Pennsylvania Man Creates Ambulance Company with "Straw Owner" and Gets Charged with Medicare Fraud

By Miles Indest

A Pennsylvania man has been charged in relation to an alleged scheme to defraud Medicare by billing for fraudulent ambulance services. The charges were announced by the Department of Justice (DOJ) on June 29, 2012.

Man Allegedly Started Ambulance Company With "Straw" Owner .

According to the indictment, the man allegedly used a "straw" owner (someone who was not actually the owner) to fraudulently open Starcare Ambulance because he was otherwise ineligible to own the company. Between 2006 and 2011, the man allegedly billed Medicare for transporting kidney dialysis patients who did not medically need ambulance service. This indictment seeks forfeiture of over $5 million in cash as well as a GMC Hum-V ("Hummer") vehicle.

If convicted of all charges, the defendant faces a statutory maximum sentence of ten years in prison on each of the health care fraud and conspiracy counts. He also faces five years in prison for aiding and abetting in false statements relating to health care fraud, a three year term of supervised release, and a fine of up to $250,000.

Ambulance Services Companies Are Target for Medicare Audits.

In recent years, and especially in 2012, ambulance services companies have become the target of Medicare audits and are frequently accused of billing Medicare for unnecessary services. Medicare and Medicaid audits can result in overpayment demands reaching into hundreds of thousands of dollars and assessment of fines. Ambulance services were included in the Department of Health and Human Services (DHHS) Office of the Inspector General (OIG) work plan for fiscal year 2012 as an area that would be subject to scrutiny. Zone Program Integrity Contractors (ZPICs) and Recovery Audit Contractors (RACs) are launching audits of ambulance service providers and emergency medical transportation companies.

Contact Health Law Attorneys Experienced in Handling Medicare Audits.

Medicare fraud is a serious crime and is vigorously investigated by the FBI and the U.S. Department of Health and Human Services (DHHS) Office of Inspector General (OIG). Don't wait until its too late. If you are concerned of any possible violations and would like a confidential consultation, contact a qualified health attorney familiar with medical billing and audits today.

The Health Law Firm’s attorneys routinely represent physicians, medical groups, clinics, pharmacies, ambulance services companies, durable medical equipment (DME) suppliers, home health agencies, nursing homes and other healthcare providers in Medicaid and Medicare investigations, audits and recovery actions.

To contact The Health Law Firm please call (407) 331-6620 or (850) 439-1001 and visit our website at www.TheHealthLawFirm.com.

Sources Include:

"Pennsylvania Man Charged With $5.4 Million Medicare Fraud." San Francisco Chronicle. (June 29, 2012). From:
http://www.sfgate.com/news/article/Pa-man-charged-with-5-4-million-Medicare-fraud-3674333.php

Department of Justice, Office of Public Affairs. "Pennsylvania Man Charged with Fraud in Ambulance Scheme." Department of Justice. Press Release. (June 29, 2012). From: http://www.justice.gov/opa/pr/2012/June/12-crm-840.html

OIG Advisory Opinion on Anesthesia Services Arrangements

By George F. Indest III, J.D., M.P.A., LL.M., Board Certified by The Florida Bar in Health Law

The Department of Health and Human Services (DHHS) Office of the Inspector General (OIG) posted an advisory opinion on June 1, 2012. In the advisory opinion the OIG concluded that two different arrangements between an ambulatory surgical center (ASC) and anesthesia services provider could result in prohibited remuneration under the federal anti-kickback statute and lead to administrative sanctions and criminal sanctions.

To view OIG Advisory Opinion 12-06, click here.

Proposed Arrangements.

Advisory Opinion 12-06 was issued in response to a request submitted by an anesthesia practice (the Requestor) regarding two different proposed arrangements. The Requestor stated that it was pressured to sign up for one of the two arrangements to stem the flow of lost business.

The Requestor is the exclusive provider of anesthesia services to several ASCs. The Requestor believes that the ASCs were formed and operate in compliance with the ASC safe harbor to the Anti-Kickback Statute (42 C.F.R. § 1001.952(r)). Under the existing relationship, the ASCs bill and receive payment from Medicare both for surgical procedures and integral ancillary items and services. The Requestor bills Medicare and patients for professional services, which are not included in the payment to ASCs. The ASCs’ physician-owners also bill for their professional services, and charge a "facility fee” for the materials and ancillary staff required to operate the ASCs.

Proposed Arrangement A.

