Former ISU Scientist’s Stiff Fraud Sentence Sends Message

The former Iowa State University scientist who defrauded the government has been handed one of the stiffest sentences ever handed for fraudulent research. A U.S. District Judge sentenced Dong-Pyou Han – a 58 year old South-Korean to 57 months in jail. The judge also ordered him to repay $7.2 million and even raised the possibility of him getting deported after serving his jail sentence.

Han had admitted to falsifying the results in a research aimed at developing an AIDS vaccine. His falsification of results gave the appearance that the vaccine was effective in protecting rabbits against HIV – the virus which causes AIDS. The supposed “successes” led to extra federal grants totalling around $20 million.

Han’s fraud was unearthed by fellow researchers at the ISU. They realised that Hans was mixing human blood products into the blood samples from rabbits which had been treated with the experimental vaccine. The result was that the vaccine appeared to be working – which was clearly not the case.

Having been uncovered, Han was pressed on the matter. He admitted having manipulated the results for four years – something which infuriated his fellow researchers. He was forced to resign from ISU, and the National Institutes of Health banned him from participating in federal funded research for three years.

The matter seemed to have been resolved, until the scandal made the headlines. The US attorney’s office pursued an indictment, which ultimately ended Han getting slapped with the hefty sentence.

Han’s sentence is considered hefty for two reasons. For starters, scientists who are charged with research-related fraud almost never go to jail. Most get off with light fines, cautions and suspension from federal research grants. The last scientist who faked research to receive grants was given a six month jail sentence (http://www.masslive.com/news/index.ssf/2010/06/scott_reuben_a_former_baystate.html). Therefore, Han’s 4 years and 9 months jail sentence seems rather harsh.

Secondly, the $7.2 million which he was ordered to repay is somewhat excessive. This is because, although his fraudulent schemes led to extra $20 million, the money didn’t go to his personal account. He didn’t even receive an extra bonus on the $78,000 per year he was earning.

Upon Han’s fraud being discovered, ISU was ordered to repay $496,000 to the federal government. The university also faced a cancellation of $1.4 million in grants.

Given that the university – which received much of the funds – wasn’t required to refund millions of dollars, some question the rationale behind the judge’s $7.2 million. Given that Han has already lost his job of $78,000 per year, how will he repay that money?

The reason for stiff penalties was set out in Assistant U.S. Attorney Rachel Sherle’s request before the judge. She asked the judge to “send a message that regardless if you have a PhD or not, you’re going to be held for your actions.” (http://www.desmoinesregister.com/story/news/crime-and-courts/2015/07/01/dong-pyou-han-sentencing-iowa-state-scientist-aids-vaccine-fraud-case/29560297/)

The judge’s sentence certainly does send a clear message to all research scientists who are on federal grants: the days of getting off lightly after falsifying research to get federal grants are over. Han’s case also sets a clear precedent. Therefore, from now on, any scientist thinking of defrauding the federal government will have to stop and think again.

CMS Proposes Sweeping Changes for Nursing Home Oversight

In the greatest standards overhaul since 1991, the Center for Medicare and Medicaid Services (CMS) recently announced sweeping changes in nursing home standards. The changes are enshrined in a new 430 – page document entitled “Proposed Rule” which was released by the CMS on July 16th, 2015.

The Proposed Rule is sets new standards which must be observed by nursing homes which provide long-term care for patients on Medicare and Medicaid. The standards cover everything from patient care and safety to the recruitment and training of caregivers.

