Medical necessity fraud is one of the most common variants of Medicare fraud, it is also one of the toughest to prove. Wikipedia says medical necessity “is a United States legal doctrine, related to activities which may be justified as reasonable, necessary, and/or appropriate, based on evidence-based clinical standards of care.” In simple terms, when a doctor performs a procedure it should be appropriate by current medical standards.
Because these determinations are speculative, proving a doctor performed too many surgeries or dispensed too many pain pills is difficult for prosecutors.
Healthcare fraud comes in many different forms. A clinic that allows unlicensed physicians to read X-rays is engaged in fraud. Proof is fairly straightforward. Either the doctor was licensed or not. Another common example involves billing for a 60 minute therapy session when the therapist saw 5 patients in that hour, each for 10 minutes.
Recently we have seen a rise in cases where healthcare providers were caught billing Medicare for services that were not medically necessary. Typical healthcare fraud involves stealing from taxpayers. Medical necessity cases, however, often involve a patient safety component. The stakes are much higher when patients are being exposed to unnecessary drugs, hospitalizations or surgery.
We recently covered on this blog a Michigan physician caught performing unnecessary spinal surgeries. Not only did he perform unnecessary surgery, patients and prosecutors say he did a terrible job.
One patient walked into the physician’s office seeking a second opinion about minor back pain. A few days later he went under the knife and is now confined to a wheelchair.
In extreme cases, medical necessity cases are easy to prove. If you a rash on your foot, a doctor shouldn’t cut your leg off. Those extreme cases are what make the media but most medical necessity cases are subtler. These cases typically involve the doctor that always seems to err on the side of surgery or hospitalization.
Proving these cases is tough. While we may correctly believe these doctors are more motivated by profits instead of their patients, proving a medical necessity case remains difficult.
Trial court judges have been siding with doctors, even when juries are eager to convict. Two recent federal appellate court cases have breathed new life into medical necessity Medicare fraud based prosecutions.
Kentucky Doctor Does More Cardiac Stents than Anyone in the Nation
In April of this year, the U.S Circuit of Appeals for the Sixth Circuit reversed a trial judge from eastern Kentucky. In 2017, a jury convicted Dr. Richard Paulus of healthcare fraud and making false statements. Despite the jury’s decision, the trial judge took the rare step of acquitting him. The government appealed.
Originally Dr. Paulus was indicted in 2015. Prosecutors say that he practiced as an interventional cardiologist. He worked at King’s Daughters Medical Center. Many of the procedures Paulus performed were cardiac catheterizations. That is an invasive procedure used to evaluate coronary artery disease.
The surgery involves inserting a long narrow tube through blood vessel in the arm or leg. The catheter is guided through the blood vessel into the heart. Cardiologists use the procedure to determine if a patient’s arteries are narrowing.
The American College of Cardiology publishes guidelines to help doctors know when an artery is so blocked that intervention is needed. The guidelines establish a range of percentage of blockage as each patient is different.
There are other procedures that can also be used to determine coronary artery disease and blockages.
Usually when a blockage is found doctors will insert a stent by use of the catheter. Dr. Paulus was also a big performer of surgical stents.
Medicare, like most insurances, pays for cardiac stent procedures but only when medically necessary. Most doctors and the American College of Cardiology agree that absent a 70% blockage, stents are not medically necessary.
Evidently Dr. Paulus patients were unusually sick.
Why do we say that? Because he performed more stent placements than any other doctor in Kentucky. In fact, prosecutors say that between 2006 and 2011, he billed Medicare more cardiac catheterizations and stent placements than any other doctor in America. For those last three years he billed more than all the cardiologists combined at either the University of Kentucky or University of Louisville health systems.
And tiny King’s Daughter Medical Center loved him. They received over $30,000,000.00 from Medicare in just a few years.
Anonymous Whistleblower Tip – the Beginning of the End
In November 2012, an anonymous whistleblower reported Paulus to the Kentucky Board of Medical Licensure. It wasn’t a disgruntled patient either. The whistleblower claimed to be another physician at the hospital. Paulus retired a few months later but by then, the wheels were already in motion.
A medical expert hired by the Board said,
“The prevailing scenario in these cases seemed to be a patient with few risk factors for heart disease presented with chest pain that had some typical and some atypical features, and the patient would be admitted to hospital and receive limited cardiac medications. Then, rather than receiving a cardiac stress test, would directly undergo coronary angiography. A number of these cases had rather trivial-to-mild coronary artery disease, but by report would be said to have severe disease …”
Paulus agreed to “permanently retire” in lieu of facing a disciplinary proceeding.
The government believed Paulus was doing all these surgeries to make more money. His compensation was tied to his billings. The more expensive catheterizations and stents performed, the more money he made.
Dr. Paulus maintained that he did nothing wrong and that the procedures were justified. The jury sided with prosecutors and convicted Paulus.
But the case was not over. In a rare move, the trial judge entered an acquittal despite the jury’s conviction. He reasoned that angiogram interpretations are not facts subject to proof or disproof. Because angiogram interpretations cannot be false, the reasoning goes, Paulus could not have lied.
That prompted the government to appeal. That appeal was decided in April 2018.
