The Government Is Serious About Insurance Fraud

Posted by on Nov 6, 2013 in Health Care Law, Legal, New Jersey Healthcare, New Jersey healthcare attorney, NJ healthcare, NJ healthcare law, NJ healthcare lawyer | 0 comments

The Government Is Serious About Insurance Fraud

It’s on the news, in the papers, even on billboards:  NJ is serious about fighting insurance fraud.  New Jersey’s “Insurance Fraud Prevention Act” (the “Act”) has been hailed nationally as “model” legislation that is a useful tool of prosecutors and the State to curb insurance abuses.

Even the act’s stated purpose makes it crystal clear that the government is serious: The purpose of this act is to confront aggressively the problem of insurance fraud in New Jersey by facilitating the detection of insurance fraud, eliminating the occurrence of such fraud through the development of fraud prevention programs, requiring the restitution of fraudulently obtained benefits, and reducing the amount of premium dollars used to pay fraudulent claims.”

The Act gives teeth to the Department of Banking and Insurance by providing funding for fraud prosecutions, and creating a department of insurance fraud.  Now, insurance fraud which is prosecuted civilly may also be prosecuted criminally.  Further, the Act requires that the civil actions be referred to the criminal prosecutor to determine if criminal prosecution is warranted.

The Act provides for some stiff penalties too.  In addition to the obvious loss of a license to practice medicine, a person found liable under the act can be fined $5,000 for the first violation, $10,000 for the second, and $15,000 for each subsequent violation.  Further, those found guilty will pay not only restitution, but he actual costs incurred by the Dept. of Insurance to make its investigation, to pay it’s attorneys, and any costs incurred.  Treble damages may also be awarded under certain circumstances.

Perhaps the only “wiggle room” available to lawyers and their clients is that the prosecuting entity must prove that the fraud was “knowing.”  Physicians who filed claims for fictitious patients will satisfy the threshold, and will other similar cases or a “pattern” of fraud over some period of time.

More recently, the Appellate Division of the Superior Court has ruled that those being prosecute under the Act are not entitled to a trial by jury.  Rather, the Court will be the sole arbiter.

In 2012, Ronald Chillemi, Acting Insurance Fraud Prosecutor, reported to Governor Christie the following:

Total Referrals Received: 4709
Total Cases Investigated: 463
Number of Indictments & Accusations Filed: 47
Number of Defendants Charged: 59
Number of Defendants Convicted: 56
Number of Defendants Sentenced: 56
Number of Sentenced who Received Prison Sentence: 23
Total years of incarceration: 68
Total Criminal Fines and Penalties: $105,685
Total Civil Fines and Penalties: $20,789,699
Restitution imposed in Criminal Cases: $29,135,018

And the amount of litigation is growing, not slowing.  Drive down the highway, and you can see signs threatening jail for insurance fraud.  Those signs are funded by the State Dept. of Insurance.

In short, at the first instance when you are asked for records, or questioned by authorities, reach out to Romanowsky Law.  Brian will assemble a team to protect you and your livelihood.

New Jersey’s “Codey Law” and the Prohibition Against Self-Referrals

Posted by on Nov 6, 2013 in Health Care Law, Legal, New Jersey Healthcare, NJ healthcare, NJ healthcare law | 0 comments

New Jersey’s “Codey Law” and the Prohibition Against Self-Referrals

Most physicians are generally aware of the “Stark” law, named after Congressman Pete Stark, which is the federal government’s attempt to prevent physician self-referrals of Medicare and Medicaid patients to health care services and facilities in which they have an ownership interest.  Many physicians however, may not be as familiar with NJ’s version of similar legislation passed by Senator Richard Codey known as the “Codey” law.

Like the Stark Law, the Codey law prohibits a physician from referring Medicare and Medicaid patients to other health care facilities in which the doctor has an ownership interest.  The prohibition was born of the belief of many legislators that such referrals lead to abuse of the Medicare and Medicaid system, by racking up charges which would otherwise be unnecessary.

The New Jersey Board of Medical examiners (the “BME”) issued an advisory opinion in 1997 in which the Board declared that referrals of a physician to ambulatory surgery centers owned by a physician is actually an extension of the referring doctor’s practice, and therefore not a violation of the statute.  To be sure, there are certain restrictions, not the least of which is that procedure to be performed at the surgery center must be done by the referring doctor.  Today, you orthopedist for example, may refer you for surgery to a surgery center in which he or she holds an ownership interest.  Indeed, the number of same day surgery centers has sprung up in the last ten years as a result of the BME opinion.

In 2007, the NJ Superior Court threw a serious monkey wrench into that business structure.  In Joseph Garcia, M.D., et al. v. Healthnet of New Jersey, Inc. v. Wayne Surgical Center, LLC et. al., the Court essentially ignored the BME opinion and ruled that the ambulatory care facilities did not qualify for the exception under the Cody law.

As a result of the outcry of physicians and the entire medical community, the legislature went back to work and amended the Codey law in 2009.  The amended law however, had some drawbacks.  First, there was a moratorium on the number of new ambulatory care facilities which would be licensed.  Second, there were new restrictions on the transfer of ownership interests within the facilities.  Third, the amendment brought new mandatory registration requirements for “surgical practices” meaning the regulation of such facilities would be regulated not only by the NJ Board of Medical Examiners, but are now regulated by the NJ Department of Health and Senior Services.

The Codey and Stark Laws are only two of the very important statutes which physicians must be mindful of when establishing their practices.  Romanowsky Law can guide you through the thicket of regulations which exist, so that you may concentrate on the practice of medicine.