[Updated July 2020] Medicare fraud prosecutions ebb and flow, just like many things in life. There seems to be no shortage of EMS fraud related cases, however. The Department of Justice and the Centers for Medicare and Medicaid Services have been focusing on ambulance providers over the last several years, so much so that at times there have been moratoriums on approving new ambulance companies in Philadelphia and Houston.
Usually when that much attention is focused on one industry group, the fraudsters tend to hibernate and hide. Not so with EMS fraud. New operators seem to pop up as fast as the Justice department can shut down the bad ones. It's like playing a high stakes version of the carnival game, Whack-a-Mole.
The Justice Department is prosecuting EMS Medicare fraud cases across the United States and has even decided to seek prison sentences against some ambulance operators. We have seen cases where regulators will shut down one shoddy operator only to have the owners file bankruptcy, buy back their own equipment and simply re-letter the trucks.
There are many different types of Medicare fraud involving ambulances, they include:
- Billing for Advanced Life Support (ALS) services when only providing BLS services (basic).
- Administering an unnecessary IV or medication simply to make the trip appear to require ALS.
- Using unqualified or underqualified personnel and billing for paramedics.
- Using ambulances as glorified taxis (frequently at the request of hospitals or nursing homes).
- Transporting otherwise healthy people to dialysis appointments by ambulance.
- Accepting or paying kickbacks in return for lucrative exclusive hospital or nursing home business arrangements.
A recent OIG news release shows a new variation of Medicare fraud -- taking people to sites where the patients didn’t actually receive any Medicare services. According to the Health and Human Services’ Inspector General’s Office, that “service” cost Medicare $30 million in the first half of 2012. (Unfortunately, that is the most recent data.)
In June 2020, the manager of EMS provider Med-1 Interfacility Care was sentenced to 64 months in prison. Prosecutors say that he was billing Medicare contractor Humana for ambulance transports that never took place. The company would bill for these non-existent transports by stealing Medicare billing information from nursing home residents and then submitting bills to make it appear that these residents were transported by ambulance to medical appointments. A billing clerk in that case was sentenced to 72 months.
Medicare imposed moratoriums on new EMS services to New Jersey, Illinois, Florida, California and Michigan. Unfortunately, the moratorium hurts legitimate operators as much as the fraudsters.
By extending the moratoria, auditing more ambulance companies and criminally prosecuting a few bad apples, Medicare will ultimately win the battles. For the next few years we expect to continue to see new EMS whistleblower opportunities .
The 2012 OIG study took so long to produce because it analyzed 7.3 million ambulance transports performed between January and June of 2012! This means current statistics are hard to determine. The spate of new criminal indictments and whistleblower complaints show that for now, there are still plenty of fraud within the industry and opportunities to collect meaningful awards.
A more recent survey says that EMS billing fraud costs Medicare $250,000,000.00 per year! And that doesn't include Medicaid or private insurance.
Medical Necessity and EMS Fraud
Medicare and Medicaid only pay for ambulance services that are medically necessary. The Medicare regulations regarding EMS transport can be found in 42 C.F.R. § 410.40, “Coverage of Ambulance services.” Those regulations say in part:
(d) Medical Necessity Requirements—
1) General rule. Medicare covers ambulance services, including fixed wing and rotary wing ambulance services, only if they are furnished to a beneficiary whose medical condition is such that other means of transportation are contraindicated. The beneficiary’s condition must require both the ambulance transportation itself and the level of service provided in order for the billed service to be considered medically necessary. Nonemergency transportation by ambulance is appropriate if either: the beneficiary is bed-confined, and it is documented that the beneficiary’s condition is such that other methods of transportation are contraindicated; or, if his or her medical condition, regardless of bed confinement, is such that transportation by ambulance is medically required. Thus, bed confinement is not the sole criterion in determining the medical necessity of ambulance transportation. It is one factor that is considered in medical necessity determinations. For a beneficiary to be considered bed-confined, the following criteria must be met:
(i) The beneficiary is unable to get up from bed without assistance.