Under Proposed Arrangement A, the Requestor would begin paying the ASCs a per-patient fee, excluding Federal health care program patients, for "Management Services." "Management Services" include paying for space and paying for the services of ASC personnel to transfer billing documentation to the anesthesiologist's billing office.

Proposed Arrangement B.

Proposed Arrangement B closely resembles a "company model" arrangement. A company model arrangement is when a referring physician, who generally also owns the facility where surgical procedures are performed, forms a separate anesthesia company in order to share the revenue. The physician-owner then contracts out a substantial portion of the operation.

Under Proposed Arrangement B, the ASC physician-owners would establish subsidiary anesthesia companies. The Requestor would be brought on as the sole independent contractor to provide anesthesia services. The physician-owners would pay the Requestor a negotiated rate and roll the profits back into the ASC.

OIG Concludes that Proposed Arrangement A Presents Problem Under Anti-Kickback Statute.

The OIG concluded that both arrangements posed regulatory concerns.

Regarding Proposed Arrangement A, the OIG decided that the arrangement presents a risk of a violation under the Anti-Kickback Statute. The Requestor could be overpaying the "Management Services" fees to induce the ASCs to refer all patients, including federal health care program patients, to the Requestor. The OIG also noted its long-standing concern that payments for non-federal health care program business may disguise remuneration for federal health care program business.

Additionally, the OIG determined that the "Management Services" covered by the fee are included in the facility fee paid by Medicare. The ASCs would essentially be paid twice for the same services. Therefore, the "Management Services" fees paid by the Requestor could influence the ASCs to select the Requestor as their exclusive provider of anesthesia services.

Proposed Arrangement B Does Not Qualify for Protection under the ASC Safe Harbor.

The OIG concluded that the subsidiary's income generated under Proposed Arrangement B could not qualify for protection under the ASC safe harbor. The ASC safe harbor protects returns on investments where the investment entity itself is a Medicare-certified ASC. This means that it operates exclusively for the purpose of providing surgical services to patients. Because the subsidiaries would provide anesthesia services, they could not qualify as ASCs for purposes of the ASC safe harbor.

Lack of compliance with a safe harbor does not necessarily result in a violation of the Anti-Kickback Statute. However, the OIG concluded that Proposed Arrangement B would pose more than a minimal risk of fraud and abuse. The OIG noted that arrangements (such as joint ventures) between parties who can refer business (i.e., the ACSs’ physician-owners), and those furnishing Medicare-payable items or services (i.e., the Requestor) are suspect. The OIG is concerned about arrangements where much of the joint venture’s business is derived from one or more of the joint venturers. Click here to view the OIG’s 1994 Special Fraud Alert on Joint Venture Arrangements. Click Here to view the OIG's 2003 Special Advisory Bulletin on Contractual Joint Ventures.

The OIG determined that many of the elements of suspect joint venture arrangements identified in its 2003 Special Advisory Bulletin were present in Proposed Arrangement B. The suspicious elements include the fact that:

• The ASCs’ physician-owners would be expanding into a related line of business (anesthesia services) that would be wholly dependent on the ASCs’ referrals;
• The ASCs’ physician-owners would not actually operate the subsidiaries, but would contract out the operations exclusively to the Requestor; and
• The ASCs’ physician-owners would have minimal business risk because they would control the amount of business they would refer to the subsidiaries.

The OIG concluded that Proposed Plan B was designed to permit the ASC's physician-owners to do indirectly what they cannot do directly---receive compensation in return for referrals to the Requestor's anesthesia practice.

Health Providers Should Be Cautious of "Company Model" Arrangements.

The Advisory Opinion's conclusion was that the proposed arrangements could potentially generate prohibited remuneration under the anti-kickback statute. The OIG could then potentially impose administrative sanctions. Therefore, if you are considering potential ventures that resemble a "company model," obtain a legal opinion from an experienced health law attorney on the legality of the arrangement.

Contact Health Law Attorneys Experienced with ASC Arrangements and Joint Ventures.

The Health Law Firm represents ambulatory surgical centers (ASCs) and other health providers in setting up corporate structures, joint ventures, and arrangements with other health services providers.

To contact The Health Law Firm, please call (407) 331-6620 or (850) 439-1001 and visit our website at http://www.thehealthlawfirm.com/.

