Category Archives: Criminal Prosecution

Fraud Alert Issued by OIG Puts Medical Directorships Under Suspicion

Make Sure Your Medical Directorship is Legal

HHS’s Office of Inspector General’s Fraud Alert issued in June of this year  puts an often-used tool for compensating physicians in the regulatory cross hairs. “Medical directorships,” or the payment of a physician for overseeing clinics or other medical services, will violate the Federal and state Anti-Kickback statutes if “even one purpose of the arrangement is to compensate a physician for his or her past or future referrals.”

Compensation arrangements between hospitals, physician groups and other medical providers that contemplate management or directorships by a physician should be carefully evaluated by competent counsel. OIG has said that it will be reviewing such arrangements with particular interest. If a violation is found, the result could include criminal, civil and regulatory fines, and exclusion from federal health care payment systems.

Some of the elements of an appropriate directorship or management position for a physician might include a written contract for at least a year with a salary that constitutes a fair market value for services actually provided. Such an agreement should be backed up by salary surveys or other documentation that the compensation is based on similar positions within the community.

By Matt Kinley,Esq., LLM, CHC


Reporting Physician Office Controlled Substance or Prescription Abuse

Physician offices often are hit with an internal crime:  employees utilize the office, its forms, the doctors DEA Number, or even the computers to write unauthorized prescriptions. The physician’s office has the obligation to make sure that forms, computers, and other tools utilized to write prescriptions are carefully safeguards.  Attorneys and malpractice carriers can be consulted for the best practices.

Health and Safety Code Section 11368 states that anyone who forges or alters a prescription or who obtains any narcotic drug by a forged, fictitious, or altered prescription may be punished by imprisonment in the county jail or state prison for not less than six months or more than one year. Since prescription forgery is considered a criminal offense, it is recommended that a report be made to the local law enforcement.

The California Medical Board provides some specific advice:

Federal law requires physicians to report theft or loss of controlled substances and official Federal Order Forms (Form 222) to a regional office of the Drug Enforcement Administration. The DEA has offices located in Los Angeles, San Diego and San Francisco and the office addresses and phone number are available through their website. In addition, the DEA has their reporting forms available online at the following link:

While neither the Medical Board nor state law requires that a report of stolen or illegal use of the physician’s DEA number be made to the Board, it is our recommendation that physicians provide the Medical Board with a written narrative of the circumstances and the actions taken by the physician so we may have this information on file. When the written narrative is received, this valuable information will be input into the Medical Board’s internal database for reference, as it is not unusual to receive complaints from pharmacists or law enforcement officers regarding concerns about physicians’ prescribing practices. If a physician has already reported that he/she has experienced a problem related to the illegal use of his/her DEA number, the Board has already been provided with background information on the problem. The written narrative should be forwarded to the Medical Board of California, Central Complaint Unit, 2005 Evergreen Street, Suite 1200, Sacramento, CA 95815.

Once the information has been processed, the physician will receive correspondence from the Central Complaint Unit containing their assigned “Conl Number,” which should be maintained for their records. A carbon copy of this correspondence will also be forwarded to the California Board of Pharmacy so they may notify pharmacies in the physician’s surrounding area of the incident. The notified pharmacies will then contact the physician to verify any prescriptions they receive on the physician’s prescription pad or using the physician’s DEA number. For additional questions or concerns regarding this issue, please contact the Central Complaint Unit through the Medical Board’s toll-free number, 1-800-633-2322.

In addition to the above, if the physician is aware of the theft or loss of the tamper-resistant prescription forms, the State Department of Justice, Bureau of Narcotic Enforcement must be notified. To report the theft or loss of the new tamper-resistant prescription forms, Form JUS MUST be completed. Please complete all applicable fields on the form and forward the form to: California Department of Justice, Bureau of Narcotic Enforcement, CURES Program, P.O. Box 160447, Sacramento, California, 95816, FAX: (916) 319-9448. If you have additional questions or concerns regarding lost or stolen tamper-resistant prescriptions forms, please contact the CURES Program at (916) 319-9062.

Matt Kinley, Esq. 

Fraudulent Claims Act: Could they investigate your office?

Physician offices sometimes feel immune to the regulatory pressures imposed by federal and state authorities. I’ve heard expressions such as “we are such a small office” or ” we deal with such small dollars” to excuse lax or ill-informed billing practices. The solution is to create an office compliance plan, to make sure your office completes all billing correctly.

Here, from the Office of Inspector General, is a report of one small physician’s office that the OIG did investigate, resulting in a $650,000 settlement. Note the investigation arose from another investigation where a doctor was banned from all federal healthcare programs for 15-years.

