Coordinated government efforts target health care fraud and abuse

Coordinated government enforcement targets fee-splitting, Stark and kickback fraud and abuse in health care.

Each day there are new reports of health care fraud enforcement actions, both under Medicare and state law.  It is much easier to find and go after health care fraud and abuse than ever:

... in 1996, the federal government broadened the Health Insurance Portability and Accountability Act of 1996 [HIPAA] to extend criminal penalties to inducements to refer to any federal healthcare insurance program, including insurers and providers. Congress enacted Title 18, United States Code, Section 1347, which, for the first time, specifically criminalized any scheme to defraud a healthcare benefit program. By 1998, DOJ began to establish both criminal and civil healthcare fraud coordinators in all ninety-four U.S. Attorneys’ offices, beginning the trend to unify and standardize national healthcare investigations and prosecutions.

After a modest increase in healthcare costs in the mid-1990s, from 1999 through the first ten years of the twenty-first century, healthcare costs doubled in addition to growing again at twice the GDP.7 Again, much attention was focused on eliminating fraud from the national healthcare system. This time, with the underlying legal fabric in place, federal law enforcement established a unified, focused team of investigators and prosecutors to combat the problem. This tactic was new to healthcare prosecution, but had been effective in many other areas.

Modern computerized methods make it ever easier to conduct health care fraud investigations:

The philosophy was simple: analyze current billing data to find outliers—providers who were billing Medicare such exorbitant amounts that the only legitimate explanation was a fraudulent one... The data comes in many forms including provider claims, cost reports, prescription data, US. Securities and Exchange Commission, nonprofit, and UCC filings, among a myriad of other sources. Investigators analyze it in many ways through data queries, correlations, and trend analysis (by provider type, CPT code, locations, etc.). They perform peer  comparisons, statistical sampling, and conduct “impossible days” analyses—where providers billed for more than twenty-four hours of work in one day. They look for double billing and upcoding (billing for a more expensive service when a less expensive one was actually performed). These analyses help determine whether fraud is evident and if an investigation is warranted. 

(P. Katz, Medicare Strike Force).  

So it is no surprise that our law office is increasingly inundated with calls from various health care practitioners under investigation for various forms of health care fraud and abuse.  Some are medical doctors and osteopaths, while others are dentists, psychologists, nurses, or other kinds of health care professionals.

Practitioners are often unaware of how they have come to the attention of enforcement authorities or what they might have done to trigger an investigation.

We also receive calls about Stark / self-referral, fee-splitting, and anti-kickback concerns from healthcare providers, institutions, and corporate entities as well as from entrepreneurs interested in launching multidisciplinary or other joint ventures.  For example, we represent physicians who want to contract with chiropractors in professional medical corporations; practitioners of acupuncture and traditional oriental medicine; massage therapists; naturopathic doctors and naturopaths; herbalists; practitioners of homeopathy and physician homeopaths; healers; and others who want to know whether they could be engaging in illegal splitting or can find more legitimate ways of structuring their businesses.

All this enforcement activity also is increasing in the areas of unlicensed practice and scope of practice.  Boards of medicine, nursing, psychology, and nutrition in particular are looking to investigate practitioners for unlicensed practice of medicine, unlicensed practice of psychology, and unlicensed practice of nutrition.  Practitioners who use touch but do not have a massage therapy license can also be at risk of unlicensed practice charges. 

And because the legal definitions of "diagnosis" and "treatment" are often interpreted so broadly, even licensed practitioners often find themselves under investigation by an enforcement agency for crossing the line into practice of medicine without a license, which is usually defined as a criminal activity.

More recently, we have represented clients under investigation for violation of laws relating to licensing of laboratories and laboratory tests.  Many are unaware of the federal Clinical Laboratory Improvements Act (CLIA) and of the need for CLIA certification or a CLIA waiver - particularly as these legal rules affect tests that are considered complementary or alternative to more accepted medical tests; or of state laws that track CLIA in terms of establishing parallel compliance parameters.

It is important to seek legal advice from a healthcare lawyer who knows the legal and regulatory enforcement landscape.  Federal law as well as state law can apply and the penalties can be severe. In many cases, there are coordinated enforcement efforts across agencies.

In addition, aiding and abetting charges can be brought to those who are helping practitioners engage in unlicensed practice.  Sometimes the activity might be thought of as innocent, but the practitioner or entrepreneur must understand that simply 'splitting the fee' and pocketing the difference can have legal consequences, as can hiring a practitioner who is trying to fit under a legal umbrella for non-licensed practice but engages in methods that can cross legal lines.

If you have questions about regulatory enforcement activities concerning multidisciplinary practices or healthcare enterprises involving a variety of disciplines, you may wish to consult our video resources or other materials, including legal references on this blog.


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Michael H. Cohen is a thought leader in health care law, pioneering legal strategies and solutions for business law clients in traditional and emerging healthcare. wellness, and lifestyle markets.  As a corporate and regulatory attorney who has also handled litigation matters, Michael H. Cohen represents conscious business leaders in a transformational era. Clients seek Michael H. Cohen's legal expertise on business structure and entity formation (corporations, partnerships, LLCs); health care licensing matters; employment contracts and independent contractor agreements; dispute resolution; e-commerce; intellectual property issues; informed consent and malpractice liability issues; HIPAA and confidentiality and privacy issues; Stark, self-referral, anti-kickback, patient brokering, and fee-splitting questions; dietary supplement labeling; medical device and FDA matters; insurance reimbursement and Medicare issues; website disclaimers; concierge medicine legal advice; telemedicine; and other business law and health care regulatory compliance arenas.  Whether advising start-ups or established companies, he brings his entrepreneurial spirit and caring insight to cutting-edge legal and regulatory challenges. Attorney Michael H. Cohen is admitted to practice law in California, Massachusetts New York, and Washington, D.C.  Contact our attorneys  firm today.