U.S. attorney to attack fraud in health care

Sept. 21--Last week a Detroit doctor pleaded guilty to eight-figure fraud in his chemotherapy practice, and a Los Angeles ambulance company manager confirmed in court that he charged the government for millions of dollars in unnecessary trips.

In Pittsburgh, U.S. Attorney David Hickton put the finishing touches on a plan to probe health care fraud that could bring more such prosecutions to the U.S. Courthouse, Downtown.

Mr. Hickton is ramping up a team of four assistant U.S. attorneys -- backed by the FBI -- whose primary focus will be fighting crime in the medical industry. He's asking the Department of Health and Human Services Office of the Inspector General to station investigators in Pittsburgh, as it has done in other big medical markets.

"Health care funding is supposed to be spent on making people better. It's not supposed to go to fraudsters," Mr. Hickton told the Pittsburgh Post-Gazette last week.

"This is not about taking the resources of the federal government and going after small ball fraud," he added. "This is a huge commitment of resources to something that I feel very strongly about."

The initiative makes his office an instant factor in a contentious industry -- one in which just this year a Highmark affiliate reported a kickback issue in its own system, and that insurer sued UPMC, accusing it of systematic overbilling.

"We always are cautious about allowing two combatants in a civil dispute to try to draw us into that," Mr. Hickton said, adding that if anyone brings to light "a valid example of fraud, we're going to follow it."

Both UPMC and Highmark welcomed his plans.

"If we're trying to control costs at all levels, it makes sense to do that," said Melissa Anderson, executive vice president, chief auditor and compliance officer for Highmark Health.

In an environment of limited resources, "health care fraud hurts us all and we all have an interest in and a responsibility to weed out fraud, so we welcome additional resources that target fraud on government programs, our health plans and our patients," wrote UPMC spokeswoman Gloria Kreps.

"UPMC commits substantial resources to monitoring our billing and other financial interactions with payers and patients to avoid mistakes, and correct them if they are discovered after the fact," she continued. "We hope the new federal resources will be deployed judiciously in [a] manner that carefully distinguishes between mistakes and the fraudulent practices they were designed to combat."

X-ray vision

Health care fraud investigation and prosecution isn't a complete novelty in Pittsburgh.

Former X-ray technician Randall F. Guzik, 49, of Monongahela, is in federal prison in Morgantown, serving a three-year sentence for health care fraud after he billed insurers $550,000 for services that never occurred. He was prosecuted by Assistant U.S. Attorney Nelson Cohen, who has been the office's health care fraud specialist.

Joining Mr. Cohen is Robert Cessar, who last year led the probe of the city of Pittsburgh and convicted its police chief. Transitioning into the team as he finishes the last of more than 100 mortgage fraud prosecutions is Brendan Conway. Overseeing the effort to sue over fraud is Civil Division Chief Michael Comber.

Targets will include those who bill Medicare or Medicaid for services they don't provide or who conduct and charge for unnecessary treatments, he said. The team also will be looking for kickbacks, billings for unwarranted narcotics, and a practice called upcoding, when services are mischaracterized to justify higher charges.

This month Highmark sued UPMC, alleging upcoding in its chemotherapy billing. UPMC called that lawsuit "a meritless attack on a reimbursement system Highmark itself designed and endorsed."

In March, West Penn Allegheny Health System, now controlled by Highmark, agreed to pay the federal government $1.53 million. West Penn told the U.S. attorney's office about below-market leases it offered to doctors, which the prosecutors concluded would violate laws barring kickbacks and self-dealing in federally funded health care.

Mr. Hickton predicted that the creation of his new team will prompt more self-reporting of questionable practices but added that he won't be depending on the honor system.

"It is really not about sitting and waiting" for cases, he said. His office, he said, is combing health care data for Western Pennsylvania, looking for anomalies that might suggest fraud.

"We're going to be, in a very short while, delivering a series of very good health care fraud cases," he said.

"He's insinuating, of course, that they're not just going for mom and pops," said Valarie K. Blake, a visiting assistant professor of health law at Duquesne University.

The area's health care giants, though, would be hard targets. "Bigger organizations have more resources to evaluate their practices, try to prevent these kinds of accidental infractions, and to catch them and self-report," Ms. Blake said.

The FBI, which has long pursued health care fraud nationally, won't be restructuring its Pittsburgh staff but is "encouraged by these changes" at Mr. Hickton's office, Patrick Fallon, assistant special agent in charge, said.

The Department of Health and Human Services has access to $350 million in new fraud-fighting resources over 10 years, allocated through the Affordable Care Act. It participates with the Department of Justice in a Medicare Fraud Strike Force that works in nine cities -- but not in Pittsburgh.

Mr. Hickton said the investigative arm of Health and Human Services is helping out from its Philadelphia office but could do more.

"We still don't have a resident, dedicated [Health and Human Services investigative] team in Western Pennsylvania," Mr. Hickton said. "I have asked [the department's Office of Inspector General] to put some staff here in Pittsburgh."

The Health and Human Services Office of Inspector General did not respond to a request for comment.

The Philadelphia model

Mr. Hickton noted Eastern Pennsylvania's federal prosecutors -- along with those in South Florida, New Jersey, Eastern Michigan and the Western District of Virginia -- as models of health care fraud prosecution.

Philadelphia-based U.S. Attorney Zane David Memeger has taken action against nine ambulance companies, numerous doctors and pharmaceutical companies, raking in huge recoveries of fraudulent gains.

Last year, pharmaceutical giant Johnson & Johnson agreed to pay $2.2 billion to settle whistleblower lawsuits backed by Mr. Memeger's office and federal investigators that accused it of paying kickbacks and illegally marketing anti-psychotic drugs. In May, a Philadelphia-based federal judge sentenced a hospice owner to 14 years in prison and ordered $16.2 million in restitution following a guilty verdict on accusations of massive fraud against Medicare.

Mr. Hickton said he'll also be "very aggressive in getting back dollars for the American taxpayers."

This month his office filed court motions to seize $754,000 related to Greensburg-based Universal Oral Fluid Laboratories, $40,000 from Altoona-area pain clinic owner John Johnson, and the 1999 Bentley Azure owned by Jeffrey Alan Thomas of Aliquippa, all characterized as participants in a kickback arrangement.

Ms. Anderson said that an estimated $230 billion per year is lost nationally through health insurance fraud.

Highmark uses data analytics to study all of the claims submitted, including those from its Allegheny Health Network. This year, the insurer is on pace to recover $100 million from vendors who overbilled, Ms. Anderson said. That's roughly twice what it recovered in 2012.

Mr. Hickton's efforts should be broadly welcomed, Ms. Blake said. "I think in the environment that we are currently in, in terms of health reform in our country, the one area that most of the public can agree on is that we want to target fraudulent and wasteful practices," she said.

Torsten Ove: tove@post-gazette.com or 412-231-0132. Rich Lord: rlord@post-gazette.com, 412-263-1542 or Twitter @richelord.

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