$1.95M False Claims Act Settlement for Radiology Billing Company

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By Adrienne Dresevic, Esq., Clinton Mikel, Esq., and Leslie Rojas, Esq., of The Health Law Partners, P.C.


On October 14, 2014, the United States Attorney’s Office for the Northern District of Georgia announced that it reached a settlement with a radiology billing company (the Company) to settle claims that the Company violated the False Claims Act (the settlement press release is available here). The qui tam lawsuit included allegations that, in order to get the rejected claims paid, the Company fraudulently changed diagnosis codes on claims made by radiologists that were submitted to Medicare and Medicaid. Pursuant to the settlement, the Company agreed to pay $1.95 million. The federal government will receive $1.917 million from the settlement, while Georgia, Florida, New York, and Texas will split the remainder of the settlement. The “whistleblower” under the qui tam suit will also share in the settlement.

This is yet another case highlighting the government’s increased efforts to battle health care billing fraud. In May 2009, the Department of Health and Human Services and the US Attorney’s Office announced a joint Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative. Since January 2009, the US Department of Justice has recovered over $20 billion from False Claims Act cases and settlements. This case demonstrates that the government focuses not only on providers, but also on outside billing entities. The US Attorney’s Office stated that “billing companies provide a key check-point to combat medical billing fraud” and “they will be examined with the same scrutiny as healthcare providers.”

For radiology providers who handle billing in-house, this case highlights the need to focus on compliance with payor guidelines, including Medicare guidelines. It is wise for providers to develop billing compliance policies and training to ensure their billing personnel follow proper protocol. On the other hand, many providers place their trust in third-party billing companies to properly process their claims. For radiology providers who use third-party billing companies, this case underscores the continuing need to diligently monitor billing compliance. Providers should ensure that the billing company has proper compliance policies and safeguards in place to protect against fraudulent billing, as well as having proper expertise related to the type of billing and coding that they provide.

While the government did not directly target the radiologists in the above-mentioned case, under a different factual scenario, it is possible that the government would go after the providers. The Office of Inspector General (OIG) stated that the “lack of compliance and oversight by [the Company] placed all these providers at risk.” Moreover, the OIG issued a Special Advisory Bulletin in June 2001 (available here) regarding “Practices of Business Consultants.” In the bulletin, the OIG warned that some outside billing consultants may advocate for providers to “engage in aggressive billing schemes or unreasonable practices that are fraudulent or abusive of the Medicare or Medicaid programs,” such as up-coding to elevate reimbursement. This case and the Special Advisory Bulletin demonstrate that providers should not blindly rely on their third-party billing companies to ensure compliance. Rather, providers should work with their billing companies to ensure the proper safeguards are in place to avoid future liability. For example, providers should request a copy of the consultant’s or outside billing company’s compliance program, including policies, procedures, and education to the company’s staff.

In addition, radiology providers who do not have a formal compliance program should implement one. Compliance programs that are properly implemented help providers avoid fraudulent activity and provide good evidence during a government investigation that a provider takes compliance seriously. While compliance programs are currently voluntary, this will not be the case for long. Compliance programs will become mandatory as a condition of participation in Medicare and Medicaid as part of the Patient Protection and Affordable Care Act – but only after the government implements regulations to establish the core elements for a mandatory compliance program.

Currently, the OIG advises that the following seven components provide a good starting point for a voluntary compliance program for a physician practice (available here):

  1. Conduct internal monitoring and auditing
  2. Implement compliance and practice standards
  3. Designate a compliance officer or contact
  4. Conduct appropriate training and education
  5. Respond appropriately to detected offenses and develop corrective action
  6. Develop open lines of communication with employees
  7. Enforce disciplinary standards through well-publicized guidelines

Instead of waiting for the mandatory compliance regulations to be issued, radiology providers should consider developing a compliance program now based on the seven factors above, and update the program once the related regulations are released. For additional compliance guidance from the OIG, visit the OIG’s website at https://oig.hhs.gov/compliance/.

Adrienne Dresevic, Esq. graduated Magna Cum Laude from Wayne State University Law School. Practicing healthcare law, she concentrates in Stark and fraud/abuse, representing various diagnostic imaging providers, e.g., IDTFs, mobile leasing entities, and radiology and multi-specialty group practices.

Clinton Mikel, Esq. graduated from the University of Michigan Law School. Practicing healthcare law, he concentrates in Stark, fraud/abuse, telehealth/telemedicine, compliance, and the corporate and financial aspects of healthcare practice.

Leslie Rojas, Esq. graduated from Wayne State University Law School and is licensed to practice law in Michigan and Illinois. Practicing healthcare law, she concentrates on fraud/abuse issues, compliance with federal and state healthcare regulations, health information privacy and technology issues, and transactional and corporate aspects of healthcare.

The authors are members of The Health Law Partners, P.C. and may be reached at (248) 996-8510 or (212) 734-0128, or at www.thehlp.com.

For more regulatory news, visit www.ahraonline.org/news.

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