What Are the Penalties in Federal Workers’ Compensation Healthcare Fraud Cases?

Oberheiden P.C. is one of the nation’s exceptional federal workers’ compensation compliance and defense law firms.

Lawyers who previously prosecuted and supervised Department of Labor healthcare fraud at the U.S. Department of Justice and expert consultants with notable experience in DOL-billing now serve federal physical therapy clinic owners across the United States in all stages of compliance and defense matters — from setting up effective compliance programs to defending business owners in case of a subpoena, search warrant or indictment.

How Can Business Owners of DOL Physical Therapy Clinics Get in Trouble?

Federal workers compensation clinic investigations are common. Despite their frequency, most investigations are generally based on ten areas of compliance concerns. If you have questions about them, contact us immediately so that experienced former DOL prosecutors and our DOL federal law defense attorneys can assess and evaluate whether your clinic might have exposure. Some of the most common bases for investigations are:

• High Patient Volume
• Unusual Modifiers that Boost Collections
• Excessive Physical Therapy Treatment
• Inappropriate Marketing to Union Members
• Illegal Cooperation with Current Claims Processors
• Billing for Services not Provided
• Use of Unqualified Billing Staff
• Lack of Appropriate Medical or PT Supervision
• Prescriptions of Controlled Substances or Compounds
• Use of Massage Therapists or Chiropractors
• Prohibited Free Services to Patients

Each of these occurrences are fertile grounds for a referral to the U.S. Attorney’s Office. The former federal prosecutors at Oberheiden PC understand too well how an underestimated operational issue, or a lack of DOL compliance, may result in search warrants, license revocations, and criminal indictments. Please call Oberheiden PC immediately (including on weekends) with your concerns so that we may discuss these issues in a free and confidential consultation.

DOL billing fraud and inappropriate marketing of federal employee patients is typically investigated and prosecuted under 18 U.S.C. 1347. Under this statute, it is a federal felony to engage in a scheme designed to defraud a federal healthcare program (like DOL). Violations —per each occurrence — can result in up to 10 years imprisonment. Don’t let this happen to you! Call Oberheiden P.C. immediately to get free and confidential advice and a free assessment of your situation and exposure.

Put our highly experienced team on your side

Dr. Nick Oberheiden

Founder

Attorney-at-Law

John W. Sellers

Former Senior Trial Attorney
U.S. Department of Justice

Local Counsel

Joanne Fine DeLena

Former Assistant U.S. Attorney

Local Counsel

Lynette S. Byrd

Former Assistant U.S. Attorney

Partner

Amanda Marshall

Former U.S. Attorney

Local Counsel

Aaron L. Wiley

Former Federal Prosecutor

Local Counsel

Roger Bach

Former Special Agent (OIG)

Gamal Abdel-Hafiz

Former Supervisory Special Agent (FBI)

Chris Quick

Former Special Agent (FBI & IRS-CI)

Kevin M. Sheridan

Former Special Agent (FBI)

Ray Yuen

Former Supervisory Special Agent (FBI)

Dennis A. Wichern

Former Special Agent-in-Charge (DEA)

How Do I Know that My Clinic is Under Investigation for Fraud?

Most white-collar crime cases, such as federal fraud investigations, announce themselves. However, many business owners simply ignore or underestimate the first signs that an investigation may be ongoing. Instead, they wait and fail to contact experienced attorneys and are thereafter confronted with escalated investigations when signs of law enforcement activity can no longer be denied — for example, when the FBI and the U.S. Postal Inspection Service show up unannounced at their clinic with a federal search warrant.

That said, you should contact Oberheiden PC at the earliest sign of an investigation (or even before, so as to address the possibility of an investigation and to forestall their occurrence in the first place). While each government investigator or team operates differently, the most common signs of an investigation are as follows:

• Patient or Staff (Including Former Staff) Interviews. First, you become aware that your patients have been contacted by government agents or investigators. Typically, investigators want to know from patients: (i) whether they received certain medical services, (ii) which doctor or therapist performed the examinations or provided clinical services, (iii) whether the clinic was clean and offered appropriate privacy, or (iv) whether the patients actually needed the services or prescriptions that were rendered. These interviews then continue and expand by contacting current or former employees and contractors at the clinic in an effort to corroborate or add to the information received or insinuated by the interviewed patients.

