The following is a summary of the federal Health and Human Services agency’s Office of Inspector General (OIG) reports of fraud and abuse enforcement activity across the country. The enforcement actions reported are based upon federal and individual states’ activity.
The summaries reflect areas of OIG’s and individual states’ current and recent enforcement activity. Knowing where regulators’ attention is focused can help healthcare providers identify areas of focus for compliance and risk assessment activities. Although not all the enforcement actions may be relevant to any one provider’s healthcare business, there may be some summaries that could be used as examples in compliance program education programs (“What to avoid”), or used in developing a risk management plan.
Of Note in this Issue:
- New York Skilled Nursing Facility subject to a $7.85 Million Federal Court Stipulation and Order of Settlement and Dismissal when it changed its Medicare residents’ Medicare coverage from Medicare Advantage to Original Medicare. The Medicare Advantage disenrollment and Original Medicare enrollment was done without the residents’ knowledge, consent, or permission. (See June 29, 2022 summary)
COVID-19 fraud schemes that are prosecuted are increasing in being reported.
Telemedicine fraud schemes connected to issuance of prescriptions for DME or drugs are being reported.
Eight States’ report on their settlements with Mallinckrodt Pharmaceutical related to Mallinckrodt’s federal and multi-state settlement of drug rebate fraud.
- AG = Attorney General
- AKS = Anti-Kickback Statute
- CIA = Corporate Integrity Agreement
- CMP = Civil Monetary Penalties
- CMS = Centers for Medicare and Medicaid Services
- CPT = Current Procedural Terminology Codes
- DME = Durable Medical Equipment
- E&M = Evaluation & Management services
- FEHBP = Federal Employees Health Benefits Program
- FMV = Fair Market Value
- DOJ = United States Department of Justice
- FCA = False Claims Act
- FWA = Fraud, Waste & Abuse
- HHS = Department of Health and Human Services
- IA = Integrity Agreement
- LTC = Long Term Care (usually facilities)
- MCO = Managed Care Organization (typically Medicaid)
- MFCU = Medicaid Fraud Control Unit
- MSO = Management Services Organization
- OIG = Office of Inspector General in HHS
- OT = Occupational Therapy
- PBM = Pharmacy Benefit Managers
- PT = Physical Therapy
- SNF = Skilled Nursing Facility
June 30, 2022 OIG News Release
Maryland Man Charged With Defrauding Medicaid in Scheme Involving Personal Care Services – Defendant Accused of Submitting Over $700,000 in Fraudulent Claims
DC. The Defendant, personal care aide and/or a participant-directed personal care aide, allegedly submitted false timesheets claiming he performed services when he did not provide the services reflected on the false timesheets. This included services when he was traveling outside of the US.
Nurse Practitioner Pleads Guilty To Conspiracy In $15 Million Durable Medical Equipment Scheme
NC. The Defendant, nurse practitioner working for a telemedicine company based in DE, caused claims to be submitted to Medicare for medically unnecessary orthopedic braces and other DME. The Defendant allegedly signed false medical records describing purported “assessments” of Medicare beneficiaries and certifying that he performed corresponding medical exams when he had no interaction with the beneficiaries and made no medical determination whether the devices were medically necessary or if the beneficiaries needed the DME. The Defendant received unsigned orders for orthopedic braces for beneficiaries from the telemedicine company which the Defendant signed and returned in exchange $15 for each purported assessment he performed.
Mississippi Pharmacist Returns $7.1 Million Unlawfully Taken From Medicare
AL. The Defendant failed to report a 2010 wire fraud conviction to CMS and in 2016 was excluded from Medicare for 10 years. From 2016 until 2021, the Defendant committed healthcare fraud by continuing to manage and control pharmacies that submitted claims for payment to Medicare. The Defendant avoided detection by ensuring that those submitting Medicare enrollment/revalidation paperwork for the pharmacies did not disclose his ownership interest or managerial role in the pharmacies.
