Kirk Ogrosky, JD; Christopher L. White, JD


Published 4/1/2010
Mary Ann Porucznik

DOJ shifting focus to Medicare fraud

Emphasis moving from “bagel police” to HEAT task forces

“I’ve been investigating healthcare fraud for 15 years, but within the last year, healthcare fraud has been raised to Cabinet-level attention,” said Kirk Ogrosky, JD, then-deputy chief for healthcare fraud in the criminal division of the U.S. Department of Justice. He was part of a panel discussing “The Orthopaedic Surgeon and Industry Relationship: Evolution or Revolution?” during the AAOS 2010 Annual Meeting.

In May 2009, Kathleen Sebelius, Secretary of the Department of Health and Human Services (HHS) and Attorney General Eric Holder announced the creation of the Health Care Fraud Prevention and Enforcement Action Team (HEAT). According to Mr. Ogrosky, this means that the federal government is going to spend more time attacking the most egregious cases of fraud and abuse.

“Medicare fraud spreads like a virus,” he said. “In many cases, it’s regional, and the people who attempt it are not necessarily sophisticated. They may not even be healthcare workers, but groups of friends and family members who believe their chances of detection are low, they won’t get caught, and the penalties—if they are caught—aren’t significant.

“But the government is addressing this issue, using claims data and the HEAT strike force. We’ll find it, prosecute, and punish,” he said.

Indeed, Mr. Ogrosky’s last three prosecutions have been against physicians, and the most recent one was against a surgeon, he told the audience.

Although he admitted that the government has not used data very effectively in the past to identify and prosecute Medicare fraud, Mr. Ogrosky noted that this is changing. For example, using data from 2002 through 2004, his office was able to identify a ring of 50 companies in the Miami area that submitted claims for more than $450 million in orthotics and prosthetics, for more than 13,000 beneficiaries.

According to the data, in less than 2 years, monthly claims for these products went from approximately $800,000 to almost $50 million.

“Now, if someone had been paying attention,” he said, “they would have asked, ‘What’s going on in Miami? Is it a war zone?’”

Turning to conviction rates, Mr. Ogrosky pointed out that his office has charged 508 individuals in 254 cases. More than half (270) have been convicted, and only 5 have been acquitted. The average sentence is 51 months.

Kirk Ogrosky, JD; Christopher L. White, JD

“The longest sentence—30 years—went to a doctor,” said Mr. Ogrosky. “The judge was so angry because of the danger this physician posed to patients that she ‘stacked’ all the convictions to ensure the longest possible sentence.”

Enforcement trends
Providing the perspective of a healthcare compliance professional, Kathleen McDermott, JD, noted that the number of subpoenas issued to physicians may not be accelerating, but is sustained and continues to transform the relationship between physicians and industry. She also noted that “off-label” use may be the basis for whistleblower investigations under the False Claims Act.

“The AAOS is in a leadership position,” she said, “because it actually has a position statement on off-label use. That statement reaffirms the regulatory principles issued by the U.S. Food and Drug Administration (FDA) and outlines best practices and professional standards for orthopaedic surgeons.”

At issue is the practice of medicine exemption. Although a physician can ask a sales representative about using a device in a way that has not been approved by the FDA, the sales representative cannot advocate, encourage, or promote its use except for approved uses.

Recent decisions may also affect the relationship between physicians and hospitals, Ms. McDermott noted. She cited the following cases:

  • A settlement reached last year over “unreasonable and unnecessary hospital admissions” to make false claims to Medicare.
  • A settlement reached in March 2010, in which a Chicago hospital agreed to pay more than $1.5 million to resolve allegations that the facility violated the False Claims Act by entering into certain leasing arrangements for office space with both individual physicians and physician groups that violated the Stark Law.
  • A case that involved industry payments to a physician who did not perform the work for which he had been contracted.

“Watch what you say and how you say it,” advised Ms. McDermott, noting that e-mails are frequently being used in government cases to suggest violations of the antikickback statutes. “Under the ‘one purpose’ rule, if the government can show that one of the reasons for an arrangement is to influence a physician’s judgment, you can be found guilty.”

  • Finally, she offered the following advice to orthopaedic practices:
  • Invest resources in compliance and carefully manage any conflicts of interest.
  • Increase awareness of ethical issues among your staff and partners.
  • Document the performance of any work contracted for with industry.
  • Don’t be fooled by the seeming relaxation in intensity of investigations.

A rapid evolution
For his part, Christopher L. White, JD, general counsel for the Advanced Medical Technology Association (AdvaMed), the medical device trade association, opined that surgeon-industry relationships are undergoing “a rapid evolution.” He discussed the AdvaMed Code of Ethics and its certification process, which has been completed by nearly 100 companies.

“Companies do not have to be members of AdvaMed to participate in the certification process,” he said, “so it provides you with a way to measure a company’s commitment to complying with ethical interactions with physicians.” Under the certification process, the company’s chief executive office and chief compliance officer must affirm that the company both abides by and has implemented policies and procedures to follow the AdvaMed Code of Ethics on Interactions with Health Care Professionals.

Mary Ann Porucznik is managing editor of AAOS Now. She can be reached at

Additional Links:
Stop Medicare Fraud Web site

AdvaMed Code of Ethics

AAOS Position Statement on Off-Label Use

AAOS SOPs on Orthopaedic Industry Relationships

AAOS "Relationships with Industry" Web site