With all the media hype over federal health care fraud enforcement and prosecution, the growing emphasis and success of state regulators in finding and prosecuting health care fraud often goes relatively unnoticed.  Health care providers concerned with managing their risks should exercise care to properly recognize and manage these state law exposures to promote an effective fraud compliance and risk management program.

Driven both by federal program mandates and daunting state health care entitlement program budget expenditures, state regulators and law enforcement teams across the United States increasingly are active and vital participants in the expanding federal and state war against health care fraud and other health care provider misconduct.  

Highlights of some of the more significant state health care fraud enforcement activities over the past month include:

• On April 4, a Gwinnett County Georgia Grand Jury indicted the former owner of a company known as Diversified Family Solutions and three employees for unlawfully obtaining approximately $980,000.00 in Medicaid payments through a fraudulent billing scheme.  See Owner and Employees of Metro Atlanta Mental Health Services Company Indicted for Stealing Nearly $1 Million from Medicaid
• In a series of announcements made on April 4-5, 2012, 9 states and the federal government announced a massive settlement with WellCare Health Plans, Inc., which resolves Medicare Fraud allegations against Wellcare by the states and federal regulators.  See e.g., Indiana Medicaid to receive $922K in WellCare settlement;   Connecticut Benefits From Settlement With WellCare on Medicaid Fraud Charges; Florida Recovers More Than $54 Million From WellCare in Medicaid Fraud Settlement
• On April 5, 2012, the Oklahoma Attorney General announced that an Oklahoma City counselor has been named in a multicounty grand jury indictment unsealed in Oklahoma County District Court. Vickie Rhea Yearwood, 53, a licensed professional counselor through Beacon Pointe LLC and Specialized Alternatives for Families and Youth, was indicted on two counts of Medicaid fraud.  See,  OKC Counselor Indicted for Medicaid Fraud
• On April 4, 2012, Attorney General Eric T. Schneiderman announced the arrests and indictment of four ringleaders of a massive scheme to distribute black market prescription HIV drugs and defraud the Medicaid Program of $155 million. After an investigation code-named “Operation Black Market Meds,” the Attorney General’s Medicaid Fraud Control Unit shut down an illegal operation that was distributing HIV prescription drugs obtained on the black market through MOMS pharmacy, a high-volume pharmacy with satellites in Suffolk County and Brooklyn. MOMS, and its parent company Allion Healthcare, then dispensed the illegally obtained drugs to Medicaid recipients, and billed the New York State Medicaid program for these un-sellable drugs.  See,  A.G. Schneiderman Announces Arrests in $274 Million Black Market Prescription Drug Operation
• On April 3, 2012,  Tennessee officials announced charges against a Montgomery County woman for TennCare fraud in a case involving prescription drugs.  See, Montgomery County Woman Charged With Tenncare Drug Fraud 
• On March 30, 2012, Massachusetts officials announced that a medical testing company will pay $20 million in restitution to resolve allegations of an elaborate kickback scheme that cost the Massachusetts Medicaid program (MassHealth) millions of dollars for unnecessary urine drug screens. See, Calloway Laboratories Pays $20 Million to Resolve Allegations of Kickbacks and Fraud on State Medicaid Program
• On March 27, 2012, Texas Attorney General announced a Texas court’s approval of “The largest recovery of taxpayer funds in a Texas civil Medicaid fraud case.”Under an agreed final judgment entered this morning, Johnson & Johnson and its subsidiaries must pay $158 million to resolve the State’s enforcement action charging Janssen Pharmaceutica with defrauding the taxpayer-funded Texas Medicaid program.  See,  Statement Regarding Final Agreed Judgment in State’s Medicaid Fraud Case Against Johnson & Johnson