MorseLife Nursing Home Health System Agrees to Pay $1.75 Million to Settle False Claims Act Allegations for Facilitating COVID-19 Vaccinations of Ineligible Donors and Prospective Donors
FL. The Defendant, MorseLife, oversees healthcare facilities on its campus, including a nursing home and an assisted living facility. The Defendant allegedly facilitated COVID-19 vaccinations for individuals who were ineligible to participate in the CDC’s Pharmacy Partnership for Long-Term Care Program (LTC PPP) which was designed to vaccinate long-term care facility residents and staff when doses of COVID-19 vaccine were in limited supply. The Defendant knowingly invited and facilitated the vaccination of hundreds of ineligible persons at the clinic by characterizing them as “staff” and “volunteers” many of whom were targeted by Defendant for donations. The Defendant characterized board members as “staff”, directed the fundraising arm to invite donors and potential donors to the vaccination clinic, and allowed the Vice Chairman of the Defendant’s Board and his brother to invite close to 300 ineligible individuals to receive the vaccine at the Defendant
Three Florida Pharmacies Agree to Pay $830,707 to Resolve Allegations They Fraudulently Billed Federal Health Care Programs
FL. State law allows collaborative pharmacy practice agreements between a physician and pharmacist which allows the pharmacist to provide specific patient care services (outlined in the agreement in accord with FL law) for chronic health conditions to the physician’s patients. The Defendants, pharmacies, allegedly used unlawful collaborative practice agreements to delegate prescribing authority from physicians to pharmacists which resulted in unlawful prescriptions and used the same collaborative practice agreements to write and fill prescriptions without any physician involvement. This resulted in fraudulent claims to Medicare and Medicaid for unlawfully prescribed medications.
This matter was initiated through a Qui Tam action.
Three More Defendants Sentenced for Their Roles in Wide-Ranging Medicaid Fraud Conspiracy
PA. The Defendants, employees of one or more of four related home care agencies, were sentenced following their prior guilty pleas. They admitted submitting fraudulent claims for services that were never provided to Medicaid beneficiaries identified on claims or for which there was insufficient or fabricated documentation to support the claims. The Defendants admitted that co-conspirators fabricated timesheets to reflect provision of in-home Personal Assistant Services (PAS) that were never provided and some Defendants stopped using their own names as the attendant on timesheets and used “ghost” attendants, some of whom permitted their names to be used in exchange for a kickback of the resulting fraudulent salary payments. Defendants admitted that co-conspirators submitted false timesheets for PAS care they never provided during times that they were actually working other jobs or living out of the area, or when Medicaid beneficiaries could not receive services because the beneficiaries were hospitalized, incarcerated, or deceased. Kickbacks were paid by co-conspirators to beneficiaries in return for some beneficiaries’ agreements to participate in the submission of fraudulent timesheets to support Medicaid claims. Additionally, Defendants admitted that co-conspirators directed them to bill the maximum allowable PAS and service coordination hours so that the agencies did not forfeit underutilized consumer hours. The underutilized hours became the subject of false claim submissions without the relevant beneficiaries’ knowledge or consent.
Sandy Springs Man Sentenced for Tricare and Medicare Fraud Scheme
GA. The Defendant, operator of a pharmaceutical company (“NHS”), was sentenced for submitting fraudulent claims for compound medications and DME to TRICARE and Medicare in violation of the FCA. The Defendant and his co-conspirators allegedly received kickbacks for TRICARE referrals and prescriptions of compound medication formulations including pain creams, scar creams, and multi-vitamins that were devised to maximize profits. NHS caused compounding pharmacies to submit false claims for the prescriptions who in turn paid NHS a portion of the TRICARE reimbursement. NHS paid a portion of its proceeds to healthcare marketing companies that pushed providers to prescribe unnecessary compound medications. The Defendant created an online portal database used by NHS to facilitate the referral of prescriptions through NHS to the compounding pharmacies and NHS used claims data to track the referrals made to compounding pharmacies and to invoice the pharmacies for the illegal kickbacks owed to NHS for the referrals.
