Florida Hospitals Fight Medicare Fraud Kickback Case

Medicare fraud is a huge national problem. Cases that involve billing for treatments and services never performed are relatively straightforward. Medicare fraud involving hospital – physician kickbacks, however, cost taxpayers billions of dollars annually and can be very difficult to prove.

Four Florida hospitals and several healthcare practices are fighting back against a whistleblower complaint alleging such a kickback scheme. The case is pending in Orlando.

A “John Doe” whistleblower alleged in a 2014 lawsuit that Holmes Regional Medical Center, Viera Hospital, Cape Canaveral Hospital and Palm Bay Hospital profited from referrals made by physicians who were paid kickbacks. Federal law prohibits kickback schemes in the healthcare industry.

Cash payment for patient referrals is too easy to prove so today, kickback schemes are often carefully disguised. The whistleblower in this suit says the hospitals concealed kickbacks made to doctors at Melbourne Internal Medicine Associates (“MIMA”) through a variety of techniques including:

• “granting them the exclusive ability to invest in and own portions of subspeciality healthcare facilities that ultimately proved very profitable”;
• paying them as “Medical Directors” even though these positions required little or no work;
• offering them exclusive benefits to patient admissions at certain hospitals;
• “using its [the hospitals’] insurance subsidiary, Health First Health Plans, as a lever by causing it to reimburse MIMA for radiation therapy at MIMA’s own radiation therapy center”;
• supplying blood products at no cost;
• giving MIMA doctors exclusive benefits related to radiation therapy, cardiac catheterization and call coverage; and
• ultimately buying MIMA for “exorbitant sums greatly in excess of fair market value.”

The complaint also says the defendants engaged in Medicare fraud by forcing hospital patients in need of PET scans to be discharged and receive the scans as outpatients so it could bill separately (and presumably more) for the scans.

If true, the allegations reveal just how far hospitals will go to hide illegal kickback schemes. The Centers for Medicare and Medicaid Services long ago figured out phony medical directorship scams but some of the other allegations in the Florida complaint are sophisticated and unique.

The hospitals and other defendants are fighting back. Because the government  didn’t intervene in the complaint, the whistleblower is on his own. Typically when the government intervenes the case is more likely to settle since the government has more powerful audit tools and the ability to revoke a provider’s ability to receive Medicare reimbursement. (Most hospitals couldn’t keep their doors open if they lost their Medicare patients.)

The defendants in this case are claiming that the whistleblower has failed to properly document the “who, what when and where” necessary for pleading fraud. In 19 states (including Florida) courts require more specificity when pleading False Claims Act cases. These enhanced pleading requirements make it harder for whistleblowers who otherwise “know” fraud is taking place yet don’t access to records to provide specific examples.

In this case it may be that whistleblower isn’t an insider. We haven’t seen a John Doe filing before and the complaint simply says that the relator (legal jargon for whistleblower) is a resident of Florida. The complaint also says the allegations are based on “information relator discovered through his work and through his own personal efforts, observations and investigation.” From that description, it doesn’t appear the whistleblower is the typical insider.

Obviously, as a leading whistleblower law firm, we support whistleblowers and their work to root out corruption and fraud. In this case, however, and in this jurisdiction, there may not be enough information to withstand the hospitals’ legal challenges.

We hope the court allows the case to proceed to discovery. If the allegations about the kickback schemes are true, the relator and his counsel should have the opportunity to conduct discovery and build their case.

Physician Kickback Schemes and Medicare Fraud

Congress has long considered kickback schemes to be a central element of Medicare fraud. As noted by the whistleblower in his complaint, “kickback schemes usurp the physician’s independent medical judgment and thereby negatively affect the integrity of federal healthcare programs..”

We agree.

It’s obvious from the 50 page complaint that the whistleblower, “John Doe,” has done a significant amount of investigation. Whistleblower complaints brought by non-insiders, however, often face an uphill battle in the courts.

While there is certainly “evidence” of Medicare fraud, the complaint would greatly benefit if the relator was one of the doctors in the physicians’ group (MIMA) or someone who worked for the hospital administrator.

It’s not too late, however. We have saved troubled complaints before by bringing in an “11th hour” co-relator; someone who actually has the inside scoop and can document the fraud.

We suspect there is something to John Doe’s complaint. We may never find out, however, unless someone inside the Health First organization steps forward.

Under the False Claims Act, successful relators can receive up to 30% of whatever the government collects from the wrongdoers. With claims of $100 million a year in damages, even if only a portion of what John Doe says is correct, there could be a huge payday if someone inside with evidence of the kickback scheme steps forward.

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As noted above, we are a law firm that concentrates our practice in representing and protecting whistleblowers. If you have inside information about Health First or fraud involving Medicaid or Medicare, give us a call. We have helped our whistleblower clients collect over $100 million in whistleblower awards.

For more information, contact attorney Brian Mahany at or by telephone at (414) 704-6731 (direct). All inquiries are protected by the attorney – client privilege and kept completely confidential.

MahanyLaw – America’s Medicare Fraud Lawyers