U.S. Department of Justice (DOJ) Targets Podiatrists for Alleged Foot Bath Schemes

The U.S. Department of Justice (DOJ) has recently targeted multiple podiatrists suspected of defrauding Medicare and other healthcare benefit programs. Each case has involved allegations of operating an unlawful “foot bath scheme” with medically unnecessary treatments that are not eligible for reimbursement.

It seems that podiatrists are now squarely within the crosshairs of the U.S. Department of Justice (DOJ). Recently, the DOJ has issued multiple press releases highlighting cases in which the nation’s top law enforcement agency is charging podiatrists with criminal healthcare fraud. If convicted, the podiatrists targeted in each of these cases face decades of federal imprisonment.

The DOJ’s Fight Against Fraudulent “Foot Bath Schemes”

In each case, the DOJ is alleging that the podiatrists involved operated fraudulent “foot bath schemes.” A case in Mississippi involves allegations that the targeted podiatrists ran a “scheme to defraud health care benefit programs, including Medicare, by prescribing and dispensing medically unnecessary medications and ordering medically unnecessary testing.” A similar case in Tennessee involves multiple charges based on an alleged “scheme to defraud Medicare and TennCare by prescribing and dispensing medically unnecessary foot bath medications.”

Each of these cases involves multiple counts of healthcare fraud, while the podiatrist in Mississippi is also facing charges of conspiracy to commit healthcare fraud, conspiracy to commit wire fraud, conspiracy to defraud the United States, and soliciting and receiving kickbacks. All of these are serious crimes that carry years or decades of imprisonment; and, even facing the “lesser” charges of these two cases, the podiatrist in Tennessee is still facing up to 50 years behind bars.

According to the DOJ, the podiatrists in both cases fraudulently billed Medicare and other government healthcare benefit programs for capsules, creams, and powders that were not medically necessary and therefore did not qualify for government reimbursement. The podiatrist in Mississippi is accused of fraudulently billing Medicare for approximately $4.9 million, while the podiatrist in Tennessee is facing allegations of improperly billing roughly $4 million to Medicare and TennCare.

Specific Allegations Against Podiatrists Accused of Fraudulently Billing for Medically Unnecessary Foot Care Medications

While the allegations in each case are slightly different, the overarching theme is the same: The DOJ is clearly targeting podiatrists who bill for medications that, according to Medicare (and other government benefit program) guidelines, do not qualify as medically necessary. Since these programs only cover medically necessary items, billing for any medication or service that falls outside of the guidelines is classified as healthcare fraud.

In these cases, however, the podiatrists are accused of billing for multiple medically unnecessary foot capsules, creams, and powders on numerous occasions. The podiatrist in Mississippi is also accused of soliciting and receiving kickbacks from a healthcare marketer in exchange for referrals—which is a violation of the federal Anti-Kickback Statute. Some examples of the specific allegations in these cases include:

• Prescribing “drug cocktails” of antibiotic and antifungal medications, “to be mixed in a tub of warm water for patients to soak their feet . . . that were not indicated to be dissolved in water and some of which were not water soluble.”
• Prescribing medications “based on their anticipated reimbursement amount, rather than medical necessity,” including vancomycin, econazole cream, and lidocaine.
• Ordering “medically unnecessary molecular diagnostic testing to be performed on . . . toenail clippings, including testing for the bacteria that causes ‘cat scratch disease,’ which is unlikely to be found in a toenail.”
• Soliciting and receiving kickbacks “in exchange for referring prescriptions for foot bath medications and referring biological specimens and testing orders to pharmacies and laboratories.”
• Submitting false and fraudulent claims to Medicare “for dispensing expensive foot bath medications that were not medically necessary,” and causing a diagnostic laboratory to submit false and fraudulent claims “for medically unnecessary molecular diagnostic testing.”

The similar nature of these cases—and the similar language used to describe the podiatrists’ alleged offenses in each press release—makes clear that this is a targeted effort on the part of the DOJ. It isn’t unusual for the DOJ to prioritize enforcement in particular areas—both in terms of the allegations involved and the geographic location of those targeted. If the DOJ uncovers one egregious case of healthcare fraud, it typically expects to uncover others as well; and, once federal agents prosecutors have a clear picture of a fraudulent “scheme” that appears to be pervasive in a particular medical field, they will leverage this to execute multiple takedowns and prosecutions in a relatively short period of time.