(ii) The beneficiary is unable to ambulate.
(iii) The beneficiary is unable to sit in a chair or wheelchair.
In addition, Medicare has rules for “nonemergency, scheduled ambulance services,” such as dialysis. These transports are only covered if the EMS provider first obtains a written order from the patient's attending physician certifying the medical necessity.
Ambulance companies love dialysis transports because they typically involve 3 scheduled round trips each week meaning 6 runs. We have seen, however, cases in which the patient walks to the ambulance meaning that ambulance transport is not necessary. Some dialysis providers have been in the scam either by providing false medical necessity certificates or being involved in kickback arrangements.
More on kickbacks below.
The most recent EMS fraud case involving medically unnecessary transport of dialysis patients was resolved on June 30, 2020. Prosecutors in Guam said the owners of Guam Medical Transport, Clifford P. Shoemake, 63, of Guam, and Kimberly Clyde “Casey” Conner, 60, of Saipan, were transporting dialysis patients that could walk to the ambulance.
"The defendants admitted they were aware that many of GMT's [Guam Medical Transport] patients were not bed-confined, and did not have acute medical conditions that would otherwise qualify them for ambulance transportation. As part of the scheme, the defendants directed GMT employees to remove from internal documents references to GMT patients’ ability to walk because they knew that Medicare and TRICARE would not provide reimbursement for the patients."
The couple were sentenced to between 5 and 6 years in prison and ordered to pay over $1o.8 million in restitution.
EMS Fraud and Kickbacks
Another growing area of EMS fraud prosecutions includes kickbacks. Under the federal Anti-Kickback Statute, it is illegal for anyone to pay money or give something of value in the hopes of getting healthcare business or referrals.
In recent years we have seen hospitals charged with anti kickback violations for paying EMS companies to bring patients to their facility. One hospital was prosecuted after being caught paying certain ambulance companies to drive critical care patients half way across the city instead of the nearest critical care hospital.
While Medicare fraud is often an economic crime, denying critical care patients immediate treatment simply so the ambulance can drive longer to a hospital that pays a kickback endangers human life.
Of course, kickbacks go both ways and both parties can be prosecuted. An ambulance company that gives "freebies" to a hospital in return for lucrative transport business, dialysis centers that pay kickbacks, nursing homes... the possibilities are endless.
Why do we discuss kickbacks in this post? Because under the False Claims Act, whistleblowers who report these schemes may be entitled to large cash awards. More on that below.
Whistleblower EMS Fraud Case Settles for $21 MILLION
In February 2019, Dr. Stephen Dean filed a whistleblower action against East Texas Medical Center Regional Healthcare System, Inc. and East Texas Medical Center Regional Health Services, Inc. and their affiliated ambulance company, Paramedics Plus, LLC (“Paramedics Plus”). He claimed the companies offered kickbacks to several municipal entities to secure their lucrative ambulance business, including Emergency Medical Services Authority of Alameda County, California and Pinellas County Emergency Medical Services Authority in Florida.
The kickback allegations against ParamedicsPlus involve both political contributions to elected officials where the services were performed and a novel arrangement called a "profit cap."
The federal complaint said the "profit-cap" was an attempt to legitimize a kickback scheme. They say Paramedics Plus distributed bribes between 1998 and 2013 but disguised those payments by claiming that a percentage of excess profits were paid to a trust that oversaw ambulance services for the service area.
Elected officials made money, Paramedics Plus made money, the county made money... and yes, taxpayers paid for it all.
The charges were settled in August 2018 for $21 million. The two counties were also had to contribute to the settlement, although their contributions were for just over $100,000.
The charges impacted EMS services in California, Texas, Oklahoma and Florida.
