Ouch! Pain Clinic Chain Loses Whistleblower Case

On April 25, a chain of 40 pain clinics in Virginia, Maryland, the District of Columbia, New Jersey, New York, and West Virginia treating 160,000 patients annually (2012 numbers) announced that they had agreed to pay $3.29 million to settle a federal whistleblower lawsuit filed by a former employee alleging that they defrauded Medicare, TRICARE, and the Federal Employees Health Benefits (FEHB) Program.

The pain treatment centers, Virginia-based Physical Medicine Associates, Ltd. (abbreviated to “Capitol Spine”), National Spine and Pain Centers, LLC (NSPC), and their parent company, are one of the largest non-surgical pain management clinic chains in the country.

The owner of the pain clinics, privately held Sentinel Capital Partners (which was alleged to be the key participant in the alleged schemes), owns 24 companies, including such well-known brands as TGI Fridays and the high-performance automotive brand Holley’s, as well as lesser-known companies, including one which blows up land mines for the safety of U.S. troops. It had total assets of $26 billion when the lawsuit was filed.

The defendants admitted no wrongdoing.

The lawsuit, United States of America ex rel. Michelle O’Connor v. National Spine and Pain Centers, LLC, et al., No. 3:15-cv-00551 (E.D. Va.), alleged a massive pattern of unlawful behaviors. The complaint is available here.

The Whistleblower’s Allegations

The lawsuit was a “qui tam” complaint, in which a private citizen, the “relator,” sues on behalf of the federal government, under the federal False Claims Act and, if successful, entitles the whistleblower to receive 15% to 25% of any resulting fines or other. Sometimes, the government stands aside and lets the relator’s attorney pursue the case. In this case, the federal government took the lead role from the start, said the co-lead plaintiff’s attorney, Jeanne Markey of Cohen Milstein Sellers & Toll PLLC.

The whistleblower is Michelle O’Connor, a physician’s assistant who worked under supervision of Douglas W. Wisor, M.D., one of the 16 named defendants. She worked at two Virginia offices of Capitol Spine from 2010 to 2012, then for the combined company until June 3, 2013, when Wisor terminated her. Her lawsuit alleges that she was fired “for complaining about the unlawful practices.”

In her complaint, she alleged that the NSPC entities committed, and required their providers to commit a number of fraudulent behaviors including:

• Routinely overcharging by mid-level providers by billing for services as though they are rendered by the patients’ physician;
• Requiring all opioid therapy patients visit the provider’s office every 30 days (rather than every 90 days) in order to increase billing for office visits and other services;
• Routinely overcharging for basic opioid therapy evaluation by mid-level providers during office visits;
• Automatically performing unnecessary drug tests on all opioid therapy patients during each office visit;
• Routinely performing and billing for unnecessary and worthless ultrasounds in connection with numerous types of pain injections;
• Routinely prescribing unnecessary and worthless orthopedic braces;
• Illegally dispensing narcotics from the Fredericksburg office;
• Performing unnecessary spinal cord stimulator trials;
• Performing unnecessary radiofrequency ablation procedures; and
• Performing unnecessary pain injections.

Alleged: Overcharged the U.S. Government

Fifty percent of the patient base, the complaint says, were insured under federal-government programs. Based on the 2012 total of patient visits, that would approximate 80,000 federal claims per year from 2012 on.

According to the complaint: “These schemes are part of a business model that is reliant upon keeping patients on a continuous pain management treatment cycle: exhaust coverage of injections; provide orthopedic braces; perform procedures such as a spinal cord stimulation or radiofrequency ablation; prescribe opioids; recommence pain injections… In sum, National Spine’s Board has created a corporate culture in which money trumps the provision of appropriate patient care.”

The government’s lawyers went on to describe a system of bonuses and extra payments which, they alleged, was created by the NSPC board to reward or penalize company’s physicians and care professionals and thereby create the system of fraudulent billing.

“During a training session held at National Spine’s headquarters in early 2012, Gordon[1] instructed Relator and other mid-level providers to bill all services that they provide under the name and NPI number of the ordering physician regardless of whether the ordering physician, another physician, or no physician is present in the office suite. In fact, since all of their services are billed under the name of the ordering physician, mid-level providers at National Spine do not even receive their own Medicare provider number.”

