A $4 million settlement by Lakeland Regional Medical Center (LRMC) in Lakeland, Florida, alerts other health care providers and state and local governments administering Medicaid-funded care to confirm their arrangements don’t involve prohibited donations.

Under federal law, a state’s share of Medicaid payments must consist of state or local government funds, and may not come from “non-bona fide donations” from private health care providers, such as hospitals.

A non-bona fide donation is a payment in cash or in kind from a private provider to a governmental entity that is then returned to the private provider through a payment by Medicaid.

Because Medicaid services are reimbursed jointly by the federal and state governments, a non-bona fide donation causes federal expenditures to increase without any corresponding increase in state expenditures, since the state share of the Medicaid payments to the provider comes from and is returned to the provider. The prohibition of this practice ensures that states are in fact paying a share of Medicaid payments and thus have an incentive to curb Medicaid costs and prevent unnecessary services.

On March 30, the Justice Department announced that LMRC has agreed to pay the United States $4 million to resolve allegations that it made prohibited donations to a local unit of government to improperly fund the state’s share of Medicaid payments to LRMC.

According to the Justice Department between October 2014 and September 2015, LRMC made improper, non-bona fide donations to Polk County, Florida by assuming and paying certain of Polk County’s financial obligations to other healthcare providers. These donations were designed to increase Medicaid payments received by LRMC, by freeing up funds for the County to make payments to the State as the state share of Medicaid payments to LRMC. This state share was “matched” by the federal government before being returned to LRMC as Medicaid payments. The Medicaid payments LRMC received were thus funded by the federal government and LRMC’s own donations, in violation of the prohibition on non-bona fide donations.

More Information

We hope this update is helpful. For more information about these or other health or other legal, management or public policy developments, please contact the author Cynthia Marcotte Stamer via e-mail or via telephone at (214) 452 -8297.  

Solutions Law Press, Inc. invites you to receive future updates by registering on our Solutions Law Press, Inc. Website and participating and contributing to the discussions in our Solutions Law Press, Inc. LinkedIn SLP Health Care Risk Management & Operations Group, HR & Benefits Update Compliance Group, and/or Coalition for Responsible Health Care Policy. 

About the Author

Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: ERISA & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely-known for 35 plus years of health industry and other management work, public policy leadership and advocacy, coaching, teachings, and publications.

A Fellow in the American College of Employee Benefit Counsel, Chair of the American Bar Association (“ABA”) International Section Life Sciences and Health Committee, Chair-Elect of the ABA TIPS Section Medicine & Law Committee, Past Chair of the ABA Managed Care & Insurance Interest Group, Scribe for the ABA JCEB Annual Agency Meeting with HHS-OCR, past chair of the ABA RPTE Employee Benefits & Other Compensation Group and current co-Chair of its Welfare Benefit Committee, Ms. Stamer is most widely recognized for her decades of pragmatic, leading-edge work, scholarship and thought leadership on health and managed care and employer benefits legal, public policy and operational concerns in the healthcare, employer benefits, and insurance and financial services industries. She speaks and publishes extensively on HIPAA and other related compliance issues.

Ms. Stamer’s work throughout her career has focused heavily on working with health care and managed care, health and other employee benefit plan, insurance and financial services and other public and private organizations and their technology, data, and other service providers and advisors domestically and internationally with legal and operational compliance and risk management, performance and workforce management, regulatory and public policy and other legal and operational concerns.

For more information about Ms. Stamer or her health industry and other experience and involvements, see www.cynthiastamer.com or contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here. 

About Solutions Law Press, Inc.™

Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested in reviewing some of our other Solutions Law Press, Inc.™ resources available here such as:

• Medical Professionals, Medical Businesses Owners and Others Criminally Charged In $490 Million Plus COVID-19 Related False Billings Takedown
• Sibley Hospital & Johns Hopkins Health System Pay $5 Million To Settle Stark Violations
• HHS Inspector General Comments Signal MorrContinuAggressive Ahghinued Aggresdiv
• 4/21 Deadline For Comments On Proposed HIPAA Administrative Simplification Adoption of Standards for Health Care Attachments Transactions and Electronic Signatures, and Modification To Referral Certification and Authorization Transaction Standard
• Pharmaceutical Distributor Danco’s $765,000 False Claims Act Settlement Shows Importance Of Customs Marking and Duty Rules
• $400K EEOC Settlement Warns Health Care Organizations Against Pregnancy Discrimination
• 2 Pharmacy FCA Convictions WarnAgainst Billing Or Undelivered Drugs Or Care
• “Rock Doc” Opioid Conviction Reaffirms DOJ Prioritization & Frequent Success of Illegal Opioid Distribution Enforcement
• Health Care Provider Pays $4 Million For Making Prohibited Donations Toward County Medicaid Funding
• OIG Asks Cigna MA Plans To Refund $6 Million, Clean Up Plan Processes After Poor Audit Results
• FY 2022 Medicaid Fraud Conviction Increase, Other Data Shows Continued Robustness of Federal Medicaid Enforcement
• Health Care Providers Should Verify Compliance, Audit Risks In Preparation For End of COVID Flexibilities
• Prepare To Handle Justice Department Marijuana Pardon Certificates From Applicant
• Sentencings & Charges Of Clinic Operators For Defrauding Health Plans Highlight Risks Of Involvement In Schemes To File Fraudulent Health Benefit Claims
• Former Missouri Lawmaker Sentenced On COVID & Stem Cell Fraud, Illegally Distributing Prescription Drugs & False Statements
• Ensure Health Care & Other Compliance Practices Updated For New DOJ Voluntary Disclosure Policy
• F-1 Visa Guidance Could Impact Health Industry Work Eligibility Of Some Foreign Students
• DOJ Withdraws Health Care Antitrust Policy & Enforcement Statements

IMPORTANT NOTICE ABOUT THIS COMMUNICATION

If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information including your preferred e-mail by creating your profile here.

NOTICE: These statements and materials are for general informational and educational purposes only. They do not establish an attorney-client relationship, are not legal advice or an offer or commitment to provide legal advice, and do not serve as a substitute for legal advice. Readers are urged to engage competent legal counsel for consultation and representation in light of the specific facts and circumstances presented in their unique circumstances at any particular time. No comment or statement in this publication is to be construed as legal advice or an admission. The author and Solutions Law Press, Inc.™ reserve the right to qualify or retract any of these statements at any time. Likewise, the content is not tailored to any particular situation and does not necessarily address all relevant issues. Because the law is rapidly evolving and rapidly evolving rules make it highly likely that subsequent developments could impact the currency and completeness of this discussion. The author and Solutions Law Press, Inc.™ disclaim, and have no responsibility to provide any update or otherwise notify anyone of any such change, limitation, or other condition that might affect the suitability of reliance upon these materials or information otherwise conveyed in connection with this program. Readers may not rely upon, are solely responsible for, and assume the risk and all liabilities resulting from their use of this publication. Readers acknowledge and agree to the conditions of this Notice as a condition of their access to this publication. 

Circular 230 Compliance. The following disclaimer is included to ensure that we comply with U.S. Treasury Department Regulations. Any statements contained herein are not intended or written by the writer to be used, and nothing contained herein can be used by you or any other person, for the purpose of (1) avoiding penalties that may be imposed under federal tax law, or (2) promoting, marketing or recommending to another party any tax-related transaction or matter addressed herein.

©2023 Cynthia Marcotte Stamer. Limited non-exclusive right to republish granted to Solutions Law Press, Inc.™

Cigna-HealthSpring Life & Health Insurance Company (“CIGNA”) earned poor marks for its administration of various Medicare Advantage contracts in compliance with Federal requirements in recent Department of Health & Human Services (“HHS”) Office of Inspector General (“OIG”) audits.

Audits’ Purpose

Under the Medicare Advantage (MA) program, the Centers for Medicare & Medicaid Services (CMS) makes monthly payments to MA organizations according to a system of risk adjustment that depends on the health status of each enrollee. Accordingly, MA organizations are paid more for providing benefits to enrollees with diagnoses associated with more intensive use of health care resources than to healthier enrollees, who would be expected to require fewer health care resources. 

