Physicians, don't make this huge mistake!

Don't sign up for a role you don't fully understand.

A huge mistake I often see physicians make is carelessly signing up to become medical directors. Becoming a medical director of a facility, a medical device company, or some other venture could place your license and liberty in jeopardy. While on their face, medical directorship is a vehicle to make ancillary income, often these contracts are structured in ways that may be illegal. For example, the agreement:

  1. pays physicians for patient referrals;
  1. pays physicians for overseeing medical care, but in actuality, the provider is not overseeing anything at all;
  2. allows non-clinicians to direct patient care;
  3. pays physicians for fees for no work performed.

Instead, if an opportunity is presented to you to become a medical director, review the agreement and business arrangement with your attorney. Your attorney should examine rules related to your state’s licensing laws, Medicare, and the facility’s payor agreements, as well as review the organization to ensure it has not been excluded from Medicare and other federal dollars. Additionally, it wouldn’t hurt to review recent Department of Justice indictments to have a better understanding of what other medical directors have gotten into trouble for. The Office of Inspector General (OIG), states to comply as a medical director, the physicians should: 

  1. actively oversee clinical care in the facility; 
  2. lead the medical staff to meet the standard of care; 
  3. ensure proper training, education, and oversight for physicians, nurses, and other staff members; and 
  4. identify and address quality problems.

Recent Dallas case—

The $27 million Novus Health Services fraud case resulted in a combined 84 years in federal prison for thirteen defendants. This conviction follows Bradley J. Harris, the former CEO of Novus and Optimum Health Services, who pleaded guilty earlier this year to fraudulent billing and a kickback scheme. According to plea papers and evidence at trial, Dallas-based Novus defrauded Medicare by making false claims about hospice services, providing kickbacks for referrals, and violating HIPAA to recruit more patients. Novus employees also gave patients Schedule II controlled substances without guidance from healthcare professionals and later transferred patients to a new hospice facility to circumvent Medicare disciplinary action.

  • Two doctors, who helped a Novus scam Medicare, were sentenced to a combined 23 years in prison for healthcare fraud.
  • The medical directors were found guilty of conspiracy to commit healthcare fraud and other charges.
  • The doctors helped defraud Medicare by, among other things, illegally admitting patients who were not appropriate for hospice and submitting materially false claims for hospice services.
  • These doctors allowed an accountant with no medical expertise – to dispense controlled substances like candy, with little to no medical oversight,” said U.S. Attorney Chad Meacham. “They claimed to have had hands-on experience with hospice patients, when in fact, they’d entrusted life-or-death medical decisions to untrained businesspeople.
  • The government relied on the doctors to certify that they had examined these patients face-to-face when no such examinations had occurred.

There is no amount of medical director pay that is worth losing your medical license and liberty. I’m sure when these physicians took this job, they never intended to lose their liberty, but sometimes fast money prevents people from thinking clearly.

Doris Dike, Esq. is the Managing Partner of Dike Law Group, a business lawyer for healthcare clients, she works with doctors, podiatrists, nurses, ERs, urgent cares, med spas, hospitals, small independent clinics, rural hospitals, and surgery centers. She can be reached at dklawg.com.