Tenet Healthcare, the parent company of Hilton Head Hospital, is denying allegations that the hospital was involved in a kickback scheme involving the Medicaid program.  The lawsuit says the hospitals fraudulently billed Medicaid for tens of thousands of ineligible claims, and asks that the hospitals pay damages and penalties. A federal whistle-blower accuses the Hilton Head Hospital and others in Georgia of paying kickbacks to clinics that directed expectant mothers in the country illegally to their hospitals and filed fraudulent Medicaid claims on those patients.

Federal law prohibits hospitals from paying to get patient referrals.  Also, people living in the country illegally are not eligible for Medicaid coverage except in emergencies. Medicaid does consider childbirth an emergency condition.



A few weeks ago, we posted a blog about the connection between doctors and prescription sales. In that article, financial data was used to show that doctors who worked with a pharmaceutical company, giving presentations and speeches, were more likely to prescribe a drug that the company had marketed.

In a similar tale of big pharma influence, one St. Louis company has been entangled in a lawsuit under the False Claims Act. John Prieve, the whistleblower who brought forth the suit, worked at Mallinckrodt LLC. In his suit, he claims that Mallinckrodt defrauded the government because they used financial incentives to increase the number of doctor prescriptions their drug got. In doing so, many of the prescriptions were paid by Medicare and Medicaid, essentially placing the added cost on the government. The suit alleges that the company ‘targeted doctors’ who prescribed similar drugs in an attempt to increase sales of the less effective and more expensive antidepressants and sleep aids that Mallinckrodt made. The company is settling the suit for $3.5 million.

Last month a federal jury found that Tuomey Healthcare System, a SC hospital, was engaging in Medicare fraud. The hospital was receiving kickbacks on referral fees, using its influence to create partnerships with doctors, solidified by contracts, and engaging in a kickback system. Tuomey received $39 million of Medicare money, all through fraudulent claims. They claim that contracts are legal and a part of the hospital’s efforts to serve the community and they asked a federal judge to overturn the verdict, in part because of the $237 million damages.

The Wall Street Journal (WSJ) reported that after 33 years, Judge Marcia Morales Howard vacated the injunction that kept Medicare information private. Information on individual doctors has for the past 33 years been considered an issue of the doctor’s privacy. But Judge Howard said that since the Privacy Act had been narrowed in its scope, the broad injunction was no longer necessary. The vacation of the injunction is just a step on the road towards getting Medicare information about doctors to become public.

The American Medical Association (AMA) may still decide to appeal the ruling. They have been a proponent of the injunction, which hides Medicare data on the premise of privacy, for the past three decades. As the injunction stands, news organizations must file Freedom of Information Act requests to access the information, and these requests, now and in the future, can be granted or denied on an individual basis by the Department of Health and Human Services, which is over Medicare. The Obama administration in the past has been favorable towards data transparency, including in the Affordable Care Act a provision which makes the Medicare claims database more accessible by the public, for certain community groups, but not for news organizations.

The information could be beneficial because it could hold the key to detailing fraud and abuse. Specific doctor information, which doesn’t include the name of the doctor, but does include a general overview of Medicare data, can be used to determine if fraud or abuse is occurring. Under the injunction, the data, hidden under the guise of privacy, could also hide countless cases of abuse and fraud. The WSJ was able to gain limited information from 2010, which did reveal numerous cases of fraud and abuse. While the AMA may be protecting doctors’ privacy, they’re also protecting some doctors’ crimes.

Good news for whistleblowers!  McKnight’s had an incredible story about a whistleblower case that resulted from comments made during a therapy provider’s public conference call in 2006.  An audience member became suspicious, investigated the situation, found fraud, and then filed a whistleblower lawsuit.   Remarks about a “therapist recruiting fee” on the public call did not sound right to Mark Essling, CEO of Health Dimensions Rehabilitation Inc..  Essling brought a False Claims Act lawsuit after spending about a year investigating the fees

The whistleblower filed against RehabCare who hosted the 2006 call.  He alleged that RehabCare overbilled Medicare and Medicaid and paid more than $10 million in kickbacks after taking over therapy at Missouri nursing homes.  Kindred Healthcare has owned RehabCare since 2011.

RehabCare argued that Essling should not qualify as a whistleblower because he based his suit on publicly available information. Only individuals identified by the False Claims Act, such as an attorney general, can sue a company based on public information. The defendants asked the judge to remove Essling from the action, which would then have proceeded with the government as plaintiff. His removal would have protected RehabCare from potentially paying Essling’s attorney fees.

Judge Audrey G. Fleissig denied RehabCare’s motion in a May 20 ruling. The “essential elements” of a fraud must be exposed publicly to trigger the public disclosure bar, and the government would not have understood this alleged fraud based only on RehabCare’s public disclosures, Fleissing wrote. Because Essling’s analysis of the information was needed to bring the case, he can remain a whistleblower plaintiff, the judge ruled.