To determine the health status of enrollees, CMS relies on MA organizations to collect diagnosis codes from their providers and submit these codes to CMS. Some diagnoses are at higher risk for being miscoded, which may result in overpayments from CMS. 

Separate audits of two contracts reviewed groups of high-risk diagnosis codes to determine if selected diagnosis codes that Cigna submitted to CMS for use in CMS’s risk adjustment program under the contracts complied with Federal requirements. The audits found poor compliance in both contract audits.

Contract H4513 Audit

According to an audit report made public in March, 2023, a Medicare Advantage compliance audit of the nine high-risk groups covered by the audit revealed most of the selected diagnosis codes that Cigna submitted to CMS for use in CMS’s risk adjustment program under Cigna’s Contract H4513 “did not comply with Federal requirements.”Specifically, for 200 of the 300 sampled enrollee-years, the medical records that Cigna provided did not support the diagnosis codes and resulted in $468,372 in overpayments. On the basis of the audit sample results, OIG estimated that Cigna received at least $6.24 million in overpayments for 2016 and 2017.

Based on these audit findings, OIG is recommending that Cigna:

• Refund to the Federal Government the $468,372 of overpayments;
• Identify, for the high-risk diagnoses included in this report, similar instances of noncompliance that occurred before or after our audit period and refund any resulting overpayments to the Federal Government; and
• Continue its examination of its existing compliance procedures to identify areas where improvements can be made to ensure that diagnosis codes that are at high risk for being miscoded comply with Federal requirements and take the necessary steps to enhance those procedures.

OIG reports Cigna disagreed with OIG’s recommendations as well as:

• OIG’s findings for 6 sampled enrollee-years which, according to Cigna, were supported by the medical records;
• OIG’s audit methodology, use of extrapolation, and standards for data accuracy, coding, and documentation requirements; but
• Cigna did not directly agree or disagree with OIG’s findings for the remaining enrollee-years.

After reviewing Cigna’s comments and the additional information Cigna provided, OIG revised the number of enrollee-years in error from 201 to 200 for this final report.

After OIG issued its draft report, CMS updated regulations for audits in its risk adjustment program to specify that extrapolated overpayments could only be recouped beginning with the payment year 2018. Because the CIGNA audit period covered payment years 2016 and 2017, OIG subsequently revised its first recommendation to specify a refund of only the overpayments for the sampled enrollee-years but made no changes to its other recommendations. OIG says it followed a reasonable audit methodology and correctly applied applicable Federal requirements underlying the MA program.

OIG expressed similar findings and concerns in its audit report about an audit of the performance of Cigna-HealthSpring of Tennessee, Inc. (“Cigna-Tenn”) made public in December 2022.

The Cigna-Tenn audit focused on 10 groups of high-risk diagnosis codes. OIG sampled 279 unique enrollee-years with the high-risk diagnosis codes for which Cigna received higher payments for 2016 through 2017. OIG limited it’s review to the portions of the payments that were associated with these high-risk diagnosis codes, which totaled $759,529.

With respect to the 10 high-risk groups covered by the audit, OIG found most of the selected diagnosis codes that Cigna submitted to CMS for use in CMS’s risk adjustment program did not comply with Federal requirements. For 195 of the 279 sampled enrollee-years, the medical records that Cigna provided did not support the diagnosis codes and resulted in $509,194 in overpayments.

Based on the errors found, OIG also concluded Cigna’s policies and procedures to prevent, detect, and correct noncompliance with CMS’s program requirements, as mandated by Federal regulations, needed improvement. On the basis of the sample results, we OIG estimates that Cigna received at least $5.9 million in overpayments for 2016 and 2017.

OIG recommend that Cigna:

• Refund to the Federal Government the $5.9 million of estimated overpayments;
• Identify, for the high-risk diagnoses included in this report, similar instances of noncompliance that occurred before and after our audit period and refund any resulting overpayments to the Federal Government; and
• Continue its examination of its existing compliance procedures to identify areas where improvements can be made to ensure that diagnosis codes that are at high risk for being miscoded comply with Federal requirements (when submitted to CMS for use in CMS’s risk adjustment program) and take the necessary steps to enhance those procedures.

As with the latest audit findings, Cigna-Tenn:

• Disputed OIG’s recommendations;
• OIG’s findings for 13 sampled enrollee-years which, according to Cigna, were supported by the diagnosis codes on the medical records.
• OIG’s audit methodology, use of extrapolation, and standards for data accuracy, coding, and documentation requirements; but
• Did not directly agree or disagree with our findings for the remaining enrollee-years.

After reviewing Cigna-Tenn’s comments and the additional information provided, OIG also revised the number of enrollee-years in error from 201 to 195 for this final report and reduced the amount of the recommended repayment to $5.9 million but made no change to its other recommendations.

More Information

We hope this update is helpful. For more information about these or other health or other legal, management or public policy developments, please contact the author Cynthia Marcotte Stamer via e-mail or via telephone at (214) 452 -8297.  

Solutions Law Press, Inc. invites you to receive future updates by registering on our Solutions Law Press, Inc. Website and participating and contributing to the discussions in our Solutions Law Press, Inc. LinkedIn SLP Health Care Risk Management & Operations Group, HR & Benefits Update Compliance Group, and/or Coalition for Responsible Health Care Policy. 

About the Author

Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: ERISA & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely-known for 35 plus years of health industry and other management work, public policy leadership and advocacy, coaching, teachings, and publications.

A Fellow in the American College of Employee Benefit Counsel, Chair of the American Bar Association (“ABA”) International Section Life Sciences and Health Committee, Chair-Elect of the ABA TIPS Section Medicine & Law Committee, Past Chair of the ABA Managed Care & Insurance Interest Group, Scribe for the ABA JCEB Annual Agency Meeting with HHS-OCR, past chair of the ABA RPTE Employee Benefits & Other Compensation Group and current co-Chair of its Welfare Benefit Committee, Ms. Stamer is most widely recognized for her decades of pragmatic, leading-edge work, scholarship and thought leadership on health and managed care and employer benefits legal, public policy and operational concerns in the healthcare, employer benefits, and insurance and financial services industries. She speaks and publishes extensively on HIPAA and other related compliance issues.

Ms. Stamer’s work throughout her career has focused heavily on working with health care and managed care, health and other employee benefit plan, insurance and financial services and other public and private organizations and their technology, data, and other service providers and advisors domestically and internationally with legal and operational compliance and risk management, performance and workforce management, regulatory and public policy and other legal and operational concerns.

For more information about Ms. Stamer or her health industry and other experience and involvements, see www.cynthiastamer.com or contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here. 

About Solutions Law Press, Inc.™

Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested in reviewing some of our other Solutions Law Press, Inc.™ resources available here such as:

• Medical Professionals, Medical Businesses Owners and Others Criminally Charged In $490 Million Plus COVID-19 Related False Billings Takedown
• Sibley Hospital & Johns Hopkins Health System Pay $5 Million To Settle Stark Violations
• HHS Inspector General Comments Signal MorrContinuAggressive Ahghinued Aggresdiv
• 4/21 Deadline For Comments On Proposed HIPAA Administrative Simplification Adoption of Standards for Health Care Attachments Transactions and Electronic Signatures, and Modification To Referral Certification and Authorization Transaction Standard
• Pharmaceutical Distributor Danco’s $765,000 False Claims Act Settlement Shows Importance Of Customs Marking and Duty Rules
• $400K EEOC Settlement Warns Health Care Organizations Against Pregnancy Discrimination
• 2 Pharmacy FCA Convictions WarnAgainst Billing Or Undelivered Drugs Or Care
• “Rock Doc” Opioid Conviction Reaffirms DOJ Prioritization & Frequent Success of Illegal Opioid Distribution Enforcement
• Health Care Provider Pays $4 Million For Making Prohibited Donations Toward County Medicaid Funding
• OIG Asks Cigna MA Plans To Refund $6 Million, Clean Up Plan Processes After Poor Audit Results
• FY 2022 Medicaid Fraud Conviction Increase, Other Data Shows Continued Robustness of Federal Medicaid Enforcement
• Health Care Providers Should Verify Compliance, Audit Risks In Preparation For End of COVID Flexibilities
• Prepare To Handle Justice Department Marijuana Pardon Certificates From Applicant
• Sentencings & Charges Of Clinic Operators For Defrauding Health Plans Highlight Risks Of Involvement In Schemes To File Fraudulent Health Benefit Claims
• Former Missouri Lawmaker Sentenced On COVID & Stem Cell Fraud, Illegally Distributing Prescription Drugs & False Statements
• Ensure Health Care & Other Compliance Practices Updated For New DOJ Voluntary Disclosure Policy
• F-1 Visa Guidance Could Impact Health Industry Work Eligibility Of Some Foreign Students
• DOJ Withdraws Health Care Antitrust Policy & Enforcement Statements

IMPORTANT NOTICE ABOUT THIS COMMUNICATION

If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information including your preferred e-mail by creating your profile here.

