Hundreds of Physicians at Risk of Prosecution in Federal Investigation

Strategic Insights -

As part of a federal investigation of Caremark International Inc., hundreds of physicians could face possible criminal prosecution for accepting payments in return for referrals of Medicaid and Medicare patients to the company's service providers. Caremark, a home care company, pleaded guilty to federal kickback and fraud charges and agreed to cooperate with government authorities in continuing investigations of individuals. The company's guilty plea stemmed from paying doctors to induce referrals of Medicare and Medicaid patients to its several home care businesses, implicating any physician to whom payments were made.

Key Takeaways:

  • The investigation, which began four years ago, has already led to charges against two physicians, Elliot Neufeld, DO, and David R. Brown, MD, who accepted payments from Caremark in exchange for referrals.
  • The government is working with the Department of Health and Human Services Office of the Inspector General (HHS-OIG) and the Department of Justice to determine whether criminal, civil, or administrative sanctions are justified in cases involving doctors.
  • Caremark's cooperation with the government is likely to include detailed information on financial arrangements the company made with referring physicians, which could be used as evidence against them.
  • Physicians who accepted payments from Caremark without providing substantial services "would be calling their lawyer and asking him or her to contact the nearest U.S. Attorney" because they lose control over the process if they wait for the government to contact them.
  • State officials, such as James Riley, director of the West Virginia Medicaid Fraud Control Unit, are also promising to follow up the Caremark investigation with indictments of physicians.
  • The American Medical Association (AMA) has condemned fraud, but also cautioned against a "witch hunt" and called for finding and treating those who participated in the scheme accordingly.
  • Caremark has admitted to paying to induce referrals in Minneapolis and Columbus, Ohio, using various arrangements, including research grants, marketing fees, and personal services contracts.

Statistics:

  • Caremark has agreed to pay more than $160 million in fines and penalties.
  • The company has identified numerous physicians around the country who remain the subjects of federal fraud investigations stemming from the Caremark pleas.
  • Between 15,000 and $3.5 million was paid to eight individual physicians or group practices in Columbus, Ohio.
  • Dr. Elliot Neufeld, DO, accepted more than $120,000 over three years as a home infusion medical director without performing duties to justify the salary.
  • Dr. David R. Brown, MD, is charged with accepting more than $1 million in exchange for prescribing large amounts of Protropin to his pediatric patients.

Sources:

  • Michael Dyer, Midwest regional special agent for the HHS-OIG
  • Paul Cacioppo, a Kansas City, Kan., health attorney
  • Alice Gosfield, a Philadelphia health lawyer
  • Robert Fabrikant, a Los Angeles attorney
  • James Riley, director of the West Virginia Medicaid Fraud Control Unit
  • Thomas Herrmann, chief of litigations and sanctions in the HHS-OIG
  • William Jacott, MD, AMA Trustee
  • Elliot Neufeld, DO
  • David R. Brown, MD
  • U.S. Department of Justice
  • HHS-OIG