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Since 1976, our litigators have effectively and efficiently represented clients in federal and state courts in business litigation, municipal law, employment law, personal injury and a variety of complex litigation.

Since 1976, our litigators have effectively and efficiently represented clients in federal and state courts in business litigation, municipal law, employment law, personal injury and a variety of complex litigation.

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Since 1976, our litigators have effectively and efficiently represented clients in federal and state courts in business litigation, municipal law, employment law, personal injury and a variety of complex litigation.



Medicare has announced new rules that may prohibit physicians and other providers from participating in Medicare.  CMS has announced that it will prohibit Medicare enrollment to any provider who was an owner of a provider or supplier that has outstanding Medicare debt.  Under the new rules, this applies even if the provider was a minority owner who did not participate in the management of the entity.

Previously, Medicare had made only the entity or the actual billing physician responsible for Medicare overpayments.  This is a fundamental change in this rule, and should make every physician (and other providers) take a new and careful look at any entity in which they have any ownership interest.

Every physician and NPP should also reexamine their billing system for accuracy and professionalism.  Every physician and NPP should, before buying into any practice entity, do appropriate due diligence to determine if there is any Medicare debt, and seek written assurances from the existing owners that there is no such debt, and an indemnity from any pre-buy in Medicare debt.

Note that “Medicare debt” is a new term that means any amount owed to Medicare regardless of the basis of liability, and regardless of any pending appeals.  This is a harsh new rule.

Additional rules were also announced that would prohibit physicians and NPPs from continuing Medicare privileges.  CMS has announced that it will revoke Medicare privileges for any provider “convicted” of a federal or state felony within the ten proceeding years.  It also appears that Medicare intends to apply this ten year look back and the bar to any person who is an owner or manager of a provider or supplier convicted.

Medicare also announced that it would revoke Medicare privileges for any provider engaging in “abuse of billing privileges”.  Abuse of billing privileges includes:

  • Submission of a claim for services that could have not been furnished on the date of service.  This would appear to include claims for services where a beneficiary is dead, a physician or beneficiary is not in the location claimed, or that the location claimed does not have equipment for that billing code.
  • Pattern or practice of false claims – In determining this pattern, CMS looks at the percentages of claims denied, the reason for claim denials, whether the provider has any history of final adverse actions on billing, the length of time over which such pattern existed, the length of Medicare enrollment and similar matters.

A revocation applies to a provider (and owner or manager) for a period ranging from one to three years.  Of concern is that CMS may institute such a bar based on abusive billing practices without any proof or finding of fraud or other intentional action.  That appears to indicate that if a practice has a pattern of mistakes over a substantial period of time, that this will be sufficient for revoking Medicare privileges.  I believe it likely that such mistakes may include the murky and the often undefined area by CMS of “medical necessity”.

My recommendation is that in addition to being careful about buying into a practice, those in a practice, solo or multiple, should make sure that their billing complies strictly with all Medicare standards.  Whether in-house or outsourced, your attention must be focused on the accuracy and timeliness of billing for your work.


Indiana Code 25-26-13-16 requires pharmacists to honor valid prescriptions unless doing so is illegal, not in the best interest of the patient, furthers a patient’s addiction or habit, or would otherwise be contrary to the patient’s health or safety.  Seems simple.

Eight patients recently sued several pharmacies and Express Scripts, Inc. over a dispute regarding fulfillment of prescriptions of HGH written by Dr. Ashok Kadambi.  The eight plaintiffs claimed that the defendants (several mail order pharmacies) refused to fill the prescriptions written by Dr. Kadambi for HGH, and therefore, violated the Indiana statute requiring prescriptions to be filled.

Express Scripts moved to dismiss the plaintiffs’ claim based on several grounds, the most legally important of which was that the statute does not provide for a private right of action by individuals against pharmacies for failing to honor the statute.  The court indicated that the remedy for the plaintiffs was to complain to the Indiana Attorney General, who could then investigate and decide whether to make any recommendations for action to the Indiana Board of Pharmacy which supervises pharmacist services in Indiana, and dismissed this part of the lawsuit.

