Tag: 2013 News

A Carson woman has been sentenced to 156 months in federal prison in an $8 million Medicare fraud case in which she illegally paid kickbacks for referrals to patients whose beneficiary information was used to make bogus claims to the government health care program.

Uben Ogbu Rush, 54, received the 13-year sentence from United States District Judge George H. King. During the sentencing hearing, Judge King said Rush was motivated by greed and the lengthy sentence was necessary, in part, to send a message of deterrence to others who might commit crimes against Medicare.

Rush owned or controlled six companies that ostensibly sold durable medical equipment, such as motorized wheelchairs and powered pressure-reducing mattresses. The companies were located in Carson, Gardena, Torrance, and Paramount.

At a trial in November 2011, federal prosecutors showed a jury how Rush paid marketers to recruit Medicare beneficiaries who would allow their identities and Medicare numbers to be used for the submission of false claims. The evidence also showed how Rush paid kickbacks to marketers, who in turn paid kickbacks to doctors who fraudulently wrote prescriptions, even though the physicians had not examined the patients or an examination revealed that the medical equipment was not medically necessary.

During the course of a scheme that ran from 1999 until 2008, Rush submitted more than $15 million in fraudulent claims to Medicare seeking payment for motorized wheelchairs, hospital beds, air pressure mattresses, and other items for patients who did not need the equipment. Medicare paid more than $8.1 on the bogus claims.

A co-defendant in the case, Carlos Alberto Rezabala, 60, of Downey, was sentenced by Judge King in June 2012 to 41 months in federal prison. Rezabala was a recruiter who brought Medicare beneficiaries into the scheme so their information could be used to submit fraudulent bills.

Another co-defendant, Phitsamay Syvoravong, 58, of Orange County, another recruiter who brought Medicare beneficiaries into the scheme, is scheduled to be sentenced by Judge King on May 20.

A related defendant, Dr. Alfred Glover, 57, of Playa Vista, testified at trial that he was paid for writing fraudulent prescriptions for Medicare beneficiaries, many of whom he never saw. Glover is schedule to be sentenced on May 28.

The investigation into Rush and her Medicare fraud scheme was conducted by the Federal Bureau of Investigation.

CMS published a new 88-page reference guide for Workers’ Compensation Medicare Set-Asides (WCMSAs). The publication’s purpose is to serve as a reference guide for claimants, attorneys, WCMSA consultants and others by consolidating information from previous CMS WCMSA Regional Office (RO) Memorandums and other information on the CMS website. For more comprehensive information, readers are requested to continue to refer to the WCMSA RO Memorandums.

The format of the guide (with version numbers, version history and paragraph numbers) is structured to make it expandable for future updates. This guide is in response to users requests for CMS to provide clearer guidance on the WCMSA program.

This guide was written to help litigants understand CMS’ Workers’ Compensation Medicare Set – Aside Arrangement (WCMSA) amount approval process and to serve as a reference for those electing to submit such proposals to CMS for approval. Submitters of arrangements may include injured workers themselves, their attorneys, Workers’ Compensation Medicare Set-Aside Arrangement agents or consultants, or claimants’ other appointed representatives. This guide reflects information compiled from all WCMSA Regional Office (RO) Memorandums issued by CMS, and from information provided on the CMS website.

A WCMSA allocates a portion of the WC settlement for all future work injury related medical expenses that are covered and otherwise reimbursable by Medicare. When a proposed WCMSA amount is submitted to CMS for review and the individual or beneficiary obtains CMS’approval, the CMS – approved WCMSA amount must be appropriately exhausted before Medicare will begin to pay for care related to the beneficiary’s settlement, judgment, award, or other payment.

The goal of establishing a WCMSA is to estimate, as accurately as possible, the total cost that will be incurred for all medical expenses otherwise reimbursable by Medicare for work-related conditions during the course of the claimant’s life, and to set aside sufficient funds from the settlement, judgment, or award to cover that cost. WCMSAs may be funded by a lump sum or may be structured, such that a fixed amount of funds are provided each year for a fixed number of years.

Any claimant who receives a WC settlement, judgment, or award that includes an amount for future medical expenses must take Medicare’s interest with respect to future medicals into account.  If Medicare’s interests are not considered, CMS has a priority right of recovery against any entity that received a portion of a third party payment either directly or indirectly. Medicare may also refuse to pay for future medical expenses related to the WC injury until the entire settlement is exhausted. These arrangements are typically not created until the individual’s condition has stabilized so that it can be determined, based on past experience, what the future medical expenses may be.

