HEAT rises on health care fraud

Health care lawyer Matthew Curley is in a room on top of the Nashville skyline, his hand resting on a glossy book chronicling dozens of stories of health care fraud.

He and Anna Grizzle, both soft-spoken and cerulean blue-eyed, work on Bass Berry & Sims’ health care fraud task force. They were part of the team that published the firm’s 2013 Healthcare Fraud and Abuse Review, which is sitting near Curley on a conference room table.

For attorneys who specialize in health care fraud, business is good. That’s because the feds are turbo-charging investigation efforts.

It is bringing the HEAT, an acronym that stands for the “Health Care Fraud Prevention and Enforcement Action Team.” The unit was created in 2009 to hunt down providers, hospitals and other groups abusing Medicare and Medicaid claims.

The HEAT has been effective. In February the Department of Health and Human Services announced that it recovered $4.3 billion worth of taxpayer money through its health care fraud investigations in 2013, up from $4.2 billion the previous year. The government has recovered more money, year-over-year, from fraud investigations every year since 2008.

The government has real financial incentives for chasing down cases it looks likely to win — for every dollar spent on a health care fraud and abuse investigation, the HHS says it recovers $8.01.

Large hospital companies — of which there are several in Nashville — must determine whethersprawling divisions are compliant. There are no easy answers — the world of health care fraud is so big and investigative efforts have intensified so quickly that different courts have ruled in opposite ways on similar cases.

Since Nashville is a health care town, it is becoming a health care law town. Attorneys are poring over legal fine print to discover ways to prosecute and defend these cases. Jerry Martin, former U.S. attorney for the Middle District of Tennessee, who is with Nashville firm Barrett Johnston LLC, worked hard to create a reputation for the Nashville office as a place where whistleblowers could bring health care fraud cases. Firms such as Bass Berry, which help companies with compliance issues, are also sharpening their toolkits.

More enforcement

While the new, large recovery numbers may look like an increase in fraud, “it’s really a reflection of increased enforcement as opposed to increased fraud,” Martin said. “Unfortunately, the fraud has always been with us. Even with this continued increase, there’s still a tremendous amount of fraud that goes undetected.”

The Federal Bureau of Investigation estimates that health care fraud costs the country $80 billion each year, which dwarfs the roughly $4 billion that the federal government recovered in 2013.

Recent investigative efforts seem to have flagged some bad actors. For example:

• Ohio’s EMH Regional Medical Center paid $4.4 million on allegations that it was, among other things, putting stents into the hearts of Medicare patients who did not medically qualify for the procedure.

• The University of California at Irvine paid $1.2 million in March to resolve allegations that it billed Medicare for anesthesiology procedures performed without a qualified supervisor.

• In May the U.S. branch of Indian generic drug company Ranbaxy paid $500 million after allegedly selling adulterated drugs and lying to the Food and Drug Information about whether it had tested the stability of certain pharmaceuticals.

More aggressive

Many cases in courts are less cut-and-dry.

“The False Claims Act has been on the books since the Civil War,” Martin said. “It’s been amended several times, but in the last several years, the Department of Justice has become much more aggressive.”

That aggression is causing prosecutors to look at new ways to pursue FCA charges. For example, lawyers could resurrect an act from the World War II era that would alter the statute of limitations for FCA cases.

In 1945 Harold Lurie and Samuel Dworett coerced World War II veterans to file false claims with the government, which was liquidating excess ammunition that had been manufactured for the war effort. Lurie and Dworett wanted to get the goods for themselves on the cheap and resell them via their own company. Veterans could buy the arms at a discount.

The fraudsters weren’t indicted until 1952, when Lurie and Dworett argued that the charges were moot because of a three-year statute of limitations. But the U.S. Court of Appeals for the 7th Circuit ruled that when an FCA violation happens while the country is at war, the statute of limitations can be extended. The criminal code provision is known as the Wartime Suspension of Limitations Act, and it went relatively undetected for decades.

Then, in the early 2000s, various prosecutors started using the act to try to extend the statute of limitations in cases that have nothing to do with military action. Courts have ruled on either side — that the WSLA applies and that it doesn’t. Lawyers at Bass Berry flagged it as one of the issues to watch that could creep into the health care sector.

Impacts patients

That’s perhaps the strangest provision on the horizon, but it’s one among many. The Bass Berry report highlights trends and cases to watch as the country’s judicial branch adjusts to the influx of health care fraud cases.

It seems like a circus that would scare off potential FCA violators. “For someone who is attempting to be a blatant criminal, probably not,” said Bass, Berry & Sims’ Grizzle. “But for the honest providers, it has had an impact,” she said, adding that providers eager to avoid a fraud lawsuit are doing their own internal compliance work.

And though the legal wrangling happens behind the scenes, health care fraud does affect patients, according to Bass Berry’s Curley. Take the FBI’s estimate that the U.S. foots the bill for $80 billion in health care fraud annually. “If you think of that money in terms of lost care,” Curley said, “it certainly impacts the way patients are being treated in the entirety of the country.”

After all, the hope is that FCA enforcement will deter those who would defraud the government without making it difficult for well-intentioned companies to comply. Until then, courts will continue to buzz with FCA violation cases. And attorneys such as Martin, Curley and Grizzle will remain busy with clients caught in the fray.

Reach Shelley DuBois at 615-259-8241 and on Twitter @shelleydubois.