NOTICE: These statements and materials are for general informational and educational purposes only. They do not establish an attorney-client relationship, are not legal advice or an offer or commitment to provide legal advice, and do not serve as a substitute for legal advice. Readers are urged to engage competent legal counsel for consultation and representation in light of the specific facts and circumstances presented in their unique circumstances at any particular time. No comment or statement in this publication is to be construed as legal advice or an admission. The author and Solutions Law Press, Inc.™ reserve the right to qualify or retract any of these statements at any time. Likewise, the content is not tailored to any particular situation and does not necessarily address all relevant issues. Because the law is rapidly evolving and rapidly evolving rules make it highly likely that subsequent developments could impact the currency and completeness of this discussion. The author and Solutions Law Press, Inc.™ disclaim, and have no responsibility to provide any update or otherwise notify anyone of any such change, limitation, or other condition that might affect the suitability of reliance upon these materials or information otherwise conveyed in connection with this program. Readers may not rely upon, are solely responsible for, and assume the risk and all liabilities resulting from their use of this publication. Readers acknowledge and agree to the conditions of this Notice as a condition of their access to this publication. 

Circular 230 Compliance. The following disclaimer is included to ensure that we comply with U.S. Treasury Department Regulations. Any statements contained herein are not intended or written by the writer to be used, and nothing contained herein can be used by you or any other person, for the purpose of (1) avoiding penalties that may be imposed under federal tax law, or (2) promoting, marketing or recommending to another party any tax-related transaction or matter addressed herein.

©2023 Cynthia Marcotte Stamer. Limited non-exclusive right to republish granted to Solutions Law Press, Inc.™

Physicians, hospitals, clinics and other health care providers should take any necessary steps to adjust their practices to ensure their defensibility under federal health care fraud laws when flexibilities allowed under the COVID-19 public health emergency declaration (COVID-19 Declaration) first issued on January 31, 2020 end in May 2023 as well as audit other potential compliance risks that may have arisen from staffing or other operational disruptions that occurred during the COVID-19 pandemic.

The Secretary of Health & Human Services (“HHS”) has announced the COVID-19 Declaration will expire at the end of the day on May 11, 2023. When the COVID-19 Declaration expires, physicians and other health care providers need to recognize and begin preparing for the end of the following special flexibilities and relief that HHS granted by the HHS Office of Inspector General (“OIG”) through various Policy Statements and Frequently Asked Questions (“FAQs”) while the COVID-19 Declaration remained in effect to provide flexibility and minimize burdens for the health care industry as it faced the challenges of the COVID-19 pandemic. Other agencies that issued flexibilities or other relief during the pandemic also have or are ending that relief, The termination of these flexibilities will immediately reactivate a host of federal, state and local rules suspended or softened during the COVID-19 pandemic even as the operations of agencies and the courts normalize. Amid these developments, health care providers, health care organizations and other businesses need to use care to avoid creating liability by continuing to use practices adopted under the flexibilities granted under the COVID-19 Declaration or other similar pandemic relief after that temporary relief expires.

OIG Policy Statement Regarding Physicians and Other Practitioners That Reduce or Waive Amounts Owed by Federal Health Care Program Beneficiaries for Telehealth Services During the 2019 Novel Coronavirus (COVID-19)Outbreak (“Telehealth Policy Statement”)

The Telehealth Policy Statement issued March 17, 2020, notified physicians and other practitioners that HHS would not impose administrative sanctions for reducing or waiving any cost-sharing obligations Federal health care program beneficiaries may owe for telehealth services furnished consistent with the then-applicable coverage and payment rules, as long as the provider met the conditions specified in the Telehealth Policy Statement.  The Telehealth Policy Statement imposed several conditions upon its applicability.  Since the Telehealth Policy Statement only applies while the COVID-19 Declaration remained in effect, reductions or waivers of Federal health care program enrollees’ cost-sharing obligations for telehealth services furnished after the expiration of the COVID-19 Declaration on May 11, 2023, will not receive prospective immunity from OIG administrative sanctions under the Telehealth Policy Statement.

OIG Policy Statement Regarding Application of Certain Administrative Enforcement Authorities Due to Declaration of Coronavirus Disease 2019 (COVID-19) Outbreak in the United States as a National Emergency (“OIG Blanket Waivers Policy Statement”)

The OIG Blanket Waivers Policy Statement issued April 3, 2020, announced OIG would not to impose certain administrative sanctions for certain remuneration related to COVID-19 covered by the Blanket Waivers of Section 1877(g) of the Social Security Act (Centers for Medicare & Medicaid Services (CMS) Blanket Waivers) issued by the Secretary, subject to the conditions specified in the Policy Statement. This relief will end on March 11, 2023.

The CMS Blanket Waivers applied to allow a health care provider to be reimbursed for the items and services and exempted from sanctions for such noncompliance, absent the government’s determination of fraud or abuse the following referrals and claims made where necessary to ensure sufficient health care items and services remained available to meet the needs of individuals enrolled in the Medicare, Medicaid, and CHIP programs and the health care providers furnishing those items and services in good faith were unable to comply with one or more of the specified requirements of section 1877 of the Social Security Act due to the consequences of the COVID-19 pandemic:

• Remuneration from an entity to a physician (or an immediate family member of a physician) that is above or below the fair market value for services personally performed by the physician (or the immediate family member of the physician) to the entity.
• Rental charges paid by an entity to a physician (or an immediate family member of a physician) that are below fair market value for the entity’s lease of office space from the physician (or the immediate family member of the physician).
• Rental charges paid by an entity to a physician (or an immediate family member of a physician) that are below fair market value for the entity’s lease of equipment from the physician (or the immediate family member of the physician).
• Remuneration from an entity to a physician (or an immediate family member of a physician) that is below fair market value for items or services purchased by the entity from the physician (or the immediate family member of the physician).
• Rental charges paid by a physician (or an immediate family member of a physician) to an entity that are below fair market value for the physician’s (or immediate family member’s) lease of office space from the entity.
• Rental charges paid by a physician (or an immediate family member of a physician) to an entity that are below fair market value for the physician’s (or immediate family member’s) lease of equipment from the entity.
• Remuneration from a physician (or an immediate family member of a physician) to an entity that is below fair market value for the use of the entity’s premises or for items or services purchased by the physician (or the immediate family member of the physician) from the entity.
• Remuneration from a hospital to a physician in the form of medical staff incidental benefits that exceeds the limit set forth in 42 CFR 411.357(m)(5).
• Remuneration from an entity to a physician (or the immediate family member of a physician) in the form of nonmonetary compensation that exceeds the limit set forth in 42 CFR 411.357(k)(1).
• Remuneration from an entity to a physician (or the immediate family member of a physician) resulting from a loan to the physician (or the immediate family member of the physician): (1) with an interest rate below fair market value; or (2) on terms that are unavailable from a lender that is not a recipient of the physician’s referrals or business generated by the physician.
• Remuneration from a physician (or the immediate family member of a physician) to an entity resulting from a loan to the entity: (1) with an interest rate below fair market value; or (2) on terms that are unavailable from a lender that is not in a position to generate business for the physician (or the immediate family member of the physician).
• The referral by a physician owner of a hospital that temporarily expands its facility capacity above the number of operating rooms, procedure rooms, and beds for which the hospital was licensed on March 23, 2010 (or, in the case of a hospital that did not have a provider agreement in effect as of March 23, 2010, but did have a provider agreement in effect on December 31, 2010, the effective date of such provider agreement) without prior application and approval of the

Providers that have or are billing for services in reliance on the blanket waiver should keep in mind that they only apply to financial relationships and referrals that are related to the COVID-19 outbreak in the United States. Any remuneration described in the blanket waivers must be directly between the entity and: (1) the physician or the physician organization in whose shoes the physician stands under 42 CFR 411.354(c); or (2) the immediate family member of the physician.

