Happy new year.

2019 will be an interesting year in the health care fraud. Here is a short summary of the must watch cases of 2019.

Prosecution of Insys Therapeautics executives. Prosecutors claim CEO Michael Babich, chairman John Kapoor and four sales executives conspired to bribe doctors to prescribe the company’s powerful fentanyl painkiller spray. Prosecutors have brought racketeering charges against the defendants. Babich is set to pled guilty on January 9, 2019. The vice president of sales, Alec Burlakoff, pled guilty last month. The remaining defendants are gearing up for trial.

Prosecution of Two Former Tenet Hospital executives. Prosecutors claim that the two former executives of Tenet engaged in a scheme to accept kickbacks from the head of a clinic that served Hispanic immigrants. The case is hotly contested and there has been extensive litigation over the past two years. It looks like the case will finally go to trial in Atlanta this year.

$1 Billion Telemedicine Case. This case is out of Tennessee. It charges seven compounding pharmacies and four individuals and alleges a telemedicine scheme involving the submission of fraudulent prescriptions for reimbursement by private insurers. Interestingly, the prosecutors did not charge the doctors in this case and has identified them as victims.

In terms of appeals, United States v. Melgen is the case to watch. Melgen was convicted in a health care fraud conspiracy that alleged that the doctor performed medically unnecessary procedures on his patients, among other allegations. The appeal raises numerous issues. Two issues that have been raised and could have a big impact on other cases is whether the admission of statistical peer comparison evidence violated the Rules of Evidence and the Confrontation Clause and whether the court erred by not instructing the juror that the prosecution’s sampling of patients was not random. The issue of “sampling of patients” was hotly contested at trial. The defense claimed that the Government cherry picked the worst patients and didn’t use a statistician. I think this is a common practice by the government. Dr. Melgen is represented by Kirk Ogrosky at Arnold and Porter.

And last but not least, 2019 might be the year we finally get an opinion from the Eleventh Circuit in United States v. AseraCare. The Eleventh Circuit heard oral arguments in this case two years ago. The central issue in this case is whether, when two experts look at medical records and disagree about their meaning, a jury can side with one expert and deem billing fraudulent. A judge in Alabama decided that this type of evidence is insufficient to create FCA liability. This opinion impacts the defense of medical necessity prosecutions that usually revolve around a dispute amongst experts.

Sixth Circuit reversed a decision by the trial court to set aside guilty verdicts for health care fraud and making false statements of a federal jury. Opinion.

Dr. Paulus was a successful Kentucky cardiologist and the first in the nation for the total amount billed to Medicare for angiograms.

Government prosecuted Dr. Paulus alleging that he exaggerated the degree of patients’ stenosis or artery blockages and often claimed 70% blockage when in reality there was 40% or lower blockage. If an angiogram shows at least 70% blockage, the accepted standard of medical care allows a doctor to insert a stent with no further testing.

The trial lasted 27 days. The Government presented testimony of nine doctors. The Government’s experts acknowledged that the interpretations of angiograms could vary from one doctor to another.

Regardless, the jury convicted Dr. Paulus of ten counts of false statements and one count of health care fraud and acquitted on five counts of false statements.

The trial court reversed the guilty verdict and ordered a new trial. The trial court found that Dr. Paulus’ interpretations of angiograms – the images that allow doctors to determine whether patient’s artery has become dangerously narrow and in need of a stent – was a “subjective medical opinion, incapable of confirmation or contradiction.”

The Government appealed.

Sixth Circuit sided with the Government and reversed the trial court finding that “a doctor who deliberately inflates the blockage he sees on an angiogram has told a lie; if he does so to bill a more expensive procedure, then he has also committed fraud. Even state-of-the-art scientific measurements may sometimes be imprecise. But in these circumstances, it is up to the jury—not the court—to decide whether the government’s proof is worthy of belief.”

I think the concerns regarding the consequences of this decision are best summarized by the NACDL in its Amicus Brief filed in the case:

Overturning the judgment below would create a precedent allowing the government to obtain criminal convictions against physicians making difficult, highly subjective medical decisions primarily on the basis of the testimony of a single expert with a contrary view. At best, this type of evidence can establish good faith medical error or perhaps negligence, which Congress did not intend tocriminalize and are already appropriately dealt with by other legal means.

NACDL Amicus Brief.

 

Dr. Jorge Zamora-Quezada was arrested on Monday and charged with leading a $240 million health care fraud and money laundering scheme.  The Indictment charges one count of conspiracy to commit health care fraud, five counts of health care fraud, and one count of conspiracy to commit money laundering.

Dr. Zamora-Quezada is a rheumatology specialist practicing in the South Texas area.  The doctor operates various clinics focused on arthritis and osteoporosis.

The Indictment alleges that Dr. Zamora-Quezada engaged in a wide ranging scheme starting in 2000.  The scheme allegedly involved falsely diagnosing patients with a degenerative diseased and giving patients unneeded treatments.  The Indictment alleges, among other things, that Dr. Zamora-Quezada would falsely diagnosis patients with rheumatoid arthritis and then administer chemotherapy and other toxic medications.  The Indictment also alleges that the doctor and co-conspirators conducted and billed for a battery of fraudulent and repetitive procedures.

The Government claims that Dr. Zamora-Quezada tried to hide his scheme by dismissing patients that questioned his practices and by the creation of fake medical records.

The Government filed a motion seeking pretrial detention.  The motion requested pretrial detention based on Dr. Zamora-Quezada’s access to wealth, his private jet, his ties to Mexico, and his history of intimidating witnesses.  The motion describes the evidence against Dr. Zamora-Quezada, which includes patients that will testify against him and other doctors in the community that will say Dr. Zamora-Quezada was known for his practice of  falsely diagnosing patients.

The detention hearing was held today.  The court granted the Government’s motion for pretrial detention and remanded the doctor to the custody of the U.S. Marshals.  The final pretrial conference in the case is set for July 2, 2018.  The court further noted that it would announce the scheduled trial date soon.

Dr. Zamora-Quezada’s detention complicates trial preparation for the defense.  In health care fraud cases, it is imperative for doctor defendants to assist in reviewing patient records and participating in the creation of a defense.