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Specialized units target Medicare, Medicaid swindlers in Indiana

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Inside an unmarked building in a nondescript office park in Castleton is a burgeoning, multi-million-dollar legal enterprise. Its mission: cracking down on Medicaid fraud.

“This work is really a niche area; there are not a lot of people involved in it,” said Deputy Attorney General Allen Pope, who heads the 53-member Indiana Medicaid Fraud Control Unit’s 10 offices around the state that operate under the direction of the attorney general’s office. “Just the acronyms you have to learn is daunting.”

fraud-main-15col.jpg Assistant U.S. attorney Bradley Shepard in the Southern District of Indiana oversaw fraud cases that recovered more than $3 million in tax dollars in 2012. (IL Photo/ Dave Stafford)

Complex investigations that involve an array of agencies and local, state and federal law enforcement also must delicately balance patient care. Nevertheless, sums recovered from providers in Medicaid and Medicare fraud investigations have soared in recent years. For instance:

For 2012, through early December, the Indiana MFCU recovered more than $52 million, Pope said. That’s a record that compares to about $4 million when Pope came to the agency a decade ago.

According to the U.S. Department of Health and Human Services, the government has recovered a record $10.7 billion from Medicare and Medicaid fraud in the last three years.

Health care fraud cases can come from anywhere. Bradley Shepard, assistant U.S. attorney for the Southern District of Indiana, recalls a case that originated with a quality-control representative’s follow-up call to a Medicaid patient in a routine survey about care.

When the patient was unfamiliar with prescription medications for which Medicaid had been billed in the patient’s name, it raised suspicions that ultimately led to federal prison for Terre Haute pharmacist John D. Love. He was sentenced in October 2011 to 51 months for billing Medicaid more than $3.5 million for prescriptions that were never given to patients.

Love had billed for prescriptions that far exceeded the quantities his pharmacy received, investigators learned.

“I just find it very offensive,” Shepard said, discussing why he is so motivated to fight health care fraud. “For people to have their greed prey upon a system that’s based on purely good intentions, those individuals are due all the punishment they have coming to them.

“And I like the puzzle aspect of it,” he said.

For Medicaid program administrators at the state Family and Social Services Administration, the puzzle pieces come from analysis of billings using nearly three dozen algorithms designed to ferret out red flags in the multitude of individual claims filed for payment, explained audit manager Kim Forrest. A simple algorithm, for example, identifies claims for services provided after a patient’s date of death.

“We try to prevent money from going out the door, because it’s much harder to get it back once it’s gone out the door,” Forrest said.

Impact on patient care is a consideration, though. “We do that evaluation every time we make a payment decision,” she said.

FSSA takes charge of cases in which waste is found, and that can be for instances such as billing twice on the same day for payment of services allowed just once, program officials said. “Most of what we find is not fraud, it’s waste and abuse,” said Kristina Moorhead, deputy manager for program integrity for Medicaid planning at FSSA.

But the new health care law puts an emphasis on enforcement and puts the onus on the agency.

“The Affordable Care Act has done a few things – one is that we are required to submit credible allegations of fraud to the Medicaid Fraud Control Unit,” said Moorhead. Those can be from patient tips, those developed internally, or from whistleblowers.

What constitutes a “credible allegation” isn’t defined. “It’s a pretty light standard our office has to meet,” said Brandon Shirley, an attorney with the FSSA Office of General Counsel.

The Affordable Care Act also increased provider enrollment standards, requiring site visits for new providers and in other situations. “Between 20 and 30 providers were not enrolled in the past calendar year due to onsite visits,” Moorhead said.

A couple of times a month, FSSA officials who oversee Medicaid meet with MFCU representatives and other law enforcement to talk about possible cases and share information, including those credible allegations of fraud the agency is compelled to disclose.

U.S. Attorney for the Northern District of Indiana David Capp said the information sharing is invaluable. In his office, Medicaid and Medicare fraud cases are assigned to some of the most experienced attorneys.

Capp said health care fraud cases “have received substantial attention from us for quite some time. They’re high-priority prosecutions, and we work hand-in-hand with Attorney General (Greg) Zoeller on many of them, and I can’t say enough about the attorney general’s office. They’ve been instrumental in a number of prosecutions.”

