Case Study: Medical Fraud in Southern California

Case Study: Medical Fraud in Southern California

Fraud offers a questionable and illegal gateway to the manipulation of institutions for financial gain. That is, it is the use of wrongful deception whose intended outcome is the achieving of either personal or commercial gain(as is common). Healthcare fraud has led to the slowing down and, in the cases, the complete halting of rolling out ofaffordable medical care by both the government and insurance companies.  Those that misappropriate healthcare funds ultimately lead to expensive costs that are incurred in the process of acquiring medical services.  The current insurance funds and government programs such as Medicare and Medicaid have suffered a massive backlash from critics that view the installed systems as too vulnerable to fraudulent activities. While the cases of fraud are widespread throughout the country, there is ranging of isolated mass scams that affect the national level. Claims that are brought to the public limelight act as a precautionary measure for warning both would-be perpetrators and potential victims. Recently, the L.A. Times published a news article that highlighted the case of medical professionals that were implicated in the Medicare Fraud Scheme. Acase study into the committed fraud narrows in the particulars of the case, investigation process, and proposed prevention measures.

In the case, the defendants were either doctors or medical professionals that were in the Medicaid and Medicare fraud schemes. Amounts that were embezzled can collectively be estimated to be a total of $257 million in billings, according to the Department of Justice. Federal prosecutors charged the various parties in ten concurrent cases in the Los Angeles Federal Court. First, Navid Vahedi, who is a pharmacist, was in collusion with Joseph K. Keiffer in the enabling of an illegal kickback scheme. The company that Vahedi worked with, Fusion Rx, produces compounded drugs that are particularly tailor-made for certain exceptional cases. Therefore, the drugs were only to be issued had there been a physician prescription as an alternative for FDA-approved medication that did not suit the specific patient needs. Vahedi acted in his capacity as an operator for Fusion Rx and Kieffer as a marketer, to allegedly offer commissions for patients that unnecessarily insisted on the use of compounded drugs that were then billed to their health care providers.Thereafter, Fusion Rx ensured that the patients were offered relief from their copayment charges as a form of incentive for participation in the fraud.  In other cases, other marketers carried out their bidding for them. Fusion Rx went ahead and got reimbursed for the medical charges at rates that were higher than average for the provision of the compounded drugs. To cover up the scheme during auditing, the two allegedly disguised in the issuing of gift cards to their customers.

An array of other professionals was also accused of their fraud cases based on the use of similar deceptive methods in the acquiring of kickbacks gotten from defrauding Medicare. On the other hand, Dr. Ronald Weaver was accused of participating in the scheme by issuing unnecessary cardiac testing and treatments in his practice in Inglewood and then billing then under Medicare. Some of the implicated suspected in the ring are inclusive of those that are not first-time offenders in the American courts. Nagesh Shetty has a history with issues with the law, with there being subsequent arrests and prosecuted cases that were filed against him. Weaver and Shetty both conducted their suspicious activities through the Global Cardio Care found in Inglewood. After a series of prosecutions and serving a jail term for numerous fraud cases, Shetty’s license was revoked by the California Medical Board. Still, he later contested the decision and was reinstated in 2005. He has approved a probationary license, with the requirement that he completes a comprehensive ethics course and a clinical training program, undergoes observing and be stripped of practicing solo, supervising physician assistants, and handling any billing matters(Scalfani 2019). Others that were included in the case were charged with billing the Medicare and other health plans with fraudulentcharges..

