Lots of news on the EMS Medicare fraud front. Two major cases to report. One appeals court decision makes it easier for ambulance whistleblowers to report fraud and collect awards. The other is a major ambulance fraud prosecution in Houston involving HCA and many Houston area ambulance companies.
As detailed below, we are actively seeking whistleblowers with information about illegal kickback schemes involving HCA and ambulance companies in general. Substantial cash whistleblower awards may be available.
Part One – Hospital Corporation of America (HCA) and Ambulance Fraud
The U.S. Department of Justice settled with four Houston area hospitals for accepting kickbacks from local ambulance companies. The hospitals include Bayshore Medical Center, Clear Lake Regional Medical Center, West Houston Medical Center and East Houston Regional Medical Center. The hospitals agreed to pay a total of $8.6 million to settle the charges. All are affiliated with HCA, a company that is no stranger to Medicare fraud allegations.
The case was originally filed by a Texas EMS worker, Daniel Block. Block was the former CEO of a competing Texas ambulance company, Northstar EMS.
In 2011 Block filed a whistleblower action under the federal and Texas False Claims Acts accusing Hospital Corporation of America (HCA) and others of a huge kickback scheme. Named as defendants in the complaint were several ambulance companies including A Med Ambulance, ACE Ambulance, Baystar EMS, First Care EMS, Guardian EMS, Maxcel EMS, National Care EMS, Northshore EMS, and Tri-State EMS.
As much of the complaint remains under seal, we can only share the story as to HCA. But it is a story worth telling!
According to Block’s complaint, when his business, Northstar, tried to comply with the anti-kickback laws, they lost business to competitors who were violating the law. He says:
“The individual ambulance defendants named in this lawsuit have engaged in a pattern and practice of soliciting nursing home, assisted living facilities and hospital business by playing on the fact that for some transports to medical facilities, or between facilities, hospitals and nursing homes incur the full liability to pay the ambulance provider, (known as facility-responsible transports) while for other trips the ambulance provider would be reimbursed directly by third party insurance including federal healthcare programs such as Medicare Medicaid.”
The ambulance companies would offer the facilities a deeply discounted flat rate or even free transports for the hospital’s “facility responsible” transfers in return for the hospital sending all the Medicare eligible work to the company paying the kickback.
To avoid detection, some ambulance companies would bill for the “facility responsible” runs but with an understanding that the hospital would simply disregard or throw out the invoice.
(Although this post is geared toward HCA and hospitals, the same scheme was also used with nursing homes.)
Federal Anti Kickback Statute and Ambulance Companies
Ambulance companies have long been a hotbed of corruption. The problem is so bad that in certain areas of the country Medicare has imposed moratoriums on new ambulance companies. Places like Philadelphia, Houston and Detroit. The feds can’t stop a new ambulance company from opening but they can prevent it from being eligible for Medicare and Medicaid reimbursement.
Certain areas of the country have such bad ambulance fraud that Medicare had to resort to drastic measures such as moratoria. Unfortunately, that also hurts the public and legit EMS services.
The Anti-Kickback law prohibits anyone from giving or receiving something of value in return for patient referrals. Congress passed the law because it believes that health care decisions should be based on medical necessity and the best interests of the patient. It should never be based on who pays the biggest bribe or kickbacks.
As this post indicates, not every kickback needs to be in cash. Giving away free services in return for referrals is also considered an illegal kickback.
Proving Kickbacks and Whistleblower Awards
This case was only possible because of an insider. All our EMS whistleblower cases to date have relied on EMTs, paramedics or managers within the company. It is certainly possible, however, that hospital and nursing home administrators and billing specialists would also have the requisite information to qualify for an award. Ditto for billing or IT people within an ambulance company.
Under the False Claims Act, whistleblowers with inside information about Medicare or Medicaid fraud can earn cash awards. Generally, those awards are between 15% and 30% of what the government collects.
To qualify for an award, one must be the first to file, must be an original source of the information and must file a sealed complaint in federal court. Medicaid fraud only complaints can be filed in state or federal court depending on the locale.
Not sure if you qualify? Call us. The call is free, confidential and without obligation. If we take your case, we only get paid if we win and collect. For more information, contact attorney Brian Mahany at or by phone at 414-704-6731 (direct).
HCA Settles, What About the Ambulance Companies?
In April, the Justice Department intervened in the whistleblower’s complaint. One month later HCA settled for $8.6 million. And the ambulance companies? The government let them out of the suit.
In announcing the settlement, a Health and Human Services spokesperson said,
“This settlement emphasizes that both sides of any arrangement where remuneration is paid in exchange for healthcare referrals are responsible for their improper actions – even entities that do not actually bill Medicare or Medicaid for the services. Any company or individual receiving anything of value in exchange for referrals should understand that their actions may have serious legal and financial consequences.”
This case is an important lesson for healthcare providers. The Justice Department can go after either the person paying the kickback or the provider that receives it… or sometimes, both.
In 2015, a nursing home company settled for $3 million as part of this same investigation.
