Scroll Top
Bothwell Law Group 304 Macy Dr, Roswell, GA 30076

Medicaid/Medicare Fraudulent Billing Qui Tam Cases

Medicaid and Medicare are essential programs in the U.S. healthcare system, providing medical coverage to millions of Americans, including the elderly, disabled, and low-income individuals. These programs are crucial in ensuring access to healthcare services and improving public health outcomes through the Medicaid program. However, fraudulent billing practices have become a significant issue, costing billions of dollars annually. According to the Centers for Medicare & Medicaid Services (CMS), improper payments in Medicare and Medicaid totaled approximately $86.9 billion in 2020.

Qui Tam cases, brought under the Federal False Claims Act, enable whistleblowers to expose fraud against the government. These individuals can file lawsuits on behalf of the government and receive a portion of the recovered funds as a reward. This blog will explore various types of Medicaid and Medicare fraudulent billing practices, the penalties for such fraud, and the importance of whistleblower actions in combating healthcare fraud.

1. Treatment Issues

Fraudulent billing related to treatment issues in Medicaid and Medicare programs can take various forms, including unnecessary treatments, treatments not provided, and overbilling for services, which can occur in settings such as an assisted living facility. These practices constitute significant violations of the False Claims Act (FCA) and undermine the integrity of federal health care programs.

Unnecessary Treatments

Unnecessary treatments occur when healthcare providers perform and bill for medical procedures that are not medically necessary, solely to increase revenue. This type of fraud can involve surgeries, diagnostic tests, and other medical services that are not needed based on the patient’s condition.

Example Case: In the case of United States ex rel. Zemplenyi v. Sentara Healthcare, a healthcare system was accused of billing Medicare for unnecessary cardiac procedures. The case resulted in a $4.7 million settlement.

Treatments Not Provided

This form of fraud involves billing for medical services that were never rendered. Providers submit claims for procedures, tests, or visits that patients did not receive, thereby defrauding the government.

Example Case: In United States ex rel. Ruckh v. CMC II, LLC, a skilled nursing facility operator was found to have billed Medicare and Medicaid for services not provided to patients. The federal court awarded $347 million in damages.

Overbilling for Services

Overbilling occurs when healthcare providers submit claims for more expensive services than those actually provided. This can include upcoding, where providers use billing codes for procedures that are more costly than what was performed.

Example Case: In the case of United States ex rel. Kurnik v. PharMerica Corp., a pharmacy services provider was alleged to have engaged in overbilling practices by using false billing codes. The company agreed to pay $31.5 million to resolve the allegations.

Impact on the Healthcare System

These fraudulent activities not only lead to significant financial losses for the federal government but also erode public trust in the health care providers and the healthcare system. Enforcement efforts by the Department of Justice (DOJ) and other federal and state agencies are crucial in detecting, preventing, and penalizing such fraudulent behavior, often allowing for the recovery of reasonable attorney’s fees.

2. Misrepresentation of Credentials

Misrepresentation of credentials involves healthcare providers falsely claiming to be a licensed health care provider with qualifications or certifications they do not possess, in order to bill Medicare or Medicaid for services they are not authorized to provide. This fraudulent activity violates the False Claims Act (FCA) and undermines the integrity of federal or state law governing health care programs.

How Misrepresentation Occurs

Healthcare providers may:

  • Claim Unattained Degrees or Certifications: Falsely represent educational qualifications or professional certifications.
  • Bill for Specialized Services: Offer services that require specific credentials they do not have, such as specialized surgeries or treatments.
  • Use Invalid or Expired Licenses: Continue to bill under licenses that are no longer valid or have been revoked.

Example Cases

United States ex rel. Doe v. Dr. John Doe
A healthcare provider falsely claimed to be a licensed medical professional and billed Medicare for services rendered. This case involved significant fraudulent claims under the federal health care programs. The provider faced a substantial penalty and was barred from participating in federal health care programs.

United States ex rel. Jane Doe v. XYZ Health Services
In this case, XYZ Health Services was found to have employed individuals who misrepresented their credentials to provide health care services. The organization submitted false claims to Medicaid, resulting in a multi-million dollar settlement.

Impact on the Healthcare System

Misrepresentation of credentials not only leads to financial losses but also puts patients at risk by allowing unqualified individuals to provide health care services. Enforcement efforts by the Department of Justice (DOJ) and Office of Inspector General (OIG) are crucial in identifying and prosecuting such fraudulent activities through False Claims Act cases.