Discovery of the scheme was made through a federal investigation that targeted health care providers that had suspicious financial records and billed healthcare programs with exorbitant fees.  According to Armstrong, “Investigations aim to uncover the full extent of the fraud and to prosecute in the most serious cases”(2014,3). The schemes offered testing, prescriptions, and services that were deemed as unnecessary or were not even provided to the alleged recipients. The Office of Public Affairs of the Department of Justice released a statement that pointed out, “The charges announced today aggressively target schemes billing Medicare and Medicaid for services, testing and prescriptions that were not medically necessary or not actually provided to beneficiaries”(2019).  For instance, Susan H. Poon submitted documents that were falsified to indicate that the said patients received chiropractic services, medical diagnoses, and office visits that were only imaginary and could not be traced to actual recipients. Most of the patients that were mentioned to have received the medical care that was billed and later reimbursed to the practice were either employees or employee-dependents of Poon. In another similar clinic, there was an additional inclusion of documentation of untendered services that were signed off by unqualified employees. The principal suspects in the schemes were tracked down through the significant benefits that they accumulated over time, thus raising suspicion. In most of the instances, the participants also had expenses that were well beyond their pay grid. For example, Navid Vahedi purchased a 1963 Ford Mustang Cobra.

The collection of evidence in a case of this type of fraud starts with the identification of violations against set medical standards. The medical scam involves making prohibited referrals for individually selected healthcare with the intention of profiting from it. In this case, the cited medical professionals knowingly assisted patients in the acquisition of unnecessary medication. Besides, there is the offense of obtaining healthcare payment through knowing submission of a false claim to the healthcare provider. As mentioned earlier, the medical professionals in the scheme are allegedly involved in either offering or receiving remuneration that is expected to reward items that are later reimbursed by healthcare programs. Therefore, the type of evidence that is to be collected during this investigation has to point towards the identification of the above violations. According to Kranacher and Riley, “Evidence of the act may include that gathered by surveillance, invigilation, documentation, posting to bank accounting, missing deposits, and other physical evidence”(2019). There has to be material that points towards knowingly and willingly using the tricks in the scheme to obtain benefits from the healthcare programs. In these cases, digital evidence is vital in the proving of the case due to the availability of records to show correspondence between the perpetrators and the victims. The identification of fraud is primarily based on the auditor’s ability to identify a smoking gun.  Generally, fraud cannot be considered as a mistake as it goes on for a given length of time. Therefore, collected evidence, in this case, includes numbers that cannot be accounted for as simple typographic or bookkeeping errors.

Conclusively, the case study into the committed fraud narrows in the particulars of the case, investigation process, and proposed prevention measures. In this context, the case study is based on the case that was reported in a local newspaper.  The LA Times published a news article that highlighted the case of medical professionals that were implicated in the Medicare Fraud Scheme. Upon prosecution, the suspects will either prove their innocence or be sentenced by the relevant authorities. Although there are traditional red flags that are found in fraudulent situations, forensic accountants still need the backing of better systems to ensure that there is a reduction of such cases. In collaboration with the public and private healthcare, authorities and designated task forces can ensure the curbing of entry of unscrupulous medical professionals into the market. Given the fragile nature of the field, Medicaid and Medicare can work on the stringent measures that govern the accreditation of both medical caregiversand beneficiaries. Fraud, as highlighted in this particular case study, leads to a slowing down of the growth of the healthcare sector due to the loss of money by the government.

References

Armstrong, J. (2014). Fraud Investigation Process. U.K. Department for Work and Pensions Session 5, U.K.

Kranacher, M., & Riley, R. (2019). Forensic Accounting and Fraud Examination. John Wiley & Sons.

Office of Public Affairs of the Department of Justice. (2019, September 18). 25 Southern California Defendants Face Federal Charges Alleging Fraud Schemes That Cost Health Care Programs Millions of Dollars. U.S. Department of Justice. https://www.justice.gov/usao-cdca/pr/25-southern-california-defendants-face-federal-charges-alleging-fraud-schemes-cost

SCLAFANI, J. (2019, September 20). H.B. Doctor Indicted in $135-million Medicare Fraud Scheme. Daily Pilot. https://www.latimes.com/socal/daily-pilot/news/story/2019-09-19/h-b-doctor-indicted-in-135-million-medicare-fraud-scheme