June 15, 2016

An Audit Gone Bad in Florida

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Today we consider a criminal case that many think should have been nothing more than a regular audit. Dr. Ona M. Colasante was a professor at a medical school in Florida for six years. She then went into practice and eventually was running several clinics, servicing a large number of patients. After a few years, she decided to sell to an investor from Kentucky. She wanted to spend more time with her autistic child, who needs around-the-clock attention.

As the deal for sale progressed, the terms started to change. First, the investor was going to purchase everything outright; then they wanted the doctor to finance much of the purchase. Things seemed to go well, but it soon became evident that the new owner was unable to run the practice. The doctor was called back in to continue practicing and to keep the clinics running.

Shortly thereafter, the purchaser started to claim that they could make no more payments to the doctor. They were backing out of the deal. The doctor was forced to begin proceedings to get the clinics back. The purchaser needed cash, and according to employees at the clinics, was overheard asking how to report Medicare fraud and contacting a qui tam attorney. 

The rewards for a successful qui tam verdict can be substantial. According to Becker’s Hospital Review, from 1987 to 1992 there were 62 qui tam cases. In 2011, there were 417; in 2012, there were 412. The reward can be 15 to 25 percent of any funds recovered by the government. In a Medicare case involving laboratory billing practices, the U.S. Department of Justice received a $333 million settlement from GlaxoSmithKline, and the whistleblower got a check for $52,049,126. It is not known if the purchaser was thinking of using qui tam as a means to getting quick cash. 

Eventually, the doctor recovered her clinics. But shortly thereafter, she was raided by the FBI. The raid was reported by the local news and is on a YouTube channel created by the doctor. You can see employees describe the FBI raid. All records were seized, practically every piece of paper, and computers as well, plus patient records. No explanations were given to anyone. There was no way to operate the clinics from there. All claim payments to the clinics were stopped. One person said that the FBI told the parties to stop paying all claims. All credit cards were frozen, all banking accounts seized. There was no way to pay the staff. Patients were alarmed, but there was no way to communicate with them.

In court documents filed August 2015, a grand jury issued an indictment charging 197 counts of claims fraud and five counts of money laundering involving around $70,000. Most of the claims were for Medicare, some for Medicaid, and a handful for Blue Cross.

Shortly thereafter, the doctor was forced to surrender her passport and flying license. She was confined to the Northern District of Florida and forbidden to speak with any of her patients or former employees. 

She retained a team of criminal law attorneys. As they collected evidence to fight the charges, an investigator she hired reported back that no one would talk with him. He concluded that they had been intimidated. Most were told that they could be charged as accomplices unless they “cooperated.”

It was a jury trial. Very quickly, the judge threw out the money laundering charges. They appear to have been based on little more than the doctor having moved money between her own checking accounts. This left a number of claims based on the common complaints of poor documentation, procedures that were not medically necessary, and an issue of having purchased some medicines from suppliers in Canada.

The government presented its case, claim by claim. It took weeks to go through the claims. The prosecuting attorney was dramatic and used frequent gestures in court, such as rubbing pant pockets and saying things like “she just wanted to line her pockets with money.” Afterwards, the doctor testified. She presented the rationale for each of her claims. Many patients were older and were given hearing tests. There were other procedures, but each was explained.

Forty-six of the counts involved claims associated with Canadian drugs that were exactly the same as the U.S. versions, manufactured by the same company, only less expensive.

The government argued that some of the labels for drugs sold in Canada had foreign languages printed on them, such as French. A number of the drugs had “approved by the FDA” printed on them, and they had been ordered not by the doctor but by her purchasing manager, who was simply trying to get good prices.

The doctor had forked out more than $40,000 to assemble a mock jury and test their reactions to various testimony approaches. Nevertheless, we can reasonably assume that the details of the medical issues involved were unintelligible to the high-school educated jury. In the typical audit case, questions of medical necessity are reviewed by doctors or other trained medical professionals.  Here, it is strange to see a jury of laypersons making decisions on medical necessity, particularly involving neuroscience issues. On a number of the “not medically necessary” claims, there was disagreement between professionals brought in to testify. Normally this would cloud any idea of the “beyond a shadow of a doubt” standard applicable to criminal cases. 

The doctor was convicted on a number of the counts; 116 claims were found to be false or fraudulent.

Her legal team filed a motion for judgment of acquittal and for a new trial. They wrote that “the government did not prove the requisite elements of knowledge, actual falsity, willfulness, or intent to defraud,” and opined that “the verdict was against the weight of the evidence.” This motion was denied. 

Although the total value of the claims found to have been false or fraudulent added up to around $3,000, the government asked for a termination of medical license and a penalty of $3.7 million. This figure was not based on a statistical extrapolation, which is the usual form for determining a recovery demand amount. Instead, in this type of case, the government is allowed to ask for all proceeds from the “scheme.”  This means that even if all other claims submitted by the doctor were valid, virtually all revenues can be demanded, and that’s not including the extra penalties.

The government also is asking for at least 10 years’ imprisonment in a federal facility. That is 116 bad claims potentially leading to a decade or more in prison. That’s amazingly different from what happens in a typical audit. In fact, several attorneys have expressed astonishment as to why this was a criminal case at all. These types of issues normally are settled using standard Recovery Auditors (RAs).

Sentencing is coming up in September. According to criminal attorneys interviewed, around 80 percent of sentences fall within the federal guidelines, which are harsh. The guidelines also allow penalties to be notched up two levels if there is an issue of abuse of trust or if the defendant has a special skill. Seasoned attorneys estimate a 15-year prison sentence, and soon the government will pile on a separate civil suit involving the same claims, even though it is obvious that by then the doctor will be left completely penniless, with no money for defense. 

She plans to appeal, but there is still the question of adequate funds. Yet even if she appeals, the process will take one to two years, and for all of that time she will be incarcerated. 

It is a public policy question as to whether these penalties are appropriate for this type of case. More later as the story develops. 

Stay tuned.

About the Author

Edward M. Roche is the founder of Barraclough NY LLC, a litigation support firm that helps healthcare providers fight against statistical extrapolations.

Contact the Author

Roche@barracloughllc.com

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