Physician beats the rap in federal mail fraud case
In a rare court victory against federal prosecutors, psychiatrist Anthony F. Valdez, MD, of El Paso, TX, has successfully defended charges that he defrauded a number of private health insurance companies by submitting claims for services he never provided.
Some experts are encouraged that the Valdez verdict could prompt more defendants to fight in court rather than simply pay to settle charges, as is more common. Others, however, note that the Valdez case is part of a troubling trend in which federal prosecutors pursue charges against physicians even when the alleged fraud doesn’t concern Medicare.
"The government is becoming more and more aggressive in bringing health care fraud cases to court," says Frederick Robinson, JD, of the law firm Fulbright & Jaworski in Washington, DC. "Five years ago, no prosecutor would have touched this particular case." In addition to the fact that no federal money was involved, Robinson notes that the amount of money in dispute was fairly small — about $37,000 in claims, less than 1% of Valdez’s practice.
Even so, the Federal Bureau of Investigation, working on a tip from a former girlfriend of Valdez and corroborating testimony from a former office manager at the practice, charged Valdez with one count of conspiracy to commit mail fraud and six counts of mail fraud, which carry a maximum penalty of five years each. Realistically, if convicted, Valdez probably would have faced two to three years in a prison and a fine as high as $250,000.
Robinson, who represented Valdez in the case, believes the government took such an active role in prosecuting a non-Medicare fraud case because it had already invested a lot of time in pursuing Valdez. "I believe they originally thought there might have been Medicare and Medicaid fraud going on," he says. "They spent a lot of time investigating that, but at the end of the day they didn’t have anything related to federal health care programs. [They went forward anyway because] I think it’s difficult for the government to give up a multiyear investigation without charging something."
The government’s principle witness in the case was a former office manager, who claimed that she and the doctor had conspired to submit fraudulent bills to private insurance companies. Before the government’s investigation began, however, Valdez had already reported her to the local police department for embezzling more than $50,000 from the practice. The defense argued that she had slipped improper claims into the stack of claims Valdez signed each week, then siphoned off the money when it came in from the payers.
For his part, Valdez maintains that, although he personally signed each claim form, he often signed 150 forms in a 10-minute period each week and that he didn’t review their contents. Since the case was criminal rather than civil, prosecutors couldn’t argue that his failure to review the bills constituted reckless disregard. Even if they had, Robinson says, "It’s still an issue of what’s reasonable under the circumstances. I don’t think it’s reasonable that a doctor should have to double-check all the work of the people on his staff. If he has to do that, why bother hiring staff?"
Even so, Robinson says the Valdez case highlights the need for even smaller physician practices to have compliance programs that include at least the following elements:
Implement a policy of conducting background checks on new hires. At a minimum, check references. Also perform a criminal background check, and consult the Office of Inspector General’s Medicare exclusion list, which is updated regularly and posted on the Internet.Send staff with billing responsibilities to Medicare-sponsored billing seminars.
Maintain subscriptions to appropriate Medicare newsletters.
Have an outside auditor review billing annually to weed out anything inappropriate.
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