proving intent in a medicaid fraud case...medicaid fraud conviction possible penalties include: •...

PROVING INTENT IN A MEDICAID FRAUD CASE

CHUCK ROEHRDANZ – ASST ATTY GEN

MFCU FEDERAL AUTHORITY

• MFCUs are located in 49 states and the District of Columbia

• Authorized under federal law and receive federal funding

• 2015 MN Medicaid spending = $10.6 billion

MFCU FEDERAL AUTHORITY

Duties • Fraud in the administration of the Medicaid Program.

• Abuse or neglect of patients in health care facilities or

agencies receiving Medicaid payments.

• Misappropriation of patient’s private funds when they are receiving services from a Medicaid provider.

• Abuse and neglect in assisted living facilities.

STAFF

• Seven attorneys

• Twelve investigators

• Two paralegals

• Four legal assistants

MEDICAID FRAUD UNIT STATISTICS Investigations (1/1/14-12/31/14) • Opened 166 fraud cases and 2 abuse, neglect and

financial exploitation Criminal • Filed 39 criminal complaints for fraud • Convicted 23 fraud defendants and 2 abuse neglect and

financial exploitation defendants • Restitution was ordered in the amount of $717,850.58

MEDICAID FRAUD UNIT STATISTICS (CONT’D)

Civil • Civil judgments in the amount of

$2,280,920.90 were negotiated • 1 license suspension • 20 program suspensions

THE LAW

Minnesota Statutes provide that “theft of public funds” no matter

what the amount is a felony – that means billing for one unit of PCA services not provided is a felony.

CONSEQUENCES OF A MEDICAID FRAUD CONVICTION Possible penalties include:

• Exclusion from working at a MA/MC funded job for at least five years, usually longer

• Felony record makes it harder to find any job • Jail • Restitution • Deportation • Disqualification from Section VIII housing

MEDICAID PROGRAM

• Roughly 50/50 Fed-State funded

• Over 1 million Minnesotans receive Medicaid (MN Medicaid = Medical Assistance)

• Health insurance for individuals and families who qualify below established income guidelines

• FFS v. Prepaid Medical Assistance Plans – easy to understand, common sense gov planning

THE BIG PICTURE

MEDICAID FRAUD CONT.

• Medicaid recipients apply for Medicaid benefits through counties – get FFS or PMAP (approx 70% pmap)

• Medicaid Providers apply through DHS

• Medicaid Providers (i.e. defendants) submit false claims to DHS or PMAP

• Medicaid Providers go to jail

CHALLENGES TO INTENT • I didn’t do it ! • I didn’t intend to defraud anybody, it was accounting

errors….

LYING, CHEATING AND STEALING “It wasn’t me” defense:

• Enrollment documentation/Electronic Claims • E-mails/communication • Employee disloyalty (i.e. whistleblower)

“It was a mistake” defense:

• MN Statutes/MN Rules • Provider Manual • Steps for Success

MHCP PROVIDER AGREEMENT

MINN. R. 9505.0470

• A provider is responsible for all medical assistance payment claims submitted to DHS

• Even if claim is submitted by provider's employee, vendor, or

business agent, or an entity who has a contract with the provider.

MHCP PROVIDER AGREEMENT

MINN. R. 9505.0205 A provider shall maintain medical, health care, and financial records, including appointment books and billing transmittal forms, for five years

MINN. R. 9505.2175, SUBP. 1 As a condition for payment by a program, a vendor must document each occurrence of a health service provided to a recipient. Program funds paid for a health service not documented in a recipient's health service record shall be recovered by the department.