Also, the remuneration and referrals described in the blanket waivers must be solely related to COVID-19 Purposes, which means:

• Diagnosis or medically necessary treatment of COVID-19 for any patient or individual, whether or not the patient or individual is diagnosed with a confirmed case of COVID[1]19;
• Securing the services of physicians and other health care practitioners and professionals to furnish medically necessary patient care services, including services not related to the diagnosis and treatment of COVID-19, in response to the COVID-19 outbreak in the United States;
• Ensuring the ability of health care providers to address patient and community needs due to the COVID-19 outbreak in the United States;
• Expanding the capacity of health care providers to address patient and community needs due to the COVID-19 outbreak in the United States;
• Shifting the diagnosis and care of patients to appropriate alternative settings due to the COVID-19 outbreak in the United States; or
• Addressing medical practice or business interruption due to the COVID-19 outbreak in the United States in order to maintain the availability of medical care and related services for patients and the community.

Providers must not attempt to rely upon the CMS Blanket Waivers to justify any transaction after May 11, 2023.  Furthermore, providers acting in reliance upon the CMS Blanket Waivers must not rely upon the CMS Blanket Waivers to bill for, and should take prompt action to correct billing for any services provided in reliance on the Blanket Waiver that don’t meet these or any other applicable conditions.

FAQs-Application of OIG’s Administrative Enforcement Authorities to Arrangements Directly Connected to the Coronavirus Disease 2019 (COVID-19) Public Health Emergency

HHS beginning April 10, 2020, also published informal, nonbinding guidance in the form of Frequently Asked Questions (“FAQs”) that discussed OIG’s views on the following arrangements when directly connected to the public health emergency and implicated OIG’s administrative enforcement authorities, including the Federal anti-kickback statute and Beneficiary Inducements CMP:

• Would the offer or provision of cash, cash-equivalent, or in-kind incentives or rewards to Federal health care program beneficiaries who receive COVID-19 vaccinations during the public health emergency violate OIG’s administrative enforcement authorities?
• What are the implications, under OIG’s administrative sanction authorities, of an ambulance provider or supplier waiving or discounting beneficiary cost-sharing obligations (required by the Medicare program) resulting from ground ambulance services paid for by the Medicare program under a waiver established pursuant to section 1135(b)(9) of the Social Security Act?
• Can a federally qualified health center (FQHC) with a location in a rural area provide free space to a retail pharmacy that administers COVID-19 vaccinations to FQHC patients and the general public (including Federal health care program beneficiaries)?
• Can a non-provider philanthropic entity contract to provide certain administrative services to a health care provider relating to the operation of COVID-19 vaccination sites and be compensated on a per-vaccine basis?
• Can a Federally Qualified Health Center (FQHC), including an entity that receives grant funds or designation under section 330 of the Public Health Service Act, conduct free COVID-19 diagnostic testing that has been cleared or approved by the Food and Drug Administration (FDA), is subject to an FDA-issued Emergency Use Authorization, or is covered by the Medicare program, including for Federal health care program beneficiaries, at community health fairs and via mobile testing in underserved communities impacted by COVID-19?
• Can a provider or supplier such as a hospital, pharmacy, or health system provide other providers and suppliers with free items and services related to COVID-19 vaccine storage, distribution, redistribution, and/or administration?
• A Federally Qualified Health Center (FQHC) received from a private foundation a $15,000 COVID-19 relief grant designated for emergency cash assistance for financially needy individuals. Can the FQHC furnish cash-equivalent gift cards, in specified amounts, to address social determinants of health for financially needy individuals, including Federal health care program beneficiaries who meet certain criteria?
• Can a home health agency’s (HHA) staff members furnish free blood draws-provided that such blood draws are within the scope of the staff’s licenses-to assisted living facility residents who are Federal health care program beneficiaries and are not patients of the HHA?
• Can clinical laboratories offer free COVID-19 antibody testing to Federal health care program beneficiaries who are contemporaneously receiving other medically necessary blood tests during the COVID-19 public health emergency?
• Can an oncology practice offer free or discounted lodging to its financially needy patients who are Federal health care program beneficiaries if, prior to the COVID-19 public health emergency, such patients would have had access to free or discounted housing at a nonprofit lodging facility while receiving chemotherapy or radiation treatment?
• Can a physician group that contracts with a nursing home to provide care to its residents furnish protective face masks at no or reduced cost to the nursing home if it is experiencing supply shortages due to the COVID-19 outbreak?
• During the time period subject to the COVID-19 Declaration, can a clinical laboratory that bills Federal health care programs for laboratory tests to diagnose COVID-19 pay a retail pharmacy a fee for certain costs that the retail pharmacy incurs related to testing collection sites?
• Why does the “OIG Policy Statement Regarding Application of Certain Administrative Enforcement Authorities Due to Declaration of Coronavirus Disease 2019 (COVID-19) Outbreak in the United States as a National Emergency” not incorporate sections II(B)(12)-(18) of the blanket waivers of the physician self-referral law as issued by the Secretary?
• Can a hospital assist a Federally Qualified Health Center Look-Alike (FQHCLA) by suspending rental charges and forgoing the accrual of interest on a line of credit during the period subject to the COVID-19 Declaration to ensure the FQHCLA is able to continue to serve the medical needs of the community during the pandemic?
• I am an eligible provider who received a distribution through the CARES Act Provider Relief Fund. Where do I sign my attestation?
• Can mental health and substance use disorder providers accept donations from public entities (i.e., local, State, or Federal government entities), private charitable foundations, or health plans to fund cell phones, service or data plans, or both for patients who are financially needy or who do not own their own cell phone for the purpose of furnishing medically necessary services while in-person care is disrupted during the COVID-19 outbreak?
• Can an oncology group practice provide free in-kind local transportation to and from an established patient’s home to an alternate practice location to receive medically necessary oncology care during the time period subject to the COVID-19 Declaration?
• Can health care providers and practitioners furnish services, not to exceed their scope of practice, for free or at a reduced rate, to assist skilled nursing facilities (SNFs) or other long-term-care providers that are facing staffing shortages due to the COVID-19 outbreak?
• Can a hospital provide access to its existing HIPAA-compliant, web-based telehealth platform for free to independent physicians on its medical staff to furnish medically necessary telehealth services during the time period subject to the COVID-19 Declaration?

As stated in the FAQs, the informal, nonbinding feedback provided “applies only to arrangements in existence solely during the time period subject to the COVID-19 Declaration”  and that OIG may take a different position on arrangements that are the same or similar in nature that existed before the effective date of the COVID-19 Declaration or after the time such COVID-19 Declaration ends versus during the COVID-19 Emergency due to the emergency situation.  Providers also are cautioned against to seek the advice of legal counsel about the potential risks and consequences of relying on FAQ or other COVID-19 relief where their proposed activity does not obviously meet all of the assumptions and requirements stated in the applicable FAQ or other guidance. In any event, providers should not rely on any relief provided by any of the FAQs after May 11, 2023.