Once the CMS-approved set-aside amount is exhausted and accurately accounted for to CMS, Medicare will pay primary for future Medicare-covered expenses related to the WC injury that exceed the approved set-aside amount.

To view the new WCMSA reference guide, click here.

On April 26, 2009, applicant Luis Enriquez was working on a farm when he was gored by a bull, ultimately resulting in his death. Mercy Air Services provided air ambulance services by airlifting Enriquez from the injury site to a hospital in Modesto, a distance of about 26 miles. Mercy billed Zenith in the amount of $11,132.93. Pursuant to AD Rule 9789.70(a), Zenith reimbursed Mercy in the amount of $4,756.42.

Administrative Director Rule 9789.70(a) provides, in relevant part, that “[t]he maximum reasonable fee for ambulance services rendered after January 1, 2004 shall not exceed 120% of the applicable fee for the Calendar Year 2004 set forth in CMS’s Ambulance Fee Schedule, which is established pursuant to Section 1834 of the Social Security Act (42 U.S.C. § 1395m) and applicable to California.” (Cal. Code Regs., tit.8, § 9789.70.)

The workers’ compensation judge concluded that, to the extent it purports to apply to air ambulance services covered by the federal Airline Deregulation Act of 1978 (“ADA”), AD Rule 9789.70 is preempted by federal law. The WCJ therefore found that “on April 26, 2009, [AD Rule 9789.70] did not apply to the provision of air ambulance services[,]” and that “lien claimant Mercy Air Services has established that the reasonable value of its services on behalf of defendant’s employee Luis Enriquez on April 26, 2009 is $11,132.93.” The WCJ ordered Zenith Insurance Company to pay that sum to Mercy.

Zenith petitioned for reconsideration in the case of Luis Enriquez (deceased) v Couto Dairy and Zenith Insurance Company, contending that (1) by making a substantive ruling on preemption, the WCJ exceeded his authority under the California Constitution; (2) the WCJ erred in concluding that AD Rule 9789.70 is preempted by the ADA; and (3) if the ADA preempts Rule 9789.70, it also preempts Labor Code section 4600, in which case Zenith allegedly “owes Mercy nothing.”

An amicus brief and request for an en banc decision was filed by California Shock Trauma Air Rescue and Reach Air Medical Services, two air ambulance companies who allege they have hundreds of pending lien claims similar to Mercy’s.

Article III, section 3.5(c) of the California Constitution declares that “[a]n administrative agency … has no power … [t]o declare a statute  unenforceable, or to refuse to enforce a statute  on the basis that federal law … prohibit[s] the enforcement of such statute  unless an appellate court has made a determination that the enforcement of such statute  is prohibited by federal law …” (Italics added.). The WCAB noted however that “it has no bearing on the Appeals Board’s ability to declare a regulation   preempted by federal law. This is because the provision refers only to an administrative agency’s lack of power “[t]o declare a statute unenforceable[.]” As further discussed below, we are finding preemption of AD Rule 9789.70, a regulation“.

However, the WCAB concluded that Mercy has the burden of showing that it is an air carrier subject to the provisions of the ADA. In order to be considered an “air carrier” under the ADA’s preemption provision, the air ambulance provider must show all of the following: (1) it is a “citizen of the United States undertaking by any means, directly or indirectly, to provide air transportation” (49 U.S.C. § 40102(a)(2); (2) it provides foreign, interstate, or mail transportation by air as a common carrier (49 U.S.C. § 40102(a)(5), (25));13 and (3) it is subject to regulation under 49 U.S.C. §§ 41101 et seq. (Med-Trans Corp., supra, 581 F.Supp.2d at 731-732.) Of course, air ambulance liens do not involve either foreign air transportation or the transportation of mail. Therefore, the essential question is whether the air ambulance “may provide” interstate air transportation.In this case, the record requires clarification as to whether Mercy is an “air carrier that may provide air transportation” within the meaning of the preemption provision of the ADA.

A federal qui tam whistle-blower lawsuit filed in 2008 by former University of California-Irvine (UCI) Professor and Anesthesiologist Dr. Dennis O’Connor triggered a multi-year investigation by the United States Department of Justice, resulting in an agreement by the California Board of Regents to pay the United States $1.2 Million.

The False Claims Act lawsuit alleged that anesthesia was routinely administered at UCI by Certified Registered Nurse Anesthetists (CRNAs) or residents when there was no supervisory anesthesiologist present or immediately available, in violation of federal regulations. The complaint alleged that, in many instances, the supervisory anesthesiologist would be in a completely different building at the time, and that anesthesia records would be “pre-filled” to make it appear that the anesthesiologist was present. The complaint also alleged that required post-operative evaluations would routinely be performed by unsupervised and/or unlicensed residents, in violation of federal regulations, increasing the likelihood that post-operative complications would be missed.

