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Wednesday, December 10, 2014
Bergen County Fraud Case 33.5 Million Dollars Awarded
The total amount includes $8 million in punitive damages
Paramus, N.J. (Sept. 22, 2014) – A three-week civil trial at the Bergen County Superior Court of New Jersey recently ended with a jury awarding The Law Funder, LLC $33.5 million dollars. The amount is payable by, among others, defendant Matthew Sheldon, who in 2013 pleaded guilty in the United States District Court for the District of New Jersey to the same unlawful conduct.
“This verdict is a victory for my clients,” said Sean Callagy of Callagy Law, who represented The Law Funder in the case. “While this does not represent a complete recovery for them, we will continue to pursue the payment due for the rest of Sheldon’s life so that he may repay some of what my clients have lost.”
Sheldon is currently incarcerated and is serving a sentence of 30 months in prison after having pled guilty to conspiracy to commit wire fraud in 2013. He admitted to engaging in a kickback scheme that resulted in him and a number of other defendants being paid improper referral fees by the litigation funding company The Law Funder, LLC.
Sheldon had served as an attorney and chief underwriter for The Law Funder of New York, a company that he co-founded in 2004 with three other individuals.
His fraudulent activity began in 2005, when Sheldon started to work with a New Jersey broker to garner referral fees, which the two split. The fees collected amounted to at least $870,000 in profit for Sheldon.
His indiscretions were uncovered in 2009 after The Law Funder had dismissed Sheldon. An investigation by Callagy Law uncovered other fraud that was also included in the civil complaint.
The case alleged wrongdoing beyond the criminal charges, including claims that Sheldon purposefully overvalued some cases and approved funding for bad cases for his own personal benefit.
Sheldon was also accused of transferring $750,000 for fictitious cases to Jessica Escobar in Houston, who posed as both attorney and paralegal and was alleged to have had an intimate relationship with Sheldon.
The suit named 20 defendants, including Gregory Krasovsky, an attorney who previously represented The Law Funder and was aware of Sheldon’s fraud but did not alert the company, according to the complaint.
The verdict was released on June 24, 2014, with the jury awarding a total of $24.5 million in compensatory damages – $22.9 million against Sheldon, $2.2 million against Krasovsky, and $375,000 against another defendant. On June 25, 2014, the jury awarded an additional $8 million in punitive damages against Sheldon for a total of $33.5 million against him and the remaining defendants.
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Callagy Law (Law Offices of Sean R. Callagy)
650 From Road, Suite 565
Paramus, NJ 07652
inquiries@callagylaw.com
ASC and the Out of Network Penalty
Callagy Law represents
several ambulatory
surgery centers (“ASCs”) in actions for PIP recoveries, and one of the most
common issues that we arbitrate for our clients is the out of network penalty
(OONP). Some insurance carriers also
call this penalty a “Vendor Utilization Network” penalty (VUN). This penalty is applied when a patient
receives medically necessary services at an ASC
which is not in-network with the carrier.
When the carrier processes the bill, they take a 30% penalty from the
amount due to the ASC,
and issue payment, along with an EOB for 70% of the balance.
The receipt of the EOB with 70% of
the balance is almost always the first time the ASCs
are informed that they might be subject to such a penalty.
While this seems like an unfair, almost ex post facto,
application of a penalty to an ASC,
the carriers do have a valid argument, in that, the first time the carrier even
knows that the ASC
is treating the patient is often when the carrier receives an ASC
bill for hosting the procedure. The
carriers argue that it would not have been possible to inform the ASC
of the penalty prior to the services being hosted.
At arbitration,
arbitrators will typically uphold the 30% penalty if the notice of the penalty
has been sent to both the patient and the treating doctor (who typically
performs the treatment at the ASC). If both of those parties have received proper
notice, the arbitrators usually rule that the carriers have done everything
they can to inform all parties of the OONP.
While this might seem like an unavoidable pitfall for the
surgery centers, it is important to note that, technically, the 30% penalty is
a co-payment penalty. This means that the ASC
is still entitled to recover the 30%, but that they have to get the money
directly from the patient. Typically, an
ASC
is not in the business of being debt collectors, but they are still entitled to
this money.
