An Arizona couple pleaded guilty to causing more than $1.2 billion in false and fraudulent Medicare and health insurance claims for unnecessary wound grafts applied to elderly and terminally ill patients.
Court documents reveal that the couple, both from Phoenix, orchestrated a large-scale scheme. The wife ran two companies that employed untrained “sales representatives” to find elderly patients, including hospice patients, with wounds at any stage. These representatives were instructed to order amniotic wound grafts, often in sizes much larger than needed, to maximize insurance reimbursements.
The wife received over $279 million in illegal kickbacks from the graft distributor and paid millions to the sales representatives in return. She then referred patients to her husband’s company, which contracted with nurse practitioners to apply the grafts. The husband’s company fraudulently billed Medicare, TRICARE, CHAMPVA, and commercial insurers for the grafts.
Despite having no medical training, the couple directed nurse practitioners to apply grafts without regard for medical necessity, leading to applications on infected, healed, or unresponsive wounds. From November 2022 to May 2024, the couple and their associates submitted $1.2 billion in false claims, including over $960 million to federal programs like Medicare, TRICARE, and CHAMPVA. The insurers paid out $614.99 million based on these claims.
In their plea agreements, the couple agreed to pay restitution totaling $1.22 billion and forfeit over $410 million in fraudulent gains. To date, nearly $100 million in assets, including bank balances over $68 million, luxury vehicles worth nearly $1 million, and other valuables, have been seized by the government.
Compliance Perspective
Issue
Submitting false or fraudulent claims to Medicare, Medicaid, or other healthcare programs is illegal. This includes falsifying documentation, failing to provide documented care, or engaging in kickback schemes that incentivize referrals for services. Both federal and state laws prohibit offering or receiving financial incentives for referrals, and violating these laws can lead to significant legal consequences, including lawsuits, fines, and sanctions. Additionally, improper accounting and failure to maintain proper checks and balances in financial transactions can jeopardize the protection of assets and the integrity of healthcare operations.
Discussion Points
- Ensure that policies and procedures address the prevention of fraudulent billing, falsified documentation, and kickbacks. This includes guidelines for detecting and preventing billing for services not provided and the prohibition of financial incentives for patient referrals. Regularly review and update policies to comply with federal and state regulations, and ensure that staff understand how to report any suspicious activities.
- Provide training for staff on relevant policies and procedures, particularly regarding the standards of care, accurate documentation, and compliance with legal requirements. Staff should be trained upon hire and annually thereafter on their responsibility to report fraud, waste, or abuse of funds, as well as the specifics of anti-kickback statutes. Additionally, accounting and billing staff should be trained to identify and report suspicious behavior, including recognizing fraudulent claims.
- Conduct routine audits of medical records, billing documentation, and financial accounts to ensure the accuracy and completeness of entries and to detect any signs of fraud or misappropriation. This should include regular reviews of claims and financial transactions to verify that all actions comply with legal and regulatory standards. Audits should also assess whether staff are correctly reporting violations and whether appropriate checks and balances are in place to prevent fraudulent activities.
*This news alert has been prepared by Med-Net Concepts, Inc. for informational purposes only and is not intended to provide legal advice.*
