More Physicians Feeling Heat From False Claims Settlements

Is the Yates memo driving a surge in physician and practice group False Claims Act settlements in 2017? A $1.6 million FCA settlement announced by the Department of Justice Oct. 11 is the latest indication of a noticeable uptick in FCA settlements involving physicians this year.

Physician Gurunath Reddy and United Surgical Partners International, which jointly owns an ambulatory surgical center with Reddy, settled allegations related to colonoscopy procedures that weren’t fully performed, were done in unsanitary conditions, and were illegally upcoded in Medicare claims.

Reddy’s settlement is one of at least 26 FCA settlements involving physicians named as individual parties this year, according to Bloomberg BNA’s FCA settlement database, far more than in prior years.

David S. Schumacher, a partner at Hooper, Lundy & Bookman PC in Boston, told me that “enforcement of FCA action against individuals is a scary new world.” Schumacher added that, “It seems like every other FCA resolution this year is not just a company but individuals, too, and there’s often a sentence saying we’re continuing to investigate individuals.”

The Yates memo, published by former acting Attorney General Sally Q. Yates in September 2015, instructed DOJ prosecutors to focus on individuals who are culpable when investigating corporate fraud allegations.

The increase in physician FCA settlements could demonstrate that the full effect of the Yates memo is finally coming to bear on FCA investigations and litigation. FCA lawsuits typically take years to resolve from initial filing to either a settlement or court decision, which may account for a delayed increase in FCA resolutions focusing on individual physicians.

Schumacher drew a correlation between the Yates memo and the settlement increase as well, though he noted that the DOJ has indicated it is looking to revise the Yates memo principles in some fashion.

Read my full story on the Reddy settlement here.

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