CEO SUMMARY: Physicians should consider the precedent established recently when the U.S. Attorney for the Western District of Michigan obtained a 72-count indictment against a local dermatologist, including 35 counts of submitting fraudulent claims for lab tests he did not perform, as well as laboratory services he did not render. One legal expert considers this federal indictment to be a significant development.
EACH TIME FEDERAL PROSECUTORS obtain an indictment for healthcare fraud and go to trial against the defendents, it helps us gain insight into the enforcement mindset of the federal establishment,” stated Jane Pine Wood, an attorney with McDonald Hopkins of Cleveland, Ohio.
Wood was referring to the recent indictment and trial of Robert W. Stokes, D.O., a dermatologist practicing in Grand Rapids, Michigan. Stokes was indicted on 72 counts of fraudulent billing, ranging from upcoding to billing for professional services not performed. In the indictment, 35 counts specifically involved laboratory testing, alleging that Stokes submitted fraudulent claims for laboratory tests he did not perform and for laboratory services that he did not render.
At his jury trial in April, Stokes was convicted on 31 counts. He will be sentenced on October 24, 2007. Stokes is currently free on bail and has agreed not to practice medicine. There has been little public discussion of the details of the trial by the court, the federal prosecutor, or the defense counsel.
However, THE DARK REPORT has learned that, at the opening of the trial, the federal prosecutor was ready to pursue a conviction on all 72 counts against Stokes. Then, as the trial proceeded, the prosecution decided to emphasize Stokes’ fraudulent billing for his professional services and not pursue the 35 counts involving Stokes’ fraudulent billing for lab testing services.
Jury Convicts Stokes
The prosecutor’s strategy succeeded. The jury convicted Stokes on 31 counts of fraudulent billing for professional services. These cases represented the bulk of the $1.04 million in restitution that the federal government was seeking as part of its case against Stokes. It is likely that the restitution amounts involved in the fraudulent laboratory testing claims were a small amount of that total, another reason the federal attorney did not more aggressively pursue these counts at trial.
Attorney Wood advised that pathologists, laboratory directors, and physicians who refer specimens to laboratories should not read too much into the fact that the federal attorney did not pursue the fraudulent lab billing counts at the trial. “Clearly the federal attorney had evidence to support indicting Stokes on 35 counts of fraudulent billing for lab tests,” observed Wood. “He also took these counts to trial. However, it appears he did not pursue them to finality at trial.
“There are many legal strategies and reasons why, at trial, a prosecutor may choose to emphasize certain counts against a defendant over others,” contin- ued Wood. “Until we know more, we won’t understand how events at Stokes’ trial caused the counts on lab billing fraud to take a back seat to other counts.
“None of this should distract from the primary lesson here,” she declared. “Physicians involved in billing for laboratory test services want to avoid the indictment itself! This case is a reminder to physicians and laboratories that U.S. attorneys will prosecute physicians who fraudulently bill for laboratory testing services.”
Wood noted that, as explained in the indictment, it was likely that Stokes had a discounted billing/client billing arrangement with his laboratory providers. “The indictment alleges that Stokes submitted claims for laboratory testing services he did not perform,” said Wood. “In addition, it says that he was account billing to some insurers. He probably knew that he couldn’t account bill for Medicare because the laboratory that performs tests for Medicare must directly bill Medicare. It’s possible that Stokes was not aware that Tricare is a government payer just as Medicare is.” Tricare is an agency of the U.S. Department of Defense that administers healthcare for the uniformed services, retirees, and their families. It insures more than 9.1 million eligible beneficiaries worldwide.
“In this case, the prosecutor was probably concerned that the defendant was account billing for lab tests when, in theory, at least the payer agreements would generally require the doctor to perform the services in order to bill,” Wood explained. “I am speculating here, but it may be that the payer contracts were not as clear or the payers were not able to provide sufficient evidence that the activity was fraudulent. Therefore, the prosecutor would have had a more difficult time when pursuing the facts behind those charges during the trial.
Indictment Under USC 1347
“The key to the case was the indictment under United States Code 1347, which is for obtaining money under false pretenses,” Wood explained. “USC 1347 is the general healthcare fraud statute that the government uses in such cases. This statute includes violations involving upcoding, miscoding, and filing claims for services not rendered.
“To me, the most important issue in this case is not necessarily what happened at trial, but that a prosecutor was willing to indict a physician in those situations where the payer contracts would have requested certification that he provided the service,” Wood continued. “Of course, it would have been nice to have a clear legal decision on the lab fraud charges, but it’s not as though those counts were dismissed. To the contrary, it’s just that they were not pursued.
Indicted And Convicted
“That is an important distinction because the defendant can’t claim the government lost its case on those counts,” Wood explained. “If the prosecution had any reservations about pursuing those charges and winning a conviction, it certainly did not have reservations about the other charges and so pursued those charges. Thus, the government got what it wanted out of its case against Stokes: an indictment and a conviction.”