Sources Include:

American Society of Anesthesiologists. "HHS Issues Advisory Opinion on the Company Model." American Society of Anesthesiologists. (June 1, 2012). From: http://asahq.org/For-Members/Advocacy/Washington-Alerts/HHS-Issues-Advisory-Opinion-on-the-Company-Model.aspx

Bradley Arant Boult Cummings LLP. "Putting ASC Anesthesia Models Under: OIG Issues Unfavorable Advisory Opinion on Anesthesia Services Arrangements for Physician-Owned ASCs." JD Supra. (June 11, 2012). From: http://www.jdsupra.com/post/documentViewer.aspx?fid=eee44b4f-5362-405c-b378-f13c52dab756

Dunphy, Brian P. and Karen S. Lovitch. "OIG Advisory Opinion 12-06 Disapproves of Proposed Arrangements Between ASCs and Anesthesia Services Providers." National Law Review. (June 10, 2012). From: http://www.natlawreview.com/article/oig-advisory-opinion-12-06-disapproves-proposed-arrangements-between-ascs-and-anesth

About the Author:  George F. Indest III, J.D., M.P.A., LL.M., is Board Certified by The Florida Bar in Health Law.  He is the President and Managing Partner of The Health Law Firm, which has a national practice.  Its main office is in the Orlando, Florida, area.  http://www.thehealthlawfirm.com/  The Health Law Firm, 1101 Douglas Ave., Altamonte Springs, FL 32714, Phone:  (407) 331-6620.

Over 100 Medical Professionals Arrested During Medicare Fraud Bust

By George F. Indest III, J.D., M.P.A., LL.M., Board Certified by The Florida Bar in Health Law
More than 100 doctors, nurses and other licensed health professionals were arrested for alleged involvement in Medicare fraud on May 2, 2012. The arrests were made by federal agents in seven cities nationwide, but more than half took place in South Florida.
This multi-agency attack on medical professionals involved law enforcement agents from the Federal Bureau of Investigation (FBI), Department of Health and Human Services-Office of Inspector General (HHS-OIG), Medicaid Fraud Control Units (MFCU) and other state and local law enforcement agencies. In addition to arresting over 100 health professionals, these agents also executed 20 search warrants in connection with ongoing Medicare fraud investigations.
Some of the charges against the medical professionals include conspiracy to commit health care fraud, health care fraud, violations of the anti-kickback statutes and money laundering. The charges are based on a variety of alleged Medicare fraud schemes involving medical treatments and services such as home health care, mental health services, physical and occupational therapy, durable medical equipment (DME), mental health counseling and ambulance services. These alleged Medicare fraud schemes resulted in a combined $452 million in false billings.
HHS also took other administrative action against 52 other health providers. These providers were tracked down through data analysis and are also accused of Medicare fraud. Because of the Affordable Care Act, HHS will be able to suspend payments to these providers the entire time until the investigations are completed.
Because of the severe state budget shortfalls and the federal deficit, we are seeing a tremendous increase in both Medicare and Medicaid fraud initiatives. If you are being accused of Medicare or Medicaid fraud, it is extremely important to retain an experienced health attorney immediately.
Don't Wait; Consult with a Health Law Attorney Experienced in Medicare and Medicaid Issues Now
The Health Law Firm's attorneys routinely represent physicians and other healthcare professionals in Medicare and Medicaid investigations, audits and recovery actions. They also represent physicians and health professionals in actions initiated by the Medicaid Fraud Control Units (MFCUs), in False Claims Act cases, in actions initiated by the state to exclude or terminate from the Medicaid Program or by the HHS OIG to exclude from the Medicare Program.
Call now at (407) 331-6620 or (850) 439-1001 or visit our website http://www.thehealthlawfirm.com/.
Sources Include:
Weaver, Jay. "Feds Arrest More Than 100 Medicare Fraud Suspects in South Florida, Nationwide." Miami Herald. (May 02, 2012). From
http://www.miamiherald.com/2012/05/02/2779369/feds-arrest-about-100-medicare.html
U.S. Department of Justice, Office of Public Affairs. "Medicare Fraud Strike Force Charges 107 Individuals for Approximately $452 Million in False Billing." U.S. Department of Justice. Press Release. (May 02, 2012). From http://www.justice.gov/opa/pr/2012/May/12-ag-568.html
About the Author:  George F. Indest III, J.D., M.P.A., LL.M., is Board Certified by The Florida Bar in Health Law.  He is the President and Managing Partner of The Health Law Firm, which has a national practice.  Its main office is in the Orlando, Florida, area.  http://www.thehealthlawfirm.com/  The Health Law Firm, 1101 Douglas Ave., Altamonte Springs, FL 32714, Phone:  (407) 331-6620.

Impact of a Criminal Charge on Florida Health Professional

Criminal charges against a health care professional can have serious consequences. This post will discuss the impact of a criminal charge on a Florida licensed health professional. 

