Prosecuting health-care fraud is a top priority for the U.S. Department of Justice (DOJ) and other federal government agencies.1,2 After all, the government earns a $6 return for every $1 that it spends on enforcement. In December 2018, the DOJ announced that it had obtained more than $2.5 billion in settlements and judgments from civil cases involving health-care fraud in the fiscal year ending September 30, 2018.3 In addition, the DOJ criminally prosecuted hundreds of health-care fraud cases over this period.4 At the same time, the U.S. Department of Health and Human Services Office of the Inspector General excluded thousands of providers and entities from participating in and billing Medicare, Medicaid, and other federal health-care programs.
Thaddeus Mason Pope, JD, PhD
Here, I briefly describe four recent settlements and convictions involving oncology clinicians and cancer treatment centers that committed fraud in a variety of ways, including administering unapproved chemotherapy drugs from foreign countries, paying or receiving kickback payments for patient referrals, administering medically unnecessary treatment, and overbilling Medicare.
Although many of the defendants I describe engaged in intentional and deliberate conduct to defraud public insurers, clinicians can also get into trouble through mere inadvertence and ignorance of the laws. For example, sloppy business practices can lead to oversights—such as incorrect coding— that could result in fines and civil penalties.5 After the following case examples, I will detail how to protect yourself and your practice from unwittingly committing health-care fraud.
Four Types of Health-Care Fraud
1. Using Unapproved Chemotherapy Drugs From Foreign Countries: Chemotherapy agents from foreign sources are less expensive than U.S. Food and Drug Administration (FDA)-approved drugs, thus offering a substantially wider profit margin.6 But using unapproved drugs exposes clinicians to significant legal risk.7-9 Not only does the FDA prohibit the receipt and provision of “misbranded” drugs, but Medicare also requires FDA drug approval for reimbursement.
Case Example: In February 2018, New York oncologist Vincent Koh, MD, and his wife and office manager, Milly Koh, agreed to pay $500,000 for violating the False Claims Act by knowingly submitting false claims to Medicare for unapproved chemotherapy drugs.10 In addition to the civil action, the Kohs pleaded guilty and were sentenced, in May 2018, to pay fines for receiving and delivering misbranded drugs in interstate commerce.11
2. Paying or Receiving Kickback Payments for Referrals: The Anti-Kickback Statute prohibits knowingly and willfully soliciting, receiving, offering, or paying remuneration to induce a referral or “in return for referring an individual to a person for the furnishing or arranging for the furnishing of any item or service” payable under the Medicare or Medicaid programs.12 Persons who violate the Anti-Kickback Statute are subject to criminal penalties and/ or exclusion from participation in the Medicare and Medicaid programs.13 The theory of this law is that compensating physicians for referrals encourages physicians to make decisions based on financial gain rather than in the best interests of their patients.13-18
“Sloppy business practices can lead to oversights—such as incorrect coding—that could result in fines and civil penalties.”— Thaddeus Mason Pope, JD, PhD
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Case Example: In March 2018, Texas-based SightLine Health (now Oncology Network Holdings LLC), a radiation therapy chain, paid the federal government $11.5 million to settle a False Claims Act suit alleging that SightLine paid physicians kickbacks for referrals.19 SightLine allegedly enticed physicians to refer patients to its cancer treatment centers by paying those physicians a share of its profits. SightLine formed several leasing companies that referring physicians bought into. SightLine then distributed the profits that its physician-investors generated by referring patients with cancer for radiation therapy.
3. Administering Medically Unnecessary Treatment: Although using unapproved drugs and paying kickbacks constitute health-care fraud, neither necessarily risks patient safety. In contrast, administering medically unnecessary treatment is a form of health-care fraud that probably does harm patients.
Case Example 1: The most infamous case of an oncology clinician convicted of health-care fraud for administering medically unnecessary treatment is Farid Fata, MD.20 In 2015, a Michigan court sentenced Dr. Fata to 45 years in prison for misdiagnosing and overtreating more than 500 patients and submitting more than $34 million in fraudulent insurance claims.21 Similar cases continue to be litigated.22,23
Case Example 2: In October 2018, the Department of Justice charged Kansas physician Mark Fesen, MD, FACP, with illegally billing Medicare and Tricare (a military health-care system) more than $30 million in unnecessary cancer medications and treatments.24 Audits in related litigation had found widespread compliance issues with the National Comprehensive Cancer Network® Clinical Practice Guidelines in Oncology, including issues with misdiagnosing patients, inappropriately treating patients, overtreating patients, and fractionated dosing.25
4. Overbilling Medicare: Just as billing for medically unnecessary treatment constitutes health-care fraud, so, too, is billing for services that were never provided at all.26-28
“Clinicians can get into trouble not only for affirmative, deliberate attempts to defraud government insurers, but also for the mere failure to take reasonable precautions to detect and prevent violations.”— Thaddeus Mason Pope, JD, PhD
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Case Example: In December 2017, Florida-based 21st Century Oncology agreed to pay $26 million in fines relating to the submission of false attestations regarding the company’s use of electronic health records software.29 When doctors attest to meaningful use of qualifying health record technology, Medicare grants incentive payments and refrains from making downward adjustments to specific claims. Not only did 21st Century physicians fail to use the software, but employees faked data and utilization reports as well.
