By Sonal Patel BA, CPMA, CPC, CMC, ICDCM SP Collaborative |
Monthly Spotlight on Fraud, Waste, and Abuse


Monthly Spotlight on Fraud, Waste, and Abuse

Date Posted: Wednesday, April 10, 2024


The following cases highlight fraud, waste, and abuse (FWA) and serve as a reminder to uphold high ethical standards when providing patient care and services.


New York Hospital Settles Healthcare Fraud Claims for $17.3 Million


March saw a settlement agreement requiring a New York hospital to pay $17.3 million to resolve allegations that it paid unlawful kickbacks to physicians at the hospital's chemotherapy infusion center. The payments were made pursuant to a contractual arrangement that linked the compensation physicians received to the number of referrals the physicians made for services at the center. The agreement also resolves claims that physicians at the infusion center failed to adequately supervise the chemotherapy services. The settlement resolves claims under the federal and New York State False Claims Acts.


Of the total settlement amount, $16.410 million is to be paid to the federal government, and $890,000 is to be paid to New York State.


The hospital voluntarily self-disclosed the issues to the United States.


A U.S. Attorney on the case stated, “This settlement addresses a compensation scheme that incentivized physicians to make referrals for services based on how much they would be paid and were essentially kickbacks.” To ensure that physicians make medical decisions based solely on the needs of their patients, Medicare and Medicaid rules prohibit physicians from receiving any kind of remuneration in exchange for patient referrals for services.


The United States' investigation of the New York hospital found that physicians at a chemotherapy infusion center affiliated with the hospital were paid based, in part, on the volume of referrals they generated for it. Medicare and Medicaid rules also require that those billing for medical services be involved in the services. A hospital, for instance, cannot bill for the services of a physician if that physician did not participate in the patient care. The rules recognize that non-physicians, like nurses, provide care to patients; such care is permissible and, often, desirable. But, in many instances, such care must be provided under the supervision of a physician who is available to assist in the care if necessary. At the infusion center at issue in this matter, Medicare and Medicaid were billed for services provided by non-physicians even in instances in which physicians were not available to adequately supervise the services.


Source: New York-Presbyterian/Brooklyn Methodist Hospital Settles Health Care Fraud Claims for $17.3 Million. (2024, March 13). www.justice.gov.


Justice Department Sues Six Health Plans and Their Alliance for Concealing Overpayments for Military Managed Care Program


The United States filed a complaint alleging that six health plans participating in the Uniformed Services Family Health Plan (USFHP) program, as well as their trade group, the US Family Health Plan Alliance, violated the False Claims Act by knowingly retaining erroneously inflated payments for healthcare services that the health plans contracted to provide to retired military members and their families.


The United States has also reached a settlement with a Department of Defense (DOD) contractor, a consulting firm, related to the conduct.


The USFHP program is one of the healthcare options available to military personnel, retirees, and their families. Six health plans are eligible to participate in this program, each of which is a defendant in the government's complaint: Brighton Marine Health Center, CHRISTUS Health Services, Johns Hopkins Medical Services Corporation, Martin's Point Health Care, Pacific Medical Center, and St. Vincent's Catholic Medical Centers of New York.


Through the USFHP program, the DOD pays the plans capitated rates to provide healthcare services to their enrollees. According to the complaint, in June 2012, the plans learned of calculation errors that had inflated the rates they had been paid in prior years. Nevertheless, the plans took steps to conceal the existence of the overpayments from the government and continued to submit invoices at the inflated payment rates.

The complaint alleges that during discussions about rates for the subsequent year, some of the plans even asked the government to continue paying them at the prior, inflated rates even though, by that time, those plans knew the rates were inflated by the errors.


The United States filed its complaint in a lawsuit originally brought under the qui tam or whistleblower provisions of the False Claims Act by two parties in the District of Maine.

The United States entered into a settlement agreement with a research and consulting firm located in Virginia that provides actuarial consulting services to the Defense Health Agency (DHA) in connection with the USFHP program. The settlement resolves allegations that the consulting firm failed to notify DHA about errors in executing the rate-setting methodology that caused the USFHP rates to be overstated and their impact on DHA's payments made to the plans.


Under the terms of the settlement agreement, the consulting firm has agreed to pay the United States $779,951, plus interest, as well as contingent payments based on its annual contract revenue and cash reserves through the year 2025. The settlement amount is based on the firms' ability to pay.