• Between March 22 and March 27, 2012, the Tennessee Department of Finance & Administration filed charges against a variety of individuals for TennCare fraud arising out of alleged misrepresentations and billings for prescription drugs to get healthcare benefits.   See, Williamson County Woman Charged With TennCare Fraud ; Two Mid-State Residents Charged With TennCare Fraud Involving Prescription Drugs Two Women Plead Guilty To TennCare Drug Fraud
• On March 22, 2012, Louisiana Attorney General Buddy Caldwell announced the trial setting in the state’s lawsuit against more than 100 drug manufacturers beginning on n March 4, 2013, June 17, 2013, and October 7, 2013. See Trial Dates Set in Cases Against Drug Manufacturers
• On March 22, 2012, the Georgia Attorney General announced the sentencing of Leetra Dometric Langston to five years of probation and restitution for following his plea to one count of Medicaid Fraud for his role in a scheme involving a businesses that purported to be a residential treatment program for homeless teenage girls. Langston was the last of three defendants to plead guilty to the scheme.  See Final Defendant Pleads Guilty to Medicaid Fraud in Scheme Involving Homeless and Pregnant Teenagers
• On March 22, 2012, Louisiana announced that a Delhi woman has been arrested and charged with three-counts of Exploitation of the Infirmed. Delhi Woman Arrested for Exploitation of the Infirmed
• On March 21, 2012, Oklahoma Attorney General Scott Pruitt’s Medicaid Fraud Control Unit announced it filed charges against the owner of a Midwest City youth counseling agency for billing services to children that parents say didn’t happen.   See, AG Pruitt Charges MWC Counselor with Medicaid Fraud
• On March 20, 2012, Alabama Attorney General Luther Strange announced that a former bookkeeper employed by a Wetumpka nursing home was sentenced to prison for the theft of $115,734 of residents’ funds from the facility.  See,  AG Announces Prison Sentence Of Former Bookkeeper For Theft Of $115,734 From Wetumpka Nursing Home
• On March 19, 2012, the Tennessee Department of Finance & Administration brought charges against a Davidson County woman is charged with TennCare fraud involving “doctor shopping,” or using TennCare to go to multiple doctors in a short time period to obtain controlled substances. See, Davidson Co. Woman Charged With TennCare “Doctor Shopping”
• On March 19, 2012, Tennessee Department of Finance & Administration charged an Anderson County woman is charged with TennCare fraud for using TennCare benefits to pay for what officials say was a fraudulent prescription.  See,  Anderson County Woman Charged With TennCare Fraud
• On March 19, 2012, Wisconsin Attorney General J.B. Van Hollen announced that Wisconsin has joined other states and the federal government and reached an agreement in principle with KV Pharmaceutical Company to settle allegations that the company failed to tell the Centers for Medicare and Medicaid Services that two unapproved products did not qualify for coverage under federal and state health care programs.  See, St. Louis-based KV Pharmaceutical to Settle Medicaid False Claims Allegations
• On March 16, 2012, Attorney General Jeffrey S. Chiesa announced that the owner of a now-defunct Newark mental health and substance abuse counseling center was sentenced to state prison  after being convicted of defrauding Medicaid.  See, Former Owner of Counseling Center Sentenced to State Prison for Defrauding Medicaid
• On March 15, 2012, Ohio Attorney General Mike DeWine said that Alicia K. Mahone, of Cleveland, was convicted of billing for home health care not provided for $20,000. Mahone regularly submitted bills, from April to December 2010, to the Ohio Department of Job and Family Services claiming to have provided 35 hours of patient care to a Medicaid recipient, while only having provided 15 hours.  See, Attorney General DeWine Announces Conviction in Medicaid Billing Fraud
• Also on March 15, 2012, New Jersey Attorney General Jeffrey S. Chiesa announced that a certified nursing assistant who worked at a Livingston nursing home was charged with allegedly conspiring to take a photograph of an elderly resident’s genitalia and have the photograph posted on Facebook. Her friend, and co-defendant, was charged on March 14 in the alleged scheme. See,  Certified Nursing Assistant Among Two Charged with Invasion of Privacy After Photo of a Nursing Home Resident’s Genitalia Posted on Facebook
• On March 13, 2012, Arizona Attorney General Tom Horne announced that a Glendale man has been sentenced to prison and probation for prescription drug fraud. See, Horne Announces Prison Sentence For Glendale Man Convicted Of Prescription Drug Fraud
• Also on March 13, 2012, New Jersey Attorney General Jeffrey S. Chiesa announced that a former Matawan doctor pleaded guilty to dispensing controlled dangerous substances by writing prescriptions for medically unnecessary pharmaceutical narcotics in return for cash payments.  See, Former Matawan Doctor Pleads Guilty to Dispensing Pharmaceutical Narcotics for Cash 
• On March 13, 2012, Arizona Attorney General Tom Horne announced that a guilty verdict in the health care fraud trial of Julianne Mari Lane, a home health worker in Tucson. See, Home Health Care Worker Convicted For Fraud Of Vulnerable Adult
• On March 13, 2012, New Jersey Attorney General Jeffrey S. Chiesa announced that a Newark pharmacist has pleaded guilty for his role in a scheme in which pharmacy owners and employees purchased prescriptions including HIV/AIDS drugs from indigent patients so Medicaid could be billed for medications that were never actually dispensed. See, Essex County Pharmacist Pleads Guilty to Medicaid Fraud in False Billing Scheme
• On March 7, 2012,  Michigan Attorney General Bill Schuette, Michigan Department of Human Services Director Maura D. Corrigan and U.S. Department of Health and Human Services, Office of Inspector General announced that the Attorney General’s Public Integrity Unit charged a former City of Detroit employee with one felony count of fraud.  See, Schuette, Corrigan Announce Fraud Charge against Ex-City of Detroit DHS Social Worker
• On March 7, 2012, Ohio Attorney General Mike DeWine announced that Janet Root, 35, was sentenced for theft of patient funds at the Arcadia Nursing Center in Coolville, Ohio. Root was sentenced to five years of community control and ordered to pay $31,471 in restitution. She also received a nine-year suspended sentence after she pled guilty last November to four counts of Theft from the Elderly, fourth-degree felonies, and two counts of Forgery, fourth-degree felonies.  See, Attorney General DeWine Announces Sentencing in Theft from Nursing Center Residents
• On March 7, 2012, Maryland Attorney General Douglas F. Gansler today announced that Maryland, along with multiple states and the federal government, has reached agreements with K-V Pharmaceutical Company to settle allegations that the company caused false claims to be submitted to the Medicaid program. Under the K-V agreement, K-V will pay the states and the federal government a total of $17 million to compensate Medicaid and various federal health care programs for the violations. The federal share of the settlement is $10,158,695, and the states’ share of the settlement is $6,841,305. Maryland will receive $36,377.  See, AG Gansler Secures Settlement with K-V Pharmaceutical
• Also on March 7, 2012,   Maryland Attorney General Douglas F. Gansler announced Dava Pharmaceuticals, Inc. agreement, (“Dava”) had agreed to a settlement of the State’s allegations that Dava failed to pay required rebates to the Medicaid program. Dava will pay $11 million to Medicaid and other government health care programs. Maryland will receive $7,054 from the settlement.  See,  AG Gansler Secures Recovery from Dava Pharmaceuticals, Inc.