And the whistleblower who first filed the case? We can only report on what the court has allowed to be unsealed. Anyone can do the math, however. 15% of $8.6 million is $1,290,000. Not a bad day for stepping forward and doing the right thing.
(Ed. Note: HCA settled without admitting any wrongdoing.)
HCA Not the First Ambulance “Swapping Arrangement” Case
Last month’s $8.6 million recovery isn’t the first case involving these swapping arrangements. In 2006 prosecutors resolved another ambulance kickback case involving swapping. That case settled for $9 million. More recently in 2015, prosecutors settled similar cases in California for $11.5 million.
Part Two – Court Opens Door for More Ambulance Fraud Whistleblower Cases
Pennsylvania has one of the highest rates of EMS fraud in the nation. Although the problem seems to be worse in the Philadelphia area, it can be found in every corner of the state. This story comes from Pittsburgh but it is useful for ambulance whistleblowers throughout the country.
We have represented many ambulance whistleblowers. One of the more difficult aspects of these cases is proving the fraud. Most people who work in EMS work “on the truck,” they are EMTs and paramedics providing care to patients.
A paramedic may know that her employer is unnecessarily transporting dialysis patients by ambulance. An EMT may be able to testify that his supervisor is forcing him to doctor records to show a higher level of care than was provided. Medicare fraud, right? You and I may say “absolutely” but some sleazy operators have been able to beat Medicare fraud charges.
How is that possible? Unfortunately because to win a whistleblower award in an ambulance fraud case, you must prove that Medicare, Tricare or Medicaid was billed for the run. [Illinois and California whistleblowers – separate state laws allow award claims for improper billing to private insurance companies as well. Even these law, however, require proof that a bill was sent.]
EMTs and paramedics typically don’t have access to billing records. They have 98% of what we need to prosecute. It’s like a jigsaw puzzle with one piece missing. Some judges have allowed us to use discovery to find that missing puzzle piece while others say that you must have all the pieces when you file your complaint.
Pamela Scalamogna’s Ambulance Fraud Whistleblower Complaint
Pamela Scalamogna began working for Steel Valley Ambulance in 2010. She was employed as an EMT. Steel City is a licensed ambulance company in Pennsylvania providing both BLS and ALS services.
Pamela’s ambulance fraud was different from most. According to her, Steel Valley’s ambulances were not fit to be on the road. Bald tires, back doors that wouldn’t latch (and would therefore swing open), no working A/C… the list goes on. The ventilation system in one rig was so bad that an EMT “was asphyxiated by cabin fumes requiring hospitalization for carbon monoxide poisoning.”
Worse, she claims that the company would often respond to Advanced Life Support (ALS) calls using vehicles only configured for Basic Life Support (BLS). That meant transporting a ventilator patient without sufficient oxygen to maintain ventilation. It also meant sending non ALS certified crews for ALS transports.
Pamela also alleged the usual EMS fraud claims, hospital kickbacks, using ambulance to transport dialysis patients, etc.
The State of Pennsylvania could shut down Steel Valley for any of one of these violations if true. But is it Medicare fraud? It is if Medicare is being billed for the transports. We all know they were but proving that can be difficult for someone working the back of the truck. In this case, it was all the owners’ family that handled billing.
Steel Valley asked the court to dismiss the case. They argued in court that, Pamela’s complaint “fails to identify a single false claim that the defendants actually submitted to the government—not one.” Steel Valley was right of course. Most EMTs don’t have access to billing.
U.S. District Court Judge Cathy Bissoon unfortunately agreed with Steel Valley. But she went one step further and threw a life ring to Ms. Scalamogna. She ruled that “a plaintiff must merely allege ‘particular details of a scheme to submit false claims paired with reliable indicia that lead to a strong inference that claims were actually submitted.’”
Ms. Scalamogna was able to say in an amended complaint that a supervisor told her to not word a report such that it said a dialysis patient could walk. In telling her this, the supervisor said, “Medicare would not reimburse for ambulance transport that could have been performed in a wheelchair van.”
By implicating Medicare billing, there was enough to establish “a strong inference that claims for ambulance services were in fact submitted to the government.” Pamela’s case isn’t over.
In our experience, once the whistleblower’s lawyers can overcome the motions to dismiss, these case settle. In this case, we doubt that Steel Valley wants anyone nosing around their bills and records.
This may all seem like legal mumbo jumbo but it is important. It is the difference between a fraudster escaping responsibility for his or her actions. It is the difference between getting nothing and what often amounts to a million dollar award. Finding the right lawyer to prosecute your ambulance fraud case is critical.
If you have inside knowledge of ambulance fraud involving Medicare or Medicaid patients, call us. If you are in California or Illinois and have knowledge of any type of EMS fraud, call us as well.
Whistleblowers are entitled to between 15% and 30% of whatever the government ultimately collects. The states and federal government are entitled to triple damages and penalties of between $11,000 and $20,000 per false bill. Suddenly that $400 dialysis run becomes a $13,000+ problem for the ambulance company. (And hence the willingness to settle once we can navigate through the motions to dismiss.)
Thank you for your service.
(The author of this post, attorney Brian Mahany, is a former EMT with the University of Delaware Dept. of Public Safety.)