In a nutshell, the new standards proposed in the Rule are summarized as follows:

  • Nursing homes should ensure that staffs are trained in preventing elder abuse and caring for patients who suffer from dementia.
  • The homes should ensure that the level and quality of staffing is sufficient to provide the sufficient care for their residents.
  • The homes should equip staff with the skills and competences required to provide person-centered care to patients and residents.
  • The homes are required to provide greater food choice for residents.
  • The homes are required to improve on care planning for all residents. Specifically, they should improve discharge planning including providing all the necessary information for follow-up and ensuring that any receiving services or facilities are given all the essential information.
  • The homes should update their programs for prevention and control of infections. Each home should have a designated officer in charge of infection prevention and control. Each home should also have clear-cut protocols for preventing and controlling infection.
  • The Proposed Rule strengthens the rights of nursing home residents. It places restrictions on arbitration agreements.
  • The Rule bans nursing homes from employing anyone who has ever been disciplined or sanctioned for patient abuse, mistreatment and neglect. It also bans them employing anyone with a history of theft.
  • The Rule proposes that thorough background checks be carried out all professionals before they can be hired. The background checks should help eliminate those who are banned from working in nursing homes.
  • The Rule expands federal oversight into nursing homes. The aim is to reduce the incidences of fraud and abuse in the homes.
  • The Rule also mandates nursing home to develop and implement policies which are aimed at preventing abuse, maltreatment, and neglect of patients and residents.
  • The Rule proposes mandatory review of how medications are used. It proposes that a pharmacist carries out a thorough review of each resident’s chart once every six months. The review is aimed at identifying any irregularities and unnecessary medications. Such irregularities should be reported to the authorities.
  • The Rule proposes a restriction on the use of certain kinds of medications – specifically psychotropic drugs. It proposes to limit their use to situations where they are absolutely necessary.
  • The Rule proposes stricter compliance requirements for nursing homes. It proposes all the home’s facilities meet the Quality Assurance and Performance Improvement (QAPI) standards.

In a nutshell, the Proposed Rule places stricter standards for nursing homes. If implemented, these standards will likely improve the overall quality of care received by nursing home patients and residents. However, these improvements won’t come cheap. The CMS estimates that the nursing home industry will incur $729 million to implement the new standards within the first year of their adoption.

10 Things To Know About The Anti-Kickback Statute

Physicians and health service providers whose patients are on federal healthcare programs like Medicare or Medicaid sometimes run afoul of the Federal Anti-Kickback Statute. When this happens, it often leads to steep penalties.

To avoid violating the Anti-Kickback Statute, it is important to know what it is about.

Here are the 10 most important things to know about the law:

  1. Enactment

The Anti-Kickback Statute was originally enacted by the congress in 1972. It was enacted as an amendment to the Social Security Act.

  1. Aim

The Statute was enacted to limit physicians and healthcare providers from defrauding federal healthcare programs like Medicare and Medicaid. Prior to the Statute, the Social Security Act had numerous loopholes which made it easy to defraud healthcare programs through kickbacks. The loopholes also made it difficult to persecute offenders.

The Anti-Kickback Statute was enacted to close the loopholes in the Social Security Act by providing clear standards through which healthcare fraudsters could be prosecuted. Its aim was to achieve two things.

First of all, to clearly spell out specific kinds of offences (i.e. kickbacks, bribes, solicitations and rebates) relating to healthcare referrals. Secondly, to outline clear penalties for those who violate the law.

  1. General Overview/Summary

In a nutshell, the Statute prohibits soliciting or accepting any type of gift, remuneration or compensation in exchange for making referrals for patients in federal healthcare programs. Basically, the statute makes it illegal for:

  • A physician or health service provider to be ask for compensation in return for referring patients who are on Medicaid or Medicare.
  • A health service provider to compensate a physician or another service provider for referring Medicare or Medicaid patients to them.
  • A physician or health service provider to claim reimbursements from Medicare or Medicaid for payments made in kickbacks.

The Statute categorizes such payments as “kickbacks, bribes or rebates”, and considers them a felony. Whoever violates the Statue can face felony charges – with steep penalties.