SUBP. 2, REQUIREMENTS FOR RECORDS Date service is provided Length of time spent with recipient Signature and title of service provider Case history and health condition Plan of care, individual service plan

PROVIDER EDUCATION

• Minnesota Statutes and Rules

• Provider Manual

• Steps for Success

• Billing Lab

MINN. STAT. 609.52(A)(3)(III) Theft by False Representation

• Actor intentionally deceiving the third person with a false representation which is known to be false, made with intent to defraud, and which does defraud to whom it is made…

• The preparation or filing of a claim for reimbursement, a rate

application, or a cost report used to establish a rate or claim for payment for medical care provided to a recipient of medical assistance under chapter 256B, which intentionally and falsely states the costs of or actual services provided…

STATUTES CONT.

609.466 - Medical Assistance Fraud • Any person who, with intent to defraud, presents a claim for

reimbursement….related to the payment of medical assistance funds pursuant to chapter 256B…which is false in whole or in part, is guilty of an attempt to commit theft of public funds….

SCENARIO #1 • DHS compares claims for PCA services sent by PCPO to

DHS to timecards for the services

• Number identifying the PCA on the claim is different from the PCA on the timecard

• No evidence that PCA services weren’t provided

SCENARIO #2 • PCPO bills for PCA services

• DHS records indicate that PCPO sent DHS form affiliating

a Qualified Professional with PCPO

• Qualified Professional says they never provided services

• Makes no claims for services of a Qualified Professional

• Evidence shows that Medicaid recipients are receiving services

INTENT DEFINED CRIM JIG 7.10

• Intentionally means that the actor either has • A purpose to do the thing or cause the result specified, or

believes that the act performed by the actor, if successful, will cause the result.

• The actor must have knowledge of those facts that are necessary to make the actor’s conduct criminal….”

“KNOWLEDGE” DEFINED Crim Jig 7.10

• The actor believes that the specified fact exists

CRIM JIG 16.05 THEFT BY FALSE REP DEFINED Whoever obtains for him/herself/another the possession, custody, or title to property of another person by intentionally deceiving the other with a false representation that is known to (him/her) to be false, is made with the intent to defraud, and does defraud the person to whom it is made, is guilty of a crime.

CRIM JIG 16.06 ELEMENTS

• Third, defendant intentionally prepared or filed claim used to establish a rate or claim for payment for medical care provided to recipient of medical assistance

• Fourth, defendant knew that the claim falsely stated the costs of or other actual services provided

ELEMENTS CONT… Fifth, Defendant intended DHS believe that the claim was true Sixth, DHS believed representation was true Seventh, DHS in reliance on representation, gave defendant money.

WHERE IS INTENT TO DEFRAUD? Elements don’t have exact language “with intent to defraud.” Intent to Defraud

• Defendant intentionally filed a claim • Defendant knew that the claim falsely stated the costs of or

other actual services provided • Defendant intended DHS believe that the claim was true • DHS believed representation was true

OTHER EXAMPLE IN CRIM JIG 16.06 Theft by check requirements

• Fifth, at time of issuing the check, the defendant intended to defraud _____ by intending that the check never be paid

Why would theft by check have “intent to defraud” but theft by false rep. not?

STATE V. WILLIAMS 324 N.W.2D 154 (MINN. 1982) Defendants owned a Log Home company, purchased logs from Louis Flake Employee of Defendant picked up logs from Flake and paid with cashier’s check Next purchase was picked up and delivered by independent trucker named Boyd Defendant wrote checks to Boyd and Flake for purchase

STATE V. WILLIAMS CONT. Boyd picked up another load of logs from Flake and delivered to Defendants. Defendants paid Boyd and Flake with separate checks All four checks were written in November and bounced for insufficient funds

STATE V. WILLIAMS CONT. Banker testified that they sent two statements in October to Defendants that bank account balance was $92.33 when Defendants issued checks Banker testified that balance was same in November Defendants testified they had accounts receivable at the time they ordered the first November load Received a check for 7k in December that was later cancelled due to defective logs

JURY INSTRUCTION FOR STATE V. WILLIAMS Defendants must have intentionally issued a check to obtain logs Defendants must have known or believed that they were not entitled to issue checks. A person is not entitled to issue a check if funds in checking account are not sufficient to cover the amount of the check (added sentence)

NO “INTENT TO DEFRAUD” IN ELEMENTS Supreme Court reverses conviction Defendant could have been found guilty w/o jury finding that defendant – at moment check was issued - had intent to defraud by permanently depriving him of property by never covering the check.

