Retired OIG Special Agent and Advize’s Director of Litigation & FWA Support will be stepping in each week to examine current fraud trends from the lens of an investigator. Stay tuned for weekly insights, updates, and information on healthcare’s most expensive crimes.

Over the past few weeks, I have been discussing the investigative process.  From the subpoenas that are served, to the way the investigation defines your place in the investigation, to the prosecution, the lifecycle of an investigation is extremely interesting to those who work in the fraud space.  One area that I did not discuss in those posts, was the use of Deferred Prosecution Agreements (DPA).  Providers who are the subject of a criminal prosecution and are likely to be charged and convicted, love the idea of a DPA.  For those that do not know what it is, a DPA is an agreement between the prosecutor (in this case the US Attorney’s Office) and the defendant in the investigation.  As part of that agreement, the defendant agrees to several stipulations over a period.  As part of the US Attorney’s part in the agreement, the provider is not prosecuted for their behavior, so long as the conditions of the DPA are met.  The conditions typically include the payment of restitution for the fraud, a heavily monitored period (by an outside monitor, appointed by the US Attorney’s Office), a regular reporting, to name a few conditions.

I was involved in the first DPA between a US Attorney’s Office and the State of New Jersey.  The matter was actually with the University of Medicine and Dentistry of New Jersey (UMDNJ).  At the time, UMDNJ operated the New Jersey Medical School (NJMS), University Hospital (UH) and a host of other state sponsored healthcare operations.  At the center of the DPA, was a double billing scheme, whereby UH billed for physician services that were also billed by the physician group at UH.  This became known as the “11/22” scheme, as these were the designated place of service codes used by the entities to submit their duplicate claims (11 being office and 22 being the facility).  Without going into too much detail, UMDNJ agreed to pay nearly $5 million and entered into a five-year DPA that included outside monitoring.

During the course of the monitoring, it was discovered that UH had also entered into numerous agreements with cardiologists in the local area, for the purpose of increasing the number of angiograms/angioplasty tests at UH.  For those who read about a recent Newark, New Jersey based hospital at risk of losing some its ability to treat patients due to poor outcomes, UH was suffering a similar fate.  UH had a poor outcome rate on its cardiothoracic surgeries.  There had been a steady decline in angio referrals, which serve to be a “feeder” for surgeries, as a certain percentage of patients who have the diagnostic exam, will then need to have a surgery to rectify the identified cardiac problem.  With declining referrals for the diagnostic test, the resulting declining surgeries will mean that surgeons are not keeping their skills up.  With UH being a level I trauma center, in the heart of Newark, New Jersey, the risk of licensure loss would be devastating.

The collateral effects of licensure loss would have a trickle effect on its trauma designation, it ability to obtain grants, etc.  How do you fix this?  You come up with the creative way to induce providers to send patients.  UH provided several local cardiologists with the title of “Clinical Assistant Professor,” or CAP as they were known.  Each CAP had a proscribed list of duties to be met in order to have their 20 hour a week contract, which paid as much as $180,000 a year.  One of their responsibilities was to provide training and education to the cardiology Fellows who were training to be interventional cardiologists.  There were only a small handful of these Fellows, yet there were over a dozen of these CAPs.  How could the CAPs all provide that training and education?  What made this even more egregious, was that at least one of the cardiologists who entered into this contract, was not even an interventional cardiologist, and could never have been able to provide the required education and training for the Fellows.  Another CAP sent one of his staff (another interventional cardiologist) in his place.

In the end, a total of four individuals were criminally prosecuted: two doctors for their role in the CAP program fraud, one doctor for a False Claims violation (the criminal False Claims statute) and an accountant for False Statements.  There were numerous civil settlements in this matter, including an additional settlement with UMDNJ for this behavior.  This investigation was fascinating to me, as it demonstrated how the greed of individual and unscrupulous providers can have a symbiotic relationship with a desperate medical entity.  UH needed to maintain its flow of angio patients, and the CAP agreements were the easiest way to do that.

Advize Health LLC is a healthcare advisory and consulting company that provides a breadth of healthcare industry services in the payer, provider, and legal communities. Contact Eric Rubenstein for more information on our Fraud Spotlight series.