- Understand how violation of Hippocratic Oath leads to Surgical Care Affiliates’ Medicare Fraud.
- My name is Lawrence Hartman and I’m a Columbia Law School graduate and a principal in Compliance Mitigation. I made very poor choices in the growth of my business, financing small public companies, bringing me under investigation for fraud. I believed my actions were protected by loopholes and Safe Harbors, operating by the letter of the law but abusing its spirit. Prosecutors filed a 36-count indictment against my partners and me, while I remained outside of the US. One of my partners went to trial during this time with another testifying against him. The partner who went to trial was found guilty and received a 25-year sentence. The partner who testified received only five. The long arm of the US law eventually caught up with me and I pled out to 10 years. I received invaluable experience both from my own direct exposure and assisting fellow inmates as a jailhouse attorney. Our team at Compliance Mitigation offers services to help develop mitigation strategies leading to lower sentences for people charged with crimes.
- Participants will be able to:
- Understand the need to better supervise employees.
- Describe how the actions of a few can undermine confidence in and lead to liability for an entire company.
- Explain why companies must better document medical need prior to performing surgeries.
- Identify ways in which companies can protect themselves in today’s environment of expanding criminal liability.
- Senior management, doctors and employees at healthcare facilities.
- Fraud, Kidney Stones, Fair Market Value, Procedures
- The US government is our nation’s largest insurer via its Medicare and Medicaid programs. Due to its size, some medical professionals try to game the system and slip in procedures not covered by the program in order to earn extra compensation. Others go even farther and criminally perform unnecessary medical procedures, contrary to their oath to do no harm. They may get away with it for a while, but massive government audits raise questions and can lead to charges of fraud.
- Most doctors take their Hippocratic Oath very seriously, but all doctors get viewed with the same jaundiced eye as if something improper occurred. Did the doctor perform too many surgeries? Were they all necessary? Doctors often find themselves in a bind stuck between (i) choosing to recommend something to avoid potential liability for not doing enough, and (ii) doing too much and facing potential government prosecution. No doctor truly believes it will occur to her or him, until it does. By then it’s too late. The US government brought 6 percent more indictments last year than the year before. This troubling trend can be expected to continue, catching more of both deserving and unsuspecting people in its vast and intricate web.
A noted urologist allegedly colludes with a medical care facility to recommend patients for unnecessary kidney stone removal procedures. The scheme goes on for years as the government uncovers the plot and prepares to investigate. The doctor dies prior to any conclusion of guilt and without a chance to defend himself. The government, nonetheless, continues its pursuit and collects it from the deceased doctor’s estate.
Surgical Care Affiliates provides surgical services nationwide with more than 230 facilities, and 8,5000 physicians who serve nearly one million patients per year. The company prides itself on caring for patients, serving its physicians and improving health across America, according to its corporate Mission Statement. They further note their core values as clinical quality, integrity, service excellence, teamwork, accountability and continuous improvement. One of the company’s care centers sits in the heart of Orlando.
Doctor Patrick Hunter, also located in Orlando, specialized in urology and regularly attended patients suffering from pain with kidney stones. Doctor Hunter frequently referred his patients to Surgical Care for lithotripsy, a process that eliminates kidney stones. Surgical Care engaged in multiple peer reviews confirming Dr. Hunter’s diagnoses that patients had kidney stones, when its questionable that any existed at all. Surgical Care paid Dr. Hunter per procedure for each patient he referred. The referral fees resulted in payments of over $5 million for the use of two machines. Surgical Care accepted payments from Medicare as a patient payment solution option.
Scott Thompson, Surgical Care’s former Director of Compliance filed a whistleblower complaint in 2016. The lawsuit claimed that Dr. Hunter, in fact, referred patients for surgery when they had no kidney stones and that Surgical Care performed many unnecessary surgeries, contrary to the medical professions Hippocratic Oath and Surgical Care’s lofty Mission Statement.
The US Attorney’s Office for the Middle District of Florida joined in, bringing criminal actions against Surgical Care and the Estate of Doctor Hunter in January 2020, since Doctor Hunter passed away in 2019. The government took three years to investigate the case before bringing charges. The federal government notably declines to intervene in 80 percent of whistleblower cases but when they do intervene, over 90 percent result in highly favorable settlements for the government and whistleblower involved.
The government’s action additionally claimed that, from 2010 through 2016, Surgical Care paid Dr. Hunter rates higher than fair market value, resulting in payments of over $5 million for the use of two machines that were valued at less than $40,000. It further alleged that Surgical Care requested a fair market value analysis, which required an annual cap of less than $800,000 be paid to Dr. Hunter; and that Surgical Care, nonetheless, paid Dr. Hunter over $1.3 million, well in excess of what had been required by the fair market value analysis.
The government’s aggressive pursuit resulted in a $1.7 million settlement with the estate of Dr. Hunter in January of 2021. The government notably brought its action prior to the settlement of Dr. Hunter’s estate, which would have terminated the government’s rights against those assets. Providing an important lesson that the government can and will even reach beyond the grave to exact justice. The settlement amount reflects the vast majority of assets in the estate.
The government’s action against Surgical Care remains open at the time of writing this case study, as Surgical Care also got hit with another lawsuit in January 2021, claiming anti-trust violations, claiming it reached agreements with several competitors not to solicit each others’ senior-level employees. It appears that the company’s Mission Statement may be little more than window dressing on a company whose compliance initiative has material shortcomings. Surgical Care faces material criminal and exposure as a result of the actions of tis employees.
The US government is extremely persistent, even to the point of pursuing people past their graves. The government, after all, has a long time horizon. They don’t need to catch someone now, just eventually. Hidden schemes, moreover, have a way of bubbling to the surface. Nothing is foolproof. It could be as a result of a whistleblower or an investigation into something else that leads a trail to spotlighting individuals or a company. In the end, the consequences typically by far outweigh any perceived benefit from the fraud. Surgical Care and principals in the company involved in this plot still face exposure to significant fines and the potential loss of freedom.
Surgical Care’s ethical claims on the website need to be backed up with a strong compliance program. In fact, all companies can benefit from compliance. It puts safeguards and checks in place to ensure that no individual(s) can undo the goodwill of entire company. In this instance, Surgical Care could also lose the benefit of receiving Medicare insurance as well, totally undermining the viability of the company. Consider, for a moment, how something like this could impact your company?