Deeper Than the Headlines: A Whopping $40 Million Bribe And Kickback Scheme

On Dec. 1, 2016, a judge ordered to unseal an indictment of 21 individuals allegedly involved in a $40 million bribe and kickback scheme involving Forest Park Medical Center Dallas (FPMC). 

FPMC was a physician-owned surgical hospital which opened in March of 2009.

The indictment alleges the following:

• FPMC paid approximately $40 million in bribes and kickbacks to surgeons, primary care physicians, chiropractors, lawyers, workers' compensation preauthorization specialists, and others in exchange for those individuals referring certain patients to FPMC.
• Those patients were primarily ones with high-reimbursing out-of-network private insurance benefits or benefits under certain federally-funded programs. At the same time, FPMC's owners, managers, and employees attempted to sell patients with lower-reimbursing insurance coverage, namely unwitting Medicare and Medicaid beneficiaries, to other facilities in exchange for cash.
• As a result of the bribes, kickbacks, and other inducements, FPMC billed patients' insurance plans and programs well over half-a-billion dollars and collected over two hundred million dollars in paid claims.
• FPMC's strategy was to maximize profits for physician investors by refusing to join the networks of insurance plans for a period of time after its formation, allowing its owners and managers to enrich themselves through out-of-network billing and reimbursement.

As for specifics, the indictment cited various alleged emails and communications which demonstrated the intent and scheme of the bribes and kickbacks, including the following examples:

• FPMC’s Chief Operating Officer sent an email to an unindicted coconspirator, a chiropractor, stating it, "appears that your projections of cases have fallen wholefully short. You said 20 in November and 40 in December. I want to sit down as soon after the beginning of the year and before the 15th to find out why my $150k investment has not produced Jack."
• A physician, after being informed that he would no longer receive payments, sent an email to a FPMC representative stating, "I am sure the courts will find the information very interesting given the facts of the matter if and when it gets to that point. It is clear to all reasonable persons what this contract [to "lease" his office] represented and who did benefit from it i.e. FPMC as evidenced by the monthly reports sent to me from FPMC."
• "How do the commissions work? I am on commission for a percentage of the surgeries that I send over (just mine)." ______ responded, "We've already figured it. I need an invoice for 10K from you."
• "How is ______ doing re-cases for his 70 k? As I recall we had to do 15 insurance bypass a month for 70 k @ at" XXXX. It should be no lower bar for [FPMC] since he is also getting paid by the partnership."
• A doctor sent an email to FPMC leadership lamenting the reduction in his monthly payments from $175,000 to $125,000, explaining, "We send our Ft Worth patients to [FPMC] for CTs, EGDs, readmissions for numerous medical conditions like fever, dehydration, pain control, and gallbladder attacks. Basically, anything we can-both the patient and we as surgeons pass up 6 hospitals on our way to FP for medical conditions that could be treated locally."
• The indictment also alleges that one of the mechanisms to hide the bribes was to claim the payments were for marketing. Two of the alleged emails shared in the indictment said:
  • "One thing that Doug and Mike wanted to understand clearly is what the sliding scale for marketing dollar contributions looks like .... Knowing that the 100K covers 20-25 cases/month, they would like to understand the levels that can be achieved when they bring in even more cases," to FPMC.
  • "I have a business proposal for you .... I truly believe that you will receive a 9:1 ratio or greater for every dollar you invest in me. I am requesting a marketing budget of $70,000 a month."

While the outcome of this indictment remains to be seen, at least one of the individuals named in the indictment has pleaded not guilty. It will be interesting to watch this case proceed against these individuals.

Previously, in Jan. 2015, the hospital itself settled a civil suit for $215,000 to resolve allegations that the hospital paid kickbacks in exchange for referrals.