In the Settlement Agreement with UCI, the United States contended that “it has certain civil claims against the Regents arising out of … the submission of claims by or on behalf of the Regents for payment by the Medicare program and the federal portion of the Medicaid program for anesthesia services performed at UCI in a manner inconsistent with federal healthcare program documentation requirements for those services, or inconsistent with federal healthcare program payment requirements for supervision of residents or CRNAs.” The Regents agreed to pay $1.2 Million to the United States to resolve such claims. UC Regents denied the allegations.

According to the story in the Los Angeles Times, the UCI Medical Center had come under fire in the past for similar accusations. The medical center was placed under state supervision in 2008 because of the anesthesiology department’s “inability to provide quality healthcare in a safe environment,” according to a federal report. Among the most serious failings federal inspectors cited was filling out reports in advance of care.

In 2008, the California Medical Board accused the former head of the anesthesiology department, Peter Breen, of gross negligence and incompetence. Two years later, the medical board gave him a public reprimand for writing that a patient was “stable” and “comfortable” during each phase of the procedure before anesthesia had been administered. Breen was ordered to take ethics and medical record-keeping courses. He also was reprimanded by the Illinois Department of Professional Regulation. Breen, who remains at UCI, did not return phone calls or an email Wednesday.

The UCI statement said “new leadership took over and transformed” the anesthesiology department in 2008, putting in place new training and policies, including “an electronic record keeping system that does not permit the practices alleged.”

O’Connor, who now works at the Veterans Administration Hospital in Long Beach, remains wary of UCI Medical Center. “I won’t go there, and I wouldn’t take my family there,” he said.

The medical center has suffered a number of scandals in the last 18 years. In 1995, fertility doctors were accused of stealing patients’ eggs and embryos and implanting them in other women without permission. In 2005, the hospital shut its liver transplant program after federal funding was withdrawn. The action came after The Times reported that 32 people died awaiting livers, even as doctors turned down organs that later were transplanted elsewhere.

A federal government watchdog has issued a warning about the risk for fraud when doctors buy an ownership interest in a medical device distributor and then share in its profits from sales to hospitals.

In its March 20 report, the Department of Health and Human Services, Office of Inspector General issued a “Special Fraud Alert” that addresses physician-owned entities that derive revenue from selling, or arranging for the sale of, implantable medical devices ordered by their physician-owners for use in procedures the physician-owners perform on their own patients at hospitals or ambulatory surgical centers (ASCs).

These entities frequently are referred to as physician-owned distributorships, or “PODs.” A “POD” is any physician-owned entity that derives revenue from selling, or arranging for the sale of, implantable medical devices and includes physician-owned entities that purport to design or manufacture, typically under contractual arrangements, their own medical devices or instrumentation. Although this Special Fraud Alert focuses on PODs that derive revenue from selling, or arranging for the sale of, implantable medical devices, the same principles would apply when evaluating arrangements involving other types of physician-owned entities.

PODs are most commonly used in orthopedics.

Longstanding OIG guidance makes clear that the opportunity for a referring physician to earn a profit, including through an investment in an entity for which he or she generates business, could constitute illegal remuneration under the anti-kickback statute. The anti-kickback statute is violated if even one purpose of the remuneration is to induce such referrals.

OIG has repeatedly expressed concerns about arrangements that exhibit questionable features with regard to the selection and retention of investors, the solicitation of capital contributions, and the distribution of profits. Such questionable features may include, but are not limited to: (1) selecting investors because they are in a position to generate substantial business for the entity, (2) requiring investors who cease practicing in the service area to divest their ownership interests, and (3) distributing extraordinary returns on investment compared to the level of risk involved. PODs that exhibit any of these or other questionable features potentially raise four major concerns typically associated with kickbacks – corruption of medical judgment, overutilization, increased costs to the Federal health care programs and beneficiaries, and unfair competition. The OIG does not believe that disclosure to a patient of the physician’s financial interest in a POD is sufficient to address these concerns.

OIG is concerned about the proliferation of PODs. This Special Fraud Alert reiterates our longstanding position that the opportunity for a referring physician to earn a profit, including through an investment in an entity for which he or she generates business, could constitute illegal remuneration under the anti-kickback statute. OIG views PODs as inherently suspect under the anti-kickback statute.