An Unsavory Business Practice? Anonymous Accusations of Fraud

Since January 2021, the Centers for Medicare & Medicaid Services (CMS) and the U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) have accepted anonymous and confidential whistleblower disclosures.

Can you imagine your competitor accusing you of fraud, in order to get your consumers? It happens. I recently promised a story of two specialized dental practices in Minnesota, and how one practice purposefully and nefariously accused the other of fraud.

One practice was comprised of a father and three sons. They had three locations and were highly profitable. They had one main competitor because apparently, they specialized in a certain dental procedure that only one other office performed in their state. The competitor dentist just happened to be on the ethics committee for the State Dental Board. The competitor submitted a complaint alleging that the family dentistry was committing fraud to the Dental Board and the State Medicaid Fraud Division. Accusations of upcoding, even if there is no proof, are easily alleged.

Accusations of alleged healthcare fraud invokes 42 CFR 455.23, which states “the State Medicaid agency must suspend all Medicaid payments to a provider after the agency determines there is a credible allegation of fraud for which an investigation is pending under the Medicaid program against an individual or entity unless the agency has good cause to not suspend payments or to suspend payment only in part.”

The word “must” was changed in 2011 with the Patient Protection and Affordable Care Act. Prior to 2011, the regulation read “may.” “Must” is much more binding. The “credible allegation of fraud” is defined as an “indicia of reliability.”

Going back to the regulation, subsection two states that “the State Medicaid agency may suspend payments without first notifying the provider of its intention to suspend such payments.”

The third subsection notes that “a provider may request, and must be granted, administrative review where State law so requires.”

One by one, the dentists accused of fraud by their competitor had their dental licenses temporarily suspended by the dental board. Then, investigations ensued. Before finding any fraud, based on the allegation of a competitor who happened to be on the ethics committee for the Dental Board, the State invoked 42 CFR 455.23 and suspended the dentists’ Medicaid reimbursements.

That accusation resulted in a two-year reimbursement suspension for the accused practice, which resulted in the business closing. The accuser facility is thriving, and opened up three new offices. Is this really what are fraud laws are intended to do? The laws are being used to put competitors out of business, not finding fraud.

Two years later, we are filing suit, stating that a) two years is not “temporary;” b) the allegation was nefarious in nature; and (c) there is no fraud.

I wish that the dental practice had retained me two years ago. I hate that they suffered for two years for no reason. If your reimbursements are suspended for any reason, especially because of a malicious competitor’s accusation, immediately push back. The more time passes, the less likely you are to obtain a federal injunction ordering the State to rescind the suspension. The State can continue its investigation; paying providers for services rendered does not inhibit an investigation. Instead, suspending reimbursements while investigating alleged fraud is assessing penalties before determining whether the penalties are warranted. What happened to due process?

Remember, the regulation also states that a State must grant administrative review where State law so requires. Do you know whether your State requires administrative review upon an accusation of fraud? Many States do not have administrative remedies. In the famous words of Sir Francis Bacon, “knowledge is power.”