Other Expiring Flexibilities

The expiration of the COVID-19 Declaration also will end relief granted during the COVID health care emergency by the Drug Enforcement Agency (“DEA”), the HHS Office of Civil Rights (“OCR”) and other agencies.

For example, the end of the COVID-19 Declaration will end COVID-19 flexibilities for prescribers and others granted by the DEA while the COVID-19 Declaration remained in effect,  See here.

For example, health care providers and their patients may need to plan ahead to avoid unexpected medication and care disruptions that could arise when DEA temporary relief waving requirements for prescribers to register in each state to prescribe across state lines and relief allowing DEA-registered practitioners to issue prescriptions for controlled substances based on telemedicine consultations to patients for whom they have not conducted an in-person medical evaluation ends on May 11, 2023.

Likewise, health care providers also need to make any adjustments in their practices for handling and protecting protected health information needed due to the expiration in COVID-19-related flexibility granted by the HHS Office of Civil Rights (“OCR”) under the COVID-19 Declaration.

Specifically, OCR’s COVID-19 nonenforcement policies like the following also expire when the COVID-10 Declaration ends on May 11, 2023:

• Use of Online or Web-Based Scheduling Applications for the Scheduling of COVID-19 Vaccination Appointments;
• Community-Based Testing Sites;
• Business Associates; and
• Telehealth.

Beyond the expiration of these and other health care specific flexibilities, health care providers, like other businesses also should anticipate and take any necessary steps to confirm their ongoing compliance with any expired or expiring COVID-19 related relief and flexibilities granted on other federal and state employment, heath care, insurance, tax, and other laws in response to the COVID-19 Declaration or other state or local COVID-19 relief.

When reviewing existing practices for required or advisable adjustments in responses to the resolution of the COVID-19 Declaration or other COVID-19 relief, health care providers and other organizations also should assess their potential exposure from other known or potential deficiencies in their overall compliance while their operations were disrupted by the COVID-19 heath care emergency. 

While federal and state agencies provided certain limited flexibility and relief in response to the COVID-19 pandemic, the majority of laws and regulations applicable to health care providers and other businesses remained in effect even as the pandemic shutdown and other disruptions disrupted staffing and other operations necessary reliably to monitor, enforce, document, keep records and perform other critical compliance functions.  Accordingly, many health care and other businesses are finding themselves susceptible to whistleblower or other complaints, audits, or other investigations or enforcement actions made by agencies, disgruntled employees, contractors, patients, vendors, or others, or both.  Conducting compliance and risk assessments with these additional requirements within the scope of attorney-client privilege may help identify and uncover opportunities to mitigate those exposures.

Enforcement Illustrates Advisability Of Caution

Health care providers are cautioned against overestimating the protection allowed by the COVID-19 flexibilities.  Although the False Claims Act generally allows OIG and the Department of Justice (“DOJ”) up to 10 years to find and prosecute providers providing care or engaging in other prohibited referrals, kickbacks or other activities, recent enforcement activities make clear the agencies are serious about enforcement against providers acting beyond the scope of the relief.  For instance, an investigation and enforcement against Dr. Musaddiq Nazeeri resulted in his agreement to pay the United States $86,506.30 to resolve civil liability for alleged violations of the False Claims Act based on DOJ charges that between February 10, 2021 and January 21, 2022, Dr. Nazeeri billed Medicare for certain services that were not supported by the medical record. During the above timeframe, Dr. Nazeeri submitted Evaluation & Management (E&M) claims when the only service rendered was the administration of the COVID-19 vaccine. In the DOJ announcement of the settlement, HHS OIG Special Agent in Charge Maureen R. Dixon warned, “Investigating violations of the False Claims Act is a top priority,”

Bottom line:  health care providers and others involved in providing care, treatment, referrals or other activities covered by the STARK, Fraud & Abuse, or other requirements of Medicare or Medicaid in reliance on flexibilities granted by OIG during the COVID-19 Declaration should cease to rely upon those flexibilities no later than May 11, 2023.  In addition, health care providers are well advised to review any activities conducted in reliance upon these flexibilities while the COVID-19 Declaration remained in effect to confirm that all conditions to qualify for those flexibilities were met or seek the assistance of legal counsel about whether and what corrective action is advisable.

More Information

We hope this update is helpful. For more information about these or other health or other legal, management or public policy developments, please contact the author Cynthia Marcotte Stamer via e-mail or via telephone at (214) 452 -8297.  

Solutions Law Press, Inc. invites you to receive future updates by registering on our Solutions Law Press, Inc. Website and participating and contributing to the discussions in our Solutions Law Press, Inc. LinkedIn SLP Health Care Risk Management & Operations Group, HR & Benefits Update Compliance Group, and/or Coalition for Responsible Health Care Policy. 

About the Author

Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: ERISA & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely-known for 35 plus years of health industry and other management work, public policy leadership and advocacy, coaching, teachings, and publications.

A Fellow in the American College of Employee Benefit Counsel, Chair of the American Bar Association (“ABA”) International Section Life Sciences and Health Committee, Chair-Elect of the ABA TIPS Section Medicine & Law Committee, Past Chair of the ABA Managed Care & Insurance Interest Group, Scribe for the ABA JCEB Annual Agency Meeting with HHS-OCR, past chair of the ABA RPTE Employee Benefits & Other Compensation Group and current co-Chair of its Welfare Benefit Committee, Ms. Stamer is most widely recognized for her decades of pragmatic, leading-edge work, scholarship and thought leadership on health and managed care and employer benefits legal, public policy and operational concerns in the healthcare, employer benefits, and insurance and financial services industries. She speaks and publishes extensively on HIPAA and other related compliance issues.

Ms. Stamer’s work throughout her career has focused heavily on working with health care and managed care, health and other employee benefit plan, insurance and financial services and other public and private organizations and their technology, data, and other service providers and advisors domestically and internationally with legal and operational compliance and risk management, performance and workforce management, regulatory and public policy and other legal and operational concerns.

For more information about Ms. Stamer or her health industry and other experience and involvements, see www.cynthiastamer.com or contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here. 

About Solutions Law Press, Inc.™

Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested in reviewing some of our other Solutions Law Press, Inc.™ resources available here such as:

• Medical Professionals, Medical Businesses Owners and Others Criminally Charged In $490 Million Plus COVID-19 Related False Billings Takedown
• Sibley Hospital & Johns Hopkins Health System Pay $5 Million To Settle Stark Violations
• HHS Inspector General Comments Signal MorrContinuAggressive Ahghinued Aggresdiv
• 4/21 Deadline For Comments On Proposed HIPAA Administrative Simplification Adoption of Standards for Health Care Attachments Transactions and Electronic Signatures, and Modification To Referral Certification and Authorization Transaction Standard
• Pharmaceutical Distributor Danco’s $765,000 False Claims Act Settlement Shows Importance Of Customs Marking and Duty Rules
• $400K EEOC Settlement Warns Health Care Organizations Against Pregnancy Discrimination
• 2 Pharmacy FCA Convictions WarnAgainst Billing Or Undelivered Drugs Or Care
• “Rock Doc” Opioid Conviction Reaffirms DOJ Prioritization & Frequent Success of Illegal Opioid Distribution Enforcement
• Health Care Provider Pays $4 Million For Making Prohibited Donations Toward County Medicaid Funding
• OIG Asks Cigna MA Plans To Refund $6 Million, Clean Up Plan Processes After Poor Audit Results
• FY 2022 Medicaid Fraud Conviction Increase, Other Data Shows Continued Robustness of Federal Medicaid Enforcement
• Health Care Providers Should Verify Compliance, Audit Risks In Preparation For End of COVID Flexibilities
• Prepare To Handle Justice Department Marijuana Pardon Certificates From Applicant
• Sentencings & Charges Of Clinic Operators For Defrauding Health Plans Highlight Risks Of Involvement In Schemes To File Fraudulent Health Benefit Claims
• Former Missouri Lawmaker Sentenced On COVID & Stem Cell Fraud, Illegally Distributing Prescription Drugs & False Statements
• Ensure Health Care & Other Compliance Practices Updated For New DOJ Voluntary Disclosure Policy
• F-1 Visa Guidance Could Impact Health Industry Work Eligibility Of Some Foreign Students
• DOJ Withdraws Health Care Antitrust Policy & Enforcement Statements

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If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information including your preferred e-mail by creating your profile here.

