Types of Qui Tam Cases


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Healthcare Fraud

While many Medicare and Medicaid processing and/or payment errors are simple mistakes and are not the result of physicians, providers, or suppliers trying to take advantage of the Medicare/Medicaid payment system, unfortunately, with increased government spending on healthcare and the ease with which the government pays Medicare and Medicaid claims, more and more individuals and entities who provide healthcare services and equipment are intent on abusing and defrauding the system, and cheating these programs (and in some cases the people with Medicare and Medicaid who are liable for co-payments) out of billons of dollars annually. Medicare and Medicaid fraud is one of the big reasons why government spending on healthcare is out of control.

Qui Tam relators have been instrumental in uncovering these massive frauds and holding wrongdoers financially accountable to the government and taxpayers. Qui tam suits under federal, state, and city (in the case of New York City and Chicago) false claims acts can be brought to combat violations made by health care providers including pharmaceutical companies, hospitals, health maintenance organizations, medical marketing firms, nursing homes, long-term care facilities, pharmacies, group purchasing organizations, physician practice management groups, among others. Some common schemes perpetrated by health care fraudsters include, but are not limited to:

Over the course of the last decade, EA Qui Tam lawyers have represented clients in a wide-array of cases involving DRG fraud, upcoding, unbundling, DME overbilling, hospice fraud, home health care fraud, and ambulance service fraud, among others, in cases brought against some of the nation’s largest healthcare service providers.

In addition, EA healthcare fraud lawyers have litigated numerous cases under the federal Stark law (“physician self-referral law”), 42 U.S.C. §1395nn, and the federal Anti-kickback statute, 42 U.S.C. § 1320a-7b(b), federal criminal laws that can be used to form the basis of claims under the False Claim Act and to attack improper and self-interested referrals and the payment of kickbacks relating to medical services and supplies paid for by Medicare or Medicaid.


HCPCS Codes, Healthcare Common Procedure Coding System numbers, are the codes used by Medicare and monitored by the Centers for Medicare and Medicaid Services (“CMS”). HCPCS Codes are based on Current Procedural Technology (“CPT”) codes which are developed by the American Medical Association (“AMA”). CPT codes are also developed, maintained and copyrighted by the AMA. As the practice of health care changes, new codes are developed for new services, current codes may be revised, and old, unused codes are discarded. Thousands of codes are in use, and they are updated annually.

HCPCS Codes are numbers assigned to every task and service a medical practitioner may provide to a Medicare patient including medical, surgical and diagnostic services. Since everyone uses the same codes to mean the same thing, they ensure uniformity. For example, no matter what doctor a Medicare patient visits for a flu shot, (code 90658) that doctor will be paid by Medicare the same amount another doctor in that same geographic region would be.

There are actually two sets of HCPCS codes. The first set, HCPCS Level I, are based on and identical to CPT codes, the codes developed by the American Medical Assocation. Level II HCPCS codes are used by medical suppliers other than physicians, such as ambulance services or durable medical equipment. These are typically not costs that get passed through a physician’s office so they must be dealt with by Medicare or Medicaid differently from the way a health insurance company would deal with them.

In many cases HCPCS codes are bundled such that a particular code includes several tests or services. For example, an AHP Panel is assigned HCPCS code number 80074. This code includes four (4) component tests. Although each of the above referenced individual tests is assigned a separate HCPCS code, when these tests are performed as part of an AHP Panel, CMS requires that they be bundled and billed under a single code as set forth above.

Unfortunately, another method used by some healthcare providers to defraud the Medicare and Medicaid programs is by what is commonly referred to as the “unbundling” or “exploding” of HCPCS codes. “Unbundling” or “exploding” refers to a billing procedure where a test or component of the “bundled” test performed is billed separately to Medicare or Medicaid in order to obtain improperly a higher payment from government payors than the amount permitted.

In order to effectively make a case for “unbundling” or “exploding” of HCPCS codes, relator’s counsel must be familiar with the vast web of codes and the manner and method by which they are used in the healthcare field. For example, in some limited circumstances, unbundling may take place but the government does not suffer any damage due to certain services being covered under what are known as DRG (Diagnostic Related Group) charges. EA attorneys have litigated numerous qui tam suits involving the misuse and abuse of HCPCS codes and, as such, are intimately familiar with the complex web of data and information necessary to bring a successful False Claims Act case.