Protecting Against Unwittingly Committing Health-Care Fraud
WHILE SPECIFIC intent to defraud is required for criminal liability, it is not required for civil fines and sanctions. Therefore, clinicians can get into trouble not only for affirmative, deliberate attempts to defraud government insurers, but also for the mere failure to take reasonable precautions to detect and prevent violations. In other words, regulators prosecute not only for voluntary acts but also for omissions, or failure to act.
By implementing an effective compliance program, clinicians can avoid the risks of government audits, investigations, and prosecutions. Be proactive, not reactive. Do not wait for the government to find your mistakes. Find them and fix them yourself. Implement internal policies and procedures that assess your adherence to the law.
“By implementing an effective compliance program, clinicians can avoid the risks of government audits, investigations, and prosecutions.”— Thaddeus Mason Pope, JD, PhD
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The U.S. Department of Health and Human Services Office of Inspector General has prepared a health-care fraud prevention and enforcement training initiative for the health-care community that includes free webcasts and written materials about the fundamentals of health-care compliance (https://oig. hhs.gov/compliance/index.asp).30 At the core of this training are seven fundamental elements: (1) Prepare written policies and procedures and keep them up-to-date. (2) Have a compliance professional who keeps up with federal and state requirements and recommendations. (3) Conduct regular employee training. (4) Establish effective communication between the compliance professional and employees, so they can report irregularities. (5) Conduct internal audits to assess how things are working. (6) Enforce your standards. (7) Respond promptly to reported issues with investigations and corrective action.
In today’s enforcement climate, oncology clinicians must prioritize compliance programs to avoid practices that may result in large financial penalties and civil liability. ■
Dr. Pope is Director of the Health Law Institute and Professor of Law at the Mitchell Hamline School of Law in Saint Paul, Minnesota (www.thaddeuspope.com).
Editor’s Note: The Law and Ethics in Oncology column is meant to provide general information about legal topics, not legal advice. The law is complex, varying from state to state, and each factual situation is different. Readers are advised to seek advice from their own attorney.
Disclaimer: This commentary represents the views of the author and may not necessarily reflect the views of ASCO or The ASCO Post.
DISCLOSURE: Dr. Pope reported no conflicts of interest.
1. U.S. Department of Health and Human Services, U.S. Department of Justice Health Care Fraud and Abuse Control Program: Annual report for fiscal year 2017, April 2018. Available at https://oig.hhs.gov/publications/docs/hcfac/ FY2017-hcfac.pdf. Accessed January 28, 2019.
2. Lu ZK, Chen B, Qureshi Z, et al: Health-care fraud and abuse: Implications for oncology. The ASCO Post, March 25, 2015.
3. U.S. Department of Justice: Justice Department recovers over $2.8 billion from False Claims Act cases in fiscal year 2018, December 21, 2018. Available at www.justice.gov/ opa/pr/justice-department-recovers-over-28-billion-false-claims-act-cases-fiscal-year-2018. Accessed January 28, 2019.
4. U.S. Department of Justice: Health care fraud: Facts and statistics. Available at www.justice.gov/criminal-fraud/facts-statistics. Accessed January 28, 2019.
6. Kesselheim AS, Choudhry NK: The international pharmaceutical market as a source of low-cost prescription drugs for US patients. Ann Intern Med 148:614-619, 2008.
7. Sullivan D: Palm Harbor oncologist gets nearly six years in prison for smuggling chemo drugs from overseas. Tampa Bay Times, August 5, 2017. Available at www.tampabay. com/news/courts/criminal/palm-harbor-oncologist-to-be-sentenced-today-for-smuggling-chemo-drugs/2332608. Accessed January 28, 2019.
8. Flessner D: Chattanooga physician pays $428,700 for using unapproved foreign drugs. Chattanooga Times Free Press, August 8, 2018. Available at www.timesfreepress.com/news/breakingnews/story/2018/aug/08/chattanooga-doctor-pays-428700-using-unapproved-foreign-cancer-treatment-drugs/476587. Accessed January 28, 2019.
9. U.S. Department of Justice: Anil J. Desai, MD, and related entities to pay over $200,000 to resolve False Claims Act allegations, December 5, 2018. Available at www.justice.gov/usao-ndga/pr/anil-j-desai-md-and-related-entities-pay-over-200000-resolve-false-claims-act. Accessed January 28, 2019.
10. U.S. Food and Drug Administration: Queensbury oncologist and spouse to pay $500,000 for submitting false claims to Medicare for the administration of unapproved cancer drugs, February 8, 2018. Available at www.fda.gov/iceci/ criminalinvestigations/ucm596161.htm. Accessed January 28, 2019.
