Physician Partners of America LLC, a physician practice management company, denies that it violated the False Claims Act by billing Federal health care programs for medically unnecessary testing, among other allegations. The settlement is part of the government’s ongoing effort to combat healthcare fraud, particularly related to the COVID-19 pandemic.
The US Department of Justice (DOJ) announced on April 12 that Physician Partners of America LLC (PPOA), its founder, and its former chief medical officer have agreed to pay $24.5 million to resolve alleged violations of the False Claims Act (FCA) for billing Federal health care programs for medically unnecessary tests, improperly compensating physician employees for ordering such tests, and making a false statement in connection with a loan obtained through the Small Business Administration’s (SBA’s) Paycheck Protection Program (PPP). The settlement does not include an admission of liability, and PPOA denies the allegations.
The matter arose from four qui tam actions filed between February 1, 2018, and March 6, 2020. During its investigation of the matter, DOJ added claims of pandemic-related healthcare fraud and an allegation that PPOA made a false statement in its PPP loan application by certifying that it had “not engaged in any activity that is illegal under federal, state or local law” during a time when it was allegedly overbilling the federal government and the State of Florida for the various testing and services identified in the settlement agreement. We have previously reported on FCA risks associated with both telehealth and PPP loans.
The government alleged that PPOA required clinicians at its affiliated pain management practices to order multiple complex urine drug tests without determining whether such tests were reasonable or necessary, and then billed those high-complexity tests to Federal health care programs. PPOA allegedly incentivized clinicians to order such tests by crediting them with 40% of the profits of those tests. This type of compensation structure can implicate the Physician Self-Referral Law, commonly known as the Stark Law, which prohibits physicians from making certain patient referrals that could financially benefit them unless an exception applies.
PPOA was also alleged to have required genetic and psychological testing for all patients, without an individualized determination of need, before those patients could be seen by a physician. This testing process was outlined in a written protocol but was made the responsibility of medical assistants with no treating physician review or oversight. While these tests may often be useful in the context of pain management, the government’s concern focused on the lack of an individual assessment for these expensive, separately billable tests.
When nonemergency medical procedures were put on hold as a result of the COVID-19 pandemic, PPOA allegedly shifted its evaluation and management visits to telehealth and thereafter directed its clinicians to see patients by telehealth twice each month, regardless of need, to make up for lost revenue.
In April 2020, like many other providers, PPOA applied for a $5.9 million PPP loan. The PPP application form includes a certification by the borrower that it has not engaged in any illegal activity under federal, state, or local law. Here, DOJ argued that PPOA’s certification of compliance with this statement was false due to its alleged fraud under federal and Florida healthcare programs through an extensive practice of overbilling.
While the portion of settlement proceeds attributable to the PPP loan is not disclosed, this settlement demonstrates that DOJ may attempt to increase the settlement amount for any PPP recipient whose alleged conduct occurred during the time it submitted its PPP application.
DOJ has previously announced that both telehealth during the pandemic and PPP loan fraud are among its enforcement priorities. This settlement reinforces both of those priorities. In addition, it reflects DOJ’s existing focus on pain management providers and the various potential billing errors that exist within that specialty, including urinalysis.
If you have any questions or would like more information on PPP loans or telehealth billing compliance, please contact the authors, W. Barron A. Avery, Jacob J. Harper, and Casey Weaver, or any of the following:
Meredith S. Auten
Andrew T. Budreika
John C. Dodds
Lisa C. Dykstra
Rebecca J. Hillyer
Ryan P. McCarthy
Zane David Memeger
John J. Pease, III
Shevon L. Scarafile
Amy E. Schuh
Eric W. Sitarchuk
Benjamin W. Stango