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What are the Penalties for Health Care Fraud Under Federal Law?

Health care fraud is a federal offense that carries substantial civil and criminal penalties. Doctors, business owners, and others accused of health care fraud must engage experienced federal defense counsel in order to avoid practice-threatening consequences.

Today, all health care providers are at risk for being targeted in federal investigations. Many non-providers are at risk for being targeted as well. This includes owners of clinics, laboratories, and dialysis centers, and even ambulance drivers who are accused assisting in the perpetration of Medicare fraud schemes.

When facing a federal health care fraud investigation, it is important to know what types of practices can be prosecuted as fraud. It is also important to know what is at stake. The following are summaries of 15 recent federal cases involving serious health care fraud allegations:

Federal Prosecutions Targeting Dentists for Health Care Fraud

1. Los Angeles Dentist Charged with Medicare Fraud, Medicaid Fraud, and Aggravated Identity Theft

A Los Angeles dentist was charged for his alleged role in a scheme to defraud Medicare and Medicaid. According to the indictment, the dentist fraudulently billed Medicare and Medicaid for procedures he did not actually perform. The indictment also alleges that the dentist would use his patients’ private information to continually bill for procedures, even when the patients did not come into his office. The charges against the dentist include six counts of health care fraud and two counts of aggravated identity theft.

2. Dental Management Company Settles Allegations of Medicaid Fraud

A national dental management company agreed to a settlement with the federal government for its alleged role in submitting false reimbursement claims to Medicaid. According to the settlement agreement, the dental management company submitted fraudulent claims for services provided to low-income children that were either medically unnecessary or not performed according to Medicaid’s standards. As a result of the settlement, the dental management company must pay $24 million to the United States and implement a strict compliance program. Since these allegations were resolved via settlement, there was no finding of liability against the dental management company.

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Aaron L. Wiley

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Roger Bach
Roger Bach

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Gamal Abdel-Hafiz
Gamal Abdel-Hafiz

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Chris Quick
Chris Quick

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Kevin M. Sheridan
Kevin M. Sheridan

Former Special Agent (FBI)

Ray Yuen
Ray Yuen

Former Supervisory Special Agent (FBI)

Dennis A. Wichern
Dennis A. Wichern

Former Special Agent-in-Charge (DEA)

3. Dentist Agrees to Settle Allegations of Upcoding and Phantom Billing

A dentist in Oklahoma agreed to settle allegations of perpetrating a scheme to defraud Medicaid. According to the settlement agreement, the dentist submitted claims to Medicaid for services that were never performed. The dentist also allegedly up-coded certain procedures in order to make them appear more expensive than they actually were. These allegations against the dentist were investigated by a joint team of agents from the FBI, OIG and Oklahoma Medicaid Control Unit. As a result of the settlement, the dentist will pay back $5 million to the United States. Since these allegations were resolved via a settlement, there has been no finding of liability against the dentist.

4. Dentist Indicted for Alleged Five-Year Medicaid Fraud Billing Scheme

A New Hampshire dentist was indicted on 189 counts of Medicaid fraud. According to the indictment, the dentist billed Medicaid for medically-unnecessary procedures and for services that had already been reimbursed over a five-year period. Specifically, the indictment alleges that the dentist would perform simple procedures but then bill Medicaid for expensive services such as root canals and extractions that were not actually performed. The dentist is also alleged to have developed a scheme which resulted in double payments for many procedures. Each of the charges filed carries the possibility of three to seven years in prison.

Federal Investigations Targeting Allegations of Oncology Fraud

1. Oncologist Charged with Fraudulently Billing Medicare $150 Million for Unnecessary Cancer Treatments

A Michigan oncologist was indicted for an alleged scheme to defraud Medicare that involved fraudulently misdiagnosing his patients with cancer. According to the indictment, the oncologist intentionally misdiagnosed hundreds of patients with cancer-related issues in order to bill Medicare for expensive treatments. The indictment further alleges that the oncologist knew many of his patients did not have cancer but still subjected them to chemotherapy and radiation treatment, and that many of these healthy patients became gravely sick upon receiving these treatments.

The oncologist allegedly billed Medicare over $150 million in fraudulent claims and pocketed $65 million from his scheme. In addition to long-term imprisonment and other severe penalties, the oncologist – who became a United States citizen in 2009 – could lose his citizenship if found guilty of the allegations.

2. Washington-Area Oncologist Indicted for Alleged $2 Million Medicare Drug Scheme

A Washington-area oncologist was indicted for his alleged role in a scheme to defraud Medicare. According to the indictment, the oncologist would bill Medicare for drugs that were never provided to his patients. The oncologist would allegedly write down drug dosage amounts on slips on paper and then give the slips of paper to his nurse. The nurse would administer the dosage amounts on the slips, and then the slips would be destroyed. Subsequently, the oncologist would fraudulently fill out patient records with higher dosages.

The indictment alleges that the oncologist submitted almost $2 million in fraudulent claims to Medicare. It further alleges that the oncologist transferred the fraudulent reimbursements to offshore bank accounts in an attempt to hide the money. The oncologist is currently facing 20 counts of healthcare fraud and a significant prison sentence if convicted.

3. Florida Oncologist Convicted of Fraudulently Billing Medicare for Unregulated and Ineffective Cancer Medications

A Florida oncologist was convicted by a federal jury for her role in a scheme to defraud Medicare. According to evidence presented at trial, the oncologist was smuggling cancer drugs from unlicensed foreign distributers into the United States and using the drugs to treat her patients. Since the drugs were unregulated, they were not eligible for reimbursement from Medicare, but the oncologist still submitted claims for reimbursement.

Further evidence showed that the drugs the oncologist used did not contain any active ingredients needed to treat cancer. After the guilty verdict, the oncologist was sentenced to 70 months in prison.