NOTICE: These statements and materials are for general informational and educational purposes only. They do not establish an attorney-client relationship, are not legal advice or an offer or commitment to provide legal advice, and do not serve as a substitute for legal advice. Readers are urged to engage competent legal counsel for consultation and representation in light of the specific facts and circumstances presented in their unique circumstances at any particular time. No comment or statement in this publication is to be construed as legal advice or an admission. The author and Solutions Law Press, Inc.™ reserve the right to qualify or retract any of these statements at any time. Likewise, the content is not tailored to any particular situation and does not necessarily address all relevant issues. Because the law is rapidly evolving and rapidly evolving rules make it highly likely that subsequent developments could impact the currency and completeness of this discussion. The author and Solutions Law Press, Inc.™ disclaim, and have no responsibility to provide any update or otherwise notify anyone of any such change, limitation, or other condition that might affect the suitability of reliance upon these materials or information otherwise conveyed in connection with this program. Readers may not rely upon, are solely responsible for, and assume the risk and all liabilities resulting from their use of this publication. Readers acknowledge and agree to the conditions of this Notice as a condition of their access to this publication. 

Circular 230 Compliance. The following disclaimer is included to ensure that we comply with U.S. Treasury Department Regulations. Any statements contained herein are not intended or written by the writer to be used, and nothing contained herein can be used by you or any other person, for the purpose of (1) avoiding penalties that may be imposed under federal tax law, or (2) promoting, marketing or recommending to another party any tax-related transaction or matter addressed herein.

©2023 Cynthia Marcotte Stamer. Limited non-exclusive right to republish granted to Solutions Law Press, Inc.™

This week’s announcement of the criminal sentencing of the co-founder of a clinic that pleaded guilty to health care fraud and other federal crimes for involvement in a scheme to defraud self-insured health plans and the Justice Department announcement of its filing of health care fraud and other federal criminal charges against two operators of a chain of substance abuse clinics for their alleged involvement in a scheme to file false claims with private health plans, Medicare and Medicaid remind health care providers and others participating in schemes to defraud private or public health plans risk criminal conviction.

This week, the U.S. District Court for the Western District of Kentucky ordered the co-founder of a that Yesdel Acosta Perez to time served of 14 months in prison and to pay $258,507 in restitution for his role in causing health care clinics he cofounded to bill 15 self-funded health plans for $4.7 million in medical services never provided. The conviction reminds health plans, health care providers and others that fraudulently billing self-insured or other private health plans can result in criminal conviction punishable as felony under multiple provisions of the United States Criminal Code. Acosta Perez’ sentencing coincides with the Justice Department’s announcement of its March 2, 2023 filing of similar criminal charges against the operator of a chain of substance abuse clinics and others for their alleged involvement in millions of dollars of false charges billed to private health plans, Medicare and Medicaid for substance abuse addition treatment not provided.

The conviction and sentencing of Acosta Perez and the newly announced charges against operators of a chain of addiction treatment clinics in Massachusetts and Rhode Island and others for alleged health care fraud aggravated identity theft, money laundering and obstruction in relation to alleged billing of millions of dollars of false charges to private health plans, Medicare and Medicaid for substance abuse treatment by clinics highlight the continuing threat fraudulent actors present for self-insured and other private health plans, Medicare and Medicaid, as well as the potential criminal prosecution and consequences those individuals convicted of these crimes risk from their criminal activity.

Acosta Perez Conviction & Sentencing

The co-founder of Romero Rehabilitation Physical Therapy Inc. and Empire USA Inc. in Louisville and Imaging Group Center Inc. in Atlanta plead guilty to one count of conspiracy to commit healthcare fraud in February, 2023, after the U.S. Department of Labor found the operators collected $258,000 from 15 self-funded healthcare benefit programs for services they never provided based on fraudulent claims made between 2016 and 2018.

In June, 2018, a federal grand jury indicted Acosta Perez and fellow co-founder Eduardo Chinea-Martinez and others on multiple counts of Health Care Fraud in violation of 18 U.S.C. §1347, Theft from a Health Care Benefit Program in violation of 18 U.S.C. §669, Aggravated Identity Theft in violation of 18 U.S 8 U.S.C. §1028A, Money Laundering in violation of 18 U,S,C. §1956, Mail Fraud in violation of 18 U.S.C Chapter 63 and aiding and abetting in the commission of these violations under 18 U.S.C. §1349. billing various healthcare benefit programs through claims administrators Humana, CIGNA and United Healthcare for $4.7 million for services never provided. The U.S. Criminal Code authorized potential sentences of between 10 to 20 years of imprisonment as well as subjected charged defendants to asset forfeiture upon conviction.

The grand jury inditement and subsequent prosecution of Acosta Perz and a fellow co-founder resulted from an Employee Benefit Security Benefit Administration investigation that found that, between May 2015 and January 2016, Acosta Perez and Eduardo Chinea-Martinez co-founded three companies to intentionally defraud various healthcare benefit programs. Investigators also determined Acosta Perez opened bank accounts for the fictitious businesses at JPMorgan Chase Bank, Wells Fargo Bank and Bank of America. Acosta Perez and Chinea-Martinez. The indictment charges that Acosta Perez and Chinea-Martinez misappropriated and used patients’ names, dates of birth, insurance/policy numbers, addresses, and patient IDs/Social Security Numbers, without the patients’ knowledge and names and National Provider Numbers (“NPIs”) from uninvolved doctors without the doctors’ knowledge to create claims for payment by representing these uninvolved doctors and clinics allegedly ordered or performed the services in the false and fraudulent billings submitted by defendants for payment to submit fraudulent claims. The fraudulent claims directed the plans to send payment for the billed services to a Regus virtual office location in Louisville, Kentucky. Acosta Perez then directed Regus via email to forward all mail to Romero Rehabilitation Physical Therapy. According to the indictment, using this process to submit claims for payment for the fraudulent services, Chinea-Martinez and Acosta Perez billed approximately $4,700,000 in fraudulent medical services to the self-insured plans and received payment for $258,000.

In March 2020, the court sentenced Chinea-Martinez to 42 months in prison and three years of supervised release for his part in the scheme. However, before his in June 2018, Acosta Perez fled the U.S. On July 22, 2022, however, the Italian government granted the request of the U.S. for the extradition of Acosta Perez and surrendered him to U.S. authorities. Acosta-Perez was arrested in June 2022.

New Health Care Fraud Charges Against Rhode Island and Massachusetts Addiction Treatment Chain Operators

Acosta-Perez’s sentencing coincides with the Justice Department’s March 2, 2023 announcement of its filing of a host of similar charges in Rhode Island against the operator of a chain of addiction treatment clinics and others for alleged aggravated identity theft, money laundering and obstruction in relation to theft of the identities and other patient and provider information and using their information to file false charges billed to private health plans, Medicare and Medicaid for substance abuse treatment by clinics.

Michael Brier, Mi Ok Bruining and Recovery Connections Centers of America, Inc. (RCCA) are charged in a federal criminal complaint with health care fraud and Michael Brier also is charged with aggravated identity theft, money laundering and obstruction. In addition, the treatment center and its former supervisory counselor were also charged with health care fraud. The Justice Department announcement of these charges reminds readers that its federal criminal complaint is merely an accusation and that the defendants are presumed innocent unless and until proven guilty.

The Justice Department alleges in court documents that, Brier, Bruining, and RCCA shortchanged Rhode Island and Massachusetts substance abuse disorder patients out of much needed counseling and treatment services, while defrauding Medicare, Medicaid, and other health insurers out of millions of dollars.

