prison sentence, 6-month house arrest after pleading guilty to health care fraud stemming from paying another physician to dictate fabricated surgical reports for services that were not rendered. An unrelated Medical Board investigation into substandard spinal surgeries resulted in the surrender of his license.
  • Dr. Abubakar Atiq Durrani pled not guilty to health care fraud and fled the country following a 10-count indictment charging that he convinced patients to undergo medically unnecessary spinal surgeries. The State of Ohio also permanently revoked his license.
  • The president of a hospital and eight co-conspirators were convicted of a massive Medicare fraud scheme to bill for more than $158 million worth of psychiatric services that were not rendered and the payment of kickbacks to recruiters to deliver Medicare ineligible patients. The hospital president was sentenced to 45 years, his son to 20 and a co-conspirator to 12 years in prison.

 

           How do these cases come about? How do they get reported? What could be done to stop them earlier or prevent them all together?

Patients can be whistleblowers; so can your fellow health care providers

On the whole, health care fraud has infinite variations, but in the end, the majority of cases involve:

(1) Medically unnecessary procedures or services not actually rendered;

(2) Kickbacks;  

(3) Fabricated records or bills; or

(4) Upcoding.

Millions of employees, patients and competitors see examples like these or other health care fraud every day, but very few feel compelled to report. For those who do, the terrain can be treacherous and filled with land mines. But, reporting can result in putting an end to egregious fraud and barring providers from having the chance to endanger patients ever again.

In the Dr. Sabit case, the cover was blown when 30 patients spoke up, suing for medical malpractice in less than 18 months. The Medical Board later investigated, stripping him of his license. Two False Claims Act suits were also filed, one by his physician colleagues who felt compelled to report to the Government after internal reporting proved futile. That suit alleges that the hospital’s peer review committee had found the doctor responsible for 71% of unplanned returns to surgery and that his infection rate was two times the national average. His fraud was lucrative. It produced an alleged $8.4 million in Medicare revenue to the hospital and $1.4 million to the doctor for the instruments he used in surgery. The whistleblower suit alleges that the hospital turned a deaf ear to complaints about his recklessly performed surgeries and it failed to properly supervise him due to the high revenues.[iii]

With Dr. Durrani, the unraveling seems to have begun with medical malpractice lawsuits claiming that more than 500 spinal surgeries were botched. The federal authorities investigated when some of his former patients filed suit under the False Claims Act alleging health care fraud stemming from unnecessary spine procedures. UC Health and West Chester Hospital paid $4.1 million in a civil fraud settlement related to the unnecessary surgeries. In all False Claims Act cases, the Government does an initial parallel criminal review. In a case like Durrani, that criminal review resulted in arrest.

The Government is watching and waiting for tips

The Government has task forces set up to investigate all sorts of health care fraud, but they usually have to be tipped off first. In all of the above examples, the fraud began to be uncovered when either the patients sued for malpractice or patients or physicians blew the whistle in sealed filings under the False Claims Act,[iv] which immediately get investigated by the Government. In the above cases, after the initial disclosure, other investigations followed, resulting in licensing and disciplinary proceedings, civil fines and even jail time.

According to a speech given by Assistant Attorney General Leslie R. Caldwell to the Health Care Compliance Association last April, the Government is looking at health care fraud through a criminal lens, and is getting results. “In the last fiscal year alone, the [Medicare fraud] strike force charged 391 defendants who had collectively billed the Medicare program approximately $1.4 billion. During the last fiscal year, the strike force had a conviction rate of 92 percent – a spectacular rate of success considering the volume and the complexity of the prosecutions – and secured prison sentences averaging 56 months.”[v]

While these examples are rare and extreme, all practices are wise to review and strengthen supervision, quality assurance reviews and compliance. There must be a robust and truly independent peer review process to root out fraud. When these processes and protocols are in place, fraud is stopped before it starts and it cannot spiral out of control.

Veronica Nannis is a principal at Joseph, Greenwald & Laake P.A. in Greenbelt specializing in complex civil litigation, especially in health care. She can be reached at vnannis@jgllaw.com. Sarah Chu, a law clerk at the firm, contributed to this article. She can be reached at schu@jgllaw.com.

 

 

[i] Dr. Sabit may be the first provider prosecuted for health care fraud under the POD theory of kickbacks. For more on PODs, see OIG Special Fraud Alert: Physician-Owned Entities, March 26, 2013, accessible at: https://oig.hhs.gov/fraud/docs/alertsandbulletins/2013/pod_special_fraud_alert.pdf

[ii] See Former Ventura spinal surgeon stripped of California medical license, August 20, 2004, accessible at http://www.scpr.org/news/2014/08/20/46123/former-ventura-spinal-surgeon-stripped-of-californ/

[iii] These remain allegations and there has been no admission or finding of liability by the hospital.

[iv] The False Claims Act provides for civil cases to be brought by whistleblowers under 31 U.S. Code §§ 3729-3733.

[v] See Assistant Attorney General Leslie R. Caldwell Speaks at Health Care Compliance Association’s 20th Annual Compliance Institute, April 18, 2016, accessible at https://www.justice.gov/opa/speech/assistant-attorney-general-leslie-r-caldwell-speaks-health-care-compliance-association-s

Veronica Nannis is a Principal and the litigation practice group manager at Joseph, Greenwald & Laake, P.A. She focuses on complex, civil litigation, including business disputes, employment litigation and False Claim Act cases involving health care fraud. You can find her on LinkedIn or email her at: vnannis@jgllaw.com.

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