In the Wake of the Affordable Care Act, Feds Get Aggressive on Health Care Fraud

A federal grand jury impaneled in Alexandria, Virginia handed down a 60-count indictment on Tuesday August 12, 2014 charging one of Northern Virginia’s top dermatologist with health care fraud in violation of 18 U.S.C. Section 1347, aggravated identity theft in violation of 18 U.S.C. Section 1028A and obstruction of justice in violation of 18 U.S.C. Section 1512. If convicted, Dr. Amir Bajoghli, 44 years old, faces 10 years in prison for each health care fraud count, two years in prison for each of the aggravated identity theft counts and up to 20 years in prison for obstruction of justice. According to Washingtonian Magazine, Dr. Bajoghli was ranked as one of the Washington, D.C. Metro Area’s top dermatologist from 2005-2012. Dr. Bajoghli’s medical group, Skin and Laser Surgery Center, has offices in Stafford, Woodbridge and Vienna, Virginia and Washington, D.C. Dr. Bajoghli is also an Associate Clinical Professor at Virginia Commonwealth University in Richmond, Virginia.

Beauty Treatment

The indictment alleges that Dr. Bajoghli intentionally misdiagnosed patients with skin cancer and then performed unnecessary procedures on those same patients, removing benign skin cells and then fraudulently submitted those claims to health care insurance providers for reimbursement, based on these alleged bogus diagnoses. Additionally, the indictment alleges that Dr. Bajoghli fraudulently billed insurance providers for procedures he did not perform. For example, the indictment alleges that at certain times, Dr. Bajoghli billed for procedures that he allegedly performed at three separate offices on the same day at the same time. Unless the doctor has learned how to transcend space and time, that would be impossible. Moreover, the indictment charges that Dr. Bajoghli had unlicensed medical assistants perform wound closures, complex suturing and skin grafts without his supervision while he in turn allegedly billed the insurance providers for these services, as if he had performed them himself or personally supervised them.

As with many criminal cases, it’s not the crime but the cover-up that often seals one’s fate. Here, the indictment alleges that during the course of the criminal investigation Dr. Bajoghli instructed his staff to tell anyone inquiring about the patients that he had “personally” performed the wound closures, regardless of who performed them. Finally, the indictment charges that Dr. Bajoghli participated in an alleged scheme with an Ohio company and a Connecticut pathologist to prepare slides and perform pathology reports, which Dr. Bajoghli in turn represented to be his own work, billing the insurance providers hundreds of dollars more than he allegedly paid the outsourced Ohio lab and Connecticut pathologist. The case is pending before U.S. District Court Judge Gerald Bruce Lee in federal court in the Eastern District of Virginia and set for arraignment on September 10, 2014.

The government’s case against Dr. Bajoghli, comes on the heels of a similar federal health care fraud case in Kentucky. On December 4, 2013 a grand jury sitting in Louisville handed down a 14-count indictment charging Dr. George Kudmani with 11 counts of unlawful distribution of a controlled substance in violation of 21 U.S.C. Section 841, health care fraud in violation of 18 U.S.C. Section 1347 and money laundering in violation of 18 U.S.C. Section 1957. If convicted, Dr. Kudmani faces 230 years’ in prison and a fine of up to $10.2 million dollars.

The indictment alleges that Dr. Kudmani from January 2009 to September 2012 saw an average of 35 patients per day and, in violation of U.S. law, wrote prescriptions for these patients without a physical exam or medical diagnosis. The indictment alleges these patients were given prescriptions for Oxycodone and Hydrocodone, highly addictive severe pain management drugs which are opiate derivatives. The indictment alleges that these patients paid cash for their so-called “exam” and Dr. Kudmani pocketed the cash and used it to buy a new car. Additionally, the grand jury accused Dr. Kudmani of performing medically unnecessary procedures and then fraudulently billing the government for those services. Both Dr. Bajoghli and Dr. Kudmani have pled not guilty and deny these charges. The indictment is merely a formal way to charge a person after a grand jury hears evidence and believes there is “probable cause” that a person or entity has committed a crime. Such charges must be proven beyond a reasonable doubt in a court of law. Their defense attorneys will have various arguments and strategies at their disposal to defend against these charges.

The federal government since the passage of the Affordable Care Act in 2010, has shown an increasing willingness to go after doctors, health care facilities and other medical professionals for criminal violations of the federal health care laws. In particular, the Affordable Care Act gave prosecutors and law enforcement new and expansive tools to root out alleged fraud and abuse. First, the ACA increased penalties for health care crimes under the U.S. Sentencing Guidelines by 20 to 50 percent for major health care fraud offenses. Additionally, the screening process for new health care providers under the Medicare Program has now become more stringent in an effort to more easily identify those the government believes is trying to scam the system. The White House reports that there has been a more than 75% increase in the number of health care criminal prosecutions from FY 2008 (797) to FY 2011 (1,430). Since the passage of the ACA, the Health Care Fraud and Abuse Control Program has returned an estimated $10.7 billion dollars in alleged fraudulent billings to the Medicare Trust Fund, including $4.2 billion in 2013 alone.

What does this mean for health care professionals? It’s simple, beware and practice vigilance. Any NFL fan would tell you, the best offense is a good defense. Doctors, clinics and other health care professionals should implement quality control mechanisms, such as real time audits and a second layer review of their billables before they are submitted to health insurance programs, including the government, for reimbursement. Compliance programs are critical to avoid costly criminal investigations. According to the medical website in May of 2014 alone, 90 people, including 16 physicians were charged by the Medicare Fraud Strike Force with criminal fraud, conspiracy to commit health care fraud, accepting kickbacks, false claims and money laundering. Doctors, other medical professionals and clinical facilities who suspect fraud and abuse should consider bringing in a seasoned white collar defense team to conduct legal review of their programs and identify weaknesses and/or possible illegal conduct. In some cases, proactively self-reporting along with corrective action and reimbursement of alleged illicit funds could be the difference between criminal prosecution and/or a non-prosecution agreement with a fine.

Terry Eaton -
Attorney, Professor & Speaker

Terry Eaton is the Founder and Principal at the Eaton Law Firm, PLLC.  Mr. Eaton focuses his practice defending

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