Feds go to great lengths to fight potential fraud
Feds go to great lengths to fight potential fraud
Acquittal shows providers can fight back and win
If you don’t believe the government is becoming more aggressive in fighting health care fraud, consider the case of Anthony F. Valdez, MD.
Valdez is a licensed psychiatrist in El Paso, TX, who specializes in pain management. A significant portion of his medical practice involves the administration of reconstructive anesthetic block injections to patients suffering from chronic pain.
While the Valdez case involves a physician practice, the government’s pursuit of a case involving private insurers could signal a different course for fraud investigators. And that could indicate the need for making your ship-shape compliance program even tighter.
Valdez reported to police that his former office manager had embezzled more than $50,000 from him. However, the office manager soon told government authorities that she and the doctor had schemed together to submit fraudulent bills to private insurance companies.
Moving in quickly
Government prosecutors moved quickly. "When they started the case, they were originally looking for any Medicare fraud. They didn’t find any," says Frederick Robinson, an attorney in the law firm of Fulbright & Jaworski LLC, in Washington, DC. Robinson, along with Lori-Ann S. Peters, another attorney with Fulbright & Jaworski, and Michael R. Gibson, an attorney in El Paso, represented Valdez in the court case.
The government did find insurance claims submitted by Valdez’s office for services that had not been provided. These discrepancies, however, accounted for less than 1% of the claims submitted by his office during the relevant time period. In addition, although Valdez had personally signed each claim, the evidence showed that he signed more than 150 claim forms in a 10-minute period approximately once a week and did not review their contents. The fraudulent claims amounted to $37,000, the government said.
"Sometimes when the government spends a lot of resources on a case and they don’t come up with what they think they’re going to get, it’s hard for them to let go of it," Robinson says. "This private insurance billing was all they had at the end of the day."
Some experts are encouraged that the Valdez verdict could prompt more defendants to fight in court rather than simply pay to settle charges — as is more common. Others, however, note that the Valdez case is part of a troubling trend in which federal prosecutors pursue charges against physicians even when the alleged fraud doesn’t concern Medicare.
In December 1997, a federal grand jury indicted Valdez on one count of conspiracy to commit mail fraud and six counts of mail fraud, in violation of 18 USC Sections 371 and 1341, respectively. The indictments alleged that Valdez had billed several private health insurance companies and workers’ compensation insurance companies for services not rendered and that he had overbilled for the supplies used in the injection procedures. If convicted, Valdez would face two to three years in prison and a fine as high as $250,000.
Most fraud litigation cases are settled by health care providers, Robinson says. "Most doctors can’t risk litigation because they are afraid their Medicare or Medicaid benefits will be suspended by the government during the litigation."
Valdez, however, felt he hadn’t done anything wrong, and he didn’t want to settle.
The case was tried in the U.S. District Court for the Western District of Texas, El Paso Division. At the trial, the defense argued that the former office manager had "slipped" improper insurance claims into the stack of claims the doctor signed each week and then "siphoned off" the payment from insurance companies. The office manager, her husband, and her sister who also worked in Valdez’s office, acted as the government’s main witnesses.
On the issue of the supplies, the evidence showed that the doctor used a wide variety of supplies in the treatment of his patients and that the amount of reimbursement he received for the supplies in question was comparable to the cost of other supplies.
Valdez acquitted
The federal jury apparently did not find the government witnesses credible. When it came time to deliberate on March 28 after eight days of testimony, the jury deliberated 40 minutes and acquitted Valdez of all charges.
The cost of trying the case was much greater than the $37,000 the government said was netted from the fraudulent billing. "The government is becoming more and more aggressive in bringing health care fraud cases to court," Robinson says. "Five years ago, no prosecutor would have touched this particular case."
Valdez, however, left himself vulnerable with his hiring and billing practices. Although it’s difficult to monitor every claim that goes out of the office, providers need to make sure that they are hiring people who have appropriate training, and that they periodically audit their billings, Robinson suggests. "Any time you have mistakes in the way that you bill, an aggressive investigator can try to turn it into a criminal case."
If providers do end up face-to-face with federal prosecutors, they need to determine if they are going to fight the charges or settle the case. "First, you have to determine if mistakes were made in your billing," Robinson explains.
"You may have a difference in opinion with the government as to whether there were mistakes. If mistakes were made, you have to look at what percentage of your total billings were affected by the mistakes to see if it’s statistically significant. Then you have to see if you can give a reasonable explanation for why mistakes could have been made. If you have good information available to you, you should stick to your guns," he adds.
"You don’t have to have perfect billings to have a defensible case," he continues. "You just have to have a credible explanation for why you could have made mistakes. Even though the government may not want to accept that explanation, sometimes a jury of regular people might."
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