The appeals court noted the subjective element to interpreting angiograms. Apparently. what one doctor says is a 30% blockage another might call at 35%. The variations between what Paulus reported and other doctors observed was simply too great to be reasonable, however.
The appeals court ruling says the degree of stenosis (blockage) is a fact capable of proof or disproof. The doors to medical necessity cases in Michigan, Kentucky, Tennessee, Ohio have reopened. (These are the states within the 6th Circuit). By ruling this way, the court returned to the jury the power to determine medical necessity.
Another Alleged Scalpel Happy Doc Faces Civil Fraud Charges
In July 2018, the 10th Circuit issued a similar decision favoring whistleblowers and prosecutors in Medicare fraud cases involving medical necessity cases.
That case started in 2015 when a physician filed a False Claims Act case against another doctor and hospital.
Dr. Gerald Polukoff worked as a cardiologist at Intermountain Medical Center in Utah from 2008 to 2012. For part of that time he worked for Dr. Sherman Sorensen, the defendant in this case. [See our September 5th post, “Case Against Alleged Scalpel Happy Doc Gets Green Light.”]
Because we have already extensively covered Sorenson’s case in a prior blog post, the facts here will be brief.
The medical procedure at the heart of this case is a patent foramen ovale (PFO) closure. The foramen ovale is a small opening in the wall separating the two upper chambers of the heart found in a fetus as it develops in the womb. For 75% of us, that opening closes after birth. For the other 25% of the population, it never closes. And except in rare cases, those who still have the opening have no ill effects.
The condition is benign except in the rarest of circumstances. For some folks with the opening and certain types of strokes, the PFO closure may be necessary.
Medicare doesn’t have precise guidelines as to when a PFO surgery is necessary but as with all medical procedures, a physician must certify that it is medically necessary.
Like Dr. Paulus, Dr. Sorensen was performing more PFO closures than any other doctor in the nation. He reasoned that even though many of his patients didn’t suffer from strokes, they might in the future. He did these invasive heart procedures as a preventative measure. Something not allowed by Medicare and in our opinion, dangerous.
His former colleague, Dr. Polukoff, said that Sorensen was engaged in fraud. Sorensen, however, said he was being a good doctor and helping patients avoid strokes. Who is correct?
That what a jury will soon get to decide.
Dr. Polukoff originally wanted to purchase Dr. Sorensen’s practice. After working with him for 4 months and reviewing his books, he decided to file a whistleblower action instead.
After 9 consecutive motions to dismiss, a trial judge ruled in favor of Sorensen. A federal judge in Tennessee found that subjective medical opinions, such as the reasonableness and necessity of the PFO closures, could not be objectively false for purposes of pleading falsity in connection with FCA claims.
“The government, of course, can promulgate a regulation that clarifies the conditions under which it will or will not pay for a PFO closure. But in the absence of an objective standard created by the government, Dr. Polukoff can only rely upon the subjective and ambiguous ‘reasonable and necessary’ standard.”
In other words, medical necessity was not a jury issue.
On appeal, the trial judge was reversed meaning the case against Sorensen and the hospital defendants can proceed. The appeals court acknowledged that deciding some of these issues might be tough. Despite being tough, however, “It is possible for a medical judgment to be ‘false or fraudulent’ as proscribed by the [False Claims Act] …”
The court noted that the Supreme Court says that court should interpret the False Claims Act broadly. “[The False Claims Act] was intended to reach all types of fraud, without qualification, that might result in financial loss to the Government.
We are encouraged by the recent rulings. Not every case where two doctors disagree about how to treat a patient means that one I engaged in fraud. Practicing medicine is as much of an art as a science. Good doctors will frequently disagree. That is why so many patients seek second opinions.
To violate the False Claims Act, there has to be more than a disagreement. One has to prove fraud. That often means proving intent or at least showing that the doctor or provider acted recklessly.
Statistics help but they are not the final word. Doctors that are national experts in certain specialties perform more of certain procedures than their colleagues. For example, the leading skin cancer specialist performs far more Mohs procedures than the average dermatologist.
But statistics can also be a useful predictor. Did a rural community in Kentucky have twenty times more blocked arteries than any other community? No.
These cases require more than statistics. They require medical experts. We believe juries can listen to competing experts and determine the difference between right and wrong. The alternative is to have no controls on doctors who put profits before patients.
The 10th Circuit covers Colorado, Kansas, New Mexico, Oklahoma, Utah and Wyoming.
Future of Medical Necessity Cases
Medical necessity remains a valid claim in Medicare fraud cases. Proving them, however, is admittedly tough.
Recently the Department of Justice issued an internal memo precluding prosecutors from bringing cases based on Medicare guidance. Unless there is a specific rule or regulation, the Justice Department will sit out many future medical necessity cases.
In our examples above, there was plenty of guidance but no official rules. Those cases began years ago, the new directives from the Department of Justice are applicable to newly filed cases.
The good news is that these cases are still prosecutable by private lawyers under the False Claims Act. That Civil War era law allows individuals with inside information of Medicare fraud to prosecute on behalf of the government.
Under the Act, whistleblowers are eligible to receive up to 30% of whatever is collected from the wrongdoer.