“12-18-2014 OIG Enforcement Case
A Medical Practice, Doctor in New York Settle False and Fraudulent Claims Case
Jennan Comprehensive Medical, P.C. (Jennan) – a medical group practice in New York – and its owner, Henry Chen, M.D., entered into a $694,887.02 settlement agreement with the Office of Inspector General (OIG) for the U.S. Department of Health and Human Services, effective December 18, 2014. The settlement resolves allegations that from May 15, 2008 to December 31, 2013, Jennan and Dr. Chen knowingly submitted or caused to be submitted false and/or fraudulent claims to Medicare for physical therapy services. Specifically, OIG alleged that these claims were false and/or fraudulent for one or more of the following reasons: 1) physical therapy services were not provided or supervised by the rendering provider; 2) group services were billed as one-on-one provider-patient physical therapy services; 3) services were performed by unqualified individuals; and/or 4) claims for time-based physical therapy services did not accurately reflect the actual time spent performing the services. Senior Counsels David M. Blank, Tamara T. Forys, and Lauren E. Marziani, along with Paralegal Specialist Mariel Filtz, represented OIG.

This case developed as a result of OIG’s prior investigation of Joseph A. Raia, M.D., a former Jennan employee. Dr. Raia entered into a settlement with OIG on February 11, 2014 for $1.5 million and agreed to be excluded from participating in Federal health care program for a minimum of 15 years.”


Posted by Matt Kinley, Esq.


Compliance in Physician Offices

Compliance guidance for physician practices was issued by the Office of Inspector General in 2000. Since that time, many physician practices, especially more complex specialty practices, have developed some sort of compliance plan. Compliance covers many areas of a healthcare practice.

Although compliance plans have not previously been mandatory, they have become “industry standard” as a way to minimize risks associated with health care regulations such as the Health Insurance Portability and Accountability Act of 1996, the Medicare and Medicaid Fraud and Abuse Laws, Anti- kickback Statute, Civil Monetary Laws, False Claims Act, the Clinical Laboratory Improvement Act and all other state and federal statutes, regulations and directives that apply to the operation of a complex physician’s practice.

The Patient Protection and Affordable Care Act of 2010, in section 6401, requires Health and Human Services and the Office of Inspector General to promulgate regulations that require most healthcare providers and suppliers to establish compliance programs. The compliance programs are intended to be “effective in preventing and detecting criminal, civil, and administrative violations” under the Medicare and Medicaid laws and other laws that govern operations.

Under the Affordable Care Act, physicians and group practices, will be required to establish compliance programs as a condition of enrollment in the Medicare program.HHS is required to issue regulations creating a timetable and basic core compliance program requirement.

Physician groups should begin the process of establishing compliance programs as soon as possible and not wait for final regulations. Compliance programs are a good way for physician practices to reduce risk associated with fraud and abuse and other legal matters that present risk to their operations. It makes sense for physicians to begin development now to provide ample time for creation of appropriately scaled policies and input from various personnel in the group.

It will not be sufficient to adopt pre-written compliance policies. Rather, physician offices must establish a continuing system of review for their office. Practices may need to be modified based upon their specialization. The seven core elements of effective compliance programs have been released by the Office of Inspector General, including the Physician Practice Guidelines.
A compliance program requires the physician to perform a risk assessment in their organization and document the outcomes of that assessment. The risk assessment could take many forms. Compliance professionals talk about a “gap analysis” which is an approach to help determine the vulnerabilities of your organization. Areas of risk provide emphasis to appropriate areas of risk that are identified through your risk assessment.
The seven areas of emphasis include:
1. Adoption of written guidelines and policies to promote the organization’s commitment to compliance;
2. Identification and appointment of a high ranking individual within the organization to serve as compliance officer;
3. Establishment of anonymous reporting systems, preferably through multiple pathways, to encourage individuals to make complaints regarding compliance items without fear of retaliation;
4. Effective education and training programs for all levels of employees and others with close relationships to the organization;
5. Ongoing auditing systems to assess the effectiveness of the compliance program and to provide input into areas that require additional emphasis;
6. Mechanisms to enforce the requirements of the compliance program and to discipline employees for violations of the organization’s commitment to compliance; and
7. An ongoing system of program modification based upon audit, feedback and experience that can further adapt the compliance policies to the specific issues faced by the organization.

By Matt Kinley, Esq


Payment for patients can land you in the federal penitentiary.

Home health care companies are facing more and more scrutiny from federal and state regulators. Such companies, particularly if they bill Medicare, are subject to all the laws, rules and regulations as are all health care providers.

In a case just reported by the Justice Department, an 64-year old owner of such a healthcare company pleaded guilty to violation of the Anti-Kickback laws for billing for services that were unnecessary and in some cases not even provided. He also paid recruiters which provided the company with patients. The owner was fined over $6.5 million, 75-months in prison and sentenced to three years supervised release. The case was investigated and brought as part of the Medicare Fraud Strike Force. However, such cases can be brought by state investigators or even by whistle blowers who are paid a percentage of recovery for reporting the health care provider, even if the whistle blower was part of the fraud.

The ramifications of even technical Medicare rules can be catastrophic a person’s life or business. Home health care companies should have competent legal representation to make sure their business plans are appropriate. Home health companies will soon be under rules that require compliance plans. Legal counsel should be engaged to help put in place an appropriate plan.

By:  Matt Kinley, Esq.  You can contact Mr. Kinley @ (562)715-5557. 