What is the Effect of a Plea of Nolo Contendere for a Florida Licensed Health Professional?

Pursuant to the general chapter of Florida Statutes applicable to all licensed health professionals (Chapter 456), a plea of nolo contendere is treated the same as a plea of guilty for all purposes. Additionally the chapter of Florida Statutes that governs each type of health professional usually contains similar provisions; sometimes this will be in the Florida Administrative Code (F.A.C.) Rules that have been adopted by the separate professional licensing board for that profession.

What Is the Effect of an Adjudication or Finding of Adjudication Withheld?

Pursuant to the general chapter of Florida Statutes applicable to all licensed health professionals (Chapter 456), an adjudication or finding of adjudication withheld (or "adjudication deferred" in some jurisdictions) is treated the same as a finding of guilty for all purposes. Additionally the chapter of Florida Statutes that governs each type of health professional usually contains similar provisions; sometimes this will be in the Florida Administrative Code (F.A.C.) Rules that have been adopted by the separate professional licensing board for that profession.

When must a Licensed Health Professional Report Guilty Pleas (Nolo Plea or Guilty Plea) and Convictions (Adjudication Withheld or Finding of Guilty) to the Florida Department of Health?

Any guilty plea (as defined above as a nolo plea or guilty plea) or any adjudication of guilt (as defined above as adjudication withheld or finding of guilty) of any crime must be reported by the health professional to his or her professional licensing board (or the Department of Health when there is no board) within thirty (30) days of the conviction or finding. Section 456.072(1)(x), Florida Statutes.

In Florida, all health professionals licensed or regulated under Chapter 456 of Florida Statutes, are required to report to their professional board (or the Florida Department of Health if there is no professional board in their profession) any convictions or findings of guilty of criminal offenses, in any jurisdiction.

Unfortunately, pursuant to Florida Statutes, a plea of nolo contendere must be reported just as a plea of guilty to an offense (a plea of not guilty does not need to be reported). A finding of guilty or a finding of adjudication withheld (also called a "withhold" or "deferred adjudication" in some jurisdictions) must also be reported (a finding of not guilty, a dismissal, a nolle prosequi, pretrial diversion or pretrial intervention program in almost all cases dose not have to be reported).

Licensed practitioners who also are required to have a profile with the Department of Health (e.g., physicians licensed under Chapters 458, 459, 460 or 461), must submit an update to their profile, including criminal convictions, within fifteen (15) days of the "final activity that renders such information a fact." Section 456.042, Florida Statutes. For example, a doctor of medicine (M.D.), licensed pursuant to chapter 458, Florida Statutes, must submit an update to the physician's profile within fifteen (15) days. A registered respiratory therapist, on the other hand, doesn't have a profile. The registered respiratory therapist would have to report a matter qualifying with the above within thirty (30) days to his or her board, the Board of Respiratory Care. (A finding of not guilty, a dismissal, a nolle prosequi, pretrial diversion or pretrial intervention program in almost all cases dose not have to be reported).

As with any such important legal matter, we recommend reporting in a typed, professional letter, via a reliable method of delivery which provides tracking and delivers you a receipt. We do not consider e-mail to be reliable or susceptible of verification or tracking. We usually recommend reporting such matters via U.S. Express Mail, with a return receipt requested. Be sure to keep copies of the correspondence, the receipt of mailing and the return receipt, to document reporting and delivery dates, and to prove receipt.

Always consult the latest versions of the Florida Statutes and the Rules of the Department of Health and your professional board to make sure you have the correct information. We recommend retaining a health attorney familiar with the Department of Health and its regulatory processes, as such a report will usually require the Department of Health to commence an investigation of the health professional, even if the health professional is located in another state.

Which Crimes May Result in an Automatic Bar to Licensure?

Senate Bill 1984, effective July 1, 2009, amended various section of Florida Statutes, including sections of Chapter 456. These amendments prohibit the Department of Health from granting a new license to or granting the renewal of a license to a health professional because of a guilty plea or conviction of certain offenses. This is also grounds for revocation of the health professional's license. Generally, as set forth in Section 456.0635(2)(a), Florida Statutes these are: Being convicted of, or entering a plea of guilty or nolo contendere to, regardless of adjudication, a felony under:

• Chapter 409 (the Medicaid Program)
• Chapter 817 (Fraud)
• Chapter 893 (Drugs)
• 21 U.S.C. Sects. 801-970 (Food and Drugs); or
• 42 U.S.C. Sects. 1395-1396 (Medicare, Medicaid, and Social Security)

unless the sentence and any subsequent period of probation for such conviction or pleas ended more than 15 years prior to the date of the application. (Sect. 456.0635(2)(a), Fla. Stat.) Additionally, grounds for discipline against the existing license of health professional includes:

• Any misdemeanor or felony relating to Medicaid fraud: "Being convicted of, or entering a plea of guilty or nolo contendere to, any misdemeanor or felony, regardless of adjudication, under 18 U.S.C. Sect. 669, Sects. 285-287, Sect. 371, Sect. 1001, Sect. 1035, Sect. 1341, Sect. 1343, Sect. 1347, Sect. 1349, or Sect. 1518, or 42 U.S.C. Sects. 1320a-7b, relating to the Medicaid program." (Sect. 456.072(1)(ii), Fla. Stat.
• Being convicted of, or entering a plea of guilty or nolo contendere to, any misdemeanor or felony, regardless of adjudication, a crime in any jurisdiction which relates to health care fraud. (Sect. 456.072(1)(ll), Fla. Stat.

Defense Strategies and Avoidances

• Plead to some offense or offenses other than the ones listed above.
• Avoid a felony conviction; misdemeanors do not prohibit licensure or renewal, but may result in disciplinary action.
• Avoid any offenses that sound like "health fraud," "Medicaid fraud" or "Medicare fraud."
• Violations of other states' laws don't count; just Florida's and federal listed above (caveat).
• Attempt to obtain pre-trial diversion, pre-trial intervention or drug court.
• Attempt to avoid having to enter a guilty plea or nolo plea.
• Attempt to include in settlement agreement/plea bargain agreement/stipulation that client may apply to have record sealed immediately upon completion of requirements and State will not object.
• Advise client to immediately apply for sealing of record when all requirements of probation are met.
• Obtain input from a board certified health lawyer or other "expert" as to the disproportionate effect (all of the collateral consequences) that a "conviction" may have on the licensed health professional.

What Are the Collateral Effects of "Conviction" of above Offenses?

1. A case involving an arrest or a conviction involving alcohol abuse (DUI/public Intoxication) or drugs (possession, diversion, theft, trafficking) will probably result in an emergency suspension order (ESO) until entire licensure case is complete.
2. Client may be required to be evaluated and probably enrolled in the Impaired Nurses Program (IPN) (for nurses only) or the Professionals Resource Network (PRN) (for all other licensed health professionals), which is usually at least a five year contract.
3. Action to revoke, suspend or take other action against the clinical privileges and medical staff membership of those licensed health professionals who may have such in a hospital, ambulatory surgical center, skilled nursing facility, or staff model HMO or clinic. This will usually be physicians, physician assistants (PAs), advance registered nurse practitioners (ARNPs), certified registered nurse anesthetists (CRNAs), podiatrists, clinical psychologists and clinical pharmacists.
4. Mandatory report to the National Practitioner Data Base (NPDB) (Note: Healthcare Integrity and Protection Data Bank or HIPDB recently folded into NPDB) which remains there for 50 years.
5. Must be reported to and included in the DOH profile that is available to the public online (for those having one), and remains for at least ten years.
6. Any other states or jurisdictions in which the client has a license will also initiate action against him or her in that jurisdiction. (Note: I have had two clients who had licenses in seven other states).
7. The OIG of HHS will take action to exclude the provider from the Medicare Program. If this occurs (and most of these offense require mandatory exclusion) the provider will be placed on the List of Excluded Individuals and Entities (LEIE) maintained by the HHS OIG.
8. If the above occurs, the provider is also automatically "debarred" or prohibited from participating in any capacity in any federal contracting and is placed on the U.S. General Services Administration's (GSA's) debarment list.
9. The U.S. Drug Enforcement Administration (DEA) will act to revoke the professional's DEA registration if he or she has one.
10. The certified health professional's certify organization will act to revoke his or her certification.
11. Third party payors (health insurance companies, HMOs, etc.) will terminate the professional's contract or panel membership with that organization.
12. Any profile maintained by a national organization or federation (e.g., American Medical Association physician profile or Federation of State Boards of Physical Therapy profile) will include the conviction.
13. Regardless of any of the above, any facility licensed by AHCA (hospitals, skilled nursing facilities (SNFs), public health clinics, public health clinics, group homes for the developmentally disabled, etc.) that are required to perform background screenings on their employees will result in AHCA notifying the facility and the professional that he or she is disqualified from employment.

 For further information, visit our website at http://www.thehealthlawfirm.com/.