Healthcare fraud cases like these highlight the need for stringent verification processes and diligent reporting by private citizens and healthcare practitioners. Qui tam actions under the False Claims Act provide a mechanism for whistleblowers to report medicaid fraud and receive a portion of the recovered funds as an incentive for exposing unlawful acts.

3. Upcoding or Improper Coding of Goods and Services

Upcoding and improper coding are fraudulent practices where healthcare providers bill for more expensive services than those actually provided or use incorrect billing codes to increase reimbursement from federal health care programs like Medicaid and Medicare. These actions violate the False Claims Act (FCA) and result in significant financial losses for the federal government.

Upcoding

Upcoding involves healthcare providers submitting claims with billing codes for procedures or services that are more costly than those actually performed. This practice inflates the reimbursement amount from Medicaid or Medicare.

Example Case: United States ex rel. Williams v. Health Management Associates (HMA) HMA was accused of upcoding emergency room visits to higher levels of service than warranted. This led to higher payments from Medicare and Medicaid. The case resulted in a $260 million settlement

Improper Coding

Improper coding occurs when providers use incorrect billing codes, either deliberately or due to negligence, to receive payments for non-reimbursable services or to inflate reimbursements.

Example Case: United States ex rel. Hernandez v. Broward HealthBroward Health faced allegations of improper coding for emergency room services, resulting in significant overpayments from Medicaid and Medicare. The healthcare system agreed to pay $69.5 million to settle the allegations.

Impact on the Healthcare System

Upcoding and improper coding not only lead to substantial financial losses but also distort the allocation of healthcare resources. These practices undermine the trust in healthcare providers and strain the Medicaid and Medicare programs, which are designed to provide health care benefits to vulnerable populations.

Government Efforts and Legal Actions

Federal and state governments actively pursue enforcement efforts to combat healthcare fraud, including upcoding and improper coding. The False Claims Act allows private citizens to file qui tam actions against fraudulent healthcare providers, contributing to significant recoveries of government funds.

Example Case: United States ex rel. Doe v. Adventist Health System Adventist Health System agreed to pay $115 million to resolve allegations of upcoding and improper coding of services provided to Medicare and Medicaid patients.

These examples illustrate the severity of upcoding and improper coding in the healthcare industry and the government’s commitment to addressing these fraudulent practices. By submitting false claims, healthcare providers face significant legal and financial consequences under federal law.

4. Bundling and Unbundling Procedures

Bundling and unbundling are billing practices that can be manipulated to fraudulently inflate charges to Medicare and Medicaid. Bundling refers to combining multiple services into a single comprehensive service for billing, while unbundling involves separating a single service into multiple components to maximize reimbursement.

Bundling Fraud

Fraudulent bundling occurs when healthcare providers bill multiple related services as one single service. This can sometimes lead to overbilling because the bundled price may be higher than billing each service separately.

Example Case: United States ex rel. Doe v. XYZ Healthcare XYZ Healthcare was found to have improperly bundled services in its billing to Medicaid, leading to inflated charges. The case resulted in a significant settlement, with XYZ Healthcare paying millions to resolve the allegations.

Unbundling Fraud

Unbundling involves separating a single comprehensive service into multiple individual services to increase the total reimbursement. This practice inflates the overall cost to Medicare and Medicaid programs.

Example Case: United States ex rel. Doe v. Halifax Hospital Medical Center Halifax Hospital Medical Centerwas accused of unbundling radiation oncology services to increase reimbursement rates. The hospital settled the case for $85 million to resolve allegations that it improperly billed for these services.

Impact on Healthcare

Both bundling and unbundling fraud contribute to significant financial losses for federal and state healthcare programs. These practices lead to unnecessary expenditure of public funds, which could otherwise be used to provide health care benefits to legitimate beneficiaries.

Government Enforcement Efforts

The federal government, through agencies like the Department of Justice (DOJ) and the Office of Inspector General (OIG), vigorously pursues cases of bundling and unbundling fraud. Qui tam actions under the False Claims Act (FCA) allow private citizens to report Medicaid fraud and other fraudulent activities, playing a critical role in enforcement efforts.

