The New Jersey Medicare/Medicaid Fraud Unit

The New Jersey Medicare/Medicaid Fraud Unit

Recently, Mark Moskovitz, Esq., Deputy Director of the Medicaid Fraud Division of the office of the State Controller gave a presentation to a small handful of attorneys who practice Medicare and Medicaid Fraud.  Here are some of the “takeaways” from the seminar:

The Medicaid Program Integrity and Protection Act was passed by the NJ Legislature on March 16, 2007.  Among other things, the Act was created for the purpose of establishing a department within the NJ government whose purpose was to detect, prevent and investigate fraud and abuse related to Medicare and Medicaid in the health care industry.  The goal of the Department is to recover improperly expended Medicaid funds, to enforce Medicaid rules and regulations, to audit cost reports and claims, to review quality of care, and to refer criminal cases to the appropriate prosecutor’s offices.

The Medicare Fraud Unit (the “MFU”) is the department created in response to the Act, for NJ.  The MFU is actively “data mining” statistics and claims made by health care providers (“providers”) seeking reimbursement through the Medicare/Medicaid programs.  The data mining is designed to discover fraudulent patterns in order to tip off investigators where fraud may be found.

The statute defines “fraud” as:  “An intentional deception or misrepresentation made by any person….with the knowledge that the deception could result in some unauthorized benefit to that person or another person, including any act that constitutes fraud under applicable federal or state law.”

It is important to note that the definition of fraud does not require that there be some actual unauthorized benefit, only that it is possible that an unauthorized benefit could have resulted from the request for Medicaid/Medicare reimbursement.

Further, provider practices are “abusive” when they are inconsistent with sound fiscal business or medical practices and; they result in unnecessary costs to Medicaid; or consist of services that are not medically necessary or fail to meet professionally recognized standards for health care.  The term also includes recipient practices that result in unnecessary costs to Medicaid.  Thus, your practice maybe deemed “abusive” if you do not take appropriate measures to assure that you are in compliance with Medicare and Medicaid rules and regulations.  A sound business model, designed to assure compliance – is necessary.

The Act

NJAC section 10:49-9.8 requires that all providers have documentation which fully supports the extent of services provided.  It is insufficient to simply state that services were provided.  Rather, any reimbursement for Medicare or Medicaid payments must be backed up with documentation at the provider’s home office in the event the request for Medicare or Medicaid funding should be audited.  In the event the provider cannot document the extent of services provided, payment adjustments will be necessary.  The documentation should establish that the procedure was medically necessary, that the provision of medical services was actually done; there should be invoices, delivery documents, related prescriptions and signature logs.

Where the MFU Gets its “business”:

The MFU receives its cases through a number of sources.  Sources include the complaint hotline, complaint letters, referrals from state and federal agencies, the data mining unit, and others.

The MFU’s Subpoena Power:

The MFU has the ability to collect documents from third-parties and from all providers through the use of the subpoena power. The MFU can issue subpoenas for the purpose of taking testimony and for securing documents.  Failure to comply with the subpoena can lead to a contempt citation, contempt proceedings and possible suspension of payments.  The MFU is not subject to HIPAA and thus, documents which are otherwise not discoverable by other parties related to a patient’s care may be turned over to the MFU in response to an appropriate subpoena.


An overpayment is a situation where a provider receives payments for Medicare or Medicaid in excess of what should have been received.  Whether the overpayment was the result of a fraud or mistake is immaterial.  The State is entitled to recover the amount of the overpayment, regardless of whether the services were provided in relation to the overpayment.

The Procedure:

If the MFU investigation reveals that overpayments have been made, a Notice of Claim is issued by the MFU which describes the factual basis for the conclusion that there was an overpayment, the amount of the overpayment, the claims involved and the right to a pre-hearing conference.  If the pre-hearing conference does not resolve the overpayment issue, providers have the right to appeal to the Office of Administrative Law within twenty (20) days of the pre-hearing conference.

Notes From an Insider:

Mr. Moskovitz indicated in no uncertain terms that the pre-hearing conference is essentially a two-way street.  The MFU is more inclined to “work with providers” who provide the MFU with appropriate and thorough information as opposed to compelling the MFU to subpoena documents which are being protected or otherwise closely shielded by providers and their counsel.

The “Criminal” Component:

The MFU is required by statute to refer “suspected” fraud to the prosecutor’s office, provided there is a “credible allegation” of fraud.  This means that it is very possible that your case may be referred to the prosecutor’s office and may result in criminal prosecution.  It is important for counsel to negotiate with the MFU to determine whether or not a case has been referred to the prosecutor’s office.  If a referral has been made, counsel should make an effort to secure a hearing conference which includes both the prosecutor’s office and the MFU so that any resolution of an outstanding claim may be resolved by both departments at the same time.

Overpayments must be returned within sixty (60) days of their being identified by the provider or the date any corresponding court report is due.  Failure to return overpayments subjects the provider to the penalties available under the False Claims Act.  The MFU is not likely to impose penalties or interest if it finds that the provider has returned the corrected amount of the overpayment within two (2) years of the date of the claim.

In the event the overpayments are substantial and the provider cannot make the overpayment, the MFU may consider a corrective action plan to make sure the cause of the overpayment is addressed.

Make a Plan:

In 2010, the Affordable Care Act (“Obamacare”) mandated that all providers have a compliance plan in place to prevent fraud and abuse.  Many providers are retaining the services of third-party consultants or in-house compliance managers to assure compliance with this section of the ACA.

Compliance plans encourage employees to report potential problems permitting the provider to conduct an internal investigation and take corrective actions.

Turn Yourself In:

Last and not least, if you determine that you are not in compliance or that overpayments have been made, you are best served by retaining appropriate counsel and “self-disclosing” the overpayment to the MFU.  This is appropriate for a number of reasons.  First and foremost, the MFU considers self-reporting an indication of good faith.  The MFU is more likely to be helpful and less punitive to providers who self-report as opposed to learning of the overpayment through independent investigation.   Furthermore, the MFU and the prosecutor’s office are more likely to find that there was no purposeful intent or intentional fraud by virtue of the fact that a provider self-reported.  The self-reporting indicates a provider’s belief that something accidental has occurred which the provider has already addressed, as opposed to some purposeful concealment on the part of the provider.

There are a number of state and federal agencies whose tentacles may reach into an overpayment depending upon the manner, type and extent of an overpayment.  Providers are well served by hiring appropriate counsel, who are well versed in Medicare and Medicaid fraud law, and who know the players involved.  Contact Romanowsky Law today if you find yourself involved in the issues touched upon in this blog.