DOJ Fines Physicians for Fraud Schemes

January 29, 2015
Rachel V. Rose, JD, MBA
Rachel V. Rose, JD, MBA

Rachel V. Rose, JD, MBA, advises clients on compliance and transactions in healthcare, cybersecurity, corporate and securities law, while representing plaintiffs in False Claims Act and Dodd-Frank whistleblower cases. She also teaches bioethics at Baylor College of Medicine in Houston. Rachel can be reached through her website, www.rvrose.com.

The recent imposition of penalties by the DOJ in two instances should cause physicians to re-evaluate their policies and practices.

Earlier this month, a physician-owned hospital, South Shore Physician Hospital Organization (SSPHO) located in Weymouth, Mass. agreed to pay $1.775 million to settle allegations associated with a recruitment grant kickback program. The scheme involved paying physician members in exchange for patient referrals.

According to the U.S. Attorney's Office, District of Massachusetts, "[i]n a consent judgment, the South Shore Physician Hospital Organization, Inc. (SSPHO) and its member organizations, South Shore Hospital, Inc., and Physicians Organization of the South Shore, Inc., acknowledged that the SSPHO paid kickbacks in the form of cash grants to doctors who agreed to make referrals to SSPHO providers. From 2001 to 2010, SSPHO allegedly approved 103 separate recruitment grants to 33 different physician groups as part of this scheme. The recruitment grant program requested that grant recipients refer patients to participating providers, which included the South Shore Hospital." This came at the cost of patients. Instead of having a choice of provider and potentially lowering healthcare costs, the inverse occurred. Choices were severely restricted and the cost of care rose.

"As a result of this conduct, SSPHO and its member organizations allegedly caused participating providers who received referrals from grant recipients to submit false claims for payment to the Medicare Program and the Massachusetts Medicaid program (MassHealth), because those claims were made in violation of the federal Anti-Kickback statute, and violated the Massachusetts Consumer Protection Act."

The second scenario occurred in Kentucky where a physician was charged with prescribing Schedule II pain medications, which led to the death of five patients. "The indictment charges Guerrero with dispensing Oxycodone, a schedule II controlled substance, to K.J., between June 6, 2011, through August 25, 2011, without a legitimate medical purpose and beyond the bounds of professional medical practice, which resulted in K.J.'s death on or about August 29, 2011. That Guerrero intentionally distributed and dispensed, Methadone, a schedule II controlled substance, to D.N., between December 15, 2009, through April 1, 2010, without a legitimate medical purpose and beyond the bounds of professional medical practice, which resulted in D.N.'s death on or about April 5, 2011. That Guerrero knowingly and intentionally distributed and dispensed, Oxycodone, to R.S., between December 10, 2009, through February 9, 2010, without a legitimate medical purpose and beyond the bounds of professional medical practice, which resulted in R.S.'s death on or about February 18, 2010. That Guerrero dispensed Oxycodone, to P.F. December 28, 2009, and continuing through February 20, 2012, without a legitimate medical purpose and beyond the bounds of professional medical practice, which resulted in P.F.'s death on or about March 3, 2012. That Guerrero knowingly and intentionally distributed and dispensed, Hydrocodone, a schedule III controlled substance, to S.O., between January 6, 2010, and continuing through September 16, 2011, without a legitimate medical purpose and beyond the bounds of professional medical practice, which resulted in S.O.'s death on or about September 24, 2011." Further charges were assessed in relation to health care fraud in relation to billing practices.