Source: United States Department of Justice Criminal Division
Community Care Health Network LLC, doing business as Matrix Medical Network (Matrix), DPN USA, doing business as HealthFair (HealthFair), and Shahriah “James” Ekbatani have agreed to pay a total of $56.5 million to resolve allegations that they violated the False Claims Act (FCA) by causing the submission of false or invalid diagnosis codes to the Medicare Advantage program. Matrix will pay $36.5 million to resolve claims in a qui tam action filed in the Southern District of New York. HealthFair, which was acquired by Matrix, will pay $5 million and Ekbatani will pay $15 million to resolve claims in a qui tam action filed in the Eastern District of Texas.
“When healthcare companies report risk-adjusting diagnoses that are invalid, they siphon money from the Medicare Advantage program,” said Assistant Attorney General Brett A. Shumate of the Justice Department’s Civil Division. “The Justice Department remains vigilant in pursuing MAOs, downstream entities, and responsible individuals who do not play by the rules.”
“Patients should be able to trust that their medical providers are making, documenting, and sending diagnosis information to insurers based on accurate assessment, testing, and what is best for the patient,” said U.S. Attorney Jay R. Combs of the Eastern District of Texas. “It is a breach of trust when providers look to make more money by making their patients appear sicker than they are. Submitting unsubstantiated diagnoses increases costs to the Medicare Advantage program. This case emphasizes our District’s commitment to justice by pursuing anyone who attempts to steal through misrepresentations.”
“For years, Matrix generated false and invalid diagnoses for patients enrolled in Medicare Advantage plans that were later reported to the Government,” said U.S. Attorney Jay Clayton for the Southern District of New York. “Matrix advertised its ability to identify new diagnosis codes that would boost Medicare Advantage insurers’ payments, and it delivered on that promise by reporting lucrative diagnoses that frequently fell well short of meeting recognized clinical criteria. Matrix did so to generate business for itself, at the expense of the public fisc. New Yorkers hate fraud that drains public funds. Why? Because New Yorkers are smart and they know fraud involving taxpayer-funded programs costs all New Yorkers. This Office is proud to join with the rest of the Department, including the National Fraud Enforcement Division, to hold perpetrators of fraud accountable in Medicare and other contexts.”
“The allegations in these matters describe conduct that puts profit ahead of patients and undermines the integrity of the Medicare Advantage program,” said Acting Deputy Inspector General for Investigations Scott J. Lampert of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG). “HHS-OIG will not tolerate efforts to divert taxpayer funded health care dollars for personal or corporate gain. We will continue to pursue every available enforcement avenue with our law enforcement partners to ensure that anyone who endangers federal program integrity is met with swift and robust accountability.”
The Medicare Advantage (MA) program, also known as Medicare Part C, allows Medicare beneficiaries to opt out of traditional Medicare and enroll in health plans that are administered by private insurance companies known as Medicare Advantage Organizations (MAOs). The MAOs contract with the Centers for Medicare and Medicaid Services (CMS) to provide traditional Medicare coverage to beneficiaries enrolled in their plans in exchange for capitated payments. CMS adjusts these capitated payments based on the health status of each beneficiary as determined through diagnoses submitted by the MAOs. In general, CMS pays more for sicker beneficiaries likely to incur higher healthcare expenses and less for healthier beneficiaries. Diagnosis codes submitted to CMS must be supported by the beneficiaries’ medical records and be accurate, complete, and truthful, based on the best knowledge, information, and belief of the MAO making the submission.
Matrix, headquartered in Nashville, Tennessee, is a health services company that contracts with MAOs to provide in-home assessments to MA plan beneficiaries. HealthFair, a company founded and managed by Ekbatani, operated mobile health care buses staffed by nurse practitioners and medical technicians and fitted with certain medical equipment. It contracted with MAOs in several states to provide health assessments to MA plan beneficiaries on HealthFair buses. Matrix acquired HealthFair in 2018 and shut down its operations by 2020.