11. U.S. Food and Drug Administration: Oncologist and office manager sentenced in connection with administering unapproved, foreign drugs, May 21, 2018. Available at www.fda.gov/ICECI/CriminalInvestigations/ucm608524.htm. Accessed January 28, 2019.
12. 42 U.S.C. § 1320a–7b.
13. Scott T: Kalispell regional settles whistleblower suit for $24M. Flathead Beacon, September 28, 2018. Available at https://flatheadbeacon.com/2018/09/28/kalispell-regional-settles-whistleblower-suit-24m/. Accessed January 28, 2019.
14. U.S. Department of Justice: Kalispell regional healthcare system to pay $24 million to settle false claims act allegations, September 28, 2018. Available at www.justice.gov/opa/pr/kalispell-regional-healthcare-system-pay-24-million-settle-false-claims-act-allegations. Accessed January 28, 2019.
15. Reindl JC: Beaumont Health to pay $84.5M over cozy doctor deals. Detroit Free Press, August 2, 2018. Available at www. freep.com/story/money/2018/08/02/beaumont-health-system-doctor-kickbacks/893189002. Accessed January 28, 2019.
16. U.S. Department of Justice: Detroit area hospital system to pay $84.5 million to settle false claims act allegations arising from improper payments to referring physicians, August 2, 2018. Available at www.justice.gov/opa/pr/detroit-area-hospital-system-pay-845-million-settle-false-claims-act-allegations-arising. Accessed January 28, 2019.
17. U.S. Department of Justice: Two California urologists agree to pay more than $1 million to settle false claims act allegations related to radiation therapy referrals, January 23, 2018. Available at www.justice.gov/usao-ndca/pr/two-california-urologists-agree-pay-more-1-million-settle-false-claims-act-allegations. Accessed January 28, 2019.
18. Gluck F: Five things: Here’s what to know about the Medicare fraud lawsuit against Lee Health. Fort Myers News-Press, December 11, 2018. Available at www.news-press.com/story/news/2018/12/11/five-things-know-lee-healths-medicare-fraud-lawsuit/2276001002. Accessed January 28, 2019.
19. U.S. Department of Justice: Radiation therapy company agrees to pay up to $11.5 million to settle allegations of false claims and kickbacks, March 29, 2018. Available at www.justice.gov/opa/pr/radiation-therapy-company-agrees-pay- 115-million-settle-allegations-false-claims-and. Accessed January 28, 2019.
20. U.S. Department of Justice: U.S. v. Farid Fata: court docket 13-CR-20600. Available at www.justice.gov/usao-edmi/us-v-farid-fata-court-docket-13-cr-20600. Accessed January 28, 2019.
21. Steensma DP: The Farid Fata Medicare fraud case and misplaced incentives in oncology care. J Oncol Practice 12:51-54, 2016.
22. Weaver J: Legal feud, criminal probe ends at UM’s Bascom Palmer. Miami Herald, September 14, 2018. Available at www.miamiherald.com/news/local/article210399439.html. Accessed January 28, 2019.
23. Watson ST: Former CCS oncology chief charged by Health Department in patient deaths. Buffalo News, December 4, 2018. Available at https://buffalonews.com/2018/12/04/ former-ccs-oncology-chief-charged-by-state-health-department-in-patient-deaths. Accessed January 28, 2019.
24. Hogg D: Feds charge Dr. Fesen, Hutch clinic. Great Bend Tribune, October 29, 2018. Available at www.gbtribune.com/news/local-news/feds-charge-dr-fesen-hutch-clinic. Accessed January 28, 2019.
25. Ryan K: Kansas law offers little hope for patients who may have received unnecessary chemo. Kansas City Star, August 20, 2018. Available at www.kansascity.com/news/business/health-care/article216445975.html. Accessed January 28, 2019.
26. U.S. Department of Justice: Benton man pleads guilty to defrauding Southern Illinois Healthcare, June 13, 2018. Available at www.justice.gov/usao-sdil/pr/benton-man-pleads-guilty-defrauding-southern-illinois-healthcare. Accessed January 28, 2019.
27. U.S. Department of Justice: Benton man sentenced to federal prison for defrauding Southern Illinois Healthcare, October 10, 2018. Available at www.justice.gov/usao-sdil/pr/ benton-man-sentenced-federal-prison-defrauding-southern-illinois-healthcare. Accessed January 28, 2019.
29. U.S. Department of Justice: 21st Century Oncology to pay $26 million to settle false claims act allegations, December 12, 2017. Available at www.justice.gov/opa/pr/21st-century-oncology-pay-26-million-settle-false-claims-act-allegations. Accessed January 28, 2019.
30. U.S. Department of Health and Human Resources Office of Inspector General: Compliance. Available at https://oig.hhs.gov/compliance/index.asp. Accessed January 28, 2019.