The case of David Hobart Payne, a former orthopedic surgeon from Orange County, California, recently brought to light a corrupt kickback scheme involving multiple physicians that resulted in over $500 million in medical bills.
The Deceptive Nature of Kickback Schemes
Payne was found guilty of accepting bribes and kickbacks totaling more than $315,000 for performing spinal surgeries at a now-defunct Long Beach hospital. As a result, the Court sentenced Payne to 33 months in prison, including a $20,000 fine and forfeiture of $316,597 in ill-gotten gains. The hospital's owner, Michael Drobot, was also imprisoned for workers' compensation insurance fraud.
This case is particularly alarming because Payne disguised these bribes as payments for marketing services, making it difficult for authorities to detect the illicit nature of the scheme. Moreover, prosecutors emphasized the harm caused to patients who may now question the necessity of their surgeries and the quality of the medical hardware used in their procedures.
Government Crackdown on Healthcare Fraud
The US Attorney's Office for the Central District of California called this case "an affront to the integrity of our healthcare system." It warned that physicians engaging in this behavior will be held accountable. They also stated they would continue investigating and prosecuting any individuals or entities involved in kickback schemes and medical fraud.
In addition, the Department of Justice is working with the Centers for Medicare and Medicaid Services to ensure that taxpayer funds are not misused. As part of their efforts, CMS has implemented new regulations on physician payments, which require detailed documentation for all payments made to physicians.
Watch the video below to learn what a kickback is and why its bad for healthcare.
Recent Cases of Healthcare Fraud
Gold Coast Health Plan and three providers in California have to pay $70.7 million to settle accusations of submitting false claims to California's Medicaid program. Submitting false claims violates both the False Claims Act and the California False Claims Act. The claims were related to the Medicaid Adult Expansion under the Patient Protection and Affordable Care Act.
Similarly, in December 2019, the Department of Justice announced that two Florida healthcare companies and their affiliated providers would pay $18 million to resolve allegations of submitting false claims for medically unnecessary services. Accusations against the companies included providing unnecessary orthotic bracing devices and physical therapy to Medicare beneficiaries.
Read Payne's Notice of Provider Suspension – Workers' Compensation below
Importance of Transparency and Accountability in Healthcare
These cases demonstrate the Department of Justice's commitment to protecting taxpayers from fraud and abuse in the healthcare system. They also remind physicians of their ethical obligations when taking payments from patients or other entities. Physicians must ensure that any payments they accept are for legitimate medical services and not part of a kickback scheme.
Increased Oversight to Prevent Fraud
In response to the growing demand for transparency and accountability in healthcare, the government has implemented more stringent regulations and increased monitoring of medical payments, especially those made to physicians. Newly enrolled hospices or existing hospices in four specific states that change ownership (CHOW) on or after July 13, 2023, will receive enhanced oversight by CMS for 30 days to one year, including medical review such as prepayment review.
This increased oversight aims to ensure that all financial transactions within the healthcare sector are conducted with the utmost integrity and per established regulatory guidelines. Furthermore, healthcare providers are strongly encouraged to report any suspicious activities or fraudulent schemes they may encounter to prevent potential harm to patients or the wider healthcare community.
Lastly, patients should always be vigilant about their care and ensure that qualified and honest healthcare professionals perform any medically necessary procedures they receive.
Read the fact sheet below to learn about enhanced oversight for new hospices
Can I make an anonymous report to health department to initiate a medical fraud investigation for health care fraud or health care scams?
Yes. You can make a confidential report to the U.S. Department of Health and Human Services Office of Inspector General by clicking here. You may report incidents such as kickbacks and DOJ medical fraud. The Office of Inspector General is also useful for finding health insurance fraud examples.
Watch the video below to learn more about Medicare kickbacks and how common healthcare fraud is.
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