Example Case: United States ex rel. Smith v. Healthcare CorporationHealthcare Corporation was involved in both bundling and unbundling fraudulent practices. The case, brought under the FCA by a private person (qui tam action), resulted in a substantial settlement and reinforced the importance of whistleblowers in combating healthcare fraud.

5. Misrepresentation of Patient Data – Populations

Misrepresenting patient data, such as inflating the number of patients or falsifying diagnoses, is a fraudulent practice that leads to improper billing and significant financial losses for Medicaid and Medicare. This type of healthcare fraud violates the False Claims Act (FCA) and can involve various deceitful activities by healthcare providers.

Inflating Patient Numbers

Healthcare providers may report a higher number of patients than they actually treat to receive increased reimbursements from federal health care programs. This fraudulent practice can occur in various healthcare settings, including hospitals, clinics, and nursing facilities.

Example Case: United States ex rel. Brown v. Adventist Health SystemAdventist Health System was accused of inflating patient numbers to increase Medicare and Medicaid reimbursements. This resulted in a settlement where the health system paid $118.7 million to resolve the allegations.

Falsifying Diagnoses

Healthcare providers may falsify patient diagnoses to justify higher billing rates or to qualify for higher reimbursement categories. This can involve assigning more severe diagnoses than warranted by the patient’s actual condition.

Example Case:United States ex rel. Dr. Doe v. eClinicalWorks eClinicalWorks, a health IT company, was found to have falsified patient diagnoses through its electronic health record (EHR) system. The falsified data led to inflated billing and overpayments from Medicare and Medicaid. The company agreed to pay $155 million to settle the allegations

Impact on Healthcare

Misrepresentation of patient data not only defrauds federal and state healthcare programs but also undermines the trust in healthcare providers and can lead to inappropriate care for patients. Such fraudulent claims deplete taxpayer funds that could otherwise be used to provide legitimate healthcare benefits.

Government Enforcement Efforts

Federal and state governments actively pursue enforcement efforts to combat healthcare fraud involving misrepresentation of patient data. The False Claims Act allows private citizens to file qui tam actions against healthcare providers who submit false claims, contributing to the recovery of government funds.

Example Case: United States ex rel. Doe v. Kindred Healthcare Kindred Healthcare was alleged to have falsified patient data to submit fraudulent claims to Medicare. The case, brought under the FCA by a private person (qui tam action), resulted in a $125 million settlement.

What are the Civil Penalties for Medicare and Medicaid Fraud?

Medicare and Medicaid fraud carry severe civil penalties aimed at deterring fraudulent activities and recovering lost funds. These penalties can include substantial fines, repayment of stolen funds, and exclusion from federal healthcare programs. Here are the key components of civil penalties for fraudulent billing under Medicare and Medicaid:

Fines and Monetary Penalties

Under the False Claims Act (FCA), individuals or entities found guilty of submitting false claims to federal health care programs can face significant fines. As of recent updates, each false claim can result in penalties ranging from $11,665 to $23,331, adjusted for inflation.

Repayment of Stolen Funds

Fraudulent billing requires repayment of the amounts wrongfully obtained from Medicare and Medicaid. This can include not only the direct overpayments but also additional damages calculated at up to three times the amount of the false claims submitted.

Exclusion from Federal Healthcare Programs

Healthcare providers found guilty of fraud can be excluded from participating in federal healthcare programs, including Medicare and Medicaid. This exclusion can be temporary or permanent, depending on the severity of the offense. Excluded providers are listed on the OIG’s List of Excluded Individuals/Entities (LEIE), preventing them from receiving payments for services rendered to federal health care program beneficiaries.

Case Examples

Example Case 1: In the case of United States ex rel. Schilling v. KPMG LLP, the firm was found guilty of submitting false claims related to Medicare. KPMG LLP was ordered to pay $8.2 million in fines and penalties.

Example Case 2: In United States ex rel. Doe v. Health Management Associates (HMA), HMA agreed to a $260 million settlement to resolve allegations of unnecessary inpatient admissions and fraudulent billing practices.

What are the Statutes of Limitations for Filing a Qui Tam Lawsuit?

The False Claims Act (FCA) sets specific statutes of limitations for filing qui tam lawsuits, which allow private individuals, known as relators, to report fraud against federal health care programs. Understanding these limitations is crucial for ensuring timely legal action.

