Louisville Based MD2U, a Regional Provider of Home-Based Care, and Its Principal Owners Admit to Violating the Federal False Claims Act and Being Liable for Millions

Knowingly Presented False Claims and Altered Records to Get False Claims Paid Will Pay Millions to Settle Allegations

MD2U Holding Company, including its related companies and individually named owners, have agreed to pay millions to resolve a government lawsuit alleging that they violated the federal False Claims Act by knowingly submitting false medical claims to Medicare and other government health care programs, altering records to support false claims and providing services that were medically unnecessary, announced U.S. Attorney John E. Kuhn Jr. for the Western District of Kentucky

“Unfortunately, our healthcare system is under assault from a small minority of providers who engage in fraudulent billing, overbilling and providing unnecessary services,” said U.S. Attorney Kuhn.  “In an effort to control these losses and force accountability, my office and the Department of Justice pursues and recovers false and fraudulent billings as one of its highest priorities.  This significant case against MD2U is but one example of the vigorous work against healthcare fraud taking place in the Western District and across the nation.” 

“This provider billed for medically unnecessary home visits and often grossly exaggerated the level of service provided,” said Special Agent in Charge Derrick L. Jackson for the U.S. Department of Health and Human Services’ Office of Inspector General (HHS-OIG) in Atlanta.  “The OIG is committed to protecting the integrity of federal health care programs by aggressively pursuing entities that increase their revenue through deceitful schemes and trickery.”

The government’s complaint alleged that between July 1, 2007, and Nov. 30, 2014, MD2U submitted false billings for patients who were neither homebound nor home-limited; improperly billed the government for medically unnecessary visits; billed government health care programs at the highest payment codes (upcoding) when a lower code would have been more appropriate; and cloned medical records (a cut, copy, paste electronic program) in order to justify patient visits.  Specifically, the government’s complaint alleged that MD2U’s schemes included the following:

• MD2U required non-physician providers (NPPs) to document that patients were homebound or home-limited and indicate in the medical record that an outpatient visit would jeopardize the patient’s health, regardless as to whether this was true or not.  A number of MD2U patients were neither homebound nor home-limited, as some patients worked outside the home, attended school outside the home, drove independently, routinely saw other providers in the office and in at least one case, went horseback riding.
• MD2U would require NPPs to perform medically unnecessary visits and improperly bill Government Health Care Programs for evaluation and management (E&M) visits in order to generate revenue.  Management instructed NPPs to schedule patient visits more frequently than necessary in order to increase productivity.
• According to a review of Medicare claims submitted by MD2U between July 1, 2007, and Nov. 30, 2014, 98 percent were falsely billed to Medicare.  NPPs’ patient visits would often last less than ten minutes with some lasting less than five minutes (and in at least one reviewed case – 34 seconds), but these encounters were billed as comprehensive medical visits and billed at the highest level E&M code possible.  The American Medical Association’s guidelines for these codes indicate that practitioner’s using the codes billed by MD2U should be performing comprehensive medical exams and should typically spend 60 minutes face-to-face with the patient, family member or caregiver.
• Management trained NPPs to bill all visits using the highest level E&M code available.
• MD2U also utilized an electronic medical records (EMR) system that permitted the NPPs to easily electronically cut, copy and paste medical notes from prior visits.  The ability to migrate notes from visits that occurred weeks, months, or even years prior to the current patient encounter created the illusion that MD2U’s NPPs were performing a significant amount of work during their patient encounters when, in fact, they were not.  If the documentation was deficient to bill the highest level code, MD2U would direct NPPs to go back and change the medical record – after the encounter had occurred – to falsely show that more work was performed during the visit in order to support the highest level billing.

Through a stipulation and order to be entered by the court, the defendants have admitted that they violated the False Claims Act, 31 U.S.C. §§ 3729-3733, by (a) making or causing others to make false statements and (b) submitting or causing others to submit false claims to the United States.  The defendants admit that these actions caused damages and that they are liable to the United States in the amount of $21,511,756 under the False Claims Act (which allows for damages in the amount of three times the government’s loss, plus penalties).

Further, in the consent judgment to be entered by the court, defendants J. Michael Benfield, Chief Executive Officer and President of MD2U; Greg Latta, Chief Information Officer; and Karen Latta, Chief Operations Officer, all owners, residing in Louisville, Kentucky, admit that, due in part to the actions of a former employee, they caused the submission of false claims to the United States in violation of the False Claims Act.  They further admit that the submission of the claims for payment caused these damages as a result of misrepresentations, false representations and/or deceptive conduct; that it was done with reckless disregard of the falsity of the claims; and in doing so, caused the United States to be deceived.

Through the terms of the stipulation and order, the defendants can fulfill their obligations to pay the consent judgment by paying $3.3 million and a percentage of MD2U’s net income over the next five years.  The defendants have also agreed to enter into a five year corporate integrity agreement with HHS-OIG.  

The settlement announced today illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services.  The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation.  One of the most powerful tools in this effort is the False Claims Act.  Since January 2009, the Justice Department has recovered a total of more than $27.1 billion through False Claims Act cases, with more than $17.1 billion of that amount recovered in cases involving fraud against federal health care programs.  Tips and complaints from all sources about potential fraud, waste, abuse and mismanagement, including the conduct described in the United States’ complaint, can be reported to the Department of Health and Human Services, at 1-800-HHS-TIPS (1-800-447-8477).

This matter was handled by Assistant U.S. Attorney Benjamin S. Schecter with the U.S. Attorney’s Office for the Western District of Kentucky, HHS-OIG; Defense Criminal Investigative Services; and the Railroad Retirement Board, Office of the Inspector General.

The case is captioned United States v. MD2U Holding Company et al., Case No. 3:16-cv-00440-GNS