The best way for an ASC
to protect themselves in situations like this is to communicate with the
treating doctors. Ask them if they’ve received
a copy of the carrier’s Decision Point Review Plan (DPRP) (which will include
language about the penalty) and ask for a copy of the DPRP. If the DPRP does provider for the OONP, the ASC
should communicate with the patient and let them know about the co-payment up
front. Maybe even create a form or
acknowledgement that the patient will sign as part of the paperwork when they
first come into the ASC. It is much less likely that the patient will
want to send the ASC
a large lump sum payment after the fact, especially if they had no idea up
front that it might be an issue.
Of course, if the ASCs
want to host these types of procedures and take their chances with the
potential application of a 30% co-payment penalty, that is a business
decision. Knowledge, however, is power,
and ASCs
should be making such a decision with their eyes wide open to all of the
potential risks.
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Tuesday, December 9, 2014
The ER Modifier: Better Safe Than Sorry
The New
Jersey No Fault Personal Injury Protection (PIP) regulations were modified
effective January 4, 2013. Those
regulations, in Section 11:3-29.4(a)(2),
provide
The
non-physician facility fees in subchapter, Appendix, Exhibit 7 [The Hospital
Outpatient Surgery Fee Schedule (HOSF)] shall not apply to services provided in
hospital emergency rooms. The bills for these services shall use the modifier
“-ER”.
PIP
insurance carriers have used this provision to argue that use of the ER
modifier for hospital Emergency Room claims is mandatory in order for the
hospital to receive reimbursement at its usual and customary rates (UCR). Without the modifier,
carriers argue, reimbursement should be at the Exhibit 7 HOSF rate, or worse,
at the Exhibit 1, Physician Fee Schedule rate.
While Callagy Law has been
aggressively opposing the carrier
position, PIP
insurance carriers have, at times, been successful with this argument. Indeed, as a general rule, we have been
prevailing about 65% of the time, with carriers prevailing about 35% of the
time.
Before
even delving into the purpose of modifiers and other arguments against the
carrier’s position, it should be understood at the outset that historically no fee
schedule applied to hospital ER services or, for that matter, any other
hospital services. To the extent the
physician fee schedule had been applied to hospital facility services they were
inappropriate applications of the fee schedule and are, at this point, largely recognized
as such. The HOSF and the regulations
effective 1/4/13 did nothing to change that.
Indeed, it is our position hospital ER services remain
outside the purview of any fee schedule, whether it is the physician’s fee schedule
or the HOSF, since the physician fee schedule applies to physicians and the
HOSF applies to outpatient surgeries.
The exemption to application of Exhibit 7 quoted above, which calls for
use of an “ER” modifier, refers to outpatient surgeries conducted as part of ER
treatment, not standard non-surgical ER services, such as evaluations (9928X),
radiology, labs or other non-surgical items.
Hence, discussion of the ER modifier is completely misplaced in the
absence of ER surgery. But even if the
exemption is implicated either because there is an ER surgery or a carrier
insists on its use even for non-surgical ER treatment, it should never be
construed as mandatory.
PIP
carriers emphasize use of the word “shall” in the regulations to suggest that
use of the modifier is a prerequisite for services to be removed from
application of Exhibit 7. If it were
optional, they argue, a more permissive word, such as “may” or “could,” would
have been used. This is too strict an interpretation and serves to undermine
the intention of the regulations.
First,
it is always eminently clear from hospital bills (UB forms) when the services
are Emergency Room services, including the words “Emergency Room” in front of
the ER evaluation CPT
Code (9928X). It is hard to fathom
how a conclusion could be drawn not to exempt a claim from Exhibit 7 because
the initials “ER” were not used after a CPT
Code but the words “Emergency Room” or something similar appears right on
the UB, and all the clinical records show the treatment was pursuant to
admission to the hospital emergency room.
Second,
the purpose of the modifier is to inform the carrier of the nature of the
services rendered, so that the carrier knows the proper level of reimbursement,
not to create a technical prerequisite to proper payment. It is disingenuous at best for any carrier to
suggest they were unaware the services were pursuant to ER treatment in the
face of a standard hospital ER claim simply because the initials “ER” do not
appear after the CPT
Codes. This certainly elevates form
over substance to an absurd and unjust level.
Finally,
it is ironic that the carrier position suggests that the intent of the
regulations, through use of the word “shall,” is to require the modifier. This turns the regulation on its head. The purpose of the regulation is not to
define modifiers as either mandatory or optional; if that were the regulation’s
purpose, I would agree with the carriers.