Medical Necessity: A Key Requirement for Reimbursement (and a Common Issue in Healthcare Fraud Investigations)

A significant percentage of all federal healthcare fraud investigations involve allegations of billing Medicare and other government benefit programs without proof of medical necessity. Only medically necessary medications and services are eligible for reimbursement, and it is up to healthcare providers to ensure that they are not billing for non-qualifying items—even if they personally believe these items benefit their patients.

Podiatrists and other healthcare providers must make appropriate medical necessity determinations before billing Medicare. Of course, given the complexity of the Medicare billing system (and the other government healthcare billing systems), this is often easier said than done. To avoid allegations of submitting “false and fraudulent” reimbursement claims, providers need to adopt comprehensive billing compliance programs, and they need to ensure that their staff comply with these programs daily.

Anti-Kickback Statute Violations: A Common (and Relatively Unknown) Issue for Podiatrists and Other Healthcare Providers

The Anti-Kickback is one of multiple federal laws that prohibit doctors from soliciting, offering, receiving, and paying program-reimbursed fees for patient referrals. These “kickbacks” can trigger either civil or criminal prosecution depending on the scope and severity of the allegations involved.

As in the case of the Mississippi podiatrist discussed above, Anti-Kickback Statute enforcement cases frequently involve payments between healthcare providers and healthcare marketers. But, doctors can face prosecution for engaging in prohibited financial relationships with clinics, laboratories, and other providers as well. Additionally, the Stark Law prohibits so-called “physician self-referrals,” which involve payments and other transactions between entities in which doctors have ownership or other financial interests.

Crucially, while the federal anti-kickback laws prohibit payments in a broad range of circumstances, they allow payments in many circumstances as well. For example, there are various “safe harbors” and exceptions under the Anti-Kickback Statute and Stark Law that expressly permit certain types of transactions.

Steps Podiatrists Should Take When Targeted By the DOJ for Healthcare Fraud

But, let’s say it’s too late for you to take advantage of one of these “safe harbors” or exceptions. The DOJ is investigating your healthcare practice for fraud. What should you do?

1. Engage Defense Counsel Advise You and Communicate with the DOJ

As soon as you find out that the DOJ is investigating your practice, you need to engage experienced defense counsel. At this point, the clock is ticking, and you will need to be proactive to have any hope of avoiding criminal prosecution. When you engage experienced healthcare fraud defense counsel, your lawyers will intervene in the DOJ’s investigation and guide you forward step-by-step.

2. Conduct an Attorney-Privileged Internal Compliance Assessment

In addition to intervening in the DOJ’s investigation, one of the first steps your defense counsel will (or should) take is to oversee a comprehensive internal compliance assessment. Why? At this stage, you need to know exactly what the DOJ is going to find. By engaging defense counsel for this process, not only can you ensure that no relevant records go overlooked, but you can also ensure that the entire process is protected under the attorney-client privilege.

3. Determine Your Practice’s (and Your Personal) Risk Exposure

Based on the data gathered during your internal compliance assessment, you can determine your practice’s (and your personal) risk exposure. Once you know what is at stake, then you can make informed decisions about your defense.

4. Formulate a Healthcare Fraud Defense Strategy

The next step is to quickly formulate an initial defense strategy. Should you dispute the allegations that your practice’s services were not medically necessary? Or, is the better approach to focus on lack of intent (a key element of criminal healthcare fraud charges)? These are critical questions that you will need to answer carefully with the advice of your healthcare fraud defense counsel.

5. Work with Your Defense Counsel to Target a Favorable Result

When facing a federal healthcare fraud investigation—even one involving substantiated allegations—it is often possible to avoid a criminal indictment with a strategic defense. By engaging with the DOJ and cooperating with the DOJ’s investigation as warranted (while still asserting appropriate privileges and protections), providers can often sidestep criminal prosecution. But, this requires providers to work closely with their defense counsel, and it requires their defense counsel to have an intimate understanding of the DOJ’s enforcement priorities, mechanisms, and objectives.

Speak with a Federal Healthcare Fraud Defense Lawyer at Oberheiden P.C.

If you need to know more about defending against a DOJ healthcare fraud investigation, we invite you to schedule a complimentary consultation at Oberheiden P.C. Please call 888-680-1745 or request an appointment online to speak with a senior federal healthcare fraud defense lawyer in confidence.