Based on the case opinion, apparently Express Scripts believed that Dr. Kadambi gave prescriptions for HGH for cosmetic, sports and other reasons it did not feel were appropriate, and claimed, in addition to the lack of individual rights to sue under the statute, that they qualified for immunity from such suits because they had a reasonable belief that Dr. Kadambi’s HGH prescriptions, at least in the case of these eight plaintiffs, was covered by one of the four reasons for not honoring a prescription provided in the statute.  The opinion also mentions a prior litigation settlement which was settled between Dr. Kadambi and Express Scripts where Dr. Kadambi alleged claims of defamation, intentional interference with a business relationship and intentional interference with a contractual relationship.  We may hear more from Dr. Kadambi and Express Scripts.


This month, the United States Seventh Circuit Court of Appeals found that a physician’s authorization for a Medicare service constituted a “referral” under the Anti-Kickback Statute (AKS).  Every physician should be genuinely and greatly concerned about this Seventh Circuit opinion.

Referral, for purposes of Stark or AKS, has previously related to a payment or some compensation to a doctor in return for steering a patient to a particular provider of a service or product reimbursed by Medicare.  Here the doctor, Kamal Patel, M.D. did not “steer” patients to Grand Home Health Center, a home healthcare service provider, rather Patel prescribed home healthcare and certified or recertified the patients’ needed care.

Dr. Patel is an internal medicine specialist who treated approximately twenty elderly patients per day, and certified approximately ten patients per month for home healthcare services.  When a patient was determined to need such home health services, one of his employees would provide from ten to twenty brochures of various area home health service providers.  The evidence indicates that out of ten patients per month, from two to four of Dr. Patel’s patients would select Grand.  The majority of Dr. Patel’s patients used other providers.  The government did not assert that Grand’s brochure was included in the array of brochures because Grand offered Patel payments.

If a patient selected Grand as a home healthcare provider, Grand would send one of its nurses to assess the patient, and complete an “OASIS” form.  According to the court’s opinion, Grand would create a treatment plan, and complete most of a Form 485 for the patient which was signed or later signed by Dr. Patel.  At the time Grand personnel met with Dr. Patel, Grand paid Dr. Patel cash (always a danger sign) of $400 for each signed Form 485, if it represented a new admission, or $300 for a recertification.

Interestingly, the Court found that Dr. Patel would have signed the 485 for each of the patients, even if they had not selected Grand.

After investigating, the Government filed a 42 count indictment against Patel and others involved from Grand, and Patel was charged with six counts of violating the AKS.

One of the key issues in the trial was the definition of “referring”.  Dr. Patel argued that it meant, in a medical context, the doctor’s recommendation that a patient see a particular specialist or provider.  In fact, Dr. Patel noted that Merriam Webster’s Dictionary online defined referral as “the process of directing or redirecting (as a medical case or a patient) to an appropriate specialist or agency for definitive treatment”.

The court acknowledged that Dr. Patel’s definition of “referral” is the common usage of the term, but found that it was not the only common usage.  The court looked at an Illinois statute that defined referral as “a written or oral authorization”, in this case for physical therapy services.  The court preferred this definition of a referral which is the key finding in the Seventh Circuit opinion – that referral, for purposes of the AKS, is not only a steering to a particular provider, but it is the authorization for services themselves without regard to any effort to steer a patient to any particular provider of the authorized services.  Physicians should be greatly concerned about this wordplay and the finding by the court of this definition of referral.  By finding that authorizing the service without regard to who provides that service, then any later payment by a downstream provider is a violation of AKS.

Certainly, Dr. Patel’s receiving of a series of cash payments makes his behavior in this case suspect.  However, the precedent set by the definition accepted by the district court and approved by the Seventh Circuit will probably find new uses by CMS and OIG in taking Stark and AKS to apply to transactions that do not appear, on the surface, to be covered.

The result – any provider receiving any payment other than one from an insurer, Medicare or Medicaid should seek legal advice to determine whether it is likely that an AKS or Stark prosecution may result.

This newsletter is edited by Paul Wallace of Jones ∙ Wallace, LLC, a member of the American Bar Association Healthcare Law Section and the American Health Lawyers Association who has been representing physicians and healthcare practices for over 25 years.  Mr. Wallace assists physicians in health practices in contract items, federal legal compliance, creation of practice entities, estate and wealth planning and similar issues.  Please feel free to call if you have any questions on this newsletter or legal matters at (812) 402-1600 or pwallace@joneswallace.com.