Dermatology Associates of Central New York to Pay More than $811,000 for Submitting False Claims to Federal and State Health Care Programs

ALBANY, NEW YORK – United States Attorney Grant C. Jaquith and New York State Attorney General Barbara D. Underwood announced today that Dermatology Associates of Central New York, PLLC (Dermatology Associates) will pay $811,196.88 to resolve allegations that it violated the federal and New York False Claims Acts by knowingly billing the federal and state governments for medical services at a higher rate than appropriate.

“The integrity and strength of our federal health care system depends on accurate and honest billing for services,” said United States Attorney Jaquith.  “We will continue to use the False Claims Act to hold healthcare providers accountable when they submit inflated claims.”

Dermatology Associates is a medical practice based in Fayetteville, New York.  The practice is owned and operated by a married couple, both of whom are medical doctors, and employs several non-physician practitioners (NPPs), such as physician assistants and nurse practitioners, who render care to Medicare, Medicaid, and TRICARE beneficiaries.

In certain circumstances, Medicare and TRICARE allow practices to bill for services furnished by an NPP “incident to” the services that are rendered by a physician.  These services, even though not personally rendered by a physician, may be billed in a physician’s name if several requirements are met.  One such requirement is that a physician directly supervise the NPP rendering the services, meaning that a physician is present in the office suite and immediately available to furnish assistance and direction throughout the procedure.  Although Medicare and TRICARE will reimburse practices for certain procedures rendered by NPPs without a physician’s direct supervision, such services are reimbursed at a lesser rate than service rendered or directly supervised by a physician.

The New York State Medicaid Program (Medicaid) does not allow for incident-to billing.  In order for an NPP to receive reimbursement for services provided to a Medicaid eligible client, an NPP is required to be enrolled as a Medicaid provider with the New York State Department of Health.

From March 2009 through February 2015, Dermatology Associates generally operated six days a week for several hours each day, but a physician was physically present in the office suite on a more limited basis.  Dermatology Associates caused its billing company to submit thousands of claims for payment to Medicare, Medicaid, and TRICARE for services that were rendered by NPPs but improperly identified one of Dermatology Associates’ physician owners as the rendering or supervising provider on days when no physician was in the office.  Dermatology Associates, which cooperated during the investigation, admitted that the practice caused its billing company to submit claims for services rendered by NPPs as though such services had been provided or supervised by a physician on more than 200 days that the physicians were traveling outside of New York State.  Dermatology Associates further acknowledged that some of the NPPs who treated Medicaid clients during this period were not credentialed to do so in New York and, in such circumstances, the uncredentialed providers were billed in a physician’s name.

“The irresponsible behavior by Dermatology Associates compromised the integrity of the Medicare, Medicaid, and TRICARE programs, and wasted taxpayer dollars,” said Special Agent in Charge Scott J. Lampert of the U.S. Department of Health and Human Services, Office of Inspector General’s New York Region (HHS-OIG).  “Along with our law enforcement partners, HHS-OIG will continue to ensure that providers that do business with federally funded health care programs do so in an honest fashion.”

“The civil settlement announced today is the direct result of a joint investigative effort,” stated Leigh-Alistair Barzey, Special Agent-in-Charge of the Defense Criminal Investigative Service (DCIS) Northeast Field Office.  “DCIS will continue to work with the U.S. Attorney’s Office for the Northern District of New York, HHS-OIG, the New York State Attorney General’s Office and its other law enforcement partners, to ensure that TRICARE, the Defense Department’s healthcare system for military members, retirees and their dependents, is protected.”

This investigation was triggered by a whistleblower lawsuit filed under the qui tam provisions of the federal and New York False Claims Acts, which allow private persons, known as “relators,” to file civil actions on behalf of the government and share in any recovery.  The relator in this case will receive $138,000 of the settlement proceeds.  The case is docketed with the U.S. District Court for the Northern District of New York under number 5:15-cv-315.

The investigation and settlement were the result of a coordinated effort among the U.S. Attorney’s Office for the Northern District of New York, the New York State Attorney General’s Office, HHS-OIG, and DCIS.  The United States was represented by Assistant U.S. Attorney Adam J. Katz and New York State was represented by Special Assistant Attorney General Paul R. Berry.