Personal Accountability: Healthcare Qui Tam Review

March 12, 2018

The Department of Justice (“DOJ”) experienced its third highest annual recovery in False Claims Act (“FCA”) history for the fiscal year (“FY”) 2016.[1] Of the $4.7 billion in settlements obtained from the DOJ involving fraud and false civil claims, over half ($2.5 billion) were related to the health care industry. These healthcare fraud claims included drugs companies, medical device companies, hospitals, nursing homes, laboratories and physicians.[2] Specifically, 21 healthcare-related qui tam cases were unsealed in May of 2017, targeting outpatient medical and psychological providers, laboratory testing companies, inpatient hospitals, and home health care providers. The majority of whistleblowers were current and former employees, with the most common alleged violations listed in the following order: billing fraud, Anti-Kickback Statute violations, and Stark Law violations.[3] Billing fraud related to Medicare and Medicaid can involve the following cases:

  • Upcoding;
  • Bundling and unbundling procedures to receive a second reimbursement on the same services;
  • Misrepresentation of provider credentials (i.e. services performed by an unlicensed physician or lack of a teaching physician); and
  • The order and provision of unnecessary medical tests to increase reimbursement.

Per the “Health Care Fraud and Abuse Control Program: Annual Report for Fiscal Year 2017” published by The Department of Health and Human Services and the DOJ, the DOJ’s Criminal Division also organized the largest national health care fraud takedown in history for FY 2016, led by the Medicare Fraud Strike Force with the cooperation of 36 Attorneys’ Offices.[1] This effort resulted in charges against 301 individuals, including 60 doctors, nurses and other licensed medical professionals for their alleged participation in Medicare and Medicaid fraud schemes aggregately involving $900 million in false billings.

Focus on Personal Accountability

The government has taken several measures over the past few years to hold individuals accountable for alleged health care fraud, not just the employers for whom they work. In FY 2016, the DOJ’s Criminal Division formerly established a Corporate Health Care Fraud Strike Force to specifically charge responsible individuals within organizations of health care fraud.

In alignment with the Yates Memo issued by the DOJ in 2015, the DOJ is focused on using the FCA to “deter and redress fraud by individuals as well as corporations.”[1] From C-level executives to advanced practice clinicians, no one is insusceptible to alleged false claims. Specifically, this means holding executives personally accountable in their individual capacities the form of sizeable payouts. Please see the list below for some recent settlements in various provider settings:

Ambulance and Transportation Services

  • Former owner of Advantage Medical Transport Inc. was fined $300,000, ordered to pay $194,378 in restitution, and sentenced to two years in prison for submitting fraudulent claims to Medicare for the transport of beneficiaries to and from dialysis treatment centers (i.e. EMTs were directed to conceal the fact that the patients were ambulatory and not eligible for Medicare paid ambulance transport).


  • An interventional pain management physician who owned and operated Washington Pain Management Center was ordered to pay restitution of $3.1 million and sentenced to 9+ years in prison for submitting false claims for nerve block injections (imaging guidance necessary was neither owned nor used)
  • Former physician assistant (Kyle D. Gandy) was ordered to pay $18,030 in restitution and sentenced to 14 months in prison for accepting illegal kickbacks by referring patients to medical clinics, physical therapy clinics, and a home health care agency.
  • President of a behavioral health practice in North Carolina (Shepard Lee Spruill II) faces up to 15 years in prison and $500,000 in fines for giving patient names and Medicaid identification numbers obtained through his practice to external coders who used them to bill Medicaid for more than $2 million in fake services[1].

Health Systems

  • Former physician at Columbus Regional Health (Dr. Pippas) was fined $425,000 for submitting claims to federal health care programs misrepresenting the level of services provided.
  • Former CEO of Tuomey Health System (Ralph J. Cox III) was fined $1 million and excluded from participating in federal healthcare programs for Toumey’s illegal billing to Medicare for services referred by physicians with whom the health system had improper financial relationships.
  • Former urologist at 21st Century Oncology LLC (Robert A. Scappa, D.O.) was fined $250,000 for ordering unnecessary medical tests.
  • Board chairman of North American Health Care Inc. was fined $1 million due to submitting false claims to government health care programs for medically unnecessary rehabilitation therapy services.

Home Health

  • Former owner of Recovery Home Care Inc. (Mark T. Conklin) was fined $1.75 million for allegedly paying dozens of physicians thousands of dollars per month to serve as false medical directors.
  • Lead physician of Home Care Physicians, Inc. was ordered to pay restitution of $4 million and sentenced to 2 years in prison for falsely certifying patients as confined to the home and requiring nursing services to bill Medicare for unnecessary in-home treatment.
  • Former owner of Rosner Home Healthcare was ordered to pay a forfeiture judgment of $2.26 million and sentenced to 1 year in prison for paying kickbacks to physicians and non-physicians for patient referrals.


  • Former owner of Sandanna Hospice, Inc., Milestone Hospice, Inc., and Carol’s Hospice & Palliative Services (collectively, “Sandanna”) was ordered to pay restitution of $1.1 million and sentenced to 3 years in prison for billing Medicare and Medicaid for hospice services for patients who were not terminally ill (including paying recruiters up to $800 per patient and cash kickbacks to the hospice medical director to sign hospice orders).
  • A billing clerk at Sandanna was also ordered to pay restitution of more than $1 million and sentenced to 1 month in prison for conspiring to commit health care fraud.

All of the aforementioned individuals showcase the participation of healthcare professionals in unlawful compensation schemes, resulting in potential civil and criminal penalties, exclusion from federal programs, and loss of tax exempt status.

The focus on personal accountability is highlighted by the growth and severity of recent cases. As a result, health systems are spending more time and resources on compliance with physician arrangements. Putting protocol in place to ensure services are needed and actually provided is critical. As part of this process, ensuring compensation paid to providers is consistent with FMV also remains paramount.

  2. Note that this figure is likely understated, as it only reflects federal losses.
  4. The Medicare Fraud Strike Force consists of investigators and prosecutors focused on uncovering Medicare fraud and abuse through the use of advanced data analytics to uncover suspicious billing patterns.