The Defendant also warehoused, packaged, and shipped thousands of fraudulent DME orders to Medicare beneficiaries, despite knowing that the DME were supported by sham prescriptions written by telemedicine physicians, who in many instances, never spoke with or examined the Medicare beneficiaries who were the subject of the prescriptions. The Defendant packaged and shipped DME to Medicare beneficiaries that were not requested or needed.
This civil settlement requires the Defendant to pay $950,000 and is based on the “ability to pay”.
June 29, 2022 OIG News Release
U.S. Attorney Announces $7.85 Million Settlement With Citadel Skilled Nursing Facility In Bronx For Fraudulently Switching Residents’ Healthcare Coverage To Boost Medicare Payments – The Plaza Rehab and Nursing Center and Citadel Consulting Group Admit to Often Not Obtaining the Residents’ Consent Prior to Switching Their Medicare Coverage
NY. Original Medicare is typically more profitable than Medicare Advantage for skilled nursing facilities. It was alleged that Plaza Rehab and Nursing Center (“Plaza”) was directed by Citadel Care Centers LLC (“Citadel”) to fraudulently switch Plaza’s residents’ Medicare Advantage coverage to Original Medicare. The changes made by Plaza were done without the residents’ or their family members’ knowledge or consent, and without any request to do so by the residents or their authorized representatives. The change to Original Medicare from the residents’ Medicare Advantage plans also had the potential to impact residents’ out-of-pocket payments, the scope of covered services, and their drug plans. The consequences of the disenrollment from Medicare Advantage to Original Medicare was not discussed with residents or their representatives.
It was admitted by Plaza and Citadel that Citadel set monthly disenrollment quotas and identified potential candidates for disenrollment; Plaza staff did not obtain consent from residents or their authorized legal representatives prior to performing the disenrollment; mental health assessments and capacity of residents were not considered when obtaining consent from the 19 residents who allegedly consented to the disenrollments; Plaza staff used the Medicare.gov website to enter residents’ personal information and make the disenrollment from Medicare Advantage and enrollment into Original Medicare; Plaza staff misrepresented themselves on the Medicare.gov website as enrollees, persons assisting enrollees, or persons authorized to act on behalf of enrollees; and Plaza and Citadel did not offer assistance to residents to re-enroll in Medicare Advantage upon discharge from Plaza.
This matter was initiated through a whistleblower lawsuit.
Plaza and Citadel agreed to enter into a federal Corporate Integrity Agreement.
Worcester Adult Day Care Center Resolves Allegations of Improper Billing – AG’s Office Alleges that Facility Overbilled MassHealth by Misrepresenting the Number of Clients Served and Hours of Care Provided
MA. The Defendant, adult day health provider, allegedly overbilled Medicaid for the number of people served and the number of hours care was provided, reporting that more people were provided care on a given day than actually received services. The Defendant also allegedly used incorrect billing codes for some members who did receive services, charging Medicaid for a full day of service when patients only attended for a few hours and a lower billing code was required. The Defendant also agreed to enter into a three year independent compliance monitoring program.
Jury Convicts State Lawmaker of COVID-19 Fraud Scheme at Springfield Health Care Charity – Also Convicted of Stem Cell Fraud Scheme, Illegally Distributing Prescription Drugs
MO. The Defendant was alleged to have fraudulently applied for CARES Act funding for COVID testing by a non-profit that was not provided or already paid for at her for-profit clinic. CARES Act funds were paid into the non-profit and then transferred into the for-profit’s bank account. The Defendant also marketed a stem cell treatment that used amniotic fluid with no stem cells to treat certain medical conditions. The Defendant distributed Oxycodone and Adderall over the internet without valid prescriptions written by persons with authority to write prescriptions for Schedule II controlled substances.