The United States alleges that during the period from 2014 to 2019, Matrix knowingly caused MAOs to submit false and invalid diagnoses of the following chronic medical conditions to CMS for risk adjustment purposes: proliferative diabetic retinopathy, drug-induced polyneuropathy, rheumatoid polyneuropathy, atrial fibrillation, rheumatoid arthritis, chronic obstructive pulmonary disease, and simple chronic bronchitis (the “Invalid Diagnoses”). Matrix reported the Invalid Diagnoses to MAOs based on its in-home assessments even though: (a) there was not sufficient information to support the diagnoses; (b) the diagnoses did not conform with the guidelines for coding and reporting diagnoses as required by CMS; and (c) the conditions were frequently not diagnosed by any other healthcare provider who saw the beneficiary during the year in which the home visit occurred or in the preceding two years or subsequent two years. As a result of the reporting of these Invalid Diagnoses, the MAOs obtained inflated risk adjustment payments from CMS to which they were not entitled.
As to HealthFair and Ekbatani, the United States contends that HealthFair knowingly reported certain diagnoses to MAOs that were unsupported, unsubstantiated, and/or invalid. Specifically, from 2015 to 2017, HealthFair providers (1) made certain diagnoses (including but not limited to HIV/AIDS, metastatic cancer, and Myasthenia Gravis) without documentation establishing or confirming the existence of the condition; (2) made certain diagnoses (including but not limited to morbid obesity, rheumatoid arthritis, coagulation defect, drug dependence, major depressive disorder, and chronic obstructive pulmonary disease) solely based on patient attestation, claims history, past medical history, or medication; (3) diagnosed congestive heart failure and heart arrhythmia despite contradiction by electrocardiogram and echocardiogram results; and (4) diagnosed thrombophilia solely based on separate diagnoses of atrial fibrillation. HealthFair, which acted at the direction of Ekbatani, submitted the diagnoses to its MAO customers, and the MAOs often submitted the diagnoses to CMS for risk-adjusted payments.
The settlement with Matrix resolves claims brought under the qui tam or whistleblower provisions of the FCA by Nancy Cahill, a former employee of Matrix, in United States ex rel. Cahill v. Matrix, No. 19-CV-11153 (S.D.N.Y.). The settlements with HealthFair and Ekbatani resolve claims brought under the qui tam or whistleblower provisions of the FCA by Robert Oristaglio, Jr., D.O., who was the chief medical officer of HealthFair, in United States ex rel. Oristaglio v. Community Care Health Network, Inc., d/b/a Matrix Medical Network et al., No. 4:22-CV-00133-SDJ (E.D. Tex.). Under the FCA, private parties are permitted to sue on behalf of the government for false claims for government funds and to receive a share of the recovery. The settlements in these cases provide for Cahill to receive $7.3 million and Oristaglio to receive $3.6 million.
This year the Administration launched the Task Force to Eliminate Fraud and the National Fraud Enforcement Division to enhance the Administration’s war on fraud, waste, and abuse in federal programs. When unscrupulous actors exploit these programs for their own financial gain, they defraud the government, harm the people these programs are designed to aid and protect, and undermine American businesses that play by the rules. The Civil Division’s FCA enforcement plays a critical role in combatting such fraudulent schemes, recovering billions of dollars for the American taxpayers, and holding wrongdoers accountable. FCA matters will continue to be on the forefront of the battle against fraud, and the Civil Division’s FCA work will support and advance the mission of the Task Force to Eliminate Fraud and the National Fraud Enforcement Division.
The resolutions obtained in this matter were the result of coordinated efforts between the Justice Department’s Civil Division, Commercial Litigation Branch, Fraud Section, and the U.S. Attorney’s Offices for the Southern District of New York and Eastern District of Texas, with assistance from HHS-OIG.
The investigation and resolution of this matter illustrate the government’s emphasis on combating healthcare fraud. One of the most powerful tools in this effort is the FCA. Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement can be reported to the Department of Health and Human Services at www.oig.hhs.gov/fraud/report-fraud/ or 800-HHS-TIPS (800-447-8477).
The matters were handled by Trial Attorney Samson Asiyanbi of the Justice Department’s Civil Division, Assistant U.S. Attorneys Rachael Doud and Ilan Stein of the Southern District of New York, and Assistant U.S. Attorney Kevin McClendon of the Eastern District of Texas.
The claims resolved by the settlement are allegations only and there has been no determination of liability.
Note: The settlement agreement with Matrix Medical Network can be read here, the settlement with HealthFair can be read here, and the settlement with Shahriah Ekbatani can be read here.