New Jersey Whistleblower Lawyer Blog

UPCODING AND OTHER HOSPITAL FRAUD

Over the past couple of weeks, the Federal Courts have passed on a spate of fraud allegations against hospitals. In the past, New Jersey hospitals have been hit with similar claims and, in fact, some New Jersey hospitals have settled with the Federal Government for these allegations of fraud. The claims allege what amounts to improper or inflated billing practices. The terms of art for inflated billing is “upcoding”. Upcoding is basically where the hospital bills for a procedure which may have been more intricate and provides for a larger reimbursement from the Federal Government. The “upcoding” refers to a different billing “code” that the Federal Government assigns to certain procedures. By submitting a claim for a more difficult or intricate procedure, the hospital is reimbursed a larger amount of money. Although there are variants on this upcoding issue, a qualified fraud attorney can explain the intricacies.

“Upcoding” can occur in hospitals as well as physician’s offices, nursing homes or, for that matter, dental offices and counselor’s offices. The upcoding can come in the form of billing for a more difficult procedure but it can also come in the form of billing for a longer procedure. For example, a false claim was brought against a counselor for billing for one hour sessions when in fact the sessions were only lasting 45 minutes. After the fraud was reported, the investigators engaged in some simple math. The accumulation of the hours billed by the professional far exceeded that which was possible.

The claims for upcoding can be very difficult to prove and nearly always require documentation. Basically, the report of fraud would have to be made by someone who had specific and direct knowledge of the actual procedure that was performed. Very often, these cases are reported by nurses or other professionals who are directly involved in patient care. The delicate balance is reporting the factual basis for the “upcoding” violation without violating privacy rules of the patient.

If you have been witness to, or are concerned about, upcoding violations in New Jersey, you should speak to a qualified New Jersey Whistleblower lawyer.

As a New Jersey Whistleblower Attorney I am truly amazing how long whistleblower cases can take! This is best exemplified by the recent IRS announcement of their FIRST award. The time lapse is interesting because the IRS established a whistleblower office in 2006. Nearly five years later, the IRS announces its first award to a whistleblower.

The facts are fairly interesting in that the whistleblower was actually an accountant. The accountant reported the underpayment of in excess of $20 million in taxes and interests from a financial services firm. At the time of the report, the accountant was working for the company he reported.

The “new” IRS program announced in 2006 was designed to encourage tips in larger cases and the awards to the person supplying the information can vary between 15% and 30% of the amount of money recovered by the IRS. The IRS awarded the whistleblower 22% of the taxes recovered.

One of the fascinating aspects of the IRS whistleblower provisions is the possibility of remaining anonymous. Any report of the information is pursued by the IRS and, if the whistleblower so chooses, the name will not be released. This is somewhat attractive to some whistleblowers who remain in the employ of the entity they are reporting on.

In an interesting piece of irony, the IRS mailed the award check to the whistleblower by first class mail. As if the use of first class mail was not ironic enough in this day and age, the check sent to the whistleblower was in the amount of $3.24 million. The difference between the $4.5 million awarded and the $3.24 million sent was a 28% tax!

The interesting aspect of this recent award is that almost every “fraud” against the government has some “tax fraud” aspect. If there is any underpayment to the government of monies owed and these monies are not reported as income, this can certainly qualify as a tax fraud”.

The recent announcement of the first award from the IRS and its significant size may prompt others to consider this alternative instead of a more “traditional” whistleblower type lawsuit.

Also interesting is the fact that the individual whistleblower attempted to pursue the matter himself and the matter languished. After the whistleblower hired an attorney, the matter seemed to move along.

The IRS whistleblower office submits an annual report to congress. The annual report indicates that the IRS whistleblower office receives nearly 1,000 tips per year. The tips received by the office often allege tax underpayments of more than $10 million and there are some instances of reported underpayments of in excess of $100 million. Needless to say, this will be an interesting subset of whistleblower representation. Knowing the limitations of the whistleblower office, the program is only “accepting” reports of fraud in excess of $2 million.

A telecommunications company paid $16.5 Million for improper billing practices. Avaya, a New Jersey based company billed governmental agencies for telephone equipment that either didn't work or had been replaced. A concerned individual brought the improper conduct to light. Under the Federal Whistleblower Statute the individual will be paid for providing the information. Although it has yet to be announced, the amount paid to the person disclosing the information will exceed $ 3 Million. If you know of improper billing practices like this, call us.