Fifteen Texas Doctors Agree to Pay over $2.8 Million to Settle Kickback Allegations – Total of 33 Texas Doctors Have Settled Related Health Care Fraud Allegations
TX. The 15 Defendants, all physicians, settled allegations that they violated the AKS and the Stark Law by receiving payments from nine MSOs in exchange for ordering lab tests from specific hospitals or labs. Remuneration from one hospital was in the form of volume-based commissions paid to independent contractor recruiters who used MSOs to pay physicians for their referrals. MSO payments were allegedly disguise as investment returns but were in fact payments for referrals.
June 28, 2022 OIG News Release
More Charges Filed in Fraud and Kickback Scheme
TX. The Defendant, a registered nurse and former owner of a home health care company, allegedly received kickbacks disguised as employee salaries from a local pharmacy. The Defendant allegedly then paid the physician that wrote the compound drug prescriptions the kickback. The pharmacy was filling prescriptions for compound drugs that had been written by a previously indicted physician. The Defendant and the physician were indicted for conspiracy to pay and receive illegal kickbacks in exchange for referral of prescriptions for compound drugs.
June 24, 2022 OIG News Release
Attorney General Bonta Secures Conviction of San Joaquin County Doctor in Connection with Four-Year Medi-Cal Fraud Scheme
CA. The Defendant, orthopedic surgeon who operated a medical clinic, was found guilty of defrauding Medicaid and Medicare by administering excessive and medically unjustifiable x-rays to his patients. Routine office visits would include x-rays of multiple parts of the patients’ bodies, regardless of whether it had any relation to a patient’s medical condition.
Outpatient Mental Health Company Will Pay $4.6 Million To Resolve False Claims Allegations – Pathways of Massachusetts Had Insufficient Clinical Supervision and Documentation Practices, Causing Millions of Dollars in False Claims to MassHealth
MA. See summary provided on June 22, 2022 below related to Molina headline.
Attorney General Josh Stein Announces $233 Million Multistate Medicaid Settlement with Mallinckrodt
Mallinckrodt To Pay $233 Million in National Settlement of Allegations That It Defrauded Medicaid Drug Rebate Program – Massachusetts Secures Nearly $2.7 Million as a Result of Opioid Manufacturer’s Allegedly False Claims to MassHealth; Mallinckrodt Allegedly Underpaid Rebates for its Multiple Sclerosis Drug
Wisconsin Department of Justice Announces Mallinckrodt to Pay $230 Million Agreement in Underpayment of Medicaid Drug Rebates Lawsuit
Oklahoma Recovers More Than $3.8 Million from Mallinckrodt for Alleged Underpayment of Medicaid Drug Rebates
AG Balderas Joins $230 Million Settlement Against Pharmaceutical Company Over Allegations of Medicaid Fraud
NM. The Defendant, Mallinckrodt pharmaceutical company, and NM settled with other States (previously reported) that Mallinckrodt knowingly underpaid Medicaid rebates to States’ Medicaid programs. This resulted in the submission of false claims to NM’s Medicaid program.
See also report on other States’ settlement in the June 17. 2022 summary below.
New Orleans Woman Charged with Health Care Fraud
LA. The Defendant, denial specialist at a Federally Qualified Health Center and AIDS Service Organization, created fraudulent invoices with falsified supporting documents (e.g., Explanations of Benefits) from insurance companies. She endorsed checks issued to patients that were in higher amounts than the usual range of the refund amount; made claims in the system that made it appear that patients paid out-of-pocket for services and when the facility’s finance department issued patient refund checks the Defendant deposited the refunds into her personal bank account. The Defendant also filed additional claims with the Louisiana Health Access Program and directed that checks be sent to her residence which she then deposited into her personal bank account.
Charlotte Doctor Is Indicted For $11 Million Durable Medical Equipment Scheme
NC. The Defendant, NC physician working as an independent contractor for a DE telemedicine company, allegedly signed fraudulent orders for medically unnecessary DME (knee braces) that were used to support claims to Medicare and TRICARE. It is alleged that the Defendant never examined the Medicare and TRICARE beneficiaries, she had little or no interaction with the beneficiaries, and made no medical determined whether the devices were medically necessary or whether the beneficiaries needed the DME. The telemedicine company provided unsigned orders for DME which the Defendant signed and returned to the telemedicine company in exchange for $20 for each purported assessment done.