According to the charging documents, Brier, Bruining and RCCA operated a chain of addiction treatment centers but failed to provide the patients with the required counseling sessions and treatment, while simultaneous billing Medicare, Medicaid and other health care payors for 45-minute counseling sessions on a routine basis even though the sessions were not more than 15 minutes, and often only 5-10 minutes or less.  At times, so many counseling sessions were billed at this level that the total amount of time would be impossible for the available therapist to have provided in any 24 hours period. 

Brier and RCCA are also alleged to have caused a fraudulent application to be submitted to Medicare which, among other things, misrepresented and concealed the role that Brier was playing in the business and failed to disclose Brier’s 2013 criminal conviction for federal tax crimes, which was relevant to Medicare’s consideration of the application. 

The Complaint also alleges that Brier purported to practice medicine and wrote and caused to be filled fraudulent prescriptions using the names and prescriber information, including Drug Enforcement Administration numbers, of doctors without their permission.

Brier is also alleged to have falsified a document in a matter within the jurisdiction of an agency of the United States by causing the Medical Director to sign a false and back-dated document.

The complaint alleges that defendants caused millions of dollars in fraudulent billings to be submitted to Medicare and millions more in fraudulent billings to other health care payors. The government is also seeking to forfeit thirteen bank accounts, two buildings, and two vehicles allegedly realized by the defendants as a result of the alleged criminal conduct.

The two prosecutions highlight the serious criminal consequences that health care providers or others participating in schemes to defraud employer or union sponsored self-insured health plans, group or individual health insurance, Medicare, Medicaid or other public or private health care programs can face under a host of federal criminal statutes. The felony liability imposed under these statutes makes it critical that health care providers, payers and other organizations involved in providing or billing for health care services both ensure that their programs are designed and administered to be legally defensible as well as to guard against the misuse of their systems, operations or data by insiders from misappropriating and using their systems, practices or data for illicit billing or other fraudulent purposes.

To maintain and promote the effectiveness of these efforts, organizations and their leaders also should consider the advisability of enhancing these fraud and other compliance efforts, as well as updating their organization’s Federal Sentencing Guideline and other compliance programs and practices in light of the new corporate criminal conduct Voluntary Self-Disclosure Policy (“VSD policy”) announced by the Department of Justice on February 23, 2023. Concurrently, organizations and their leaders also will want to monitor and respond promptly to Justice Department statements and congressional recommendations on proposed Guideline changes providing critical insights into the Justice Department’s planned interpretation and enforcement of federal criminal laws and the Guidelines against organizations and their leaders like those available here. For more information about the VSD policy and its implications on your organization under the Federal Sentencing Guidelines, see Ensure Health Care & Other Compliance Practices Updated For New DOJ Voluntary Disclosure Policy.

More Information

We hope this update is helpful. For more information about the these or other health or other legal, management or public policy developments, please contact the author Cynthia Marcotte Stamer via e-mail or via telephone at (214) 452 -8297. 

Solutions Law Press, Inc. invites you receive future updates by registering on our Solutions Law Press, Inc. Website and participating and contributing to the discussions in our Solutions Law Press, Inc. LinkedIn SLP Health Care Risk Management & Operations Group, HR & Benefits Update Compliance Group, and/or Coalition for Responsible Health Care Policy.  

About the Author

Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: ERISA & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for 35+ years of workforce and other management work, public policy leadership and advocacy, coaching, teachings, scholarship and thought leadership.

A Fellow in the American College of Employee Benefit Counsel, Vice Chair of the American Bar Association (“ABA”) International Section Life Sciences and Health Committee, Past Chair of the ABA Managed Care & Insurance Interest Group, Scribe for the ABA JCEB Annual Agency Meeting with HHS-OCR, past chair of the ABA RPTE Employee Benefits & Other Compensation Group and current co-Chair of its Welfare Benefit Committee, Ms. Stamer’s work throughout her 35 year career has focused heavily on working with health care and managed care, health and other employee benefit plan, insurance and financial services and other public and private organizations and their technology, data, and other service providers and advisors domestically and internationally with legal and operational compliance and risk management, performance and workforce management, regulatory and public policy and other legal and operational concerns. As an ongoing component of this work, she regularly advises, represents and defends businesses on Guideline Program and other compliance, risk management and other internal and external controls in a wide range of areas and has published and spoken extensively on these concerns.

Ms. Stamer also is widely recognized for her decades of pragmatic, leading edge work, scholarship and thought leadership on workforce, compensation, and other operations, risk management, compliance and regulatory and public affairs concerns.

For more information about Ms. Stamer or her health industry and other experience and involvements, see www.cynthiastamer.com or contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here. 

IMPORTANT NOTICE ABOUT THIS COMMUNICATION

If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information including your preferred e-mail by creating your profile here.

NOTICE: These statements and materials are for general informational and purposes only. They do not establish an attorney-client relationship, are not legal advice or an offer or commitment to provide legal advice, and do not serve as a substitute for legal advice. Readers are urged to engage competent legal counsel for consultation and representation in light of the specific facts and circumstances presented in their unique circumstance at any particular time. No comment or statement in this publication is to be construed as legal advice or an admission. The author and Solutions Law Press, Inc.™ reserve the right to qualify or retract any of these statements at any time. Likewise, the content is not tailored to any particular situation and does not necessarily address all relevant issues. Because the law is rapidly evolving, and rapidly evolving rules makes it highly likely that subsequent developments could impact the currency and completeness of this discussion. The author and Solutions Law Press, Inc.™ disclaim, and have no responsibility to provide any update or otherwise notify anyone any such change, limitation, or other condition that might affect the suitability of reliance upon these materials or information otherwise conveyed in connection with this program. Readers may not rely upon, are solely responsible for, and assume the risk and all liabilities resulting from their use of this publication. Readers acknowledge and agree to the conditions of this Notice as a condition of their access of this publication.

Circular 230 Compliance. The following disclaimer is included to ensure that we comply with U.S. Treasury Department Regulations. Any statements contained herein are not intended or written by the writer to be used, and nothing contained herein can be used by you or any other person, for the purpose of (1) avoiding penalties that may be imposed under federal tax law, or (2) promoting, marketing or recommending to another party any tax-related transaction or matter addressed herein.

©2023 Cynthia Marcotte Stamer. Limited non-exclusive right to republish granted to Solutions Law Press, Inc.™

Former Missouri state representative Patricia “Tricia” Ashton Derges was sentenced in federal court for a nearly $900,000 COVID-19 fraud scheme, as well as a separate $200,000 fraud scheme in which she made false claims about a fake stem cell treatment marketed through her clinics in southern Missouri, and for illegally providing prescription drugs to clients of those clinics.

U..S. District Judge Brian C. Wimes sentenced Derges to six years and three months in federal prison without parole and ordered Derges to pay $500,600 in restitution to her victims.

“Derges exploited her position as an elected official and a medical professional to benefit herself financially with complete disregard, to not only her constituents, but to the oath she took as a health care professional to do no harm,” said Charles Dayoub, Special Agent in Charge of FBI Kansas City. “She not only fraudulently received nearly $300,000 in CARES Act funds, but also deceived patients by marketing fake stem cell treatment and illegally provided drugs to clients of her clinics. Her actions were a betrayal of trust, eroding the very core of our confidence in a system we rely on and damaging the public’s trust not only in our elected officials but in our health care system.”

Derges was elected in November 2020 as a Missouri state representative in District 140 (Christian County) and served one term. Derges, who was never a physician, surrendered her physician’s assistant license on June 29, 2023. Derges formerly operated three for-profit Ozark Valley Medical Clinic locations in Springfield, Ozark, and Branson, Mo. Derges also operated the non-profit corporation Lift Up Someone Today, Inc., with a medical and dental clinic in Springfield.

COVID-19 Fraud Scheme

Derges was convicted of three counts of wire fraud related to her attempt to fraudulently receive nearly $900,000 in CARES Act funds. Derges actually was awarded $296,574 in CARES Act funds for Lift Up, although Lift Up did not provide any COVID-19 testing services to its patients. In fact, Lift Up’s medical clinic closed at the beginning of the COVID-19 pandemic and remained closed from March to June 2020.