The complaint said that the monetary consequence of billing under the physician’s name is that if billed by a subordinate, the reimbursement is 85% of the amount for the same procedure billed by the physician.

“Relator…witnessed firsthand Capitol Spine, National Spine, Sentinel and National Spine’s Board develop and implement multiple systematic fraudulent schemes to increase revenues and profits and thereby increase their own personal returns on their investments and wealth. The substantial revenue and profits generated through these schemes came at the expense of the government healthcare programs and patients,” the complaint said.

“National Spine’s Board closely monitors physicians’, mid-level providers’, and medical assistants’ compliance with the Company’s revenue maximization policies and requirements,” the complaint said.

The complaint also said that as of the time it was filed, David Vaughn, who had been previously sentenced to 18 months in prison for misrepresenting the finances of an insurance company he ran—a company which subsequently failed, causing losses to both claimants and Louisiana taxpayers—was NSPC’s corporate compliance officer.

$700 Ultrasound Machines

According to the complaint, the pain center managers instructed physicians to use ultrasonic guidance for injections. There is data which shows that the accuracy of joint injections can improve when a care provider uses fluoroscopic or ultrasonic guidance.

Specifically, said the government lawyers, “In or around 2012, Medicare stopped reimbursing for fluoroscopic guidance performed in conjunction with sacroiliac (SI) joint injections because the guidance was not medically necessary. To avoid the resultant dropoff in revenue caused by this change, National Spine instructed physicians to perform ultrasonic guidance for SI injections.”

“…and to increase its profitability on other injections, National Spine instituted a policy requiring that physicians and mid-level providers bill for ultrasound guidance on every joint injection where the government healthcare programs will not cover fluoroscopy.”

“Wisor (who was president of NSPC at the time) directed National Spine’s Facilities Manager, Kevin Gartland, to purchase the cheapest ultrasound machine available because he was concerned that the government healthcare programs and other insurers may soon stop reimbursing for ultrasound needle guidance, in which case National Spine would have no use for the equipment,” the complaint said.

The scanners purchased were $700 each, from Wuhan Tianyi Electronic, a Chinese company; the units plugged into a laptop. In contrast, a website, Costowl.com, says, “Most new ultrasound machines fall in the $20,000 to $75,000 range. Used or refurbished machines—which offer a great opportunity for saving money—usually run $5,000 to $40,000 for average models.”

“The image quality of the Wuhan Tianyi Electronic laptop ultrasound scanner is of such poor quality that physicians and mid-level providers could not even see the needle on the screen.”

“Accordingly, National Spine’s providers did not use the ultrasound for needle guidance. In accordance with National Spine’s directives, however, the providers reported utilizing ultrasonic guidance and billed for it. And, National Spine instructed the providers to take a picture of the ultrasound probe next to the joint and create a false patient note so that, in the event that the government audits the false bills, it will appear as though National Spine really utilized ultrasonic guidance for the injections,” the complaint says.

The reimbursement rate for ultrasound guidance for injections was $207 per use, the complaint said.

Milking the Opioid Testing Rules

According to an October 2009 Medicare directive, qualitative opioid drug screening is medically necessary when “illicit drug use is suspected”. That directive was reiterated on July 1, 2011.

According to the complaint, “qualitative drug screening is considered medically reasonable and necessary in patients receiving opioid therapy where (i) “illicit drug use, non-compliance or a significant pre-test probability of non-adherence to the prescribed drug regimen is suspected and documented in the medical record,” or (ii) the patients are “at high risk for medication abuse due to psychiatric issues…[patients] have engaged in aberrant drug-related behaviors, or who have a history of substance abuse.”

Medicare’s directive also said drug screening should be only for those drugs or classes likely to be present, and that confirmation (lab testing) is allowed only when the result of the drug screening is at odds with the patient’s medical history, clinical presentation, or the patient’s own statements.

National Spine, alleged the complaint, milked those directives by issuing “a blanket order requiring that each opioid therapy patient receive a qualitative drug test for numerous drug classes during each office visit and also that every patient’s urine sample be sent to an outside lab for confirmatory quantitative testing.”

“Relator witnessed the office manager and medical assistants at Fredericksburg train medical assistants from several other offices to collect a urine sample from every opioid therapy patient during each visit and then perform a qualitative twelve panel test on each sample and send each sample to an outside lab for quantitative testing,” the complaint alleged.

