No, it's not Super Troopers, but Medicare Strike Force might inspire an action movie.

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April 30, 2018

Medicare Strike Force Isn’t Super Troopers, But They Indict Two Healthcare Executives Anyway

No, it's not Super Troopers, but Medicare Strike Force might inspire an action movie.

Some of their work came to light last week when the U.S. Attorney for the Middle District of Tennessee (joined by enough other Feds to field a basketball team) announced the indictment of the John Davis, the former CEO of Comprehensive Pain Specialists (“CPS”), a large regional pain medicine practice doing business across twelve states, and Brenda Montgomery, the owner of CCC Medical Equipment (“CCC”), a privately held durable medical equipment ("DME”) supplier for violation of the federal Anti-Kickback Statute (“AKS”), and a host of other federal crimes.

Although it’s important to note that this is “only” an indictment, and neither Davis nor Montgomery have yet been convicted, one can safely assume that they’re about to spend hundreds of thousands of dollars, each, on their defense.

The allegations are instructive in connection with the sort of indirect arrangements that defendants in these sorts of actions commonly believe immunize them from being found out.

The Allegations

The government alleges that Davis and Montgomery, together with unindicted conspirators, including one identified as “Individual A,” entered into a conspiracy to violate the AKS and other federal statutes. They’re alleged to have concealed their unlawful relationship from Medicare as well as from CPS’s owners and other employees.

Among the acts that the government claims took place are:

  1. That Montgomery issued 1099 forms in the name of Individual A in order to launder kickbacks that were actually going from CCC to Davis;
  2. That Davis prevented the company that he led, CPS, from obtaining its own Medicare DME billing numbers in order to keep the referrals from CPS to CCC flowing;
  3. That they negotiated the sham sale of a shell company, purportedly owned by Individual A, to Montgomery in order to funnel hundreds of thousands of dollars to Davis; and
  4. That the general arrangement was that Montgomery would pay Davis, via Individual A, 60% of the profits that CCC made from DME sales to patients referred by CPS.

In total, the government alleges that Montgomery paid at least $770,000 in illegal kickbacks and bribes to Davis through Individual A and the sham shell company. They allege that the illegal referrals totaled at least $4.6 million in claims to Medicare which resulted in at least $2.6 million in payments to CCC.

It’s unclear how the government was tipped off. From the mention of the unindicted co-conspirator identified as Individual A, it’s possible that he or she alerted the Feds or was flipped under pressure from the FBI to give evidence against Davis and Montgomery. It's clear from the indictment that the government has significant banking information as well as emails between the defendants.

The Takeaways for You

  1. The AKS prohibits indirect as well as direct remuneration for referrals of Medicare and other federal health care program patients. Paying spouses or third parties and engaging in funny payments to sham (or real) entities, doesn’t effectively launder dirty money.
  2. Although CPS itself isn’t alleged to have engaged in any illegal conduct, an employee can drag you into an investigation and a mess. What are your employees doing? How active are you in monitoring compliance? What begins as an investigation into your employee’s actions can lead to discovery of other illegality.
  3. There’s no honor among criminals. While, again, it’s too soon to know who Individual A is, it’s alleged that he or she was central to the scheme. And, yet, he or she is an unindicted co-conspirator. In other words, it looks like he/she was promised a deal in return for cooperation.
  4. In the more garden variety kickback case, that is, when one entity (e.g., a referral receiving physician or practice) is “forced” to pay a kickback to the physician or practice or facility making the referral, thinking you won’t get caught isn’t really thinking. “Everyone’s doing it,” isn’t a defense. Someone knows and someone, sooner or later, will talk, either to avoid punishment, to collect a whistle-blower reward, or just to get even with you: If you can’t do the time, just drop the dime.
 
 
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All Things Personal

A few hours ago, I read a news story based on a leaked memo from Apple. The subject of the leaked memo? Stopping leakers from leaking. According to the piece in The Guardian, Apple reportedly warned employees in an internal memo that it caught 29 leakers last year and that 12 were arrested. The paper reported that Apple’s memo told workers who disclose information to the media that they have “everything to lose.”

Although it appears as if Apple wants to chill almost any disclosure to the press, not just the passing on of actual, protectable confidential information and trade secrets, another story of actual intellectual property theft by a Chinese company hit the press. It concerns the conviction of Sinovel Wind Group, Ltd. for stealing U.S. company AMSC, Inc.’s trade secrets causing $800 million in losses and the layoff of more than half of its global work force. Sentencing is set for June 2018 and Sinovel faces fines exceeding $1 billion.

Interestingly, the source of the theft wasn’t an embedded Chinese spy. Instead, Sinovel recruited a disgruntled AMSC employee to transfer the information.

What are you doing to protect your trade secrets? If you think that industrial spying is the stuff of movies or at least of foreign intrigue, then you're fooling yourself. And, it’s not just disgruntled employees who leak actual, protectable information, it’s happy employees “just talking.”

What confidentiality protocols do you have in place? How is access to trade secrets restricted? What cybersecurity is in place? What training do you provide and how are your staff members, employees, and vendors bound?

 
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Books and Publications

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We all hear, and most of us say, that the pace of change in healthcare is quickening. That means that the pace of required decision-making is increasing, too. Unless, that is, you want to take the “default” route. That’s the one is which you let someone else make the decisions that impact you; you’re just along for the ride. Of course, playing a bit part in scripting your own future isn’t the smart route to stardom. But despite your own best intentions, perhaps it’s your medical group’s governance structure that’s holding you back. In fact, it’s very likely that the problem is systemic. The Medical Group Governance Matrix introduces a simple four-quadrant diagnostic tool to help you find out. It then shows you how to use that tool to build your better, more profitable future. Get your free copy here.

Learning opportunity: Mark will be presenting the key concepts of the Matrix as a part of his presentation at the Advanced Institute for Anesthesia Practice Management, April 28 – 30, 2018 at The Cosmopolitan of Las Vegas. http://aiapmconference.com

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1. Download a copy of The Success Prescription. My book, The Success Prescription provides you with a framework for thinking about your success.

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3. Book me to speak to your group or organization. I’ve spoken at dozens of medical group, healthcare organization, university-sponsored, and private events on many topics such as The Impending Death of Hospitals, the strategic use of OIG Advisory Opinions, medical group governance, and succeeding at negotiations. For more information about a custom presentation for you, drop us a line.

4. If You’re Not Yet a Client, Engage Me to Represent You. If you’re interested in increasing your profit and managing your risk of loss, email me to connect directly.

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The Mark F. Weiss Law Firm 1227 De La Vina St. Santa Barbara, California 93101 United States (310) 843-2800