Source: Justice Department Sues Six Health Plans and Their Alliance for Concealing Overpayments for Military Managed Care Program. (2024, March 13). www.justice.gov.


Sandusky Doctor Sentenced to Prison for Illegally Dispensing Drugs to Patients


This Ohio doctor was sentenced to prison by a U.S. District Judge on the case after earlier pleading guilty to illegally dispensing narcotics to patients. He was sentenced to 42 months imprisonment to be followed by one year of home confinement for the first of three years of supervised release. He was also ordered to pay a $100 special assessment and restitution in the amount of $861,892.13.


According to testimony and court records, from January 2010 to August 2018, the doctor repeatedly prescribed controlled substances outside the usual course of professional practice and not for a legitimate medical purpose, including powerful painkillers such as fentanyl, oxycodone, oxymorphone, and other drugs. He distributed narcotics that were not medically necessary by writing controlled substance prescriptions without first performing adequate patient physical examinations.


He also used faulty diagnoses to prescribe excessive doses of controlled substances for long periods of time without evidence that the controlled substances were helping the patients, all while ignoring signs of addiction and drug abuse among those patients.


He also profited significantly from prescribing Subsys, a particular branded formulation of fentanyl manufactured by Insys Therapeutics, Inc. Between 2013 and 2016, he received $175,000 from Insys for promoting the drug through Insys's speaker's bureau program. During that same time, the doctor wrote 835 prescriptions for Subsys.


Source: Sandusky Doctor Sentenced to Prison for Illegally Dispensing Drugs to Patients. (2024, March 14). www.justice.gov .


St. Louis Area Pediatrician Indicted, Accused of Exchanging Prescriptions for Sex Acts


This pediatrician was indicted and accused of prescribing pain pills and other controlled substances in exchange for sex acts or cash. The indictment charges the doctor with 17 counts of illegal distribution of controlled substances and six counts of making false statements related to healthcare matters. He and a female accomplice were also indicted on one count of conspiracy to distribute controlled substances.


The indictment says that since at least 2014, the pediatrician allegedly repeatedly issued controlled substance prescriptions to numerous adult women – many of whom he met because he was their pediatrician when they were children – in exchange for sexual acts and sexual photographs, without regard for the patient's medical condition or the medical necessity of the prescription.


In many cases, the indictment says he allegedly issued those controlled substance prescriptions even though he knew the recipients had a substance use disorder and he knew that issuing the prescription was illegal and could endanger the recipient's mental health and physical safety. He also allegedly pressured reluctant women to engage in sex acts at his pediatrics office.


In a motion seeking to have the doctor held in jail until trial, the government alleges that investigators are aware of at least 25 individuals with whom he exchanged controlled substance prescriptions for sexual acts or cash. The indictment also alleges that he ignored widely known “red flags” that can indicate prescription drugs are being abused or sold, endangering the well-being of the patients and the community.


The indictment also lists a series of alleged examples:

•  One patient met the pediatrician through a friend who told her that he would write any prescription she desired if she performed a sex act while topless.

•  On numerous occasions, she did so or provided nude photos in exchange for Adderall, Xanax, and Percocet.

•  He provided the same three drugs to another patient in exchange for sex acts, despite knowing that she had a severe substance use disorder and was at high risk of overdose.

•  This alleged patient died of a drug overdose in April of 2022 at the age of 40.

The indictment continues more allegations that, beginning in 2021, the female accomplice, who did not have any medical training or a Drug Enforcement Administration (DEA) registration allowing her to prescribe controlled substances, agreed to distribute controlled substances under the doctor's DEA registration. The indictment says the doctor issued controlled substance prescriptions to the female accomplice for sexual favors that he provided. It further alleges that he knew his female accomplice was selling some of the drugs he prescribed to her for cash.


The indictment goes on and alleges the pediatrician used the identities of third-party individuals, including the female accomplice's ex-husband, mother, and friends, to either take advantage of their prescription insurance benefits or conceal from pharmacies the frequency with which she was receiving controlled substances prescribed by the doctor. The indictment says the female accomplice allegedly also introduced the doctor to others who provided him with cash or sex acts in exchange for prescriptions.


The charges of conspiracy and illegal distribution of controlled substances are each punishable by up to 20 years in prison, a $1 million fine, or both prison and a fine.

Each charge of making false statements is punishable by five years in prison, a $250,000 fine, or both.