Anti-Kickback Statute(“AKS”)

The Medicare and Medicaid Patient Protection Act of 1987, is codified at 42 U.S.C. §1320a-7b. Congress enacted the AKS to provide for criminal penalties for the payment of remuneration designed to induce or reward medical referral decisions involving services or treatments covered by Medicare and Medicaid. Although payment of such remuneration

Of primary concern is the section of the statute which prohibits the offer or receipt of certain remuneration in return for referrals for or recommending purchase of supplies and services reimbursable under government health care programs. The AKS is a felony offense that carries with it penalties of imprisonment of up to five years, fines, and mandatory exclusion from federal health care programs. The AKA also provides for administrative remedies, authorizing the Office of Inspector General of Health and Human Services to impose a civil monetary penalty and seek to exclude any provider which it determines has violated the Act. The AKS is an extremely broad statute, covering everything from volume-based discounts to physician referrals. Health care providers are vulnerable to liability under the AKA unless the conduct falls into one of the statutory or regulatory “safe harbors.”

While the AKS does not contain a private right of action, qui tam plaintiffs have been successful in bringing claims under the False Claims Act based upon violations of the AKS Under this theory, a claim to the government is rendered “false” for purposes of the FCA if the medical services or items were furnished in violation of the AKS notwithstanding the fact that the services or items provided were themselves appropriate and proper. The seminal cases on this issue are United States ex rel. Pogue v. American Heatlhcorp and United States ex rel. Thompson v. Columbia/HCA Healthcare Corporation.

The Stark Law

The Stark governs and limits physician self-referral for Medicare and Medicaid patients. The law is named for United States Congressman Pete Stark, who sponsored the initial bill. The Stark Law was actually enacted in 3 parts, commonly known as Stark I, Stark II, and more recently Stark III. Stark I applied to referrals of Medicare patients for clinical laboratory services made on or after January 1, 1992 by physicians with a prohibited financial relationship with the clinical lab provider. In 1993, Congress amended the Stark Statute, Stark II, to cover referrals for ten additional designated health services. Stark II applied to patient referrals by physicians with a prohibited financial relationship for the following ten additional “designated health services”: (1) inpatient and outpatient hospital services; (2) physical therapy; (3) occupational therapy; (4) radiology; (5) radiation therapy (services and supplies); (6) durable medical equipment and supplies; (7) parenteral and enteral nutrients, equipment and supplies; (8) prosthetics,orthotics and prosthetic devices and supplies; (9)outpatient prescription drugs; and (10) home health services. See 42 U.S.C. § 395nn(h)(6).

The Stark Law prohibits hospitals or other healthcare providers who bill Medicare for certain designated equipment or services from receiving payments or other consideration (or “kickbacks”) from physicians who have an improper “financial relationship” with the hospital or other covered provider. In other words, covered health care providers cannot submit claims for items or services referred by physicians who have improper financial relationships with the providers of the items or services. The Starks Law was enacted because improper financial relationships between physicians and other covered health care providers were found to have clouded many physicians’ professional judgment with regard to whether an item or service is medically necessary, safe, or effective. The Stark Law was enacted to reduce overpayments by Medicare for such questionable utilization of services.

There are numerous exceptions or “safe harbors” that allow certain payment arrangements between physicians and hospitals or other covered healthcare entities. For example, referrals made pursuant to bona fide employment relationship may be considered proper under the Stark Law, but only if the amount of the remuneration under the employment is consistent with the fair market value of the services, and is not determined in a manner that takes into account (directly or indirectly) the volume or value of any referrals by the referring physician. Likewise, compensation paid to a referring physician serving as a consultant to a physician or practice group may fall within an exception to the statute but only if a written contract specifies the services covered, covers all the services to be provided by the physician, and the aggregate of such services is reasonable and necessary for the legitimate business purposes of the paying physician or practice and is consistent with fair market value for services actually rendered, not taking into account the volume or value of the referrals or other business generated between the parties.

Another example would be the leasing of office space by a hospital to a physician or physician practice group. These arrangements may be proper, but only if the rent over the term of the lease is consistent with fair market value and is not determined in a way that takes into account the volume or value of referrals or other business generated between the parties. Likewise, payments made to a referring physician for lease of equipment owned by the physician or practice group may be considered proper under the Stark Law, but only if the amount paid by the physician or practice group for lease of the equipment is consistent with fair market value and is not determined in a way that takes into account the volume or value of referrals or other business generated between the parties.

Stark Law violations are serious as they can bar offenders from further participation in federal health care programs and can result in substantial financial damages as the Stark Law can be used to form the basis of a qui tam suit under the federal False Claim Act.