How an honest mistake can lead to fraud

Dr Doc has been running an honest, reputable and successful dermatology practice since
15 years old. She is respected by her colleagues and loved by her patients. His usual Medicare office visit fee of $ 125 is considered reasonable and customary by all managed care providers in his service area. Unfortunately, her office manager fell ill and Doc’s husband, who had an MBA, took over as temporary manager.

He quickly realizes that $ 125 seems a small amount compared to the effort undertaken by his wife. He explains that his coding could be done honestly, but more aggressively, and simply suggests that he overcode with his billing. He shows her how to manipulate her electronic medical records to achieve higher current procedural terminology codes. This will improve repayments, he tells her.

Doc takes her husband’s advice. She continues to provide impeccable care, but her “standard of care” documentation is appalling. In 1 year, it bills 1000 patients. Doc receives a Medicare audit which suggests fraud on his part. She is convinced that she is innocent. If she used better documentation, she could charge higher fees. Is it really a fraud?

A healthcare provider can be sued under 8 major fraud theories:

  1. Fraudulent processing (violations of laws regulating controlled substances).
  2. Invoicing for services not provided.
  3. Denature the nature of the services provided to patients.
  4. Car accident scams.
  5. Charlatanism (distortion of identifying information or remedies).
  6. Erroneous cost reports.
  7. Illegal remuneration.
  8. Provide unnecessary or substandard health services.

Medicare and Medicaid service centers1 notes that the most common forms of fraud include billing for services not provided

distort the diagnosis to justify payment; solicit, offer or receive a bribe; unbundling charges or “explode”; falsify treatment plans and medical records to justify payment; and billing for a service not provided as billed, known as overcoding.

Civil and criminal laws deal with these false claims. Medicaid and Medicare fraud and abuse laws make it a crime to distort the nature of the services rendered, which is punishable by fines and imprisonment.

A health care provider is responsible for knowing and understanding the proper billing procedures and regulations. One attempt at defense is that regulations or laws are ambiguous. People of New York v Alizadeh is an unusual case in which this defense worked. In this case, an obstetrician was convicted of fraudulent billing. On appeal, Aliadeh, a doctor, successfully argued that the billing system was unfamiliar to him and difficult to interpret. As a result, his billing reflected honest errors, not fraud. This defense is hardly ever successful.

In Michigan v Perez-DeLeon and Velez-Ruiz, Velez-Ruiz, a doctor, and her husband / office manager, Perez-DeLeon, were convicted of filing false Medicaid claims by billing Blue Cross Blue Shield of Michigan for office visits to patients who were not, in fact, in the office. Velez-Ruiz was sentenced to 500 hours of community service; $ 38,340.63 in fines, compensation and costs; and 5 years of probation. Her husband was ordered to pay $ 17,169.34 in restitution, spend 1 year in prison, and be on probation for 5 years.

On appeal, the doctor argued that the laws under which she and her husband were convicted were unconstitutionally vague. The court did not accept this argument, noting the persistent nature of the inaccurate allegations. The court said that because the doctor received a constant flow of government funds, she had an obligation to verify the accuracy of her claims. Errors would not be accepted.

Computerized invoicing facilitates execution for investigators; Additionally, HCFA audits can be triggered by increased use of particular services. Confusion over billing records will not be accepted by the government as a defense.

In United States v Krizek, Krizek, a doctor, was found guilty of reckless disregard when he delegated the authority to bill for him to his wife and failed to review the bills she submitted. Confusion over billing procedures is not an effective defense in these cases.

The surest way to ensure compliance with laws is to implement and maintain a compliance program, which offers clear benefits: screening employees, reducing the risk of fraud and abuse, and minimizing the imposition of tax. ” a government-mandated compliance program.

Doc, on her husband’s advice, was guilty of overcoding. Her innocent mistake and lack of sophisticated coding knowledge will not protect her from prosecution. It is exposed to civil and criminal penalties. His “honest mistake” will not be considered honest when assessed by the courts


1. Medicare and Medicaid service centers. Medicare fraud and abuse:
vent, Detect, Report
. Medicare and Medicaid Service Centers; January 2021. Accessed October 7, 2021.

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