The Department of Health and Human Services and The Department of Justice Health Care Fraud and Abuse Control Program Annual Report for Fiscal Year 2013

The HHS report details efforts to recover for fraud claims under the Federal False Claims Act, including convictions against physicians, hospitals, device manufacturers and drug manufacturers.

For California, the star of the report goes to this Tustin doctor and hospital.  As stated by the report:

‘In December 2012, a California physician was sentenced for his role in a hospital fraud scheme to 1 year and 1 day in prison and ordered to pay $11 million in restitution. He previously pleaded guilty to conspiracy to receive kickbacks. According to court documents, Tustin Hospital paid marketers to recruit patients and drive them from “Skid Row” around Los Angeles, past other hospitals, to be admitted to its facility. The physician admitted these patients and then he and the hospital billed Medicare for in-patient services, even if the services were not medically necessary. The physician admitted that many of the recruited patients had been coached to recite false symptoms, and that he falsified medical records to justify the admission of some patients. On average, he admitted approximately 60 patients per month to the hospital, even though some did not require hospitalization”



Let’s say someone in your office accidentally sends a patient the information about a different patient?  Or, your web portal  allows patients to see other patients information? What to do?

Notifying Patient of Revealed Information

Both under Federal and State Law, the covered entity must notify all individuals whose unsecured protected health information has been accessed as a result of a security breach.   Such notification may not be “unreasonably delayed” but must be within 60-days of the breach.  It must be specific as to content disclosed.  Also the Secretary of the Department of Health and Human Services must be notified.  (See, generally:  HSS Website.)

Review Your Policies

Security and Privacy procedures must be reviewed, and the review must be documented, and changes must be made to prevent reoccurrence.

California Law Has Additional Requirements

State law must be further consulted for further requirements. California’s general privacy laws and the Confidentiality of Medical Information Act apply.

There are civil and criminal penalties and there is a private cause of action

Talk to a Lawyer

When making a decision about revealed health information, speak to an attorney.   The decisions about what to do should not be taken lightly as there can be major fines from both the federal and state government, as well as likely lawsuits by the patients involved.


Make sure you have the right insurance.  This is usually not included with your normal civil insurance or your malpractice insurance.  Review your policies, talk to your broker.  These policies can save you from the high costs of attorneys and helping your patients deal with the problems.  

By Matthew L. Kinley, Esq. 

Student Loan Default Causes Doctor to Lose Medicare/Medicaid Eligibility

Many doctors and other professionals have graduated from graduate school with huge student loan debts, sometimes taking years to pay them off.

Medical professionals have the risk that if they fail to pay their loans, the United States will stop payment from federal sources for services provided.

In a recent case, the Department of Health and Human Services began exclusion of a doctor from receiving Medicare or Medicaid, threatening to cut off payment for services.  This was after the physician failed to make payments on her loan, after a default judgment was entered, and after the physician failed to respond to correspondence from the government.  The action to cut off Medicare payments finally brought a response from the physician, who settled the claim.

According to the United States Attorney General’s office, the government will aggressively pursue those who fail to make good on their promises and obligations to repay their federally backed student loans.

Generally, such loans may not be discharged and there is no statute of limitations that would prevent the government from seeking repayment.  The government attorney in charge said that “[i]t simply is not fair that certain individuals obtain the benefits of receiving student loans, and then act irresponsibly in failing to repay them.  We will take whatever steps are necessary to collect these debts.”

Written by Matthew L. Kinley

Memo Courtesy of the United States Attorney’s Office: Don’t Get Caught on Vacation

What kind of conduct can lead a medical provider to have pleaded guilty to a criminal information admitting false statements to Medicaid?

Consider this one case where a husband and wife, both dentists signed a document that stated they performed services to Medicaid eligible children.  Their dentistry practice was targeted to largely disadvantaged children.  While Medicaid regulations require the providers to actually be in their office when providing services, the US Attorney’s office proved that the couple were on vacation together on two occasions when they billed for services.

On one occasion they billed for performing an evaluation and management of a new patient on a certain date and they claimed entitlement to payment. On that date, the couple was vacationing in Hawaii, no where near their offices. At the time they made this false representation to Medicaid, the couple knew the statement was false and that neither of them performed that service on or about that date.

Similarly, on another occasion the couple was en route to the U.S. Virgin Islands on the same date they  falsely represented to Medicaid that she performed an orthodontic retention on that date claiming entitlement to payment. However, at the time of this false representation to Medicaid, they knew the statement was false and that neither of them performed an orthodontic retention on or about that date.

This couple will likely lose their license to practice dentistry as a result of these false statements and the resulting federal conviction. While they avoided prison, they will be required to pay almost $700,000 in fines and restitution.  The case was conducted by the FBI, the Department of Health and Human Services-Office of the Inspector General and the state attorney general.

Nothing in the information provided tells of any mitigating circumstances (which probably existed but weren’t relevant to these authorities).  For instance, the services may have been provided by another dentist in the office, but not this couple.  Or if it was relevant in the long run that the couple provided a necessary community service by providing dental services to an indigent population.
The lesson:  check and double check those requests for payments.  You don’t want the FBI and various other agencies studying them.