In announcing the settlement, the Justice Department released a statement saying, “The United States’ efforts in this case ended abusive practices in the ambulance industry. These settlements demonstrate our commitment to ensuring that health care decisions are made based on patient needs, not a health care provider’s financial interests."
For his efforts in coming forward, Dr. Dean received a whistleblower award of $4.9 million.
Four Houston HCA Hospitals Settle EMS Kickback Charges
Four Houston area hospitals affiliated with HCA settled federal charges that they took kickbacks from local ambulance companies. Prosecutors say the ambulance companies made the kickbacks in return for Medicare and Medicaid referrals.
In a rather complex scheme, the hospitals set up a “swapping” arrangement in which they accepted free ambulance transports in exchange for referring Medicare patients back to the EMS providers. Some might say it is a win-win, it certainly was for both HCA and the ambulance companies. Unfortunately, Medicare (meaning taxpayers) was footing the bill.
HCA settled the case with the Justice Department for $8 million. They were not required to admit wrongdoing. Two years ago a national nursing home chain settled in this same case for $3 million.
This EMS fraud case is unusual in that the Justice Department targeted the recipients of the kickbacks (the hospitals and nursing home chain) and not the EMS companies paying the kickbacks.
Another lesson in this case is that the kickbacks were not cash. Instead, the "thing of value" was free or discounted rides given by the ambulance companies to the hospitals.
The case was originally brought by three people working for the ambulance companies. The government has not yet released their award information. For the $8 million portion of the settlement, we anticipate the three EMS workers will split approximately $1,290,000.
EMS Fraud and Whistleblower Awards
Of great interest to would be EMS fraud whistleblowers may be the rewards payable by the Justice Department. Under the federal False Claims Act, the government can pay a whistleblower up to 30% of whatever the government collects from the wrongdoer. Approximately 30 states have their own state false claims law that apply to state funded Medicaid. These programs also pay awards.
The average award when the government prosecutes the case is closer to 15%. If the whistleblower's own lawyer prosecutes, the awards are closer to 30%.
There are a few catches, however.
First, to receive an award you must have inside, original source information.
Second, you must file a lawsuit in federal court. (The suits are secret while the government is investigating them.) Calling the Medicare fraud hotline does not get you a big cash award, however.
Third, you must be first to file. Wait too long and chances are good that someone else may be the first to report your information.
Although Medicare is catching up with the current crop of fraudsters, there is generally a 6 year statute of limitations. (The law is a bit more complex but for discussion purposes, we will say 6 years.) Even if your employer cleaned up its act today, it remains on the hook for all the bad things done over the last several years.
EMS and Retaliation
Congress knows that whistleblowers who stick their necks out are taking a risk. The public knows that first responders are heroes. Unfortunately, when someone blows the whistle, their employer may not treat them like a hero.
The False Claims Act outlaws whistleblower retaliation and provides double lost pay, lost future pay and benefits, costs and even pays for your lawyer. Most states have similar whistleblower protection rules.
Medicare fraud is a huge problem that costs taxpayers tens of billions of dollars annually. It is not a victimless crime and it prevents vital healthcare dollars from being spent where they are most needed.
We have helped our whistleblower clients collect over $100 million in award monies. If you have information about Medicare fraud of any type, now is the time to call. Don’t wait another day.
For more information, contact attorney Tim Granitz at [hidden email] or by telephone at 800.669.7782.
Not ready to call? Use the search feature on our blog and search for EMS. We have several ambulance / EMS fraud stories involving whistleblowers. You can also visit our Medicare fraud or anti-kickback information pages.
All inquiries are protected by the attorney - client privilege and kept confidential. We accept EMS fraud cases nationwide. Whistleblower awards are also available for EMS billing fraud and in Illinois and California involving private health insurance.
MahanyLaw – America’s Medicare Fraud Lawyers
*The author of this post, attorney Tim Granitz is a former Emergency Medical Technician with the University of Delaware Department of Public Safety.