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Feds Crack Down on Home Health Fraud

Recent convictions in the Chicago area reveal a high level of fraudulent activity
By Stephen Chahn Lee, Esq

Arthur Davida, MD, did not necessarily set out to defraud Medicare of millions of dollars, but he helped home-health agencies do just that by falsely certifying patients for home-health services, sometimes without the knowledge of the patients’ primary care physicians. He recently received a two-year prison sentence for health care fraud.

“I departed from my principles which I upheld for over 22 years,” Dr. Davida said in federal court at the January 2015 sentencing. “I approved many patients for home-health care nursing visits knowing that these patients were not homebound and did not need home nurse visits.” Dr. Davida continued, “I’m heartsick that I wasn’t strong enough to reject this type of action until the law showed up at my doorstep.”

“I have failed my profession,” Dr. Davida said. “I disgraced myself, and I am truly, truly sorry for committing this crime.”

Dr. Davida is one of multiple physicians, nurses, business people, home-health agency owners, and marketers who have been charged and convicted in recent years in the Chicago area in connection with home-health fraud. Federal investigations of home-health companies in the Chicago area have revealed many problems, including doctors improperly certifying patients for home-health services; doctors taking kickbacks; nurses lying in patient charts; and home-health agencies billing Medicare for unnecessary services.

A Hotbed of Activity

The Chicago area has been noted in particular for its problems with home health. In 2013, the Centers for Medicare and Medicare Services (CMS) cited factors that strongly indicated fraudulent activity in the metropolitan Chicago area compared to other areas when imposing the first-ever moratorium authorized by the Affordable Care Act to halt the enrollment of new home health providers in the metropolitan Chicago area. Dr. Davida is one of three physicians who have been convicted in connection with just one home-health agency, Rosner Home Healthcare, which was based in Skokie. These physicians’ involvement may provide useful lessons for other physicians in staying away from home-health fraud.

Rosner got its patients in one of two ways, each of which involved violations of the Anti-Kickback Statute, which prohibits payments to induce referrals for services that are billed to Medicare. First, Rosner paid physicians up to $500 cash every time that a physician certified the patient for a new cycle of home-health services. Rosner delivered the payments in cash that was hidden in envelopes. In 2012, an employee of Rosner began cooperating with law enforcement and recorded multiple cash payments to two physicians. Both pled guilty to taking a kickback in violation of the Anti-Kickback Statute.

Second, Rosner paid non-physician marketers to find patients who expressed some interest in receiving home-health services. Rosner then referred those patients to doctors such as Dr. Davida, with the expectation that those doctors would certify the patients for home-health services. Dr. Davida knew that many of these patients already had a primary care physician and did not qualify for home-health services, but he nonetheless falsely certified many of the patients because he knew that if he did not sign or cause to be signed the orders that were created by home-health agencies and sent to him, the home-health agencies would stop referring patients to his company and would take patients away from his company. As a result, Dr. Davida at times certified patients for home-health services without the knowledge of the patients’ primary care physicians even while those patients continued to see their primary care physicians for office visits.

In addition, Rosner’s nurses regularly put false information into patient charts to make the patients appear to qualify for home-health services and to increase Medicare payments to Rosner. In 2015, three Rosner nurses, including one of the company’s owners, pled guilty to charges related to making false statements in patient charts. These nurses regularly put false information in patient charts to make patients look sicker than they were, such as falsely claiming that patients were unable to leave their homes and were unable to dress themselves. Nurses also periodically discharged patients and then re-admitted them in order to hide the fact that Rosner saw patients unnecessarily for years without any real changes in their medical conditions.

The nurses created orders for the physicians to sign, and the physicians all signed orders that made it appear that those physicians had used their medical judgment to issue orders admitting, recertifying, discharging, and readmitting the patients. In fact, one nurse testified in a recent trial that Rosner nurses simply followed their patterns and got a doctor to sign the paperwork afterwards in order to make the files appear legitimate.

Physicians may want to keep some principles in mind when referring patients for home-health services.

•   Physicians who refer patients for home-health services should know that patients receiving home health services must be “confined to the home,” which has a multi-factor definition set forth in Chapter 30.1 of the Medicare Benefit Policy Manual. A patient who finds it taxing to leave the home or uses a walker is not necessarily confined to the home unless other criteria are met.

•   Physicians who refer patients for home-health services should ensure that nurses are actually providing nursing services that are medically necessary and that can only be done by a skilled nurse. Nurses should not simply be checking up on stable, chronic conditions; such services are not covered by Medicare and billing for such services may constitute fraud.

•   Physicians who refer patients for home-health services should ensure that they are only ordering services as long as they are medically necessary. A patient may need home-health services for a few weeks after a surgery or a stay in the hospital, but should not continue to receive home-health services once he or she is no longer confined to the home and no longer needs skilled nursing services at home.

•   Physicians should be careful to not accept money or anything of value in exchange for referring patients for any services for which payment may be made under Medicare or Medicaid. Even if a patient does qualify for home health services, a physician who accepts payment for referring that patient to a particular home-health agency may violate the Anti-Kickback Statute.

Physicians who improperly refer and certify patients for home-health services may face criminal or civil liability.

Crime Hurts Health Care

In imposing Dr. Davida’s sentence in January, District Judge John Tharp said that the crime was a “very serious offense” and described the actions of Dr. Davida and others as an “effort to milk the Medicare system of funds to which” Dr. Davida and “others involved in the scheme were simply not entitled.” Judge Tharp also noted that the crime imposed other difficulties on the health care system, saying that it was because of crimes like this that Medicare imposed so many rules and regulations.

Physicians with office practices may also want to talk to their patients to make sure that the patients are not receiving improper home-health services that have been ordered without the physician’s knowledge. Federal investigations have found that many patients have received telemarketing-like calls offering free nursing services and have received home-health services and physician visits at their home without their primary care physicians’ knowledge and sometimes with the mistaken belief that their primary care physician had arranged for such services.

Stephen Chahn Lee, Esq., is an Assistant United States Attorney for the Northern District of Illinois. Physicians can report information about fraud or illegal kickbacks by calling 1.800.Medicare or going to

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