Derges sought CARES Act funding for COVID-19 testing that had been provided, and already paid for, at her for-profit Ozark Valley Medical Clinic. Derges requested reimbursement for $379,294 in COVID-19 testing and related expenses, and future funding in the amount of $503,350. In total, Derges applied for $882,644 from the CARES Act Relief Fund on Lift Up’s behalf.

Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act in March 2020, which provided $150 billion to states, tribal governments, and units of local government. Missouri was allocated approximately $2.3 billion. Missouri allocated approximately $34 million in CARES Act funds to Greene County. To administer the CARES Act funds it received, the Greene County Commission created the CARES Act Relief Fund to “promote recovery by funding programs and services that support the needs of those impacted by the COVID-19 public health emergency.” An advisory council of 30 citizen volunteers was appointed to review funding requests and make funding recommendations to the Greene County Commission.

Derges claimed in her application to the Greene County CARES Act Relief Fund that Lift Up provided COVID-19 testing and sought reimbursement for “COVID-19 eligible expenses” that Lift Up had incurred. To support her claim, Derges provided invoices totaling $296,574 from Dynamic DNA for more than 3,000 COVID-19 laboratory tests. Derges submitted the Dynamic DNA invoices as Lift Up expenditures, although they were actually for testing done at Derges’s for-profit Ozark Valley Medical Clinic.

Lift Up, a non-profit charity, and Ozark Valley Medical Clinic, a for-profit corporation, are separate legal entities. Ozark Valley Medical Center had already received payment from its clients of approximately $517,000 for these COVID-19 tests. Ozark Valley Medical Center charged clients, patients, or their patients’ employers approximately $167 per sample for its COVID-19 testing services. Derges concealed from Greene County that these COVID-19 tests had already been paid for by other payors.

In December 2020, the Greene County Commission awarded Lift Up $296,574 in CARES Act funding based upon Lift Up’s fraudulent application and the Dynamic DNA invoices Derges had submitted. Derges deposited the check into Lift Up’s bank account, then transferred the funds into Ozark Valley Medical Center’s bank account.

Derges provided several more invoices from Dynamic DNA to Greene County later in December 2020 to further support her application for Lift Up, although the invoices were actually for testing done for clients at Ozark Valley Medical Center, raising the total to $589,143 for 6,177 COVID-19 tests. Derges concealed from Greene County that Ozark Valley Medical Center already had been paid approximately $1 million by clients, patients, or their patients’ employers, for these COVID-19 tests.

Stem Cell Fraud Scheme

Derges also was convicted of seven counts of wire fraud related to a nearly $200,000 fraud scheme, which lasted from December 2018 to May 2020. Derges marketed a stem cell treatment that actually utilized amniotic fluid that did not contain any stem cells. The federal indictment charged her with defrauding four specific victims, each of whom testified during the trial.

Derges exclusively obtained amniotic fluid from the University of Utah, which she marketed under the name Regenerative Biologics. Derges advertised Ozark Valley Medical Clinic as a “Leader in … Regenerative Medicine,” including stem cells, and marketed her “stem cell” practice through seminars, media interviews, and social media. Derges made similar claims in personal consultations.

In fact, however, the amniotic fluid Derges administered to her patients did not contain mesenchymal stem cells, or any other stem cells. The amniotic fluid she obtained from the University of Utah was a sterile filtered amniotic fluid allograft (a tissue graft comprised of human amniotic membrane and amniotic fluid components derived from placental tissue). The amniotic fluid allograft was “acellular,” meaning it did not contain any cells, including stem cells.

Despite being told by the University of Utah that the University of Utah’s amniotic fluid allograft was “acellular” and did not contain mesenchymal stem cells, Derges continued to tell her patients and the public that the amniotic fluid allograft contained stem cells.

Derges administered amniotic fluid, which she falsely claimed contained stem cells, to patients who suffered from, among other things, tissue damage, kidney disease, chronic obstructive pulmonary disease (COPD), Lyme disease, and urinary incontinence. In an April 11, 2020, Facebook post-Derges wrote of amniotic fluid allograft: “This amazing treatment stands to provide a potential cure for COVID-19 patients that is safe and natural.”

The University of Utah sold its amniotic fluid allograft to Derges for approximately $244 per milliliter and $438 for two milliliters. Derges charged her patients $950 to $1,450 per milliliter. In total, Derges’s patients paid her approximately $191,815 for amniotic fluid that did not contain stem cells.

Controlled Substances Act

Derges also was convicted of 10 counts of distributing Oxycodone and Adderall over the internet without valid prescriptions. Derges, without conducting in-person medical evaluations of the patients, wrote electronic prescriptions for Oxycodone and Adderall for patients and transmitted them to pharmacies over the Internet.

Because none of the assistant physicians whom Derges employed at Ozark Valley Medical Clinic could prescribe Schedule II controlled substances, it was the standard practice of the assistant physicians to see a patient and later communicate to Derges the controlled substances they wanted her to prescribe to their patients. Derges, without conducting an in-person medical evaluation of the patients as required by federal law, wrote electronic prescriptions for the patients and transmitted the prescriptions over the Internet to pharmacies.

False Statements

Derges also was convicted of two counts of making false statements to federal agents investigating this case in May 2020.

Derges told agents that the amniotic fluid allograft that she used in her practice contained mesenchymal stem cells, which she knew was false. Derges also told federal agents that she had not treated a patient for urinary incontinence with amniotic fluid allograft, which she knew was false.

Convictions

On June 28, 2022, Derges was found guilty at trial of 10 counts of wire fraud, 10 counts of distributing drugs over the Internet without a valid prescription, and two counts of making false statements to a federal law enforcement agent.

The convictions remind other healthcare providers, their practices and their leaders of the risks of violating federal, false claims act and other laws in relation to the practice of healthcare and investigations of fraud, or other misconduct connected to their practices. healthcare providers, or healthcare practices that suspect that they or others practicing as their employees, practitioners or agents have engaged in these or other violations of federal healthcare laws should contact counsel to explore their responsibilities and potential liability under the Federal Sentencing Guidelines, and other laws.

More Information

We hope this update is helpful. For more information about these or other health or other legal, management or public policy developments, please contact the author Cynthia Marcotte Stamer via e-mail or via telephone at (214) 452 -8297.  

Solutions Law Press, Inc. invites you to receive future updates by registering on our Solutions Law Press, Inc. Website and participating and contributing to the discussions in our Solutions Law Press, Inc. LinkedIn SLP Health Care Risk Management & Operations Group, HR & Benefits Update Compliance Group, and/or Coalition for Responsible Health Care Policy. 

About the Author

Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: ERISA & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely-known for 35 plus years of health industry and other management work, public policy leadership and advocacy, coaching, teachings, and publications.

A Fellow in the American College of Employee Benefit Counsel, Chair of the American Bar Association (“ABA”) International Section Life Sciences and Health Committee, Chair-Elect of the ABA TIPS Section Medicine & Law Committee, Past Chair of the ABA Managed Care & Insurance Interest Group, Scribe for the ABA JCEB Annual Agency Meeting with HHS-OCR, past chair of the ABA RPTE Employee Benefits & Other Compensation Group and current co-Chair of its Welfare Benefit Committee, Ms. Stamer is most widely recognized for her decades of pragmatic, leading-edge work, scholarship and thought leadership on health and managed care and employer benefits legal, public policy and operational concerns in the healthcare, employer benefits, and insurance and financial services industries. She speaks and publishes extensively on HIPAA and other related compliance issues.

Ms. Stamer’s work throughout her career has focused heavily on working with health care and managed care, health and other employee benefit plan, insurance and financial services and other public and private organizations and their technology, data, and other service providers and advisors domestically and internationally with legal and operational compliance and risk management, performance and workforce management, regulatory and public policy and other legal and operational concerns.

For more information about Ms. Stamer or her health industry and other experience and involvements, see www.cynthiastamer.com or contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here. 

About Solutions Law Press, Inc.™

Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested in reviewing some of our other Solutions Law Press, Inc.™ resources available here such as:

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