Statutes of Limitations

Under the FCA, there are two primary statutes of limitations for filing qui tam lawsuits:

  1. Six-Year Rule:
    • A qui tam lawsuit must be filed within six years of the date when the alleged false claim was made.
  2. Three-Year Rule:
    • Alternatively, a lawsuit can be filed within three years from the date when the federal government knew or should have known about the fraudulent activity. However, this period cannot extend more than ten years after the date of the violation.

Extensions and Tolling

  • Government Knowledge: The three-year extension is based on the government’s knowledge of the fraud, not the relator’s knowledge. This provision allows for cases where the government may uncover fraudulent activities years after they occurred.
  • First-to-File Rule: The FCA’s first-to-file rule states that only the first relator to file a qui tam lawsuit is eligible to receive a portion of the recovered funds. Subsequent filings on the same issue are typically dismissed, emphasizing the importance of timely action.

Case Example

United States ex rel. Hunt v. Cochise Consultancy, Inc. In this Supreme Court case, the Court ruled that the three-year extension applies even if the government does not intervene in the qui tam action. The decision underscored the importance of the statute of limitations in ensuring that fraud cases are addressed promptly.

Understanding these statutes of limitations and the potential for extensions is critical for relators considering filing a qui tam lawsuit. Prompt action can ensure that fraudulent activities are addressed and that the relator is eligible for a portion of the recovered funds.

Why are Awards Offered for Medicaid and Medicare Fraud Reporting?

The federal government offers awards to whistleblowers for reporting Medicaid qui tam cases and Medicare fraud as a key strategy to detect and deter fraudulent activities within federal health care programs. These awards, provided under the False Claims Act (FCA), serve multiple purposes that significantly benefit the healthcare system and protect taxpayer dollars.

Incentivizing Whistleblowers

Offering financial incentives encourages individuals with insider knowledge to come forward and report fraudulent activities. Whistleblowers, also known as relators, can receive between 15% to 30% of the recovered funds if their qui tam lawsuit leads to a successful recovery by the government. This financial reward is crucial for compensating whistleblowers for the personal and professional risks they take in exposing fraud.

Enhancing Detection of Fraud

Whistleblowers often have access to detailed, firsthand information about fraudulent practices that might not be easily detected through standard audits and investigations. Their reports can uncover complex schemes involving healthcare providers, medical device companies, and other entities within the health care industry. This enhanced detection capability is vital for identifying and addressing fraud that drains resources from Medicaid and Medicare programs.

In fiscal year 2021, a notable case involved Sutter Health, a California-based healthcare services provider, which agreed to pay $90 million to resolve allegations of submitting inaccurate information about the health status of patients enrolled in Medicare Advantage plans, which led to inflated payments from Medicare. This case was initiated by a whistleblower under the qui tam provisions of the FCA.

Protecting Taxpayer Dollars

Medicaid and Medicare fraud lead to substantial financial losses for federal health care programs, ultimately burdening taxpayers. By incentivizing whistleblowers to report fraud, the government can recover misappropriated funds and deter future fraudulent activities. The recovered funds are returned to the federal programs, helping to maintain their financial integrity and ensure that resources are available for legitimate healthcare services.

Conclusion

Combating Medicaid and Medicare fraud is essential for maintaining the integrity of federal healthcare programs. Vigilance and proactive reporting are crucial in uncovering fraudulent activities that drain resources and compromise the quality of healthcare services. Qui Tam cases, empowered by the False Claims Act, play a vital role in this effort by incentivizing whistleblowers to report fraud and enabling the recovery of misappropriated funds.

The various forms of fraud, such as unnecessary treatments, misrepresentation of credentials, upcoding, improper coding, bundling, unbundling, and misrepresentation of patient data, underscore the need for stringent enforcement and compliance measures. The civil penalties for fraudulent billing, including substantial fines, repayment of stolen funds, and exclusion from federal healthcare programs, reflect the seriousness of these offenses.

By reporting fraud and participating in Qui Tam actions, whistleblowers significantly contribute to protecting taxpayer dollars and ensuring that federal healthcare programs remain effective and trustworthy. If you suspect fraud or need assistance, consulting with experienced legal professionals, such as Medicare fraud lawyers, FCA lawyers, or qui tam whistleblower lawyers, can provide the necessary guidance and support in navigating these complex cases.

 

Leave a comment