• Undercover Agents. Second, the government will likely send undercover agents to your clinic. Although well trained to disguise their true identity, observant clinic owners and staff may notice “fake patients” when they ask a lot of questions, inquire into operational procedures that would typically not matter to normal patients and overall, appear very curious about the clinic’s procedures and sometimes demand unusual services or prescriptions to test whether the clinic would fall into one of their predetermined traps.

• Subpoena or Search Warrant. Third, while the first two stages of an investigation require a good sense of alertness, receiving a target letter, a subpoena or being exposed to a search warrant are clear and obvious signs that a criminal investigation against you is pending. Because criminal charges are the logical next step at that point, you must immediately act and reach out to attorneys if you are to have a change at avoid criminal charges.

These stages should — again — caution and alert you to act upon the earliest sign of an investigation. The longer you wait, the more difficult it is to change or impact the perception of fraud gained through interviews of what may have been disgruntled former employees or naive patients. Even patients that are completely happy with the services they receive can be manipulated into government witnesses by psychologically and tactically trained federal agents, for example:

• Investigator: How many hours of physical therapy did you do at the Federal Workers Comp Clinic on a given day?

• Patient: Sometimes 1, sometimes 2 hours. I really liked it.

• Investigator: Did you work out with a physical therapist the entire time?

• Patient: No, I worked with Mark. I think he is a massage therapist.

• Investigator: How often were you seen by Jim, the physical therapist?

• Patient: Who is Jim?

How Can I Help to Protect My Clinic Against a Fraud Investigation?

Unfortunately, calling the DOL does not offer any help. For one, it takes forever to reach someone. For another, once you get through and overcome the wait period, you will be educated that your minutes limited conversation with a DOL representative will not address your pressing billing questions. The DOL, unfortunately, may be useless to guide you and will not tend to help you protect your business. Instead of providing help to people inquiring with good intent and with a true interest to do things right, the Department of Labor essentially rejects your inquiry. Then, your guidance must come from elsewhere.

• Attorney Advice. Make sure you surround yourself with reliable attorney advice as early as possible. Have an experienced DOL attorney on standby and answer your compliance questions whenever they arise. Nonetheless, you should make sure that your attorney truly understands DOL billing and compliance. When you call Oberheiden PC you will speak to former DOJ prosecutors (with significant government experience of federal workers compensation prosecutions) and experienced DOL attorneys that can competently discuss and address your workers compensation concerns with you and your staff.

• Compliance. Most people talk about compliance but do not act upon it. A true compliance program — not one that includes just foundational HIPAA training materials but one that addresses the pertinent laws, establishes rigid employment rules and provides instant guidance to all staff members — puts you miles ahead of most to address the potential of a criminal intent finding against you or your business. Oberheiden PC has established new and improved compliance protocols in federal workers’ compensation clinics across the country. Call us today to discuss how our DOL Compliance Package can serve to protect your clinic and your operations.

• External Billing. Because many issues arise out of the complicated billing mandates that the Department of Labor expects you to be familiar with (and follow to total perfection), many clinics are simply overwhelmed and cannot find billers with necessary and specific DOL billing expertise. To export the liability of incorrect billing, federal workers’ compensation clinics are well-advised to outsource their billing to an attorney-recommended billing specialist.

Here Are Recent Examples of DOL-Fraud Prosecutions

Healthcare business owners and physicians accepting Department of Labor patients must remain at all times on high alert. The Department of Justice, the U.S. Postal Inspection Service, the Department of Health and Human Services, the Office of Inspector General, and the Federal Bureau of Investigation continue to scrutinize and investigate federal workers’ compensation clinics in all parts of the country. Recent take-downs and search warrants are reminders that billing the Department of Labor incorrectly or entering questionable marketing or promotional relationships can lead to drastic consequences. The following cases reflect a very small selection of recent DOL healthcare fraud investigations against pharmacies, physical therapy clinics, owners of rehabilitation centers, and medical providers.

• The CEO of a physical therapy clinic chain based out of Texas was found guilty for his role in a healthcare fraud scheme. According to evidence presented at trial, the CEO and his other executives submitted millions of dollars’ worth of false claims to the Department of Labor for reimbursement. The evidence showed that the physical therapy centers would submit bills for services that were never performed. Indeed, the therapy centers would bill for physical therapy services, but patients never received the services – the patients would watch TV or play video games at their therapy appointments. Testimony from the trial revealed that the physical therapy clinics had upwards of 60 patients a day. As a result of the scheme, the CEO was sentenced to nineteen years in prison.