4. New York Oncology Practice Settles $5 Million Medicare Fraud Allegations

A New York oncology practice group entered into a settlement agreement with the United Sates following multiple allegations of Medicare fraud. According to the settlement agreement, the oncology practice allegedly billed Medicare for cancer-related treatment services that were never actually provided. The oncology practice also allegedly routinely waived Medicare beneficiaries’ copays and instead billed them to Medicare. As a result of the settlement, the oncology practice will pay the United States $5 million. Since these allegations were resolved via a settlement, there has been no finding of liability against the practice group.

Federal Prosecutions Targeting Allegations of Dialysis Fraud

1. Dialysis Center Employee Pleads Guilty to Receiving Kickbacks for Unnecessary Ambulance Transport

An employee at a California dialysis center pleaded guilty to a scheme to defraud Medicare. According to the plea agreement, the employee conspired with a California ambulance company to receive kickbacks for fraudulent referrals of dialysis patients. The dialysis center employee instructed employees at the ambulance company to falsify patient records in order to indicate that the patients needed ambulance transport to her dialysis center, when in fact they did not meet the Medicare requirements for ambulance transport. The employees at the ambulance company submitted the fraudulent transfer bills to Medicare and then paid the dialysis center employee a portion of the funds received.

As a result of this scheme, Medicare paid $6 million for medically-unnecessary ambulance transfers. As part of the plea agreement, the dialysis center employee will pay restitution to Medicare.

2. Dialysis Company Settles Allegations of False Claims Act Violations Involving Incentivized Patient Referrals

A major dialysis company agreed to a settlement with the United States based on allegations that it violated the False Claims Act. According to the settlement agreement, the dialysis company targeted physicians who treated a large percentage of patients who were eligible for dialysis. The company would offer these physicians lucrative incentives in exchange for referring their patients to the company. It also allegedly had the physicians sign non-compete agreements that prohibited them from referring dialysis patients to other companies. To settle these allegations, the dialysis company will pay $350 million back to the United States. Since these allegations were resolved via a settlement, there has been no finding of liability against the dialysis company.

3. Los Angeles Ambulance Driver Pleads Guilty to Facilitating Medicare Fraud Scheme Involving Dialysis Treatments

An ambulance driver in Los Angeles pleaded guilty to allegations that he participated in a scheme to defraud Medicare. According to the plea agreement, the ambulance driver conspired with the owner of a Los Angeles-based dialysis center to bill Medicare for medically-unnecessary services. The plea agreement states that the ambulance driver falsified patient records in order to make it appear that their transportation to the dialysis center was eligible for Medicare reimbursement. The owner of the dialysis center would then provide dialysis to the patients, in many cases without medical necessity. The ambulance transport services and the dialysis treatments were then fraudulently submitted to Medicare for reimbursement.

According to the plea agreement, Medicare paid $1.3 million for the fraudulent ambulance transfers and dialysis treatments.

4. Pennsylvania Ambulance Driver Indicted for Alleged $5.4 Million Medicare Fraud Scheme

A Pennsylvania ambulance driver who transported dialysis patients was indicted for his alleged role in a scheme to defraud Medicare. According to the indictment, the ambulance driver falsified dialysis patients’ medical records in order to make them appear eligible for Medicare reimbursement. As a result of the scheme, Medicare paid $5.4 million for medically-unnecessary ambulance transportation services.

Federal Prosecutions Targeting Allegations of Acupuncture Fraud

1. Acupuncture Therapy Center Owner Sentenced to Federal Prison for Medicare Fraud

An acupuncture therapy center owner in California was convicted of Medicare fraud by a federal jury. According to the evidence presented at trial, the therapy center owner enticed patients to his center under the guise of providing free acupuncture treatments. The therapy center owner would perform acupuncture on his patients, but then use their personal information to bill Medicare for occupational therapy services that were never performed. The owner also falsified his patients’ records in order to make it appear that the therapy services were performed and were medically necessary. As a result of the scheme, Medicare paid over $2 million in fraudulent claims. A federal judge sentenced the therapy center owner to 63 months in prison.

2. Florida Chiropractor Indicted for Fraudulently Billing Acupuncture Services to Tricare

A chiropractor in Florida who operated numerous wellness centers within the state was indicted for Tricare fraud. According to the indictment, the chiropractor would see patients; but, instead of providing medically-necessary services, he would perform acupuncture services that were not eligible for Tricare reimbursement. The chiropractor would then use patients’ personal information in order to fraudulently bill Tricare for reimbursable services such as occupational and physical therapy. As a result of the scheme, the chiropractor billed over $23 million to Tricare.

3. New York Chiropractors Indicted for Alleged $80 Million Acupuncture Fraud Scheme

Two New York chiropractors were indicted for their alleged roles in a multi-million-dollar healthcare fraud scheme. According to the indictment, the chiropractors billed Medicare and private insurance companies for millions of dollars’ worth of services that were not medically necessary and that were never provided. The chiropractors allegedly performed acupuncture services on most of their patients and then used these patients’ personal information to fraudulently bill for services such as physical therapy and diagnostic testing.

The chiropractors are also alleged to have established numerous phony clinics in order to avoid tipping off federal authorities as to the vast number of patients they were “treating” at their one clinic. As a result of the scheme, the indictment alleges that the chiropractors fraudulently billed Medicare and various private insurance companies more than $80 million.

Contact the Federal Health Care Fraud Defense Team at Oberheiden P.C.

Are you facing federal health care fraud allegations? Are you concerned that your practice’s or business’s compliance efforts may be inadequate? To discuss your situation with a senior attorney on our federal health care fraud defense team, call 214-692-2171 or request a free case assessment online now.

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