CONT… Instruction didn’t allow jury to consider Defendants testimony Essentially just going on what banker said about accounts.

THEFT BY FALSE REP INSTRUCTION Intentionally prepared or filed claim + knew claim was false + intended recipient of claim to believe it was true Instruction allows jury to consider testimony that Defendant is not guilty

• Didn’t intentionally file the claim • Simply wasn’t them who submitted the claim

• Didn’t know the claim was false • Time shifting

CIRCUMSTANTIAL EVIDENCE STATE V. HAYES 831 N.W.2D 546 (MINN. 2013)

Determine the circumstances proved • Giving deference to the jury’s acceptance of the proof • Reject evidence that contradicts State’s

Court independently examines the reasonableness of all inferences drawn from circumstances proved

• Are inferences proved consistent with guilt and inconsistent with rational hypothesis except that of guilt – not simply whether guilt is reasonable inference.

CONT. On review of a conviction – circumstances proved will be the prosecutor’s case Hayes case was a homicide involved a head injury to a baby. Defendant had expert testify that injuries were consistent with an accident On appeal, defendant argued that taking the expert testimony – one can reasonably infer accident

CONT. If jury found defendant guilty then they also rejected the expert’s testimony Court didn’t look to defendant’s expert testimony when assessing “reasonable inference”

APPLYING TO A MEDICAID FRAUD CASE DHS Provider Agreements

• All signed

DHS online Provider Manual • Easily available • Accepted in provider agreement

Steps for Success Training/Billing Training

• 2 day training seminar Every timecard has a fraud statement

SCENARIO #1 DHS compares claims for PCA services sent by PCPO to DHS to timecards for the services Number identifying the PCA on the claim is different from the PCA on the timecard No evidence that PCA services weren’t provided

SCENARIO #2 PCPO bills for PCA services DHS records indicate that PCPO sent DHS form affiliating a QP with PCPO QP says they never provided services Makes no claims for services of a QP Evidence shows that Medicaid recipients are receiving services

STATE V. LONE, 361 N.W.2D 854 (MINN. 1985) Intent to defraud does not mean there needs to be a bad purpose for $ stolen or that victim didn’t receive services Lone owned a Central States Waterproofing, Inc. (CSW). CSW cold called – gave a script that said

• Homeowner was assured that an inspector sent out by company was expert in field of waterproofing homes

• Paid per inspection Inspectors were salesman – followed CSW instruction

CONT. Salesman pushed a total home package – interior and exterior

• Workers believed that interior was good enough

People had water in basements Inspectors saying water would cause structural damage Other testimony that additional products were useless CSW ended up getting a service call for each system they installed

STATE V. LONE ISSUE Instruction

• “The crime is committed when the victim parts with his or her money…it is no defense that the victim received something of value for the money.”

Defendant’s Requested Instruction • “Theft is taking money from a person without getting value in

return. If you find that defendants did take money from the victims, but they did so in the good faith belief that they were giving something in return, then you must acquit”

STATE V. LONE CONT. CSW tried to argue that there was water in the basements Court focused on how CSW presented itself

• Fraudulently emphasized the presence of water was evidence of more serious structural damage

• Evidence suggested otherwise

Value of services received is irrelevant – once victim parted with money based on false representation – immaterial whether victim received value.

MULTI-LEVEL SCHEMES

MULTI-LEVEL SCHEMES Owners of fledgling PCPOs agree to step back and let a management group take over Owners step back - management not on paper Management gets clients – essentially follows no rules DHS audits – PCPO closes – management moves on

QUESTIONS? Chuck Roehrdanz

• chuck.roehrdanz@ag.state.mn.us • 651-757-1299