• A husband and wife from Texas pleaded guilty to their roles in a multi-million-dollar healthcare fraud scheme. According to the plea agreement, the husband and wife worked for a treatment facility, but were both fired for subpar work performance. Upon their termination, the couple stole patient information from the treatment facility and then used the stolen information to submit false claims for durable medical equipment (DME) to the Office of Worker’s Compensation Program (OWCP).

• In February 2019, the United States entered into a False Claims Act civil settlement with several entities, including a North Carolina marketing company, a Texas marketing company as well as an Oklahoma doctor for their alleged roles in a Department of Labor healthcare fraud scheme. According to the settlement, the scheme involved the two marketing companies and one doctor who accepted illegal monetary payments from a compounding pharmacy in Oklahoma. The compounding pharmacy allegedly paid the marketing companies and the doctor substantial sums in exchange for federal workers’ compensation prescription referrals to be sent to the pharmacy. In total, the United States expects to recover $ 800,000 as a result of the settlement.

• A pharmacy sales representative from New York has pleaded guilty to his role in a major healthcare fraud scheme. According to the plea agreement, the sales representative marketed compounded prescription pain patches and pain creams to federal workers’ compensation insured patients and sought out patients whose insurance would pay for these high-dollar compounded medications. The sales rep would convince individuals they needed the compounded medications without any input from a doctor regarding medical necessity. In return for convincing these patients to use his compounded medications, the sales rep would receive a prohibited commission from every compounded prescription filled. The United States determined almost $6 million was paid for these fraudulent prescriptions.

• A former UPS employee pleaded guilty for his role in defrauding the UPS Healthcare Benefit program. According to the plea agreement, the former employee would recruit individuals to have sleep study tests performed at a sleep testing facility. The employee would pay the individuals a nominal amount of money to have the sleep test performed knowing no doctor had prescribed a sleep study be performed. The UPS Healthcare Benefit program would reimburse the sleep study center and the individuals who had the tests performed. The UPS employee then directed the individuals to deposit the reimbursement checks in bank accounts controlled by him. In total, the United States determined the fraudulent sleep studies cost the UPS Healthcare Benefit program over $4 million.

• A pharmacist from Mississippi pleaded guilty to his role in a DOL compounding pharmacy scheme. According to the plea agreement, the pharmacist would solicit and pay various doctors to write compound prescriptions for patients that were never examined. The prescriptions were written without any medical necessity. The pharmacist would then submit claims to federally funded healthcare programs and convert the reimbursements for his own use. In an attempt to make his scheme look legitimate, the pharmacist would create fake patient records to make it look as if the patients had been seen by a doctor and the compounded prescriptions were medically needed. As a result of the scheme, the pharmacist pocketed over $2 million.

• A Texas pharmacist was sentenced to sixty months in prison for his role in a healthcare fraud scheme. According to federal prosecutors, the pharmacist paid a Texas chiropractor to refer patients to his pharmacy to have their prescriptions filled. The pharmacist also paid the chiropractor to influence other Texas doctors to write compound prescriptions for DOL patients, which in turn the pharmacist would fill. The pharmacist solicited prescriptions for compound drugs due to their high reimbursement rate. In addition to his prison sentence, the pharmacist will also have to pay back the United States over $5 million he received from the fraudulent scheme.

• A man from Tennessee pleaded guilty to his role in a multimillion dollar healthcare fraud scheme. According to the plea agreement, the man sold unauthorized healthcare plans to hundreds of individuals. These healthcare plans were not legitimate and were not backed by an underwriter. Individuals who bought the healthcare plans paid monthly premiums to the Tennessee man, to which the man then converted for his own personal use. Individuals who bought the healthcare plans never received any legitimate medical services as the plans were not accepted by any medical provider.

• A Kentucky doctor entered into a settlement agreement with the United States to resolve allegations that he intentionally submitted false healthcare claims for reimbursement from federally funded healthcare plans, such as the Department of Labor. According the settlement agreement, the doctor would submit bills for hearing tests claiming they were medically necessary and performed by licensed personnel. Federal prosecutors determined the hearing tests were not medically necessary and were in fact performed by unlicensed employees of the doctor. To settle these allegations, the doctor will pay back almost $3 million to the government.

Call Oberheiden PC Today and Speak to Our Experienced DOL Attorneys and DOL Billing Experts

If you are being targeted by federal authorities, contact us for your free and confidential initial case assessment. To speak with a member of our federal healthcare fraud defense team as soon as possible, call 888-680-1745 or tell us how to reach you online now.