Case Study: Physicians & The False Claim Act
Physician Compliance
Oct 21

Case Study: Physicians & The False Claim Act

Physicians & The False Claim Act

The Department of Justice announced this month (October 2021) that Colonial Family Practice, LLC, a physician-owned primary and urgent care practice with multiple clinics in South Carolina, had agreed to a $1.25 million settlement to resolve allegations that it violated the False Claims Act by billing Medicare, Medicaid, and TRICARE for medically unnecessary services.

Specifically, the United States alleged that Colonial Family Practice filed claims for medically unnecessary nuclear stress tests ordered by two physicians between February 22, 2012, and November 26, 2019.  Further, the United States alleged the practice systematically billed for unnecessary Cystatin-C laboratory tests—a test to detect kidney dysfunction that is only payable in a narrow set of patients.  Colonial Family Practice allegedly added this test to a panel run on most of its patients between August 13, 2013, and November 29, 2019.

Two False Claims Whistleblower Lawsuits

The allegations settled arose from two whistleblower lawsuits—one by a Physician Assistant formerly employed by Colonial and the other by a former clinical manager at the practice.

In United States ex rel. Debi Coker v. Colonial Family Practice LLC, et al., Civ. No. 3:18-cv-00800-JMC, the former clinical manager alleged that between February 2012 and November 2019 physicians at the practice falsified symptoms in medical records to support unnecessary EKGs, laboratory orders, and radiology services.

In United States ex rel. James Fields v. Colonial Family Practice, et al., Civ. No. 3:19-cv-02703-JMC, the Physician Assistant alleged that, between August 2013 and November 2019, Colonial created a protocol to add a Cystatin-C laboratory test to its Basic Metabolic Panel, which led to systematic billing for medically unnecessary Cystatin-C tests.

DOJ Commentary

“The United States Attorney’s Office will continue its effort to ensure healthcare providers doing business with the federal government do so with competent care within the full letter of the law,” said Acting U.S. Attorney DeHart.  “By doing so, we not only will ensure the rule of law is followed but also ensure tax dollars are protected.”

“False and inappropriate healthcare billing erodes public confidence in the healthcare system, subjects patients to unnecessary tests and procedures, and increases the cost of healthcare for active duty service members, retirees, and their families,” said Special Agent in Charge Christopher Dillard, Department of Defense Office of Inspector General, Defense Criminal Investigative Service (DCIS), Mid-Atlantic Field Office.  “DCIS and its law enforcement partners will continue targeting fraud waste and abuse of the TRICARE program and hold wrongdoers accountable.”

Govt and the False Claims Act

The litigation and settlement of this matter illustrates the government’s emphasis on combating health care fraud.  One of the most powerful tools in this effort is the False Claims Act.  Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement can be reported to the Department of Health and Human Services, at 800-HHS-TIPS (800-447-8477).

Please note that the claims resolved by this settlement are allegations only.  Colonial Family Practice, LLC does not admit wrongdoing or liability. Also please note that this  is another example of a physician medical practice that most likely did not have the proper compliance plan checks and balances in place. A good lesson for all physician medical practices.

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About Reed Tinsley, CPA

As a top advisor to physicians, I help increase practice profits by delivering hands-on, expert medical accounting/tax support, practice counsel, and revenue-building strategies. Read more →