Medical provider fraud has become the national focus of attention in workers’ compensation claims administration. Recovery efforts by the State Compensation Insurance Fund and others have been focused primarily on the physician who was perpetrator of the scheme.

Yet the physician perpetrator cannot act in an isolated environment. Others in the enterprise have to lend a hand in some way. Why are they not also held responsible?

That was the question Deputy Attorney General Sally Yates answered in her landmark “Yates Memo” which announced that “Americans should never believe, even incorrectly, that one’s criminal activity will go unpunished simply because it was committed on behalf of a corporation.” This was the pronouncement made by Yates a day after she issued new guidance to Department of Justice (DOJ) attorneys outlining the importance of individual accountability in DOJ prosecutions.

Now a medical billing company has been penalized by federal authorities for participating in a fraudulent scheme along with its client physician.

In an unprecedented administrative action, the U.S. Department of Health & Human Services Office of the Inspector General (“HHS-OIG”) penalized a medical billing company for preparing and submitting claims to Medicare for diagnostic tests that were never conducted.

On July 1, 2016, OIG issued a letter to Susan Toy, the owner and operator of a New Jersey billing company, proposing to impose a civil money penalty and program exclusion on her, pursuant to the Civil Monetary Penalties Law.

On September 19, 2016 Toy entered into a $100,000 settlement agreement with HHS-OIG and agreed to be excluded from participation in federal health care programs for a minimum of five years under the Civil Monetary Penalties Law.

The medical billing company was responsible for preparing and submitting claims to Medicare on behalf of an OB-GYN practice based, in part, on “superbills” identifying the services purportedly performed during a patient encounter.

According to HHS-OIG, the billing company routinely added additional CPT codes to Medicare claims for unperformed services that the billing company knew were neither performed nor identified as performed on the superbill.

OIG contended that Toy prepared and submitted claims for Current Procedural Terminology code 91122 (anorectal manometry) for patient encounters where the procedure was neither performed nor identified as performed on the superbill.

It is important to note that billing companies have been subject to federal and state civil and criminal prosecution over their billing practices since the 1990s.

However, this is the first time HHS-OIG has imposed administrative sanctions against a billing company.

In announcing the settlement agreement, HHS-OIG spokesman Donald White noted that this first-of-its-kind penalty demonstrates that HHS-OIG expects “compliance throughout the full range of federal health care program processes.”