What began as a whistleblower complaint has ended in a $2.45 million settlement agreement by three clinical labs to resolve allegations that they engaged in healthcare fraud in violation of the False Claims Act.
Codejamming
Vista Clinical Diagnostics, LLC; Access Dermpath, Inc.; and Advanced Clinical Laboratories, Inc. located in Clermont, Fla. are alleged to have manipulated diagnosis codes in a scheme known as “code jamming” which results in a higher reimbursement rate in violation of the false claims act.
This occurs when a provider, in this case the labs, add diagnosis codes to a Medicare or Medicaid patient’s submission for reimbursement that have nothing to do with the patient’s condition nor were they submitted by the patient’s physician.
How Codejamming Works
“Defendants use macros, which are a saved sequence of commands or keyboard strikes that can be stored and then recalled with a single command or keyboard stroke and have been created in-house to add diagnosis codes to a large number of their patient’s submissions strictly to assure reimbursement will be made by Medicare and/or Medicaid. A specific macro is added to billings based on what CPT Code has been ordered by the beneficiary’s physician,” the complaint explains.
Alleged Fraud Began Seven Years Ago
According to the whistleblower complaint filed in 2020, the “code jamming” started as early as 2017 and continued through 2021. First it was done manually later via a computer program so the codes could be added more quickly. The alleged fraud took place in North Carolina, Virginia, and Florida.
Swapping Scheme
In addition, the whistleblower complaint also alleged the labs took part in a “swapping scheme” with skilling nursing facilities offering discounts in exchange for exclusive referrals in violation of anti-kickback laws.
The complaint was filed in the United States District Court for the Middle District of Florida by Balbina Castillo, a former billing office manager. According to the complaint, she was told by higher-ups to add the diagnosis codes but was not aware that her actions were fraudulent.
She estimated that “a sizable portion” of the company’s $5 million in annual billings were fraudulent and that total was easily $25 million to $30 million more during the period that her employer engages in this healthcare fraud scheme.
The False Claims Act allows the United States to intervene in the whistleblower complaint and prosecute the action. The Relator will receive over $440,000 of the proceeds from the settlement.
State and Federal Government Reimbursed
According to the settlement agreement, the federal government will receive about $1.84 million, Florida will receive $550,00, North Carolina will receive $29,000 and Virginia will receive $25,000
Corporate Integrity Agreement
In 2023, Vista filed for Chapter 11 bankruptcy and the settlement agreement had to be approved by the bankruptcy court.
The labs also have entered into a five-year Corporate Integrity Agreement with HHS-OIG, which requires the labs, among other obligations, to establish and maintain a compliance program meeting certain requirements and to submit to an Independent Review Organization’s review of the labs’ Medicare claims to determine whether such claims were medically necessary, appropriately documented, and correctly coded.
How We Can Help
Whistleblower cases are highly complex and require the knowledge and skill of an attorney who has extensive and relevant experience. The Health Law Offices of Anthony C. Vitale is known for its representation of whistleblowers, as well as its ability to defend those who become the target of a whistleblower action.
Our firm also has extensive experience representing clients under investigation by a wide range of state and federal agencies including the FBI, Drug Enforcement Administration, U.S. Attorney’s Office, Attorney General’s Office, State Attorney’s Office, Medicaid Fraud Control Unit, Medicare Fraud Task Force, as well as licensing boards and other enforcement agencies.
Give us a call at 305-358-4500 or email info@vitalehealthlaw.com.
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