The purpose of the regulation is to exempt hospital ER surgical treatment
from the HOSF Fee
Schedule. To deny that exemption
because the modifier is not used defeats that purpose. The carriers’ position calls for use of the
modifier simply for the sake of the modifier, not for the intent of the
regulation, which is the exemption of ER services from application of Exhibit
7.
Several
arbitrators, in very well-reasoned decisions, agree with this position. They
are well-reasoned not because they agree with our view, but because they hold
true to the intent of the regulation and a common sense reading of the
language, rather than an interpretation that is hyper-technical. For example, DRP Joseph Tamburino,
in Cape Regional Medical Center v.
Geico, NJ1404001554453, determined:
[T]he purpose of appending a modifier to a CPT Code is to
provide clarification and detail as to the nature of the medical services
rendered. . . . I find that the
[carrier] was on notice of the nature of the services rendered (emergency room
services) and to now argue that the lack of the “ER” modifier justifies denial
is a matter of form over substance. The
[hospital’s] . . . bill served upon [the carrier] clearly indicates next to CPT
29125 and 99284—“emerg room.”
In
conclusion, even though Callagy Law
is prevailing the great majority of the time on this issue, and we are
confident we will continue to prevail to an even greater degree, and despite
the fact that our position is the correct one from both the legislative intent
of the regulation and a common sense interpretation, we recommend that all of
our hospital clients use the ER modifier.
Even if a manual process needs to be added to ER billing procedures, or
corrected claims need to be issued with the modifier, it is worth it. As explained above, we have found that
carriers are prevailing on this issue in excess of 30% of the time. This is too often and is costing hospitals
significant revenue.
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Friday, December 5, 2014
Medical Provider, Heal Thyself: Information on the Affordable Care Act
The moral of this
biblical proverb is in its advice to attend to one's own defects rather than
criticizing defects in others. Its
relevance and practical applications are virtually without limit, for it can
even be referenced in any situation or circumstance wherein an entity (whether
corporate, individual, or other) bemoans the unfair treatment it feels it is
receiving, but where that entity's inaction or misguided effort enables the
perpetuation of such mistreatment despite the availability of assistance that
could affect a positive change.
What does this have
to do with medical providers and facilities?
Plenty.
While the
outworking of the Affordable
Care Act continues, for better or worse, to define the economic impact to
one-sixth of the U.S. economy - an impact which in a free enterprise
system is felt on every level of a medical
provider's ability to thrive and thus continue to offer the highest quality
of care - the interposition of healthcare insurers in the doctor/patient
relationship remains powerfully influential in determining what that
quality of care will ultimately be.
Physician practices, like hospitals, are after all "for-profit"
entities, and are largely dependent on receiving fair payment for the vital
treatments they render. That payment
must pass through a for-profit
insurer. And therein lies a problem,
both potentially and practically, if not inherently.
Even a cursory
review of websites devoted to the bad faith payment practices of medical insurers can
leave one's head spinning. The means
utilized to achieve their end (which is quite simply, to increase their profits)
are often the results of far more time, thought, and investment than the
medical arena as a whole seems able to match.
Whether by implementing evermore obstructionist appeals processes,
defaulting to payment schedules developed within the insurance community
itself, or adopting computerized payment systems whose very appeal to the
insurer is the cost savings promised by that system's sales representative, the
insurer has come to occupy the coveted high ground on the battlefield of
reimbursement to medical providers. Thus,
they are winning that battle. What's a doctor, hospital, or
surgery center to do?
First, know that it
doesn't have to be this way. There are
very powerful remedies available to the victims of insurer
denial and short-pay practices.
Next, get connected with a law firm that cares enough to fight hard for
the fullest extent of your rights and has done so with consistent effectiveness
and with integrity. Be very circumspect
in your choice of that advocate, for there are many and their track records are
as varied as their cultures and business models. But regardless of whether or you choose to
take these steps, consider this: Callagy Law has recovered
over $140,000,000 in additional payments for our healthcare clients and medical
providers, including over 30,000 settlements and awards in the past five years
alone.
This is a huge, and
hugely significant, battle. Fighting it
alone is like taking on the Red Army with a BB gun. Ultimately, you will get the representation
and results that you insist on for yourself.
Just know that we are here to help you as well. Contact
us, and let the healing begin.
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