Deeper Than the Headlines: Domino Effect

It’s not unusual to read about large, multi-million dollar settlements for alleged healthcare fraud and abuses. Often times, the alleged abuses come from a larger entity trying to influence smaller entities, such as single physicians, to send them referrals or patients needing ancillary services. When this occurs, the individual physicians involved are less likely to be featured in headlines as much as the larger entity who settled for a larger dollar amount.

How One Settlement Brought Down Additional Physicians

Many thought that would have been the case when the Department of Justice announced late last year a settlement of close to $20 million with the oncology laboratory 21st Century Oncology, LLC headquartered in Fort Myers, Florida.

The allegations included 21st Century billing for medically unnecessary laboratory tests known as ‘FISH’ (fluorescence in situ hybridization). FISH tests are laboratory tests performed on urine that can detect genetic abnormalities associated with bladder cancer. But, someone has to order these tests and in this case, allegedly, it was four separate urologists. It often seems that no enforcement action is taken against the individual physicians who were alleged to have taken part in the scheme.

However, not in this case. Since their original settlement with 21st Century, in December of 2015, the government has announced additional individual settlements with two of the previously named physicians. The government probably felt that 21st Century could not have acted alone because they first needed physicians to order the tests. In the most recent announcement by U.S. Attorney, A. Lee Bentley, of the Middle District of Florida, U.S. Attorney’s Office,“In fighting healthcare fraud, it’s important that individual physicians, as well as their employers, be held accountable. Doctors should not be able to escape personal liability for health care fraud.”

These words came from the press release that announced the settlement for $250,000 with Dr. Robert A. Scappa, for allegedly ordering these FISH tests when they were not truly medically necessary. Specifically, Medicare does not consider a FISH test reasonable or necessary unless it’s used to monitor for tumor recurrence in a patient previously diagnosed with bladder cancer or after performing a full urologic workup, after the physician has reason to suspect that a patient with hematuria (i.e. blood in the urine) may have bladder cancer.

The allegation stated that Dr. Scappa began referring all of the FISH testing ordered by him to a laboratory owned and operated by 21st Century. He was paid bonuses by the company based, in part, on the number of FISH tests he referred to 21st Century laboratory. 

Dr. David Spellberg was the other physician who settled in relation to these allegations, for $1.05 million dollars, as announced in January of 2016, by the Department of Justice. The allegations were essentially the same as in the cases of 21st Century and Dr. Scappa. It was alleged that Dr. Spellberg was also ordering unnecessary FISH tests that would be performed at 21st Century’s laboratory and subsequently billed by them. This included the allegation that Dr. Spellberg was paid bonuses by 21st Century, based, in part, on the number of FISH tests he referred to 21st Century.

One of the government special agents involved stated, "This settlement demonstrates the commitment of the Defense Criminal Investigative Service (DCIS) and its law enforcement partners to protect the integrity of the U.S. military health care program (TRICARE) against fraudulent claims submitted by both corporate and individual medical services providers."

If you retrace the filings and lawsuits in this particular case, it’s like watching the very beginning of a game of dominoes. The whistleblower who first brought the allegations to the government was a medical assistant of Dr. Spellberg. The first domino to fall was the $19.75 million settlement with 21st Century, announced in December of 2015. Shortly after, Dr. Spellberg settled for a little over $1 million in January of 2016. Then, followed by the announcement of Dr. Scappa’s settlement for $250,000.

At this time, there doesn’t appear to have been any other settlements announced with individual physicians, but more could follow. There were two other physicians named by the Department of Justice in the first settlement announcement, Dr. Meir Daller and Dr. Steven Paletsky, both of whom also practiced in the Fort Myers area.

Stayed tuned, we’ll be monitoring for any settlements with these two physicians. When one domino falls, more usually follow.

Questions or Comments?