The media coverage of healthcare fraud and abuse settlement cases is changing, no doubt a reflection of the government’s focus. Historically, cases with the highest dollar amounts made the news, often involving large medical centers, laboratories or pharmaceutical/medical device companies.
While physician and medical practice settlements occasionally make the news, it usually is due a larger entity trying to influence smaller entities — single physician or group practices — to send referrals or patients. The individual physicians alleged to be involved are not featured in the headlines as much as the larger entity that settles for a large dollar amount, until recently.
In late 2015, the Department of Justice announced a settlement of about $20 million with the oncology laboratory 21st Century Oncology, LLC, headquartered in Fort Myers, Fla. The allegations against 21st Century included billing for medically unnecessary laboratory tests known as FISH (fluorescence in situ hybridization) tests. FISH tests are laboratory tests performed on urine that can detect genetic abnormalities associated with bladder cancer. Someone must order these tests, but in this case the government alleged four separate urologists ordered the unnecessary FISH tests. Enforcement action was taken against these physicians or their practices individually.
Since their original settlement with 21st Century in December 2015, the government has announced additional individual settlements with three physicians. The amounts may be smaller, but the government probably felt that 21st Century could not have acted alone because it needed physicians to order the tests. This point was driven home in the most recent announcement by the U.S. Attorney’s Office, Middle District of Florida, when U.S. Attorney A. Lee Bentley stated: “In fighting healthcare fraud, it’s important that individual physicians, as well as their employers, be held accountable. Doctors should not be able to escape personal liability for healthcare fraud.”
Robert A. Scappa, DO, agreed to a $250,000 settlement for allegedly ordering these medically unnecessary FISH tests. Medicare does not consider a FISH test reasonable or necessary unless it is used to monitor for tumor recurrence in a patient previously diagnosed with bladder cancer, or unless, after performing a full urologic workup, the physician has reason to suspect that a patient with hematuria (blood in the urine) may have bladder cancer. The allegation stated that Scappa referred all the FISH testing ordered by him to a laboratory owned and operated by 21st Century and was paid bonuses by the company based, in part, on the number of FISH tests referred.
The other physician who settled in relation to these allegations was David Spellberg, MD. In January 2016, the Department of Justice announced a $1.05 million settlement with Spellberg. The allegations were essentially the same as in the cases of 21st Century and Scappa: that Spellberg also ordered unnecessary FISH tests that would be performed at 21st Century’s laboratory and subsequently billed by them. This included the allegation that Spellberg was also paid bonuses based, in part, on the number of FISH tests he referred to 21st Century. The whistleblower who first brought the allegations to the government was Spellberg’s medical assistant.
“This settlement demonstrates the commitment of the Defense Criminal Investigative Service and its law enforcement partners to protect the integrity of the U.S. military healthcare program (TRICARE) against fraudulent claims submitted by both corporate and individual medical services providers,” according to one of the government special agents involved in the case.
In February of 2017, Meir Daller, MD, a urologist with Gulfstream Urology, a division of 21st Century Oncology, settled with the government for $3.81 million.
Another example features a slightly different scenario, one alleging that a pharmaceutical company paid kickbacks to a physician to influence his prescribing habits of one of the company's drugs. The kickbacks reportedly were in the form of speaking fees, consulting payments, travel expenses and entertainment.
Teva Pharmaceuticals and its subsidiary IVAX agreed to pay $27.6 million to settle false claims allegations that they paid Illinois physician Michael J. Reinstein, MD, to prescribe the generic antipsychotic drug clozapine to elderly patients. Many months after the settlement with the company, the physician pled guilty to receiving kickbacks and settled for roughly $3.79 million in a civil case.
Both the 21st Century Oncology and IVAX settlements could be seen as examples of the Department of Justice holding true to the principles outlined in a 2015 memo released by former Deputy Attorney General Sally Q. Yates, which called for holding individuals — not just corporations — responsible for wrongdoing.
After the settlement: What we can learn from corporate integrity agreements
Beyond financial settlements and associated legal costs, most of these settlements also include an agreement with the Office of Inspector General (OIG) to enter into a multiyear corporate integrity agreement (CIA) that mandates certain compliance program requirements and reviews. Most providers agree to the obligations found in CIAs to avoid the possibility of being excluded as participants in Medicare and Medicaid, which would bring most practices to the brink of closing their doors.
For example, Daller’s CIA from the 21st Century Oncology case is 33 pages long and includes requirements such as hiring an independent review organization to periodically assess certain billing and medical documentation practices. All CIAs are published on the OIG’s website for review by others. Reviewing these and other OIG documents can give practices an idea of what is expected in proactive compliance programs, which most physician practices are already engaged in as a best practice.
Prevention is better than the cure
The OIG explains the generally accepted seven elements of an effective compliance program. Some of these include the naming of a compliance officer or contact, training, written policies and procedures, and internal auditing and monitoring. Additionally, in March the OIG published some practical tools that compliance professionals can use to assess the effectiveness of their compliance programs. These types of preventive compliance measures are much better than being forced into compliance program obligations.
Like preventive health messages espoused by physicians to their patients, it would be wise for practices to engage in some preventive compliance measures for the financial and legal health of their own practice. More than ever, physicians are at risk and personally liable for noncompliance.
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