Tennessee Healthcare Fraud/Medicare Fraud Enforcement

The federal government sometimes accomplishes this task with the assistance of the Tennessee Medicaid Fraud Control Unit (MFCU). Both entities are, in turn, often assisted in their efforts by the bravery and actions of whistleblowers.

Tennessee has both a False Claims Act and a Medicaid False Claims Act. Modeled after the federal False Claims Act, the Tennessee False Claims Act permits private citizens to bring qui tam actions on behalf of the State of Tennessee to recover treble damages and civil penalties. Tenn. Code Ann. § 4-18-101 et seq. and Tennessee Medicaid False Claims Act, Tenn. Code Ann. § 71-5-181 et seq. (liability on people and companies who knowingly submit false claims to Tennessee’s Medicaid program).

The liability provisions of the Tennessee False Claims Act, Tenn. Code Ann. §4-18-103(a), provide liability for any person who:

(1) Knowingly presents, or causes to be presented to an officer or employee of the state…, a false claim for payment or approval;

(2) Knowingly makes, uses, or causes to be made or used, a false record or statement to get a false claim paid or approved by the state or by any political subdivision;

(3) Conspires to defraud the state or any political subdivision by getting a claim allowed or paid by the state of by any political subdivision.

• • 71-5-182(a)(1) provides liability for any person who-

(A)  presents, or causes to be presented to the state, a claim for payment under the Medicaid program knowing such claim is false or fraudulent;

(B)  makes or uses, or causes to be made or used, a record or statement to get a false or fraudulent claim under the Medicaid program paid for or approved by the state knowing such record or statement is false;

(C) conspires to defraud the State by getting a claim allowed or paid under the Medicaid program knowing such claim is false or fraudulent.

False Claims Act cases originally brought in a Tennessee federal court include:

Rinova The Wellness Group, PC, a Franklin, Tennessee based company, involving allegations that Medicare overpaid Rinova for claims that were non-payable due to fraudulent misrepresentations. The Complaint alleged that Rinova misrepresented that it had provided services, when they were actually a continuation of services by a suspended company Pain MD, LLC.  Rinova obtained new Medicare payment numbers in an attempt to evade the Medicare payment suspension of Pain MD, so that Rinova obtain Medicare reimbursements while operating Pain MD’s Tennessee and Virginia pain clinics according to the allegations. Resolved recently in 2020, Rinova has now ceased its operations and no longer operates any pain clinics in Tennessee or elsewhere.

On February 4, 2020 the United States Attorney’s Office for the Eastern District of Tennessee resolved a case against Southeastern Retina Associates (SERA) in the amount of $1.5 million.  The Complaint alleged that from 2009 through 2016, SERA improperly used a modifier billing code (25) to charge for exams that were not separately billable from other procedures that were performed on the same day.

On February 28, 2020, the Department of Justice announced that Diversicare Health Services, Inc. (Diversicare) agreed to pay the Government $9.5 million to resolve False Claims Act allegations relating to Diversicare’s provision of medically unnecessary rehabilitation therapy services to patients. The Government alleged that Diversicare submitted claims for consistently high therapy levels despite evidence that they were neither reasonable nor necessary, and that Diversicare submitted physician signatures that were forged, photocopied, or pre-signed. The whistleblowers in the case were former employees of Diversicare Health Services.

On February 14, 2020 the U.S. Attorney’s Office for the Middle District of Tennessee announced a $4.1 million settlement with Cookeville Regional Medical Center Authority. The settlement resolved allegations by the United States and State of Tennessee against Cookeville Regional Medical Center (“CRMC”), a hospital in Cookeville, Tennessee. The alleged violations related to improper financial arrangements between CRMC and physicians associated with its wholly owned subsidiary physician practice. The whistleblower in this case was a former employee of Cookeville Regional Medical Center.

Vanguard Healthcare, LLC, and related Vanguard companies (“Vanguard”), based in Brentwood, Tennessee agreed to resolve the False Claims Act case alleging False Claims Act violations for grossly substandard nursing home services.  Further, the Government contended that preadmission forms with forged signatures were submitted to TennCare in order to be reimbursed by Medicaid. On February 27, 2019 U.S. Attorney Don Cochran and the Department of Justice announced an agreement involving the payment of $18 million, the largest worthless services resolution in Tennessee history. 

MedQuest Associates, Inc., BioImaging at Charlotte, Inc., BioImaging of CoolSprings, Inc., and BioImaging at Harding, Inc. were ordered to pay $11.1 million after the U.S. District Court for the Middle District of Tennessee granted summary judgment to the United States in a False Claims Act qui tam action. The companies submitted claims for payment to Medicare for diagnostic testing conducted without the required physician supervision, and caused the submission of false Medicare claims in which another Medicare provider’s billing number was improperly used.

DOJ announced that Gayle Rogers and the estate of her late husband, Tom Rogers, agreed to pay $15.25 million to settle allegations that he filed false claims with Medicare. The Government alleged that Tom Rogers and his management company, Alpha Medical Inc., submitted false claims to Medicare for the company’s fees for servicing a network that he created of home health agencies owned by his relatives, his best friend, and others who were indebted to him. Medicare would not have paid the fee if it had known about the relationships between the management company and the network. Medicare’s rule against paying fees which result in profit when there is a controlling relationship is designed to protect Medicare from unscrupulous demands for excessive fees. 

Hill-Rom Company, Inc., a durable medical equipment supplier, agreed to pay the United States $41.8 million to resolve Medicare fraud allegations. Hill-Rom was alleged to have knowingly submitted numerous false claims to the Medicare program for certain specialized medical equipment for patients who did not qualify for the equipment and for patients who had died or were no longer using the equipment. Hill-Rom also was alleged to have submitted claims for medically unnecessary equipment. 

Medtronic, Inc. agreed to pay $40 million to the United States based upon allegations about certain sales and marketing practices in the spinal business. Two qui tam suits alleged that the Medtronic Sofamor Danek division (MSD) paid kickbacks to doctors to induce them to use MSD’s spinal products. The government alleged that, between 1998 and 2003, Medtronic paid kickbacks in a number of forms, including sham consulting agreements, sham royalty agreements and lavish trips to desirable locations. 

Renal Care Group, RCG Supply Company, and Fresenius Medical Holdings, Inc. were ordered to pay more than $19.4 million plus interest to resolve claims made in a qui tam complaint. The complaint alleged that following a merger, Renal Care Group and Fresenius created RCG Supply Company, a sham supply company, in order to fraudulently bill Medicare and Medicaid in violation of the False Claims Act.