Nursing Director Pleads Guilty to Lying to Federal Agents Regarding Production of Fraudulent COVID-19 Vaccine Cards – Case Marks First Conviction in District of South Carolina Related to Fraudulent Vaccine Cards
SC. The Defendant, director of nursing at an SNF, pled guilty to providing false COVID-19 vaccine cards to others. When completing false COVID cards, the Defendant was aware that the individuals receiving the cards did not receive the vaccine noted on the cards. She also lied to federal investigators after the investigators identified themselves as such and advised that lying to a federal agent was a crime.
June 22, 2022 OIG News Release
Molina Healthcare Agrees to Pay Over $4.5 Million to Resolve Allegations of False Claims Act Violations
NMA. Molina and its previously owned subsidiary Pathways of Massachusetts, allegedly submitted improper claims for reimbursement to Medicaid and entities managed by Medicaid when they failed to properly license and supervise mental health center staff, including social workers and psychological associates, and failing to provide and timely document the provision of adequate clinical supervision to clinicians requiring supervision.
This matter was initiated by a Qui Tam action.
Paducah Doctor Admits to Violating the False Claims Act and Being Liable for Millions for His Role in a Telehealth Scheme by Ordering Durable Medical Equipment (DME) and Genetic Tests
KY. The Defendant, physician, admitted he violated the FCA. He allegedly submitted and conspired to submit false claims to Medicare by (a) entering into a financial arrangement with a locum tenens physician staffing firm to provide telehealth services to the firm related to referral of Medicare patients for DME and genetic testing items and services, and for arranging for their ordering of same; (b) receiving payments in violation of AKS from the firm and its telehealth clients in return for the Medicare patient referrals; and (c) causing false claims to be billed to Medicare for DME and genetic testing because the claims were tainted by kickbacks and were not medically necessary since he did not have a physician-patient relationship with beneficiaries, did not speak with beneficiaries, did not engage in treatment of the beneficiaries, and knew his prescribed goods and services were not medically necessary.
June 21, 2022 OIG News Release
Registered Nurse Pleads Guilty in Covid-19 Vaccination Record Card Fraud
MI. The Defendant, RN at a Veteran’s Hospital, pled guilty to COVID-19 Vaccination Record Card (VRC) fraud. The Defendant admitted to stealing or embezzling authentic COVID-19 VRCs from the hospital along with vaccine lot numbers necessary to make the cards appear legitimate. She resold the cards and information to individuals for $150 – $200 each and communicated with buyers primarily via Facebook.
June 17, 2022 OIG News Release
Medford Man Found Guilty, Sentenced To Jail for Defrauding MassHealth – Defendant Caused MassHealth to Pay Over $100,000 for Personal Care Attendant Services That Were Not Provided
MA. The Defendant, Medicaid beneficiary, was found guilty for his role in a scheme to falsely submit claims to Medicaid for Personal Care Attendant (“PCA”) services. The Defendant and his PCA schemed to falsely submit timesheets for PCA services that were not actually rendered. Bills were submitted for time that the PCA was working at a secondary employer or while the Defendant or the PCA were traveling or residing out of the country separately for long periods of time. After release from prison, the Defendant will be required to receive services from a home health company and not a PCA program.
Attorney General O’Connor Announces Settlement with Tri-State Medical Supplies
OK. The Defendant, DME supplier, allegedly provided DME to Medicaid beneficiaries at inflated prices and shipping charges. OK’s investigation was initiated when a developmental disabilities agency using the Defendant compared Defendant’s claims with those of other companies that provided similar services and equipment.
Attorney General Bonta Announces Settlement Resolving Medi-Cal Fraud Allegations Against Internal Medicine Practitioner in Southern California
CA. The Defendant, physician, allegedly submitted false claims to Medicare and Medicaid for drugs, procedures, services, and tests that were never administered to patients. This case was initiated through a Qui Tam action filed by the practice’s former medical assistant and former informational technology consultant.
