Doctors pay $2.4 million for cheating Medicare without jail or admitting guilt

The federal government is once again imposing monetary penalties without demanding an admission of guilt from a business that allegedly robbed millions of dollars from taxpayers.

A New Jersey pathology practice will pay $2.4 million to resolve allegations that it violated the False Claims Act by making false representations in connection with submissions to the Centers for Medicare & Medicaid Services (CMS), as a result of a whistleblower complaint. 

According to U.S. Attorney Rachael A. Honig in the settlement agreement, Princeton Pathology Services P.A. submitted claims to Medicare under Current Procedural Terminology (CPT) code 85390-26 from Jan. 1, 2015, through Dec. 31, 2020.

That code requires written analysis by a pathologist, but Princeton Pathology submitted claims using this code without written substantiation in medical records.

As a result, the company billed Medicare for analysis of tests that did not require analysis, causing the government-run health insurance program to significantly overpay.

Contemporaneous with the civil settlement, Princeton Pathology also entered into a three-year Integrity Agreement with the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG), which requires, among other things, training, auditing, and monitoring designed to address the conduct at issue in the case as well as evolving compliance risks on an ongoing basis.

“Federal health care programs rely on practitioners to accurately bill for services they perform,” said Honig. “The U.S. Attorney’s Office for the District of New Jersey will hold accountable physician practices that seek payment for unnecessary or unsubstantiated services.”

America’s taxpayers could recoup billions of dollars in misspent Medicare, Medicaid, and other government-funded services as a result of work by the HHS-OIG, according to a new report, but critics say that while street-level criminals and other minor offenders often face prison, those who steal big money often do so without the threat of serving time in jail.

“The latest Semiannual Report to Congress highlights nearly $4 billion in expected recoveries as a result of audits and investigations conducted this year but if criminals can simply return the money when they get caught, then there is hardly any incentive for staying honest,” said progressive advocate Lisa McCormick, who has advocated a “corporate death penalty” and other more stringent punishments for corrupt businesses. “Companies that profit from corruption, cause permanent environmental damage, cause physical pain and death, and violate basic human rights, so we need to have stronger sanctions against corporate crime.”

“One out of every four people entering prison is incarcerated for a technical violation, but instead of addressing factors that have fueled mass incarceration and cost taxpayers billions without making communities any safer, prosecutors and politicians in power keep locking up poor people while releasing wealthy criminals with barely a slap on the wrist,” said McCormick.

“Submitting claims for unsubstantiated services threatens the integrity of the Medicare program and will not be tolerated,” Scott J. Lampert, HHS-OIG Special Agent in Charge said. “We will continue to protect patients and taxpayers by holding accountable providers who endanger the integrity of federal health care programs and the beneficiaries they serve.”

The allegations arose from a lawsuit filed under the whistleblower provisions of the False Claims Act by Jayant Barai M.D. The False Claims Act permits private parties to sue for false claims on behalf of the United States and to share in any recovery. Dr. Barai will receive $456,000 from the federal share of the settlement.

The government’s pursuit of this lawsuit illustrates its efforts to combat healthcare fraud.  One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement can be reported to the Department of Health and Human Services, at 800‑HHS‑TIPS (800-447-8477).  

Honig credited special agents of the HHS-OIG, under the direction of Special Agent in Charge Lampert; and special agents of the U.S. Attorney’s Office for the District of New Jersey, under the direction of Special Agent in Charge Thomas Mahoney, with the investigation leading to the settlement.

The government is represented by Assistant U.S. Attorney Daniel Meyler of the Health Care Fraud Unit in Newark. 

The lawsuit is captioned United States ex rel. Barai v. Princeton Pathology Services, P.A., et al. (D.N.J.). The claims settled by this agreement are allegations only, and there has been no determination of liability.

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