DOJ announced a $12 million settlement with Hospice of Arizona along with American Hospice Management, LLC, and their parent corporation, American Hospice Management Holdings, LLC, for claims involving Medicare fraud and the False Claims Act.  The allegations involved submitting or causing the submission of claims to the Medicare program for ineligible hospice services provided by Hospice of Arizona.   The government alleges that Hospice of Arizona and its related entities engaged in certain practices that resulted in the submission of false claims, including pressuring staff to meet admissions and census targets, adopting procedures that delayed and discouraged discharges of ineligible patients, and failing to timely implement an adequate compliance program.
"The Medicare hospice benefit is available for patients who elect palliative treatment (medical care focused on providing patients with relief from the symptoms, pain and stress of a serious illness) for a terminal illness, and have a life expectancy of six months or less if their disease runs its normal course. Today’s settlement resolves allegations that Hospice of Arizona and its related entities submitted or caused the submission of false Medicare claims between September 1, 2002 and December 31, 2010 for Hospice of Arizona patients that did not have a terminal prognosis of six months or less, or that did but were not eligible for the level of care billed."


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McKnight’s reported thatTennessee-based nursing home operator Grace Healthcare LLC will pay the federal government more than $2.7 million, settling charges that Grace violated the False Claims Act by billing Medicare for unnecessary rehabilitation therapy.   A whistleblower said 10 Grace-operated skilled nursing facilities billed for unnecessary and unreasonable physical, occupational and speech therapy to meet the corporation’s reimbursement goals from 2007 to 2011.

The government proved that Grace’s billing was an example of “waste and abuse” driven by “financial considerations,” said U.S. Attorney for the Eastern District of Tennessee Bill Killian.  Grace will enter into a Corporate Integrity Agreement regarding its therapy services as part of the settlement. The former Grace employee received $405,000 under the settlement agreement.


Slate’s Matthew Yglesias wrote an interesting article titled American Doctors are Overpaid.

“The last time the OECD looked at this, they found that, adjusted for local purchasing power, America has the highest-paid general practitioners in the world. And our specialists make more than specialists in every other country except the Netherlands. What’s even more striking, as the Washington Post’s Sarah Kliff observed, these highly paid doctors don’t buy us more doctors’ visits. Canada has about 25 percent more doctors’ consultations per capita than we do, and the average rich country has 50 percent more. This doctor compensation gap is hardly the only issue in overpriced American health care—overpriced medical equipment, pharmaceuticals, prescription drugs, and administrative overhead are all problems—but it’s a huge deal.”

He concludes “When it comes to the federal budget, Medicare is a problem. An uncapped commitment to finance the health care needs of elderly Americans is a big challenge for an aging country. But when it comes to the question of health care costs overall, Medicare is the solution. Its vast bargaining clout lets it get much better prices than any private insurer, and we should be relying on it more to pay our bills, not less.”

Nursing homes nationwide that were not meeting even basic requirements to look after their residents charged taxpayers billions of dollars.  The Department of Health and Human Services’ inspector general said Medicare paid about $5.1 billion for patients to stay in skilled nursing facilities that failed to meet minimum quality of care rules in 2009, in some cases resulting in dangerous and neglectful conditionsOne out of every three times patients wound up in nursing homes that year, they landed in facilities that failed to follow basic care requirements laid out by the federal agency that administers Medicare, investigators estimated.


By law, nursing homes need to write up care plans specially tailored for each resident, so doctors, nurses, therapists and all other caregivers are aware how to help residents reach the highest possible levels of physical, mental and psychological well-being.  This is not done. Neglect is rampant.  Investigators estimate that in one out of five stays, patients’ health problems weren’t addressed in the care plans, falling far short of government directives.

The government spends taxpayer money on facilities that actually endangers people’s health. In other cases, residents got therapy they didn’t need, which the report said was in the nursing homes’ financial interest because they would be reimbursed at a higher rate by Medicare.




USA Today reported the Obama Administration recovered $4.2 billion in health care fraud money in 2012, continuing the trend of large investigations that has been breaking records since Obamacare was passed in 2010.  The 2010 health care law created one agency and expanded another to fight health care fraud, resulting in nine Medicare Fraud Strike Force Teams that sprouted up in areas particularly prone to Medicare fraud — such as Texas and Florida.

Health and Human Services Secretary Kathleen Sebelius said for every dollar spent on fraud and abuse in the past three years, the government brought $7.90 back in through lawsuits and fines.


The government also identified 150,000 ineligible Medicare providers by screening the providers who participate in the program in 2012. They recovered $3 billion through settlements and judgments through whistle-blower claims that included illegal pricing by drug manufacturers, marketing medical devices and medications for uses that have not been approved, and fraud by hospitals and other health care providers. And they recovered $1.5 billion in fines and forfeitures.