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Understanding The Healthcare Fraud Investigation

On Behalf of | Dec 27, 2023 | Firm News

Mathew J. Levy, Esq. & Stephen J. Cucolo, Esq.

By Mathew J. Levy, Esq. & Stephen J. Cucolo, Esq.

The United States Department of Health and Human Services (HHS) HHS in fiscal year 2022 recouped $11 for every $1 spent on health care audits and investigations. HHS has released a report detailing the results of its actions. The report indicates there was a recovery of $3.9 billion dollars. HHS utilizes data analytics to identify potentially fraudulent activity and then harnesses the resources of Federal, state, and local law enforcement to investigate and prosecute health care fraud and suspicious billing patterns.

The HHS Office of the Inspector General (HHS-OIG) has its Health Care Fraud Strike Force target specific geographic areas and practice areas that they deem to be fraud hot spots. In 2022 the Strike Force was directed to scrutinize telemedicine, durable medical equipment, and opioid abuse. HHS-OIG investigations resulted in charging providers with $10 billion in fraudulent bills related to telehealth alone.

HHS has also released its Semiannual Report to Congress. HHS expects to recover another $3.44 Billion in 2023 as the result of audits and investigations. The results of these investigations can be more than just financial penalties. As of September 2023, HHS-OIG has filed 746 civil actions for false claims and unjust enrichment and HHS-OIG investigations generated nearly 700 Criminal actions resulting in nearly 400 guilty pleas, and 42 jury trials. These actions resulted in imprisonment of 323 individuals for an average of sentence of 53 months. More than 2,000 individuals and entities have been excluded from participating in federal health care programs between April and September of 2023.

The reality for the average healthcare provider is that they are likely to be caught up in this massive investigatory regime. Any provider working in a practice area that is under heightened scrutiny may find themselves flagged via data analytics for making a simple coding error.

Today, the sensationalized stories of FBI agents and criminal indictments are the day-to-day realities of Medicare enforcement faced by every physician. What is Medicare Fraud?

First, there are the obvious cases of greed, physicians billing for fictitious patients and services never performed and the rendering of unnecessary medical procedures. However, there is there more to Medicare fraud than the obvious like widely practiced rule-bending to assist patients. This includes exaggerating either the severity of a patient’s condition, changing a patient’s billing diagnosis or reported signs or symptoms that a patient did not have, to help the patient secure coverage for needed care.

While gaming the system may be viewed as a charitable and humane gesture, necessary to circumvent arbitrary and even cruel decisions of third-party payors (even if it technically cheats the payor), government prosecutors take a very different view. Recent events make clear that these infractions can result in serious problems for the well-meaning physician. The truth is that all well-meaning practitioners who bend the rules are placing their careers, indeed their very freedom, at risk.

The Healthcare Portability Act of 1996 authorized several hundred million dollars in funding, exclusively designated for the investigation of allegations of Medicare Fraud. These funds are not being used to simply audit providers and seek reimbursement where the audit demonstrates improper billing. These funds are being used by the FBI to conduct criminal investigations which are then referred to the United States Attorney for prosecution.

Longstanding notions that the Government’s efforts are limited to the classic “Medicare and Medicaid mills,” which submit claims for fictitious patients or for providing durable medical equipment, which was never indicated or provided, are dispelled by an examination of the pending criminal and civil Medicare Fraud actions.

Many of the pending actions involve individual practitioners and their interpretations of the ICD 10 codes, modifiers 25 or 59, and unbundling of fees: and other purported billing infractions.

Broad definitions of fraud have provided prosecutors with a net wide enough to trap many well-meaning physicians who fail to interpret the Medicare guidelines or Local Coverage Determinations according to the latest interpretation offered by the Government, or who fail to provide medical care as the Government determines, retrospectively, it should have been provided. Equally inappropriate is the belief that fraud investigations are limited to physicians who purposefully defraud the Medicare System.

No longer does the Government limit its activities to those who intentionally defraud the system. While the False Claims Act prohibits only the “knowing” submission of false claims, the definition of “knowing” is very different. “Knowing” is redefined to include physicians who act in “deliberate ignorance” or engage in “reckless disregard” for the truth or falsity of the claim. Delegating billing authority to a billing clerk or to an outside agency, without regular monitoring of their activities, can fall within the Government’s definition of “deliberate ignorance” or “reckless disregard.” Therefore, errors not detected through vigilant supervision of the billing department, or delegation of billing functions to a third party, can readily fall within the definition of “knowing” if services are not correctly documented, coded and billed. Under the False Claims Act, a physician who violates the Act can be assessed penalties equal to three times the original amount of the claim along with mandatory penalties of $5,000 to $10,000 per claim.

Providers should be aware that the reports of Medicare fraud come from disgruntled patients, associates and employees. These “whistleblowers” can receive as much as twenty-five percent of any recovery obtained by the government by providing the information the government relies upon to initiate its investigation. Individuals have received hundreds of thousands of dollars by bringing these qui tam actions against their employers and former employers.

In conclusion, the Government is not likely to change course in the foreseeable future. Failure to implement a formal compliance program, can lead to serious problems later. In addition, the utilization of a certified coder to review and analyze your documentation and coding on an annual basis can help avoid investigations in the future.

If you find yourself the subject of an HHS investigation, you do not need to face the investigative might of the Federal government alone. Mathew Levy and the team at Weiss, Zarett, Brofman, Sonnenklar, and Levy P.C. have experience defending medical practitioners in HHS, OIG, and other State and Federal Health Care Fraud investigations.

Mathew J. Levy, Esq. is a Principal of Weiss Zarett Brofman Sonnenklar & Levy, PC. Mr. Levy is nationally recognized as having extensive experience representing healthcare clients in transactional and regulatory matters. Mr. Levy has particular expertise in advising health care clients with respect to contract issues, business transactions, practice formation, regulatory compliance, mergers & acquisitions, professional discipline, criminal law, healthcare fraud & billing fraud, insurance carrier audits, litigation & arbitration, and asset protection-estate planning. You can reach Mathew Levy at 516-926-3320 or [email protected].

Stephen Cucolo is an associate at Weiss Zarett Brofman Sonnenklar & Levy, P.C with experience representing healthcare providers in connection with transactional and regulatory matters including the formation and structure of business entities, negotiating and drafting contracts. Stephen Cucolo can be reached at 516-627-7000 or [email protected].

By Mathew J. Levy, Esq.
[email protected]


Stephen Cucolo, Esq.
[email protected]