A doctor (Defendant 1) and a clinic employee (Defendant 2) were found guilty by a federal jury for receiving illegal kickbacks after ordering unnecessary lab tests and prescriptions, US Attorney Alamdar S. Hamdani announced on March 1, 2024. The defendants were found guilty of conspiracy to commit healthcare fraud, healthcare fraud, and conspiracy to violate the Anti-Kickback Statute following a two-week trial. Defendant 2 was also convicted for aggravated identity theft.
Defendant 1 is the owner and physician at a Texas medical clinic. He would travel to adult daycare centers around the Rio Grande Valley ordering unnecessary lab tests and prescriptions for the elderly and vulnerable clients who were spending time there. Defendant 2, a medical assistant at the clinic, assisted him in the scheme, helping to forge patient signatures on consent forms and misappropriate expensive patient medications such as pain creams. Among other things, Defendant 2 would strip off the patient information and remove the creams from their boxes so that she could hand them out as “goodie bags” to incentivize patients to be tested.
From January 2016 to December 2017, the defendants ordered unnecessary lab tests and prescriptions which resulted in millions of dollars in losses. They directed those prescriptions and tests to companies who then paid them in kickbacks. In June 2018, law enforcement executed a search warrant at the medical clinic and found stolen medications worth hundreds of thousands of dollars.
The defendants also bribed their way into the adult daycare facilities by offering kickbacks to the adult daycare owners disguised as “rent” payments. Evidence revealed that both received tens of thousands of dollars in kickbacks from January 2016 to December 2017.
Defendant 1 attempted to convince the jury that the payments he received were legitimate “rent” payments for the use of space, and that Defendant 2 had ordered all the prescriptions and lab tests without his consent. Defendant 2’s defense argued that she was doing what Defendant 1 had taught her and was following orders. Defendant 2 also denied committing any forgeries. The jury did not believe either of them and found both guilty as charged.
Compliance Perspective
Issue
The Anti‑Kickback Statute prohibits offering or paying remuneration to induce the referral of items or services covered by Medicare, Medicaid, and other federally funded healthcare programs. Under federal and state anti-kickback statutes, you may not knowingly and willfully offer, pay, solicit, or receive anything of value to induce or reward for referrals of federal or state healthcare program business. The prohibition against kickbacks applies to those who pay for referrals and to those who receive them. Kickbacks can take various forms, such as bribes or rebates. Failure to promptly report a kickback can result in lawsuits, fines, and other sanctions. Federal and state regulations prohibit anyone, including facility staff, volunteers, visitors, family members, or other residents, from exploiting or misappropriating a resident’s funds or personal property, including prescribed medications. Facilities are obligated to report any allegations of misappropriation or exploitation to the State Agency and local authorities. Violations of these rules, including misappropriation of residents’ medications, fall under F602 Free from Misappropriation/Exploitation.
Discussion Points
- Review policies and procedures for preventing and reporting an anti-kickback violation. Also review your policies on misappropriation of residents’ belongings or funds, to include medications, and ensure that they meet all federal and state requirements. Update your policies and procedures as needed.
- Train all staff on federal and state anti-kickback statutes and what can be considered a kickback. Include information on how to report concerns and suspected violations, and make sure staff know that prompt reporting is mandatory. Also, train appropriate staff on actions that can be taken to prevent, identify, and respond to any suspicion of drug diversion, and what should be done if it occurs. Document that the training occurred, and place the signed document in each employee’s education file.
- Periodically audit staff understanding to ensure that they are aware of what should be done if they suspect an illegal kickback has occurred, whether intentionally or unintentionally. Conduct audits of documentation and billing routinely to prevent and detect errors before they progress to a false claim. Routinely audit to ensure that all controlled substances are accounted for each shift, and that proper documentation of all controlled substances has occurred.
*This news alert has been prepared by Med-Net Concepts, LLC for informational purposes only and is not intended to provide legal advice.*