This lengthy and growing list of state prosecution and other enforcement actions encompass both fraudulent billing activities of the nature commonly drawing the attention of federal health care fraud enforcement teams, as well as a wide range of other misconduct often not targeted by federal investigators.

Coupled with the growth and success of federal health care fraud investigation and enforcement efforts continue to prove the need for health care providers and payers to strengthen their compliance practices and documentation to avoid getting caught in the ever tightening health care fraud dragnet.  When taking these efforts, the lengthy and growing list of successful state prosecutions show the need for health care providers and payers to make sure their compliance and risk management activities provide adequate protection of their organizations and people against both the highly publicized federal health care fraud war, and the much quieter, but equally active state health care fraud effort.

Health Care Providers Must Act To Manage Risks

In response to the growing emphasis and effectiveness of Federal and state officials in investigating and taking action against health care providers and organizations, health care providers should constantly work to keep up and strengthen their defensive shield against health care fraud. 

Among other things, health care providers should consider auditing the adequacy of existing practices, tightening training, oversight and controls on billing and other regulated conduct, reaffirming their commitment to compliance to workforce members and constituents and taking other appropriate steps to help prevent, detect and timely redress health care fraud exposures within their organization and to position their organization to respond and defend against potential investigations or charges.

For More Information Or Assistance

If you need assistance reviewing or responding to these or other health care related risk management, compliance, enforcement or management concerns, the author of this update, attorney Cynthia Marcotte Stamer, may be able to help. Vice President of the North Texas Health Care Compliance Professionals Association, Past Chair of the ABA Health Law Section Managed Care & Insurance Section and the former Board Compliance Chair of the National Kidney Foundation of North Texas, Ms. Stamer has more than 24 years experience advising health industry clients about these and other matters. Her experience includes advising hospitals, nursing home, home health, rehabilitation and other health care providers and health industry clients to set up and administer compliance and risk management policies; prevent, conduct and investigate, and respond to peer review and other quality concerns; and to respond to Board of Medicine, Department of Aging & Disability, Drug Enforcement Agency, OCR Privacy and Civil Rights, HHS, DOD and other health care industry investigation, enforcement and other compliance, public policy, regulatory, staffing, and other operations and risk management concerns.

A popular lecturer and widely published author on health industry concerns, Ms. Stamer continuously advises health industry clients about compliance and internal controls, workforce and medical staff performance, quality, governance, reimbursement, and other risk management and operational matters. Ms. Stamer also publishes and speaks extensively on health and managed care industry regulatory, staffing and human resources, compensation and benefits, technology, public policy, reimbursement and other operations and risk management concerns. Her insights on these and other related matters appear in the Health Care Compliance Association, Atlantic Information Service, Bureau of National Affairs, The Wall Street Journal, Business Insurance, the Dallas Morning News, Modern Health Care, Managed Healthcare, Health Leaders, and a many other national and local publications.  You can get more information about her health industry experience here. If you need assistance responding to concerns about the matters discussed in this publication or other health care concerns, wish to obtain information about arranging for training or presentations by Ms. Stamer, wish to suggest a topic for a future program or update, or wish to request other information or materials, please contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here.

If you or someone else you know would like to receive future updates about developments on these and other concerns from Ms. Stamer, see here.

About Solutions Law Press

Solutions Law Press™ provides business risk management, legal compliance, management effectiveness and other resources, training and education on human resources, employee benefits, compensation, data security and privacy, health care, insurance, and other key compliance, risk management, internal controls and other key operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press resources including:

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©2012 Cynthia Marcotte Stamer, P.C. Non-exclusive license to republish granted to Solutions Law Press.  All other rights reserved.

This entry was posted on Monday, April 9th, 2012 at 1:11 pm and is filed under Controlled Substances, DEA, Doctor, E-Prescribing, FDA, Health Care, Health Care Fraud, Health Care Provider, Hospital, Licensing, Medical Licensure, Medical Malpractice, OIG, Physician, Physician Licensing, Prescription Drugs, Substance Abuse. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.