California-based Beaver Medical Group and Dr. Sherif Khalil have agreed to pay $5 million to settle allegations that they conspired to defraud Medicare by providing false information about individuals participating in the Medicare Advantage program.
Medicare Advantage Organizations (“MAOs”) provide comprehensive health care services to individuals enrolled in Medicare Advantage. Medicare pays them a fixed amount per individual, depending on the state of the beneficiaries’ health. The sicker the Medicare beneficiaries, the higher the payments. If they provide false diagnoses to Medicare, healthcare providers can illegally boost their profits.
Beaver was under contract with numerous MAOs in California. According to the allegations, the company falsified diagnoses to boost the MAOs’ Medicare billings. The MAOs would then share some of those profits with Beaver, thus creating an illegal financial incentive, the DOJ said. Dr. Khalil was allegedly part of the scheme, as some of the false diagnosis records bore his signature. After analyzing the evidence, the DOJ found that there were no patient records or tests results to substantiate many of the diagnoses submitted by the MAOs.
The alleged fraudulent scheme was first brought forward in a whistleblower lawsuit initiated by a former Beaver employee, Dr. David Nutter. Filed under the False Claims Act, the suit has enabled Dr. Nutter to collect a whistleblower award estimated at $850,000. Tipsters with information about Medicare and Medicaid fraud must file an FCA lawsuit with the help of a whistleblower attorney in order to be eligible for this type of awards.
In a press release, a representative for the Department of Justice said our country relies on companies providing accurate information about the Medicare beneficiaries they service, so they can receive the appropriate compensation from government healthcare programs. The DOJ spokesperson said fraudsters “undermine the integrity of the Medicare program.”
Healthcare fraud is the most rampant type of fraud against taxpayers in the U.S. Due to its payment system, Medicare Advantage is a particularly vulnerable program. As it expands to cover more and more Medicare beneficiaries, more government scrutiny is needed to ensure that it is not being abused. A spokesperson for the Department of Health’s Office of the Inspector General said in a statement that, “Those who inflate bills sent to government health programs can expect to pay a heavy price.”
The Department of Justice is cracking down on healthcare fraud on a variety of fronts. Over the last year, investigated fraudsters have paid dozens of millions of dollars to settle allegations of fraud involving Medicare Advantage.
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