  1. Penalties For Violations

The Anti-Kickback Statute imposes a number of penalties for violations. Here is a summary of the major penalties:

  • Criminal penalties can include fines of up to $25,000 per kickback
  • Civil penalties can include a prison sentence of up to 5 years per kickback
  • Civil penalties can include fines of up to $50,000
  • Civil penalties can include damages of three times of the amount incurred by the government as a result of the violation
  • Violators can also face expulsion from federal healthcare programs such as Medicare and Medicaid.
  1. Some Costly Settlements

Over the past few years, a number of healthcare providers have faced lawsuits for violating the Statute. A few of these have ended up paying some costly amounts in settlements. A few of these settlements include the following:

  • In 2014, Amedisys – a LA-based health services provider – paid $150 million to settle Statute violation allegations. The company allegedly claimed Medicare reimbursements for money which it had offered to physicians to refer patients to its services. Click to read more.
  • In 2014, Omnicare – a Cincinnati-based pharmaceutical company – paid $124 million to settle claims that it violated the Anti-Kickback Statute. The company allegedly offered financial incentives to nursing homes to recommend its services to Medicare and Medicaid patients. Click here to read more.
  1. Whistleblower Compensation

The Anti-Kickback Statute doesn’t explicitly mention whistle-blowers. However, in the Amedisys case, the violations were first revealed by a whistle-blower. That whistle-blower ended up receiving $26 million out of the $150 million paid by the company, click here to read more.

This payment causes a predicament for potential Ant-Kickback Statute violators. It means that their own employees now have an incentive to report on violations.

  1. The Question of Intent

Prior to the Anti-Kickback Statute, to charge someone with committing healthcare fraud required proving that they had “knowingly” or “willfully” committed the violation. Basically, the burden of proof was on the government or prosecutor.

The Anti-Kickback Statute eliminated the question of “willful intent”. The only requirement for culpability is committing any of the forbidden acts. This eliminates the scenarios where individuals deliberately commit violations and then claim that they had no idea that they were breaking any law. It also makes prosecuting violations quite straightforward.

  1. Exemptions from the Statute

The Anti-Kickback Statute has a wide interpretation which can have a stifling effect on legitimate business operations. To prevent this stifling effect, the Congress outlined so-called “safe harbor arrangements” through which an individual or healthcare provider can avoid violating the Statute.

These safe harbor arrangements are exempt from the Statute. Examples include:

  • Rentals for space and equipment
  • Contracts for personal services and management
  • Payments to bona fide employees
  • Electronic prescriptions arrangements
  • Electronic health records arrangements
  1. State Anti-Kickback Laws

Although the Anti-Kickback Statute is a federal law, many states have their own anti-kickback laws. Most of these laws are based on the Statute, and are similar in many respects. However, some have provisions which differ from the Statute. For instance, many state laws differ on what constitutes a referral source.

The onus is on every physician or health service provider to find out the anti-kickback laws which are relevant to the state within which their operations are based. Even then, except for provisions which differ from the Statute, the state laws do not nullify the Anti-Kickback Statute.

  1. Enforcement Authority

The agency which is charged with enforcing the Anti-Kickback Statute is the Office of the Inspector General (OIG) in the US Department of Health & Human Services. It is the OIG which investigates violations, brings lawsuits against violators, and recommends penalties such as suspension from federal healthcare programs. Since 1972, the OIG gas secured over 800 convictions, judgments and settlements under the Statute.

In 2009, the Health Care Fraud Prevention and Enforcement Action Team (HEAT) was created by the Department of Justice to investigate Medicare and Medicaid fraud and abuse. The HEAT follows up on the Anti-Kickback Statute as well. In this respect, it works in conjunction with the OIG.

In a nutshell, those are the 10 key things to know about the Anti-Kickback Statute. This information is vital for any physician or healthcare provider whose patients include recipients of Medicaid and Medicare. Observing the Statute is critical towards ensuring that one steers clear of violating it. The relative importance of Medicaid and Medicare means that the federal government clamps down hard on any perceived fraud. To steer clear of the violations, it is critical to study and understand the Statute.