Charges set forth in an indictment are merely accusations and do not constitute proof of guilt. Every defendant is presumed to be innocent unless and until proven guilty.


Source: St. Louis Area Pediatrician Indicted, Accused of Exchanging Prescriptions for Sex Acts. (2024, March 14). www.justice.gov


“Rock Doc” Sentenced for Opioid Distribution Conspiracy

A Tennessee nurse practitioner known locally as the “Rock Doc” was sentenced recently to 20 years in prison for illegally prescribing opioids — including oxycodone and fentanyl — from his medical practice in Tennessee.


“The self-proclaimed ‘Rock Doc' abused the power of the prescription pad to supply his small community with hundreds of thousands of doses of highly addictive prescription opioids to obtain money, notoriety, and sexual favors,” said the Principal Deputy Assistant Attorney General on the case.


According to court documents and evidence presented at trial, this nurse practitioner illegally prescribed medically unnecessary controlled substance pills to hundreds of patients, including a pregnant woman and women with whom he was having inappropriate physical relationships.


He maintained a party-type atmosphere at his clinic, and prescribed these drugs at least in part to boost his popularity on social media and promote a self-produced reality TV show pilot based on his self-identified persona, the “Rock Doc.”


He prescribed more than 100,000 doses of hydrocodone, oxycodone, and fentanyl into the community.


Source: “Rock Doc” Sentenced for Opioid Distribution Conspiracy. (2024, March 18.) www.justice.gov


Former Georgia Insurance Commissioner Pleads Guilty in Healthcare Fraud Scheme


The former Georgia State Insurance Commissioner pleaded guilty to conspiracy to commit healthcare fraud in which a co-conspirator and he referred unnecessary medical tests to a lab company in Texas in return for hundreds of thousands of dollars in kickbacks.


According to the charges and other information presented in court, the former Georgia insurance commissioner conspired with an ENT physician and others to submit fraudulent insurance claims for medically unnecessary pharmacogenetic, molecular genetic, and toxicology testing. Physicians associated with the ENT practice were pressured to order these medically unnecessary tests from a lab in Texas.


As part of the healthcare fraud scheme, the lab agreed to pay the former Georgia insurance commissioner and the ENT physician a kickback of 50 percent of the net profit for eligible specimens submitted by the ENT practice to the lab company.


In connection with the scheme, the former Georgia insurance commissioner gave a presentation at the Ritz Carlton where he pressured doctors in the ENT practice to order the unnecessary tests. The lab later submitted insurance claims seeking more than $2,500,000 in payments from private health insurers for the unnecessary tests. The insurance companies paid almost $700,000 to the lab because of these fraudulent claims. The lab then paid $260,000 in kickbacks to the former Georgia insurance commissioner and the ENT doctor. Some patients were also charged for the tests, receiving bills of up to $18,000.


To conceal the kickback payments, the duo arranged for the payments to be made from the lab to the former Georgia insurance commissioner's insurance consulting business. He used a portion of the kickback money to pay debts for the ENT physician, a $150,000 charitable contribution, and $70,000 in attorney's fees.


When a compliance officer at the ENT practice raised concerns about the kickbacks, the former Georgia insurance commissioner told the ENT doctor to lie and say the payments from him were loans. He directed the ENT doctor to repeat the lie after he was questioned by federal agents about the Texas lab. And when interviewed about the lab by an Atlanta publication in connection with a private lawsuit, the former Georgia insurance commissioner falsely denied working with the lab company or receiving money from the business.


Source: Former Georgia Insurance Commissioner John Oxendine Pleads Guilty in Health Care Fraud Scheme. (2024, March 22). www.justice.gov.


Sonal Patel, BA, CPMA, CPC, CMC, ICDCM, is CEO and Principal Strategist at SP Collaborative, LLC.


Sonal has over 13 years of experience understanding the art of business medicine. She is a nationally recognized thought-leader, speaker, author, creator, and consultant. As the CEO & Principal Strategist of SP Collaborative, LLC, she serves as a partner to healthcare organizations, medical practices, physicians, healthcare providers, vendors, consultants, medical coders, auditors and compliance professionals in working together to elevate coding compliance education for the business of medicine.


Home - SP Collaborative




Search BCA Magazine

Search here

List Articles

Select below

Editorial Board



CEO & Principal Strategist
SP Collaborative