How many such tests were done? “Relator estimates that the Fredericksburg office alone administered approximately 400 in-house twelve panel qualitative drug screenings and ordered 400 duplicative quantitative drug tests per month.”

The complaint also alleges that NSPC put boilerplate language in each opioid patient’s chart falsely claiming that it did only random testing.

“Wisor characterized the mandatory, repeated drug screenings as “low hanging fruit” because they are a guaranteed way to generate revenue for National Spine and cash bonuses for employees,” the complaint alleged.

The False Claims Act “provides that a person is liable to the United States Government for three times the amount of damages that the Government sustains because of the act of that person, plus a civil penalty of $5,000 to $10,000 per violation,” according to the complaint. At those values, if the allegations are true, then the federally-insured half of the 400 qualitative test strip plus 400 quantitative lab monthly drug tests in the Fredericksburg office alone would result in damages and penalties far greater than the $3.29 million settlement over the period in question.

Slap on the Wrist?

Attorney Markey, who represents the whistleblower O’Connor, told OTW that the size of the settlement was not what had been anticipated. While the complaint described many claims, “ultimately, the settlement achieved focuses on a subset of defendants and allegations, and in particular…billing of physician assistants, the claims related to anti-kickback/Stark violations, and lastly claims that relate to unnecessary quantitative drug testing.”

“Even though the relator wanted to pursue the remaining defendants and numerous claims on her own, once the government reached a settlement with PMA and NSPC, the government stated that it would move to dismiss those defendants and claims in order to preserve the settlement it had reached with PMA and NSPC. Under those circumstances, and considering the defendants and the specific conduct covered by the settlement, the terms of the settlement reached with PMA and NSPC were fair and reasonable.”

Recent Pain Clinic Billing Fraud Cases

“Pain Clinics’ Doctors Needlessly Tested Hundreds Of Urine Samples, Court Records Show.”

An April 24, 2019 news report under that headline in Kaiser Health News said that a Tennessee-based chain of pain clinics which closed abruptly last summer has been accused in five whistleblower lawsuits of precisely the same activity as one of the allegations in the NSPC lawsuit: massively billing for unnecessary drug screening tests.

“Fort Myers Pain Management Physician Pleads Guilty to Healthcare Offenses and Agrees to $2.8 Million Civil Settlement With the United States”

On June 4, 2018 The U.S. Attorney’s Office for the Middle District of Florida issued a press release saying that Fort Myers Dr. Michael Frey, M.D. “agreed to a civil settlement under which he will pay $2.8 million to the United States to resolve allegations that he violated the False Claims Act in a number of ways, including receiving illegal kickbacks and by ordering medically unnecessary laboratory tests.”

“Syracuse Area Medical Practice to Pay Nearly $2 Million to Resolve False Claims Act Exposure”

An October 3, 2017 U.S. Justice Department news release said the Syracuse-based pain management and spine procedure clinic New York Anesthesiology Medical Specialties, P.C. d/b/a New York Spine and Wellness Center (New York Spine & Wellness) “agreed today to pay $1,941,850.29 to resolve claims that it improperly billed for moderate sedation services.”

“Liquid gold: Pain doctors soak up profits by screening urine for drugs”

Modern Healthcare reported on November 7, 2017:

“Millennium encouraged doctors to order more tests both as a way to lower patients’ risks and to shield the physicians against possible investigations by law enforcement or medical licensing boards, according to court filings. Millennium denied the allegations in the whistleblower suits and settled all of them with the Justice Department in 2015 by agreeing to pay $256 million; its parent company, Millennium Lab Holdings II, declared bankruptcy.”

“Coastal Spine and Pain Pays $7.4 Million to Settle False Claims Charges”

Walter Eisner of Orthopedics This Week reported in September 2016, “Physicians Group Services, P.A., doing business as Coastal Spine and Pain based in Jacksonville, Florida, agreed to pay $7.4 million to the government to resolve allegations that Coastal violated the False Claims Act by performing medically unnecessary drug screening procedures.”

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[1] *Assaf T. Gordon, MD, a cofounder of Capitol Spine, who oversaw billing, compliance, and physician assistants before the merger, and who became a member of the NSPC board of directors afterward.