The Northern District in 2012 won Medicare and Medicaid fraud judgments of $8.1 million, compared with less than $1.5 million a year earlier, according to spokeswoman Mary Hatton. Major convictions came in U.S.A. v. Human Services Transport Provider Inc., 3:11-CR-5. The Gary-based ambulance service defrauded Medicaid of $1.9 million, according to two guilty pleas in the case, and restitution of close to $2.5 million was ordered.

In that case, the ambulance company billed for services that weren’t provided, inflated mileage claims, and conspired to kick back some of the fraudulent revenue to another provider.

pope Pope

Often, people identify fraud with the anticipation that they might share in the reward for doing so. “Ninety percent of the people are whistleblowers,” Pope said of those who initiate MFCU investigations.

Such cases have been enabled by Indiana’s False Claims Act, I.C. 5-11-5.5. Passed in 2005, the act allows qui tam claims in which whistleblowers may be eligible to collect 10 to 30 percent of tax money recovered by the government. “The truth is at this time we have multiple whistleblowers in the cases that get settled,” Pope said.

The dollars coming in this year are the result of investigations that began years earlier, he said. Whistleblower cases can take as long as eight years to conclude because of the amount of discovery required and the complexity of the cases.

Several multi-million-dollar settlements of late involve “off-label” marketing of pharmaceuticals – medications sold for treatments other than those the drugs have been approved for by the Food and Drug Administration, Pope said. Whistleblowers were key to those cases.

One of the most prevalent fraud schemes Shepard described is “upcoding” – vendors billing for procedures, products or services costlier than those provided. But he said it’s not easy to get jury convictions based on billing-code patterns found in reams of documents in Bankers Boxes worth of evidence.

“Sometimes the investigation is a lot easier than coming up with a compelling way to take it to the jury and make it make sense,” Shepard said. Nonetheless, he’s personally overseen cases in 2012 that resulted in recovery of more than $3 million in tax dollars. The total of recovery in Medicaid and Medicare fraud cases for all of the Southern District was not available.

For all the information sharing that’s led to a spike in recoveries and criminal penalties, Pope said there’s more that he and others in the field would like to be able to do. Currently, Medicaid Fraud Control Units are prohibited from independent claims analysis without referrals from the administrative agency – in Indiana’s case, FSSA.

“For 10 years it’s been a matter of discussion (nationally among MFCU officials) because it does make sense” to have greater independent investigative authority, Pope said. “When we have a particular suspected pattern of fraud, we’d like to have the ability to do that.”•

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  1. I have been on this program while on parole from 2011-2013. No person should be forced mentally to share private details of their personal life with total strangers. Also giving permission for a mental therapist to report to your parole agent that your not participating in group therapy because you don't have the financial mean to be in the group therapy. I was personally singled out and sent back three times for not having money and also sent back within the six month when you aren't to be sent according to state law. I will work to het this INSOMM's removed from this state. I also had twelve or thirteen parole agents with a fifteen month period. Thanks for your time.

  2. Our nation produces very few jurists of the caliber of Justice DOUGLAS and his peers these days. Here is that great civil libertarian, who recognized government as both a blessing and, when corrupted by ideological interests, a curse: "Once the investigator has only the conscience of government as a guide, the conscience can become ‘ravenous,’ as Cromwell, bent on destroying Thomas More, said in Bolt, A Man For All Seasons (1960), p. 120. The First Amendment mirrors many episodes where men, harried and harassed by government, sought refuge in their conscience, as these lines of Thomas More show: ‘MORE: And when we stand before God, and you are sent to Paradise for doing according to your conscience, *575 and I am damned for not doing according to mine, will you come with me, for fellowship? ‘CRANMER: So those of us whose names are there are damned, Sir Thomas? ‘MORE: I don't know, Your Grace. I have no window to look into another man's conscience. I condemn no one. ‘CRANMER: Then the matter is capable of question? ‘MORE: Certainly. ‘CRANMER: But that you owe obedience to your King is not capable of question. So weigh a doubt against a certainty—and sign. ‘MORE: Some men think the Earth is round, others think it flat; it is a matter capable of question. But if it is flat, will the King's command make it round? And if it is round, will the King's command flatten it? No, I will not sign.’ Id., pp. 132—133. DOUGLAS THEN WROTE: Where government is the Big Brother,11 privacy gives way to surveillance. **909 But our commitment is otherwise. *576 By the First Amendment we have staked our security on freedom to promote a multiplicity of ideas, to associate at will with kindred spirits, and to defy governmental intrusion into these precincts" Gibson v. Florida Legislative Investigation Comm., 372 U.S. 539, 574-76, 83 S. Ct. 889, 908-09, 9 L. Ed. 2d 929 (1963) Mr. Justice DOUGLAS, concurring. I write: Happy Memorial Day to all -- God please bless our fallen who lived and died to preserve constitutional governance in our wonderful series of Republics. And God open the eyes of those government officials who denounce the constitutions of these Republics by arbitrary actions arising out capricious motives.