Attorney General Moody Announces Arrest of Home Health Aide Employee for Withholding Services from Disabled Adult
FL. The Defendant, home health aide employee, falsified time spend helping a disabled Medicaid recipient. When a social worker visited the beneficiary’s home, the Defendant was sitting in her car and when the owner of the agency arrived following a call from the social worker, the Defendant fled the scene and never returned, also stealing the company tablet.
Attorney General Ford Announces Settlement with Mallinckrodt ARD Pharmaceutical Company for Fraudulent Medicaid Claims
Attorney General Moody Helps Secure More Than $233 Million From Mallinckrodt Over Alleged Underpayment of Medicaid Drug Rebates
Attorney General James Recovers $26.8 Million from Drug Manufacturer Mallinckrodt for Medicaid Fraud – Mallinckrodt to Pay $26.8 Million for Years of Underpaying Medicaid Drug Rebates to New York’s Medicaid Program
NY. The Defendant, pharmaceutical manufacturer, was alleged to have defrauded Medicaid by not paying the full value of drug rebates. This settlement payment is being made to resolve the States’ claims under the prior federal and multi-State litigation against the Defendant.
This case was initiated through a Qui Tam case which the federal government and 26 states, PR and District of Columbia joined.
Medical Director of Baltimore County Pain Management Clinic Pleads Guilty to Conspiracy to Distribute and Dispense Oxycodone
MD. The Defendant’s practice partner pled guilty to conspiracy to violate the AKS in connection with a scheme to accept payments from a pharmaceutical company in exchange for prescribing a fentanyl-based drug.
The subject Defendant of this article was prosecuted for distribution and dispensing of oxycodone. That portion of the article is outside the scope of this summary.
Kentucky Psychiatrist Sentenced for Health Care Fraud Related to Referrals for Drug Testing at Greensburg Lab
PA. The Defendant previously admitted, during a plea hearing, that she referred patients for drug testing and related services to a clinical drug testing and drug screening laboratory that billed Medicaid for testing based on referrals that were outside the ordinary course of professional practice and not for a legitimate medical purpose. The Defendant acknowledged that she did not document a legitimate justification for ordering certain drug tests and services, failed to document the result of certain drug tests and services performed by the lab in her medical files, and failed to address the results of certain drug tests and services in the treatment of her patients. She also admitted that she received a certain portion of the reimbursement the laboratory received for the Medicaid services.
Two Doctors and Their Medical Practice to Pay More than $181,000 to Resolve False Claims Act Liability Arising from Billing of “Sanexas” Devices
PA. The Defendants, podiatrists and co-owners of a foot and ankle practice corporation, settled allegations that they violated the FCA by submitting claims to Medicare for an electric stimulation device and vitamin injections that were not covered by Medicare in the manner performed and billed. The identified billing codes and procedures used were not recognized under Local Coverage Determination directives.
Owner and Operator of Telemedicine and Telemarketing Companies Sentenced to 14 Years for $20 Million Fraud Scheme and $4 Million Tax Evasion
FL. The Defendant owned and operated several telemarketing and telemedicine companies and used them to market medically unnecessary genetic tests to Medicare beneficiaries and to sell physicians’ orders (sell prescriptions) for medically unnecessary genetic tests to laboratories in exchange for kickbacks and bribes. He also marketed compounded prescription creams to customers with certain health conditions. Pharmacies and laboratories filled the prescriptions, billed insurance, and paid kickbacks to the Defendant. Proceeds were paid into bank accounts of shell companies with those proceeds then diverted to the Defendant.
 Not included in the summaries are prosecutions related solely to drug diversion and inappropriate prescriptions, patient fiscal or physical abuse, or non-healthcare related matters. The summaries also do not include enforcement announcements of arrests with no report of an indictment or civil complaint.
 The summaries should be considered to reflect allegations and not necessarily be considered to be statements of fact.