  3. From back in the day before secularism got a stranglehold on Hoosier jurists comes this great excerpt via Indiana federal court judge Allan Sharp, dedicated to those many Indiana government attorneys (with whom I have dealt) who count the law as a mere tool, an optional tool that is not to be used when political correctness compels a more acceptable result than merely following the path that the law directs: ALLEN SHARP, District Judge. I. In a scene following a visit by Henry VIII to the home of Sir Thomas More, playwriter Robert Bolt puts the following words into the mouths of his characters: Margaret: Father, that man's bad. MORE: There is no law against that. ROPER: There is! God's law! MORE: Then God can arrest him. ROPER: Sophistication upon sophistication! MORE: No, sheer simplicity. The law, Roper, the law. I know what's legal not what's right. And I'll stick to what's legal. ROPER: Then you set man's law above God's! MORE: No, far below; but let me draw your attention to a fact I'm not God. The currents and eddies of right and wrong, which you find such plain sailing, I can't navigate. I'm no voyager. But in the thickets of law, oh, there I'm a forester. I doubt if there's a man alive who could follow me there, thank God... ALICE: (Exasperated, pointing after Rich) While you talk, he's gone! MORE: And go he should, if he was the Devil himself, until he broke the law! ROPER: So now you'd give the Devil benefit of law! MORE: Yes. What would you do? Cut a great road through the law to get after the Devil? ROPER: I'd cut down every law in England to do that! MORE: (Roused and excited) Oh? (Advances on Roper) And when the last law was down, and the Devil turned round on you where would you hide, Roper, the laws being flat? (He leaves *1257 him) This country's planted thick with laws from coast to coast man's laws, not God's and if you cut them down and you're just the man to do it d'you really think you would stand upright in the winds that would blow then? (Quietly) Yes, I'd give the Devil benefit of law, for my own safety's sake. ROPER: I have long suspected this; this is the golden calf; the law's your god. MORE: (Wearily) Oh, Roper, you're a fool, God's my god... (Rather bitterly) But I find him rather too (Very bitterly) subtle... I don't know where he is nor what he wants. ROPER: My God wants service, to the end and unremitting; nothing else! MORE: (Dryly) Are you sure that's God! He sounds like Moloch. But indeed it may be God And whoever hunts for me, Roper, God or Devil, will find me hiding in the thickets of the law! And I'll hide my daughter with me! Not hoist her up the mainmast of your seagoing principles! They put about too nimbly! (Exit More. They all look after him). Pgs. 65-67, A MAN FOR ALL SEASONS A Play in Two Acts, Robert Bolt, Random House, New York, 1960. Linley E. Pearson, Atty. Gen. of Indiana, Indianapolis, for defendants. Childs v. Duckworth, 509 F. Supp. 1254, 1256 (N.D. Ind. 1981) aff'd, 705 F.2d 915 (7th Cir. 1983)

  4. "Meanwhile small- and mid-size firms are getting squeezed and likely will not survive unless they become a boutique firm." I've been a business attorney in small, and now mid-size firm for over 30 years, and for over 30 years legal consultants have been preaching this exact same mantra of impending doom for small and mid-sized firms -- verbatim. This claim apparently helps them gin up merger opportunities from smaller firms who become convinced that they need to become larger overnight. The claim that large corporations are interested in cost-saving and efficiency has likewise been preached for decades, and is likewise bunk. If large corporations had any real interest in saving money they wouldn't use large law firms whose rates are substantially higher than those of high-quality mid-sized firms.

  5. The family is the foundation of all human government. That is the Grand Design. Modern governments throw off this Design and make bureaucratic war against the family, as does Hollywood and cultural elitists such as third wave feminists. Since WWII we have been on a ship of fools that way, with both the elite and government and their social engineering hacks relentlessly attacking the very foundation of social order. And their success? See it in the streets of Fergusson, on the food stamp doles (mostly broken families)and in the above article. Reject the Grand Design for true social function, enter the Glorious State to manage social dysfunction. Our Brave New World will be a prison camp, and we will welcome it as the only way to manage given the anarchy without it.

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